DEVELOPMENT of the underground mine at Oyu Tolgoi (OT) Copper-Gold Project in Mongolia took a significant step forward in May with the signing of the OT Underground Mine Development and Financing Plan by the Government of Mongolia, Turquoise Hill Resources and Rio Tinto. The phase two plan addresses the key outstanding shareholder issues and sets out an agreed basis for project funding.
Open pit operations at the Oyu Tolgoi Copper-Gold Project in southern Mongolia.
With a new pathway to development of the underground mine agreed, the focus now shifts to finalizing the project finance, the feasibility study and securing all necessary permits so that the underground mine development can proceed. Phase two work was paused on August 12, 2013.
Turquoise Hill’s CEO Jeff Tygesen said, “The signing of this agreement is the culmination of extensive work by OT’s shareholders over the last year. The agreement outlines a pathway to restarting development of the underground mine, and builds on the value that has already been unlocked for Mongolia from operation of the open-pit mine which is providing jobs and other economic contributions as well as best practices in mining standards.”
Oyu Tolgoi LLC chairman Batsukh Galsan said, “This is an extremely positive development for Mongolia and all those involved with OT. I want to thank the negotiating teams, of both the Government of Mongolia and Rio Tinto, for the patience, respect, and professionalism shown with reaching this agreement. This is a proud moment for the OT project, its shareholders and the country.
The construction of the first phase of the project, the open-pit mine, was completed on schedule in less than 24 months. The operation celebrated one million tonnes of copper concentrate shipped in March 2015, less than two years after the first production left the mine.
OT has a workforce that is 95% Mongolian and Oyu Tolgoi LLC has paid $1.3 billion in taxes, fees and other payments to date. It is estimated that 80% of the value of OT lies in the underground part of the mine.
Turquoise Hill says the next steps include approval of the underground feasibility study and project financing as well as obtaining all necessary permits. The Mine Plan confirms the project cost for Oyu Tolgoi’s initial construction and development and reinforces the principles set out in the Investment Agreement and the Amended and Restated Shareholders Agreement (ARSHA).
Jeff Tygesen says, “The Mine Plan outlines a pathway to restarting underground development at Oyu Tolgoi, where approximately 80% of the mine’s value resides. The agreement will supplement the benefits of open-pit operations, which is providing jobs in Mongolia, additional economic contributions and best practices in mining.”