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OT gold output to double in 2018

2th of 2, 2018


Oyu Tolgoi is expected to produce 125,000 to 155,000 tonnes of copper and 240,000 to 280,000 ounces of gold in concentrates in 2018, according to a production and financial guidance released by Rio Tinto-controlled Canadian miner Turquoise Hill, which holds majority stakes in the copper and gold mine in Umnugovi aimag. Operating costs are expected to drop about 2.8%.

The gold concentrate forecast is more than double the 100,000 to 140,000 ounces expected for 2017. This should not come as surprise to our readers as MMJ has already reported that next year’s State budget estimates Oyu Tolgoi’s gold extraction in 2018 to reach 8.8 tonnes (~283’000 ounces). The increased gold production can be explained by the splitting of Phase 4 into two parts (4A and 4B) and also by bringing production forward from future years, Turquoise Hill noted.

Operating cash costs for 2018 are expected to be about $700 million, some $20 million less than anticipated for this year, as a result of lower concentrator and logistics costs. Capital expenditures for 2018 on a cash-basis have been put at around $150 million for open-pit operations and $1.1 billion to $1.2 billion for underground development. The mine is expected to be the world’s third-largest copper operation at peak production in 2025, with output of over 550,000 tonnes per year.

Open-pit capital is mainly to be used for deferred stripping, equipment purchase, tailings storage facility construction and maintenance componentization. The main drivers of the 2018 estimate increase compared to the forecast for 2017 are equipment purchase and maintenance componentization.

Underground development capital includes both expansion capital and VAT. Based on the 2016 Oyu Tolgoi Technical Report, lateral development is expected to advance approximately 10 kilometres during 2018. Turquoise Hill continues to expect the first draw bell in mid-2020 and sustainable first production in 2021.

Open-pit operations are expected to mine in Phase 6 in early 2018 and Phase 4 throughout the year. In addition, stockpiled ore will be processed during 2018.
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