CIMIC Group mining services provider Thiess, in joint venture with Mongolian contractor Khishig Arvin, has secured the first underground decline project at Turquoise Hill Resources’ Oyu Tolgoi (OT) Copper-Gold Project. The contract will generate total revenue of approximately $130 million, of which Thiess’ share is 80%.

The work was due to commence in July and is scheduled for completion in 2020. It will include construction of a box cut and development of twin declines, incorporating both a service and a conveyor tunnel.

CIMIC executive chairman and CEO Marcelino Fernández Verdes said, “This project is key to unlocking OT’s potential and is a great addition to Thiess’ diverse mining portfolio.”

Thiess managing director Michael Wright said, “The combination of our underground development expertise and ability to leverage our experienced Mongolia-based team provides us with the foundations for success.

“We are proud to facilitate the growth of a world-class copper and gold operation and deliver long-term solutions at OT. Building local capability is integral to our approach and, with the assistance of our partnership with Khishig Arvin, more than 90% of our workforce will be Mongolian personnel.”

Meantime, open pit production at OT is on target to meet the 2016 production guidance of 175,000 to 195,000 tonnes of copper in concentrates and 255,000 to 285,000 ounces of gold.

The project is operated by Oyu Tolgoi LLC, which is 66%-owned by Turquoise Hill with the Mongolian Government holding the remainder. Turquoise Hill is majority owned by Rio Tinto.

Turquoise Hill’s chief executive officer Jeff Tygesen said, “Oyu Tolgoi’s second quarter production was as planned reflecting reduced mining in Phase 2 of the open pit, which included higher grades of both copper and gold. In the second half of 2016, lower gold production is expected as mining occurs in areas with reduced grades.

“The concentrator continues to perform well with throughput exceeding nameplate capacity.”

In the June quarter concentrator throughput was broadly consistent with the previous quarter, resulting in average daily throughput of approximately 105,000 tonnes.

Copper production in the quarter declined 10.3% over the March quarter to 517,000 tonnes reflecting lower grades from reduced mining in Phase 2 and lower recovery from Phase 6 ore. As expected, gold production in the second quarter declined approximately 52% to 1440,000 ounces over the first quarter due to lower grades from reduced mining in Phase 2.

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