Ivanhoe Says Oyu Tolgoi Project On Track For 1st Test In 4Q12

Canada-listed Ivanhoe Mines Ltd. (IVN.T) said Tuesday the massive Oyu Tolgoi copper and gold project in Mongolia is proceeding on schedule and is now expected to start processing its first ore in the fourth quarter of 2012.

"The steady progress being logged across the Oyu Tolgoi site every week means we are on track to be ahead of our construction schedule by the end of this year," John Macken, president and chief executive officer of Ivanhoe, said in a statement.

Oyu Tolgoi is expected to enter production in 2013 and then ramp up over five years to 450,000 metric tons of copper output annually. Ivanhoe estimates the total investment over the next four years to build the initial mining complex and start producing will be about $4 billion.

The Oyu Tolgoi workforce has steadily increased in recent months and currently stands at about 4,400. The budget for construction in 2010 has been set at $754 million, with an additional $195 million earmarked for operations.

Macken said some of the striking achievements of the project so far are the extensive foundations for the large concentrate plant and for the 31-storey-high concrete frame for the main production shaft at the underground block-cave mine at the Hugo Dummett Deposit.

Macken added that one nearer-term goal is to complete the foundations and allow the erection of the exterior steel to enclose the concentrator building before the onset of winter next year so that work can continue indoors until the start of the 2012 outdoor construction season.

Ivanhoe owns a 66% stake in the project while the Mongolian government owns the remaining 34% stake. Anglo-Australian miner Rio Tinto PLC (RTP), acting as operator of the project, owns a 29.6% stake in Ivanhoe.

-By Alex MacDonald, Dow Jones Newswires; 44 20 7842 9328; alex.macdonald@dowjones.com

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