Completion of the conditions precedent to the Oyu Tolgoi Investment Agreement clears the way for full-scale mine construction to begin at Ivanhoe Mines’ Oyu Tolgoi Copper-Gold Project in Mongolia’s South Gobi region.
The comprehensive Investment Agreement, which creates a stable and long-term regulatory, fiscal and legal environment for the project in Mongolia, now has taken full legal effect.
Under terms of the agreement, the Government of Mongolia will become a partner in the development of Oyu Tolgoi. The government will acquire a 34% interest in the Ivanhoe Mines subsidiary, Oyu Tolgoi LLC, which holds the mining licences. Ivanhoe, which has Rio Tinto a a strategic shareholder, will own a 66% interest.
Mongolia’s interest will be held through the state-owned, sovereign-wealth resources company, Erdenes MGL LLC.
Ivanhoe’s executive chairman Robert Friedland says, “After nine years of discoveries at Oyu Tolgoi, a big piece of the future of copper and gold in Asia is poised to become a reality. With this Investment Agreement taking full effect, we now have a long-term partnership and a definitive blueprint to start building that future at Oyu Tolgoi.”
He says the participation of Rio Tinto guarantees that the world’s best mining and environmental practices and some of the most advanced mining technologies will be applied to the Oyu Tolgoi Project. Rio Tinto owns 22.4% of Ivanhoe Mines and holds options to increase that interest to 46.6% in the next 19 months.
The joint Ivanhoe Mines-Rio Tinto Technical Committee has approved a US$758 million budget to launch full-scale construction of the Oyu Tolgoi complex in the second quarter of 2010 with commercial production scheduled for 2013.
Work planned in 2010 includes:
• Resumption of the sinking of the 10-metre-diameter Shaft 2, which will be used to hoist ore to the surface from the deep, underground, copper-gold-rich Hugo Dummett Deposit.
• Construction of a 97-metre-tall (about 31-storey), reinforced-concrete headframe for Shaft 2.
• Pouring the concrete foundation for the 100,000 tonnes/day concentrator and deliveries of building materials for the concentrator and infrastructure.
• Installation of a 20-megawatt power station and 35-kilovolt distribution system.
• Initial earthworks for the open-pit mine at the Southern Oyu deposits.
• Continuation of lateral underground development off Shaft 1 at the Hugo Dummett Deposit.
• Construction of a 105km highway link to the Mongolia-China border, which will be fully paved by the time production begins.
• Construction of a regional airport, with a concrete runway to accommodate Boeing 737-sized aircraft.