Oyu Tolgoi
Oyu Tolgoi”s 2013 gross revenues were US$55 million(1) on sales of 26,400 tonnes of concentrate. Year to date sales volumes have fallen short of expectations and some sales have been deferred into the second and third quarters of 2014.
Sixty percent of Oyu Tolgoi”s 2014 production is under contract, with additional volumes confirmed and subject to contract finalization. Discussions are advancing well to place the balance of material. Production rates have recently been impacted by various post-commissioning issues including the failure of the rake blades in the tailings thickeners. This is expected to result in the shutdown of one line for a period of six to eight weeks. The operations team is taking the opportunity to pull forward plant maintenance and modification work, that would have required plant slow down later in the year. For 2014, Oyu Tolgoi continues to target production of 150,000 to 175,000 tonnes of copper in concentrates and 700,000 to 750,000 ounces of gold in concentrates. However, Oyu Tolgoi will monitor production levels and if necessary, match them to meet customer requirements, with the goal of returning to more normal levels of inventory by the end of 2014.
Discussions with the Mongolian Government
On July 28, 2013, Turquoise Hill announced that funding and all work on the underground development of Oyu Tolgoi would be delayed. Since then, engagement with the Government of Mongolia has continued with the aim of resolving a number of outstanding shareholder issues and to progress project finance. An option to restart the underground development, subject to certain conditions being met, has been proposed. However, further delays may occur if outstanding shareholder issues, including project finance, are not resolved before the expiration of lender commitments on existing project finance arrangements.
All parties are committed to further construction of the underground and development of Oyu Tolgoi subject to resolution of shareholder issues, agreement of a comprehensive funding plan including project finance, completion and approval of the feasibility study by all shareholders and the Mongolian Minerals Council and receipt of permits required for development.
