Mining in the open pit at the Oyu Tolgoi Copper-Gold Project. Copyright © 2014 Oyu Tolgoi.
Mining in the open pit at the Oyu Tolgoi Copper-Gold Project. Copyright © 2014 Oyu Tolgoi.

BANKS have agreed to extend their financing commitments to fund the underground expansion of the Oyu Tolgoi Copper-Gold Project (OT). By mid-May 14 of 15 banks had agreed to extend financing commitments to September 30 with a response from the final bank imminent.

Turquoise Hill Resources’ CEO Kay Priestly said the company now had sufficient commitments to reach the funding goal of approximately a $4 billion facility. OT is being developed by Rio Tinto, which owns 51% of Turquoise Hill. An open pit mine at the site is in production.

The underground development of OT was put on hold last year when the Mongolian government became concerned about cost overruns. Kay Priestly says the underground expansion must still be approved by the company and the government after a new feasibility study is done. This study was expected to be finished by the end of June.
She said ongoing talks with the Mongolian government on restarting development of the underground expansion had been constructive.

During the first quarter of 2014 OT produced 102,900 tonnes of copper-gold concentrate containing 25,300 tonnes of copper. It recorded net revenue of $108 million on sales of about 48,200 tonnes of concentrate.

OT’s concentrate sales continue to increase with April 2014 sales of about 68,000 tonnes. The sales exceeded production resulting in an inventory drawdown. Contracts have been signed for 94% of OT’s expected 2014 concentrate production and long-term contracts account for 91% of 1015 planned production.

Following some post-commissioning issues experienced in the first quarter, production rates have returned to normal and the concentrator is operating close to nameplate capacity. OT expects to produce 135,000 to 160,000 tonnes of copper and 600,000 to 700,000 ounces of gold in concentrates for 2014.

As operations transition from post-commissioning to steady state, OT has been focusing on costs and productivity. Extensive work is well under way in a number of areas to improve operational performance.

OT’s exploration strategy is focused on developing a project pipeline prioritized in areas that can impact the current development of the OT ore bodies, seeking low-cost development options with the potential to directly impact the value of current operations and continuing development of legacy datasets to enable future discovery.

During the first quarter exploration drilling continued with more than 1000 metres of surface diamond drilling completed in four holes on the OT mining licence. A Hugo North resource estimate update was undertaken during the quarter and is being validated. The next geology model and estimate include new drilling data from the Hugo North Lift 1 infill drilling program.

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