Turquoise Hill Resources today announced its financial results for the quarter ended September 30, 2017. All figures are
in U.S. dollars unless otherwise stated.
? Oyu Tolgoi achieved an All Injury Frequency Rate of 0.25 per 200,000 hours worked for the nine months ended September 30, 2017.
? During Q3’17, underground lateral development made good progress and since the re-start of development a total of
5.4 equivalent kilometres has been completed.
? Shaft 2 sinking was at 1,249 metres at the end of Q3’17 and sinking is expected to be complete by the end of 2017
with fit out occurring over 2018.
? During September 2017, the underground development team achieved the best sinking rate for Shaft 5 since project
restart averaging 2.6 metres per day.
? At the end of Q3’17, total underground project spend since re-start and capital commitments totaled $1.9 billion.
? First draw bell is planned for mid-2020 and sustainable first production in 2021.
? Oyu Tolgoi set three operational records during Q3’17 for total material mined, ore treated and average daily
? Revenue of $246.9 million in Q3’17 increased 21.2% over Q2’17 reflecting higher copper and gold prices partly offset
by lower concentrate sales.
? Cash generated from operating activities before interest and taxes in Q3’17 was $94.7 million and $234.7 million yearto-
date at the end of Q3’17.
? In Q3’17, the Company recorded net income attributable to owners of Turquoise Hill of $65.3 million or $0.03 per
? Copper production in Q3’17 was essentially flat compared to Q2’17 while gold production increased 29.2% over Q2’17
due to higher head grades from the medium-grade stockpile and Phase 4A.
? For Q3’17, Oyu Tolgoi’s cost of sales was $2.43 per pound of copper sold; C1 cash costs were $1.83 per pound of
copper produced and all-in sustaining costs were $2.76 per pound of copper produced1.
? Operating cash costs1 of $161.9 million for Q3’17 were relatively flat over Q2’17 while year-to-date operating cash
costs of $494.0 million at the end of Q3’17 declined 17.7% over year-to-date Q3’16.
? Turquoise Hill’s cash and cash equivalents at September 30, 2017 were approximately $1.5 billion.
Please refer to the NON-GAAP MEASURES of this press release for further information
In Q3’17, the Company recorded net income attributable to owners of Turquoise Hill of $65.3 million ($0.03 per share)
compared with net loss attributable to owners of Turquoise Hill of $31.4 million ($0.02 loss per share) in Q3’16, an
increase of $96.7 million as the result of adjustments to recognize additional deferred tax assets and higher copper and
gold prices. Cost of sales for Q3’17 was $197.8 million compared with $232.5 million in Q3’16 reflecting lower volumes of
concentrates sold, partly offset by an increased cost of production due to grade reductions. Cash generated from
operating activities before interest and taxes in Q3’17 was $94.7 million compared with $24.0 million in Q3’16, mainly
reflecting the impact of higher copper and gold prices. Capital expenditure on property, plant and equipment was $234.0
million on a cash basis in Q3’17 compared to $74.4 million in Q3’16, attributed principally to underground and a lesser
amount for open-pit capital activities.
Turquoise Hill’s cash and cash equivalents at September 30, 2017 were approximately $1.5 billion.
The Oyu Tolgoi mine is approximately 550 kilometres south of Ulaanbaatar, Mongolia’s capital city, and 80 kilometres
north of the Mongolia-China border. Mineralization on the property consists of porphyry-style copper, gold, silver and
molybdenum contained in a linear structural trend (the Oyu Tolgoi Trend) of deposits throughout this trend. They include,
from south to north, the Heruga Deposit, the Oyut deposit and the Hugo Dummett deposits (Hugo South, Hugo North
and Hugo North Extension).
The Oyu Tolgoi mine was initially developed as an open-pit operation. The copper concentrator plant, with related
facilities and necessary infrastructure, was originally designed to process approximately 100,000 tonnes of ore per day
from the Oyut open pit. However since 2014, the concentrator has improved operating practices and gained experience,
which has helped achieve a consistent throughput of over 110,000 tonnes per day. This is expected to continue through
2017 with softer ores from the Central zone.
In August 2013, development of the underground mine was suspended pending resolution of matters with the
Government of Mongolia. Following signing of the Oyu Tolgoi Underground Mine Development and Financing Plan
(Underground Plan) in May 2015 and the signing of a $4.4 billion project finance facility in December 2015, Oyu Tolgoi
received the formal notice to proceed approval by the boards of Turquoise Hill, Rio Tinto and Oyu Tolgoi LLC in May
2016, which was the final requirement for the re-start of underground development. Underground construction recommenced in May 2016.
Oyu Tolgoi is expected to be the world’s third-largest copper mine at peak production in 2025. Copper production is
expected to increase by more than 300% between 2017 and 2025 when Hugo North Lift 1 reaches peak production.
Average production from 2025 to 2030 is expected to be more than 550,000 tonnes of copper per year.
Underground development progress
The main focus of underground development programs during Q3’17 continued to be underground lateral development,
sinking of Shafts 2 and 5, support infrastructure and the convey-to-surface system, which all progressed during the
quarter. Approximately 89% of the underground workforce are Mongolian nationals. After more than a year of
construction progress, Rio Tinto is currently undertaking a schedule and cost review, which is common with large-scale,
complex development project such as Hugo North Lift 1. The Company continues to plan for first draw bell in mid-2020
and sustainable first production in 2021.
Oyu Tolgoi spent $205.6 million on underground expansion during Q3’17. As of September 30, 2017, total underground
project spend since January 1, 2016 was $753.5 million. In addition, Oyu Tolgoi had further capital commitments2 of $1.1
billion as of September 30, 2017.
During Q3’17, underground lateral development made good progress with approximately 1.4 equivalent kilometres
completed. Since the re-start of development, a total of 5.4 equivalent kilometres of lateral development has been
completed. During Q3’17, the third development crew was deployed. Crews four and five were in training during thequarter and are expected to be deployed during Q4’17. Also during Q3’17, commissioning of the new 3,500 tonne per
day development crusher was completed. With the deployment of crews four and five, a step up in lateral development
rates is expected to begin in Q4’17. At the end of Q3’17, lateral development was in-line with the development timeline in
the 2016 Oyu Tolgoi Technical Report.
At the end of Q3’17, Shaft 2 sinking was at 1,249 metres and work had commenced on the service-level excavation that
has a floor at 1,256 metres. Shaft 2 sinking is expected to be complete in 2017 at a final depth of 1,284 metres with fit
out occurring over 2018. Shaft 2 is key to future increases in lateral development activity.
Shaft 5 sinking progressed approximately 214 metres during Q3’17. During September, the underground team achieved
the best sinking rate for Shaft 5 since project re-start averaging 2.6 metres per day. Sinking of Shaft 5 began slower than
expected due to an extended construction re-start period and lower productivity with completion now likely in early 2018.
When completed, Shaft 5 will be dedicated to ventilation thereby increasing the capacity for underground activities;
however, with good early progress and continued on-plan lateral development, the completion of Shaft 5 sinking in early
2018 is not expected to materially impact the lateral development plan.
2 Please refer to the NON-GAAP MEASURES section of this press release for further information.
read and see more on
Entré Resources zit ook in het Oyu Tolgoi project.