The Oyu Tolgoi copper-gold project in Mongolia is on track to begin initial production in the third quarter, Canada’s Ivanhoe Mines Ltd., co-developer of the project with global mining giant Rio Tinto PLC, said on Monday.
The Vancouver, B.C.-based miner, which is majority owned by Rio Tinto, said it expects the mine to achieve full commercial production in the first half of next year.
“The first production line is scheduled to be completed during the third quarter followed by completion of the second production line in the fourth quarter,” Ivanhoe chief executive officer Robert Friedland said in a statement.
Oyu Tolgoi, which means Turquoise Hill, is about 80 kilometres north of Mongolia’s border with copper-hungry China and is considered one of the world’s largest copper and gold deposits.
Development of the $6-billion (U.S.) project was delayed for years as Ivanhoe hammered out a complicated royalty agreement with Mongolia, finally agreeing to a deal in 2009 that gave the Mongolian government 34 per cent of the project.
Once at commercial production in 2013, Oyu Tolgoi is expected to produce more than 544,000 tonnes of copper, 650,000 ounces of gold, and three million ounces of silver a year, on average, over its first 10 years.
Rio, which has built its stake in Ivanhoe as it helped the Canadian company to fund construction of Oyu Tolgoi, raised its stake in the miner to 51 per cent from 49 per cent earlier this year.
Mr. Friedland, one of the industry’s best-known financiers, said a comprehensive financing plan for the completion and startup of Oyu Tolgoi remains under discussion with Rio Tinto.
“Both companies have exchanged proposals,” Mr. Friedland said. “We are continuing to work together in an attempt to reach agreement on a comprehensive financing approach that will accommodate our mutual interests in advancing Oyu Tolgoi.”
Mr. Friedland also said Ivanhoe is highly encouraged by the progress made in discussions regarding asset divestment.
“Ivanhoe Mines has received detailed, written expressions of interest on potential asset divestments that could realize significant capital to support the ongoing development of Oyu Tolgoi,” he said, without providing details on whether it is considering selling a stake in its Mongolian assets or any of its other assets.
Ivanhoe’s other assets include stakes in coal miner South Gobi, Ivanhoe Australia, and Altynalmas Gold, a private company developing the Kyzyl gold project in Kazakhstan.