Turquoise Hill completes feasibility study for Oyu Tolgoi underground expansion

Turquoise Hill has finalised the feasibility study for the underground expansion of the Oyu Tolgoi copper-gold mine in Mongolia, the company announced on Tuesday September 23.

Turquoise Hill has finalised the feasibility study for the underground expansion of the Oyu Tolgoi copper-gold mine in Mongolia, the company announced on Tuesday September 23.

The company has set out two development cases for the project, the first of which focuses on exploitation of open-pit resources and the Hugo North Lift 1 block cave, while the second life-of-mine case also explores the potential to develop other underground zones in the Oyu Tolgoi deposit.

The feasibility study outlines a $4.9 billion capex budget for first-phase development, not including $500 million already spent on the project in 2013 and 2014, Turquoise Hill, which is majority-owned by Rio Tinto, told investors on Tuesday.

Interested in copper mine developments? Sign up here to try out Metal Bulletin’s Copper Price Briefing

While capex spend was broadly in line with earlier guidance, the new reserve case carries a lower post-tax net present value (NPV) of $7.43 billion, as project delays and “more cautious cave-performance assumptions” reduced NPV by $800 million and $1.5 billion, respectively.

Turquoise Hill said total recoverable copper in the first development case stands at 24.9 billion lb (11.3 million tonnes), which will be exploited over a 41-year mine life.

The life-of-mine development case, which the company will evaluate fully at a later date, sets recoverable copper at 56.5 billion lbs, while the mine life will be extended to 94 years.

The underground expansion at Oyu Tolgoi was delayed in July last year pending the resolution of a funding and tax dispute with the Mongolian government. 

Turquoise Hill received a judgment from the Mongolian General Taxation Department’s dispute resolution council earlier this month, and on Tuesday it notified investors of its review of the ruling.

The council’s judgment will reduce Turquoise Hill’s bill for taxes, interest and penalties to approximately $30 million, down from about $127 million, the company said.

“While this significant reduction is welcome, there are aspects of the ruling that require further clarification. Oyu Tolgoi LLC will continue to work with the Mongolian Tax Authority to obtain further clarity on some of the findings in the ruling,” Turquoise Hill said on Tuesday.

Turquoise Hill also said notified the market that it expects repair work being carried out on a tailings thickener rake to be completed by the end of September.

Since the rake failed on September 10, the concentrator has been operating at 60% capacity using a second thickener, Oyu Tolgoi said. 

Do you want all the copper market news, prices and intelligence you need in one place, weekly? Then sign up here to try out Metal Bulletin’s Copper Price Briefing.

Mark Burton
mburton@metalbulletin.com
Twitter: @mburtonmb

What to read next
The most recent financial results published by base metals mining companies highlight just how inflation is affecting profit margins, with increasing wages, financing costs and input prices all hitting profits, sources told Fastmarkets in the week to Thursday March 28
Century Aluminum is among those selected to start award negotiations for up to $500 million in Bipartisan Infrastructure Law and Inflation Reduction Act funding to build a new aluminium smelter, the company said on Monday March 25
Participants in the copper concentrates market are struggling to comprehend an “unstoppable” decline in treatment and refinement charges (TC/RCs), with every week bringing spot deals at fresh lows and rumors each “crazier” than the last, sources have told Fastmarkets
The US Department of Energy selected five base metals projects to receive more than $900 million in federal investment from its Industrial Demonstration Program (IDP), leading to a reduction of four million tonnes of carbon dioxide emissions annually, according to a statement by the Department on Monday March 25
Aluminium producer and recycler Constellium announced on Tuesday March 12 that the company is moving to test hydrogen utilization at an industrial scale as a power source in its casthouses
Fastmarkets has corrected its MB-ALU-0002 alumina index, fob Australia and its MB-ALU-0010 alumina inferred index, fob Brazil, which were published incorrectly on Monday March 18.