Explorations and Machinery

Turquoise Hill updates mine design for Oyu Tolgoi underground

Turquoise Hill updates mine design for Oyu Tolgoi underground
Mining News Pro - Rio Tinto-controlled Turquoise Hill has completed the updated mine design for Panel 0 – the first panel of mining at its Oyu Tolgoi underground project – narrowing the previously announced cost overrun and delay ranges.
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The approved design is based on a block cave approach, which leaves two pillars to the north and south of Panel 0.

CEO Ulf Quellmann says the preferred block cave design is a “more resilient mine plan that provides the best opportunity for success. It is based on an extensive trade-off analysis taking into account the reserve recovery, geotechnical, constructability, operability, schedule, cost and value risks”.

Compared with the 2016 technical report, the block cave design anticipates a delay of sustainable production of 25 months, with a 21- to 29-month delay range expected. The development capital cost will increase by $1.5-billion, with a range of $1.3-billion to $1.8-billion.

These new estimates compare with the July 2019 guidance of a 16- to 30-month delay and a $1.2-billion to $1.9-billion cost overrun for the Oyu Tolgoi underground project.

“It is still a range. It is still fairly broad, but it is narrower, and importantly, it stayed within the range we have given."

A definitive estimate will be published in the second half of the year.

The Oyu Tolgoi 2016 feasibility study estimated that production ramp-up would start in early 2021 and that full production of 95 000 t/d would be achieved in early 2027. The 2016 capital cost estimate is $4.64-billion for the underground project.

“Given the importance of the Panel 0 mine design, Turquoise Hill engaged subject matter experts to undertake an external and independent assurance process that focused on the technical review of the proposed mine redesign options, and a review of the schedule and estimating process.”

Turquoise Hill, which owns 66% of Oyu Tolgoi, has $1.8-billion of available liquidity, which Quellman says is sufficient to fund operations, underground and power development into the third quarter of 2021.

The company is in discussions with 50.8%-owner Rio Tinto regarding a proposal for sourcing incremental interim funding.

CFO Luke Colton has confirmed that the company’s incremental funding requirement over and above the liquidity currently available is at least $4-billion.

This estimate, he points out, has improved from the previously disclosed $4.5-billion, owing in part to the selection of the Panel 0 mine design, coupled with lower forecast interest rates.

Turquoise Hill has spent about $3.8-billion on underground development, $291.5-million of which was spent in the first quarter of the year.

OPERATIONAL OUTLOOK
Meanwhile, Turquoise Hill has provided a new operational outlook for 2020. The company is expected to produce 140 000 t to 170 000 t of copper and 120 000 oz to 150 000 oz of gold in concentrates this year from both the openpit and underground development material being processed.

Although the mid-point copper production range guidance is higher in 2020 than the 2019 guidance, a lower gold production year is expected for 2020.

This, Turquoise Hill says, is owing 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 lower in 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.

“Initiatives have been implemented by Oyu Tolgoi to bring forward some of the higher gold-bearing ore into 2020; consequently, if these initiatives are successful, we anticipate gold production will be at the upper end of the guidance range. Mill throughput for 2020 is expected to be approximately 40-million tonnes.”

Production in 2021 is expected to increase to a range of 170 000 t to 200 000 t of copper, and 450 000 oz to 500 000 oz of gold,

In the first quarter, Oyu Tolgoi produced 35 203 t of copper and 26 154 oz of gold and is on track to achieve 2020 copper and gold production guidance.


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