The openpit mine at Oyu Tolgoi, in Mongolia, produced significantly less copper and gold during the three months ended September, but Vancouver-headquartered Turquoise Hill reported on Tuesday that the quarter was a strong one from a production and safety perspective, while announcing an increased 2019 gold production guidance.

Compared with the third quarter of 2018, copper concentrate production fell by 28% to 28 400 t, gold production decreased by 66.8% to 28 600 oz and silver output dropped 17% to 191 000 oz.

Openpit tonnes mined rose by 10.3% to 24.84-million and 4% more ore were also treated. However, the average mill head grades for copper fell by 27.4% to 0.37%, gold dropped 63.2% to 0.14 g/t and silver decreased by 13.5% to 1.03 g/t.

Turquoise Hill reported that the openpit operations were expected to continue to mine in the lower-grade Phase 4B ore and stockpiles through the remainder of the year, with mill throughput forecast to be about 40-million tonnes.

Average copper mill head grades were also expected to be lower over the remainder of the year; however, the miner said that it remained on track to achieve its full-year copper guidance of 125 000 t to 155 000 t.

For gold, Turquoise Hill is now forecasting higher production in 2019, with the guidance shifted up from 230 000 oz to 240 000 oz.

C1 cash costs are expected to be between $1.50/lb and $1.70/lb of copper produced, owing to the impact of the increase in the gold production guidance, combined with the revised reduction in operating cash cost guidance to $800-million, from an $800-million to $850-million range.

The previous 2019 C1 cash cost guidance was $1.75/lb to $1.95/lb of copper produced.

Turquoise Hill reported September-quarter revenue of $209.2-million, a decrease of 15.1% from $246.5-million in the third quarter of 2018, primarily owing to the expected 66.8% decrease in gold production and the 28.0% decrease in copper production.

The decreased production and a 5% decrease in copper price were partly offset by a 22% increase in the average gold price in the period.

Turquoise Hill’s income for the period was $45.1-million compared with income of $15.2-million in the third quarter of 2018, with the increase primarily owing to additional deferred tax assets recognised, partly offset by lower gross margin driven by the reduced revenue.

Income attributable to owners of Turquoise Hill was $71.7-million, or $0.04 a share, compared with income of $53.2-million, or $0.03 a share, in the prior-year period.

UNDERGROUND DEVELOPMENT

Meanwhile, the mining company reported that underground development at Oyu Tolgoi progressed successfully during the quarter under review, achieving 3.6 total equivalent kilometres – its best quarterly result to date.

Since the restart of underground development, 28 total equivalent kilometres and 22.1 kilometres of lateral development has been completed. In September, a record 1 385 m of lateral development metres were mined.

The construction of Shaft 2 was completed in October and has entered the final stages of commissioning.

Shafts 3 and 4 pre-sink work is complete with both shafts at 80 m below the shaft collar as of September 30. The sinking headframes and sinking stages for the shafts are being assembled to enable the hard rock sinking to start over the coming months.