MONGOLIA - Oyu Tolgoi complex 82% complete

Overall construction of Ivanhoe Mines’ Oyu Tolgoi copper-gold mining complex in southern Mongolia is 82% complete and on track to begin commercial production in 2013. The company has spent $4.6 billion on the first phase of construction to date, from a $6.2 billion budget allocated for this stage of development. 

Mining and stockpiling of the first ore from the complex’s phase one open-pit mine began in April and arrangements are progressing to secure electricity from China to be available for the start of initial production in the second half of this year. Ivanhoe says the physical construction of all transmission infrastructure needed to import power will be in place by July. In the meantime, additional diesel-powered generation capacity has been installed to meet the project’s more immediate requirements.

The installation of two ore-processing production lines in the 100,000 tonne/day concentrator is progressing, as is construction of the second shaft at the Hugo North underground mine. Long term contracts have also been signed for a substantial portion of the mine’s total concentrate production.

Construction of the off-site facilities and infrastructure has reached 72% completion, which is behind schedule due to delays during the building of the Oyu Tolgoi-Gashuun Sukhait road to the Mongolia-China border and the Khanbumbat permanent airport. Pre-stripping of 16 million tonnes of overburden has been carried out to gain access to the ore in the phase one open pit mine.

The staffing strategy for the start of initial production is relying heavily on the utilization of Mongolian men and women who are receiving training to develop their skills. The Oyu Tolgoi project is employing almost 10,000 locals.

Development and exploration drilling is continuing with five exploration rigs in operation at the Heruga North deposit and others testing the Javhlant mining licence in the southwestern end of the Oyu Tolgoi trend.

In April, the company secured US$4 billion from its major shareholder Rio Tinto to fund completion of the Oyu Tolgoi project, with the omnibus agreement including US$1.8 billion in equity financing to ensure the project through to commercial production and additional expansion. The investment will also support construction of a dedicated, coal-fired electrical power plant in Mongolia which will eventually supply the project with its power requirements.

Rio Tinto is also providing additional bridging finance which is currently being negotiated with multi-national banks.

In other news, at this year’s annual general meeting, scheduled for June 28, 2012, shareholders of Ivanhoe Mines will be asked to approve a change of name for the company to Turquoise Hill Resources.

www.ivanhoemines.com