Gold, silver may generate up to 50% of Oyu Tolgoi annual revenues–Friedland
Ivanhoe Mines CEO Robert Friedland announced Monday that the massive Oyu Tolgoi copper-gold project would have negative total cash costs of 7-cents per pound of payable copper in the first five years of mining under a scenario of current gold and silver prices. “While copper is Oyu Tolgoi’s most important metal over the longer term of the mine, gold and silver are major contributors to the launch of value building during the project’s initial years of mining,” he said in a news release.Using a current price of US$1,850/oz for gold, $42/oz for silver and $4/pound for copper, the estimated annual contribution of gold and silver to total revenue in the first five years of production from the open-pit mine at Oyu Tolgoi would average 44% with a peak of 53%, according to the May 2010 Integrated Development Plan (IDP-10), an independent 43-101 Technical Report.
Using the base-case scenario long-term prices of $2/lb for copper, $850/oz for gold and US$13,50/oz for silver, IDP-10 estimated that Oyu Tolgoi’s total cash costs in the first decade of production would be 45-cents per pound of payable copper produced, after gold credits.
Oyu Tolgoi’s average annual output during the first 10 years of commercial production is expected to exceed 650,000 gold ounces, 3 million ounces of silver, and 1.2 billion pounds of copper. Peak annual gold production is expected to reach 1.1 million ounces in year seven of mine life.
IDP-10 projects 59 years of production under the report’s life-of-mine scenario. Current Oyu Tolgoi holds measured and indicated gold resources of almost 21 million ounces. Exploration has made additional discoveries that are continuing to expand resources at the massive Mongolian project.
“Gold-rich ore from the open pit will be the primary feed to the processing plant during Oyu Tolgoi’s first five years of production of gold, copper and silver,” said Friedland. “With overall mine construction quickly advancing toward 50% completion, Oyu Tolgoi’s phase-one mine is on track to begin initial production from the open pit in late 2012 and to ramp up to commercial production in the first half of 2013.”
Combined gold ounces at Oyu Tolgoi and at Ivanhoe’s Antynalmas Gold joint venture in Kazakhstan and at Ivanhoe Australia total more than 30 million M&I resources, which Ivanhoe Mines says ranks the company among the world’s largest gold companies.
Using the base-case scenario long-term prices of $2/lb for copper, $850/oz for gold and US$13,50/oz for silver, IDP-10 estimated that Oyu Tolgoi’s total cash costs in the first decade of production would be 45-cents per pound of payable copper produced, after gold credits.
Oyu Tolgoi’s average annual output during the first 10 years of commercial production is expected to exceed 650,000 gold ounces, 3 million ounces of silver, and 1.2 billion pounds of copper. Peak annual gold production is expected to reach 1.1 million ounces in year seven of mine life.
IDP-10 projects 59 years of production under the report’s life-of-mine scenario. Current Oyu Tolgoi holds measured and indicated gold resources of almost 21 million ounces. Exploration has made additional discoveries that are continuing to expand resources at the massive Mongolian project.
“Gold-rich ore from the open pit will be the primary feed to the processing plant during Oyu Tolgoi’s first five years of production of gold, copper and silver,” said Friedland. “With overall mine construction quickly advancing toward 50% completion, Oyu Tolgoi’s phase-one mine is on track to begin initial production from the open pit in late 2012 and to ramp up to commercial production in the first half of 2013.”
Combined gold ounces at Oyu Tolgoi and at Ivanhoe’s Antynalmas Gold joint venture in Kazakhstan and at Ivanhoe Australia total more than 30 million M&I resources, which Ivanhoe Mines says ranks the company among the world’s largest gold companies.
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