An independent study of Oyu Tolgoi shows that Ivanhoe Mines (IVN-T, IVN-N, IVN-Q) indeed does have one of the world’s largest copper and gold projects on its hands.
The new report, created by 18 different independent consultants, says Oyu Tolgoi will produce 1.2 billion lbs of copper and 650,000 oz. of gold a year for its first 10 years, making it one of the world’s top three copper and gold mines.
The figures come out of an integrated development plan for the site, which updates a previous study completed back in 2005. Ivanhoe had been in negotiations with the government for an investment agreement since that time, and finally had the agreement signed off on in October of last year. The agreement gave the Mongolian government a 34% stake in the project.
The new plan increases estimated copper production by 50% over the old plan to 52.5 billion lbs and increases gold production by 126% to 26.4 million oz.
Proven and probable mineral reserves at Oyu Tolgoi stand at 1.4 billion tonnes grading 0.93% copper and 0.37 grams gold. Measured and indicated resources stand at 1.4 billion tonnes grading 1.33% copper and 0.47 grams gold while an additional 2.4 billion tonnes sit in the inferred category with an average grade of 0.78% copper and 0.33 grams gold.
In all, the company estimates that the site hosts 81.3 billion lbs of copper and 46.4 million oz. of gold — enough to keep it in operation for 59 years.
Those kind of numbers put the project in the same league as Freeport-McMoRan Copper & Gold (FCX-N) Grasberg mine in Indonesia, BHP Billiton’s (BHP-N, BLT-L) majority controlled Escondida project in Chile and Chilean state-controlled Codelco’s Codelco Norte project, which is also in Chile.
Oyu Tolgoi is expected to be in production by mid-2013. Rio Tinto currently holds 22.4% of Ivanhoe’s shares.
To get there though the mine will require another $4.6 billion in capital expenditures.
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