Phase-one Oyu Tolgoi mine production will be from the Southern Oyu open-pit. A concentrator, with related facilities and necessary infrastructure to support an ini-tial throughput of 100,000 mt/d, is being constructed to process the ore. Initial pro-duction of copper-gold-silver concentrate is expected in the second half of 2012, and commercial production is expected to begin in the first half of 2013.

Pre-stripping of overburden to gain access to ore in the open-pit was complet-ed during the second quarter. Pre-commis-sioning of the primary crusher, overland conveyor, and coarse-ore stockpile circuits was progressing on schedule, with the first ore delivered to the crusher in July 2012.

Construction of the concentrator was 95% complete at the end of the second quarter and ahead of schedule. Line No. 1 of the concentrator was on track to be com-pleted and pre-commissioned in the third quarter; Line No. 2 was on track to be com-pleted and pre-commissioned in the fourth quarter. Commissioning of the concentrator with ore will depend on the availability of electrical power from China and successful completion of final mechanical components.

Underground lateral development at the Hugo North Deposit at Oyu Tolgoi was suspended in February 2012 as planned to enable the upgrading of hoisting equip-ment at Shaft No. 1. Underground lateral development was scheduled to resume in September. Construction of Shaft No. 2 at the Hugo North Deposit was progressing well, and the headframe had reached its final height of 96 m. The headframe and ancillary buildings were 95% complete at the end of the second quarter and ahead of schedule. The shaft had reached a depth of approximately 460 m below surface.

Long-term sales contracts have been signed for 75% of the Oyu Tolgoi project’s concentrate production for the first three years. Including renewals, 50% of concen-trate production is contracted for 10 years.