Ivanhoe Mines has approved a US$2.3 billion capital budget for 2011 in what will be the peak year of construction activity on the first phase of the Oyu Tolgoi copper-gold project in southern Mongolia.
Approval of the budget followed earlier full approval of the 100,000-tonne/day project by the Ivanhoe Mines-Rio Tinto joint Technical Committee, which is overseeing the Oyu Tolgoi Project, and the board of Oyu Tolgoi LLC, the Mongolian company that holds the Oyu Tolgoi licences and is 66% owned by Ivanhoe Mines and 34% by the Mongolian government.
Ivanhoe’s president John Macken says, “Our ramp-up to full-scale construction during 2010 was so successful that we now are targeting to deliver the first ore to the concentrator up to six months earlier than previously projected.
“Oyu Tolgoi should be making its first sales of copper and gold in concentrate produced from ore from the Southern Oyu open pit during the fourth quarter of 2012.
“Outstanding work by our project team, which currently includes 3000 Mongolian men and women, means that the accelerated development program will generate earlier revenues from the gold-rich open-pit ore while we also are maintaining the pace of development of the future underground block-cave mine at the copper-rich Hugo Dummett Deposit.
“The announcement of a series of financing measures as part of a new agreement with Rio Tinto will enable us to proceed in coming weeks with the signing of the largest contracts of the entire phase-one construction program.”
Principal elements of the 2011 construction program include:
- US$561 million for the copper-gold concentrator, which will see complete enclosure of the building, completion of steel work for the overland ore conveyor, installation of one of four ball mills and installation of all material-handling equipment in the pebble crusher.
- US$186 million to purchase the initial mining fleet of trucks, shovels and ancillary equipment, and to start pre-stripping of the Southern Oyu open-pit mine.
- US$713 million for project infrastructure and electrical power, including completion of the central substation, completion of the process-water supply, completion of the truck maintenance shop and phases one and two of the operations camp.
- US$211 million for ongoing underground mine development at the Hugo North Deposit, construction of the headframe on Shaft 2 and further sinking of Shaft 2, which are critical elements of the development of the block-cave mine planned to begin production in 2015.