Oyu Tolgoi 2019 fourth quarter production and 2020 guidance released

2020-01-17 14:54:49

Ulaanbaatar /MONTSAME/. Turquoise Hill, who focuses on the Oyu Tolgoi mine development in Mongolia through its 66 percent of stakes, today announced fourth quarter 2019 production for Oyu Tolgoi as well as operational and financial guidance for 2020.

Some highlights:

Full year copper production of 146,346 tonnes vs original guidance range of 125,000 – 155,000 tonnes

Full year gold production of 241,840 ounces vs original guidance range of 180,000 – 220,000 ounces

Another strong Safety performance at Oyu Tolgoi in 2019 with an All Injury Frequency Rate of 0.16

Full year mill throughput of 40,777,225 tonnes, an increase of 5% over 2018

Copper production in the last quarter of 2019 of 32,905 tonnes was lower compared to the same period of 2018. due to decreased head grade and lower grade stockpiles. Equally, gold production in this period of 24,343 ounces was also lower compared to fourth quarter of 2018 due to the low grade sources and stockpiles.

2020 Guidance

Oyu Tolgoi is expected to produce 140,000 to 170,000 tonnes of copper and 120,000 to 150,000 ounces of gold in concentrates in 2020 from both the open pit and the beginning of the underground development material being processed.

Although the mid-point copper production range guidance is higher in 2020 versus the 2019 guidance, a lower gold production year is expected for 2020 due to the need to mine through lower grade material on the periphery of the South West pit as Phase 4b sinks towards the highest gold and copper grades in the bottom of the pit. 

It is anticipated that the higher grade ore will be accessed in 2021, resulting in a significant increase in gold production in 2021. Mill throughput for 2020 is expected to be approximately 40 million tonnes.

Operating cash costs for 2020 are expected to be $800 million to $850 million.

Capital expenditure for 2020 on a cash-basis is expected to be approximately $80 million to $120 million for open-pit operations and $1.2 billion to $1.3 billion for the underground development exclusive of any expenditure on power.

Open-pit capital is mainly comprised of deferred stripping, equipment purchases, tailings storage facility construction and maintenance componentization. Underground development capital includes both expansion capital and VAT.

2021 Outlook

Production in 2021 is expected to increase to a range of 170,000 to 200,000 tonnes of copper, and 450,000 to 500,000 ounces of gold, as we transition to the higher grade ore in the bottom of the pit and continue to increase the amount of underground development material processed.

Underground Development Update

Construction of shaft 2 was completed in October 2019 allowing for the movement of 300 people per cage cycle versus a maximum of 60 people per cage cycle through shaft 1. Underground development material is also being lifted to surface via the Shaft 2 production hoist.

Productivity improvements resulted in increased underground lateral development rates during the fourth quarter, with an average rate of 1,607 equivalent meters (eqm) compared to 1,214 eqm in the third quarter, with December seeing a record 1,809 eqm.

Construction is progressing on shafts 3 and 4 with both collars now installed. Final preparations are now underway to enable commencement of main sinking operations for both shafts during the second quarter of 2020

Detailed analysis work on the mine design is still anticipated to be completed during the first half of 2020, and the Definitive Estimate, which will include the estimate of cost and schedule for the underground project based on the updated design of Panel 0, is still expected to be delivered in the second half of 2020. 

Turquoise Hill