The construction of Ivanhoe Mines’ flagship Oyu Tolgoi copper-gold-silver project in Mongolia is on schedule for completion later this year, with the first stage of the mine 75% complete.
Ivanhoe chief executive officer Robert Friedland says, “Installation of the two production lines in the concentrator and pre-commissioning works are progressing ahead of plan. The concentrator, which will have an initial daily capacity of 100,000 tonnes, is now more than 80% complete. The first production line is scheduled to be completed during the third quarter, followed by completion of the second production line in the fourth quarter this year.
“After achieving the scheduled milestones of the production of first ore and the production of the first copper, gold and silver concentrate this year, Oyu Tolgoi will ramp up to reach commercial production during the first half of next year.”
Progress has been made on securing an interim power supply for the mine, with the company hoping to have Oyu Tolgoi connected to a 220kv power line into China’s Inner Mongolia by the end of July this year.
“Contractors have begun construction of the power line and switching station as part of the 87km link to be built within China that will connect Oyu Tolgoi with the established distribution grid,” says Robert Friedland.
A separate electricity-purchase agreement establishing a supply arrangement between Mongolian and Chinese authorities is required before power can be imported into Mongolia.
Ivanhoe says the long-term investment agreement signed with the Mongolian government in 2009 permits Oyu Tolgoi to import electrical power from China for up to four years after the start of commercial production, following which power will be sourced from within Mongolia.
The company is also in discussion with Rio Tinto, which increased its holding in Ivanhoe Mines to 51% in January, about the financing plan for the completion and start-up of Oyu Tolgoi.
Ivanhoe Mines has invested more than US$5 billion to date in Oyu Tolgoi’s exploration and development during the past decade. In January this year, Ivanhoe announced it had secured US$1.8 billion in bridging finance from a major international bank, to pay for the first stage in construction.
“Both companies have exchanged proposals and we are continuing to work together in an attempt to reach agreement on a comprehensive financing approach that will accommodate our mutual interests in advancing Oyu Tolgoi’s development,” says Robert Friedland.
“We have a plan that will provide the remaining fiscal resources to complete construction of the first phase of development and also to continue progressing development work on the phase-two underground mine that is scheduled to begin production in 2015.”