Rio Tinto-controlled Turquoise Hill (TSX:TRQ) is expecting its majority-owned Oyu Tolgoi copper and gold mine in Mongolia to churn in 2018 more than double the amount of the precious metal forecast for this year, with operating costs dropping about 2.8%.
In an update that went almost unnoticed, the Canadian miner said earlier this week it expected the massive Mongolian mine to produce 240,000 to 280,000 ounces of gold concentrate next year, more than double the 100,000 to 140,000 ounces initially expected for 2017.
The Vancouver-based company also forecast the mine to generate 125,000 to 155,000 tonnes of copper in 2018, slightly less than the 130,000 to 160,000 tonnes predicted for this year.
Operating cash costs for 2018 are expected to be about $700 million, down from the $720 anticipated for this year as a result of lower concentrator and logistics costs.
Capital expenditures for 2018 on a cash-basis are expected to be approximately $150 million for open-pit operations and $1.1 billion to $1.2 billion for underground development, Turquoise Hill noted.
Open-pit operations are expected to mine in Phase 6 in early 2018 and Phase 4 throughout the year, while it will also expects to process stockpiled ore in 2018.
The increased gold production relative to the 2016 technical report, Turquoise Hill said, can be explained by the splitting of Phase 4 into two parts (4A and 4B) and also by bringing production forward from future years, it noted.
Situated in the southern Gobi desert of Mongolia, about 550 km south of the capital, Ulaanbaatar and 80 k north of the border with China, Oyu Tolgoi is jointly owned by the government of Mongolia (34%) and Turquoise Hill (66%, of which Rio Tinto owns 51%).
The mine is expected to be world’s third-largest copper operation at peak production in 2025, with output of over 550,000 tonnes per year.
While Oyu Tolgoi is Mongolia’s highest profile asset, the country hosts a number of other copper, gold and coal mines and projects, including Canada’s Erdene Resource Development (TSX:ERD), the company that literally struck gold earlier this year after finding its new gold project was richer than previously thought.
Australian explorer Xanadu Mines (ASX:XAM) is also among the established companies in Mongolia, with its underway Kharmagtai copper-gold project, south-east of Ulaanbaatar, returning exceptional results in the first months of this year.
Aware of the country’s mineral potential, Rio Tinto and Turquoise Hill revealed earlier this year they are already exploring the area close to Oyu Tolgoi, following the country’s renewed efforts to attract foreign investment.
In May, the landlocked country bordering China and Russia decided to open more than one-fifth of its territory for mining exploration, hoping to shore up its finances following an International Monetary Fund-led bailout.
Since mining accounts for around 25% of Mongolia’s GDP and more than 80%of exports, experts believe that increasing mining exploration could potentially raise the Asian nation’s GDP and economic security.