CONCENTRATE production for the second quarter at Turquoise Hill Resources' Oyu Tolgoi Copper-Gold Project (OT) returned to normal rates after recovering from thickener rake repairs. Copper concentrate increased from 1.029 million tonnes to 1.4 million tonnes and the average grade was 25.8% copper, up from 24.6%.
Metal production, however, was impacted by lower-grade ore due to delayed open pit mine advancement. Small amounts of higher-grade ore were processed in quarter two but the grade will increase through the second half of 2014 as the mine deepens into a high-grade zone. Turquoise Hill continues to expect OT to produce between 135,000 and 160,000 tonnes of copper and 600,000 to 700,000 ounces of gold in concentrates for 2014.
OT is about 550km south of Ulaanbaatar and 80km north of the Mongolia-China border. Mineralization on the property consists of porphyry-style copper, gold, silver and molybdenum contained in a linear structural trend (the Oyu Tolgoi Trend) that has a strike length extending over 26km.
Concentrate sales during the second quarter increased significantly due to ongoing improvements in customer logistics and marketing. As a result of the increase, sales exceeded production resulting in an inventory drawdown for the quarter. Strong concentrate sales are expected to continue throughout the second half of 2014 and sales are expected to exceed production through the end of 2014.
OT's goal is to reach four to eight weeks of concentrate production in inventory by the end of 2014. Sales contracts have been signed for 100% of OT's expected 2014 concentrate production and long-term contracts account for 92% of 2015 planned production. Additionally, 84% of concentrate production has been contracted for up to eight years.
There was 16.861 million tonnes mined from the open pit in the quarter, compared to 21.621 million tonnes in the previous quarter. There were 7.778 million tonnes of ore treated compared to 5.56 million in the previous quarter. The copper grade was 0.53% compared to 0.52%, the gold grade was 0.60 grams/tonne, up from 0.49 grams/tonne and the silver grade was 1.57 grams/tonne, up from 1.52 grams/tonne.
The OT mine has initially been developed as an open-pit operation. A copper concentrator plant, with related facilities and necessary infrastructure to support an initial daily throughput of 100,000 tonnes of ore, has been constructed to process ore mined from the Southern Oyu open pit. Development plans are based on a 95,000-tonne-per-day underground block-cave mine. In August 2013, development of the underground mine was delayed to allow matters with the Government of Mongolia to be resolved.