The Oyu Tolgoi mine, in Mongolia, has had a strong start to 2019, with copper and gold production in the openpit mine rising strongly, standing Vancouver-based Turquoise Hill in good stead to meet its production guidance for the year.
During the first three months of the year, Oyu Tolgoi produced 45 800 t of copper and 120 000 oz of gold, compared with 38 800 t of copper and 42 000 oz of gold a year earlier.
Turquoise Hill generated revenue of $352.7-million in the first quarter, up 44% on the first quarter of 2018, reflecting the significant increase in gold production as higher gold content ore were processed.
The mine’s cost of sales was $1.99/lb of copper sold, C1 cash costs were $0.77/lb of copper produced and all-in sustaining costs were $1.45/lb of copper produced.
For the March quarter, Turquoise Hill recorded income of $105.2-million and net income attributable to owners of the company of $111.2-million.
"Oyu Tolgoi has made a strong start to 2019," said Turquoise Hill CEO Ulf Quellmann.
Commenting on the delays to underground mining, he said that Oyu Tolgoi remained engaged with mine manager Rio Tinto to incorporate new geotechnical data into the mine design.
“We expect to provide an update along with our mid-year results.”
The company previously advised that Rio Tinto would complete a review of the Shaft 2 schedule and that outcomes were expected by the end of October.
Turquoise Hill owns the mine in a 66:34 partnership with the Mongolian government, but while it is seen as one of the most lucrative copper/gold properties under development, Oyu Tolgoi has been dogged by political challenges, corruption investigations and construction delays.
Oyu Tolgoi mine was initially developed as an openpit operation. The copper concentrator plant, with related facilities and necessary infrastructure, was originally designed to process about 100 000 t/d of ore from the Oyut openpit. Since 2014, the concentrator has improved operating practices and gained experience, which has helped achieve a consistent throughput of more than 105 000 t/d. Concentrator throughput for 2019 is targeted at 110 000 t/d.
In August 2013, development of the underground mine was suspended pending resolution of matters with the government of Mongolia. Following signing of the Oyu Tolgoi underground plan in May 2015 and the signing of a $4.4-billion project finance facility in December 2015, Oyu Tolgoi received formal notice to proceed approval by the boards of Turquoise Hill, Rio Tinto and Oyu Tolgoi in May 2016, which was the final requirement for the restart of underground development.
Underground construction restarted in May 2016. Since then, a total of $2.6-billion had been spent on underground construction. Another $1.3-billion to $1.4-bilion is earmarked for underground development this year.
Oyu Tolgoi is expected to produce 125 000 t to 155 000 t of copper and 180 000 oz to 220 000 oz of gold in concentrates for 2019.