AS Turquoise Hill Resources gears up to begin underground production from the Oyu Tolgoi (OT) Copper-Gold Project in 2020, it expects the open pit operations to more than double gold production during 2018. The Rio Tinto controlled company has forecast production of 240,000 to 280,000 ounces with operating costs dropping by about 2.8%.
|The concentrator facilities at Oyu Tolgoi in Mongolia’s South Gobi region.|
This guidance has more than doubled from 100,000 to 140,000 ounces expected to be produced during 2017.
The open pit is expected to produce 125,000 to 155,000 tonnes of copper in concentrate in 2018, slightly less than the 130,000 to 160,000 tonnes predicted for 2017.
The open pit is expected to mine in Phase 6 in early 2018 and in Phase 4 throughout the year while stockpiled ore is also expected to be processed.
The increased gold production relative to the 2016 Technical Report is due to splitting Phase 4 into two parts and bringing production forward from future years.
Operating cash costs for 2018 are expected to be about $700 million, down from the $720 anticipated for 2017 as a result of lower concentrator and logistics costs.
Capital expenditures for 2018 on a cash-basis are expected to be approximately $150 million for open-pit operations and $1.1 billion to $1.2 billion for underground development.
Open-pit capital mainly comprises deferred stripping, equipment purchases, tailings storage facility construction and maintenance components. The main drivers of the 2018 estimate increase are equipment purchases and maintenance.
Underground development capital includes expansion capital and VAT. Based on the 2016 report, lateral development is expected to advance about 10km in 2018.
During the September quarter, operational records were achieved for total material mined, ore treated and average daily concentrator throughput. Material mined was 27.466 million tonnes, an increase of 9% over the June quarter and ore treated increased 10.1% to 10.615 million tonnes. Average daily concentrator throughput was 115,400 tonnes, an increase of 8.9%, although average throughput was impacted by a scheduled maintenance shutdown.
Turquoise Hill continues to expect the first draw bell in mid-2020 and expects sustainable first production in 2021. OT is jointly owned by the government of Mongolia (34%) and Turquoise Hill (66%). Rio owns 51% of Turquoise Hill.