Although Oyu Tolgoi shipped its 1 millionth metric ton of copper concentrate from surface operations earlier
this year, the mine’s long-term prospects depend on development of its underground reserves.
(Photo courtesy Oyu Tolgoi)

Oyu Tolgoi came into production as an open-pit, copper-gold-silver mine in early 2013. The operation shipped its 1 millionth metric ton (mt) of copper concentrate in March. However, 80% of the project’s value is in its underground reserves, and its long-term success depends on development of those reserves.

Turquoise Hill Resources completed a feasibility study for development of an underground block cave mine at Oyu Tolgoi in September 2014, based on 1.5 billion mt of mineral reserves grading 0.85% copper, 0.32 g/mt gold, and 1.94 g/mt silver. Recoverable metal would total 24.9 billion lb of copper, 11.9 million oz of gold, and 78 million oz of silver over a 41-year mine life.

Mine production would average 95,000 mt/d. Capital investment requirements were estimated at $4.9 billion.

While the May 18 agreement represents a key step toward renewal of underground development at Oyu Tolgoi, three additional hurdles remain to be cleared: approval of the underground feasibility study by Oyu Tolgoi shareholders; agreement on a comprehensive funding plan, including project finance; and receipt of all necessary permits.

Commenting on the importance of the May 18 agreement, Mongolia’s Prime Minister Chimediin Saikhanbileg said, “Mongolia is back to business. Oyu Tolgoi is a world-class copper-gold asset, and its further development is of great economic significance for Mongolia. We have finalized a way forward with our partners that re-establishes the foundations of a new and constructive relationship based on mutual trust and our joint long-term commitment to Mongolia’s growth.”