Turquoise Hill's cash position, on a consolidated basis at March 31, 2013, was $580.6 million. As at May 13, 2013, Turquoise Hill's consolidated cash position was approximately $361.4 million.
OYU TOLGOI COPPER-GOLD MINE
Construction of the Oyu Tolgoi open-pit mine and concentrator complete at the end of Q1'13
At the end of Q1'13, construction of the Oyu Tolgoi open-pit mine and concentrator complex was complete, and mine infrastructure was substantially complete. Total capital invested in the initial development and construction of the Oyu Tolgoi mine to March 31, 2013 was approximately $6.0 billion. The final cost for the initial development and construction is expected to be approximately $6.2 billion, excluding foreign-exchange exposures.
During Q1'13, additions to property, plant and equipment for the Oyu Tolgoi mine totalled $225.2 million (Q1'12: $608.0 million), which included development costs.
Major updates for Q1'13 and plans for Q2'13 include the following:
-- On January 31, 2013, the Oyu Tolgoi mine produced its first copper-gold concentrate. This comes following the processing of first ore through the concentrator in early January 2013.-- In Q1'13, a total of 24.5 million tonnes of material was moved from the open pit, 8.5 million tonnes of ore was moved to the stockpile and approximately 875,000 tonnes of ore was delivered to the crusher. During Q1'13, approximately 525,000 tonnes of ore was processed by the concentrator.-- Oyu Tolgoi continues to commission the concentrator. Production rates have progressively increased and have recently achieved daily run rates of up to 60% of nameplate capacity. It is anticipated that the concentrator will be consistently running at production rates of 70% of nameplate capacity and begin shipments of concentrate by the end of June 2013, subject to the resolution of the issues being discussed with the Government of Mongolia.-- Underground lateral development at the Hugo North Deposit continued and 1,319 metres were achieved during Q1'13. As at March 31, 2013, the total distance excavated was approximately 13.7 kilometres.-- Construction of Shaft #2 continued during Q1'13. The depth of the shaft is now 1,081 metres below surface, 82% of its final 1,319 metre depth.-- Sinking activity for Shaft #5 commenced in April 2013. Shaft #5 will provide primary ventilation for underground operations and is expected to have a final depth of approximately 1,200 metres.-- Construction of infrastructure was behind schedule at the end of Q1'13 due to slower progress in the building of the Oyu Tolgoi-Gashuun Sukhait road to the Mongolia-China border and the diversion of the Undai River, which began in December 2012. Road work was suspended for the winter, however the transportation of concentrate to the border is not expected to be impacted.-- Long-term sales contracts have been signed for 75% of the Oyu Tolgoi mine's concentrate production in the first three years, while 50% of concentrate production is contracted for ten years (subject to renewals). In addition to the signed contracts, in principle commitments have been made at international terms for up to 25% of the concentrate available for export. These commitments range from three to ten years and are subject to the conclusion of detailed sales contracts.
Discussions with the Government of Mongolia
Turquoise Hill and its majority shareholder Rio Tinto plc (Rio Tinto) continue to have productive discussions with the Government of Mongolia on a range of issues related to the implementation of the Investment Agreement, including project development and costs, the operating budget, project financing, management fees and governance. While progress on these issues has been made, all parties have agreed to continue discussions with a goal of resolving the issues in the near term. The Oyu Tolgoi Board of Directors has approved continued funding to progress the project as discussions with the Government of Mongolia proceed.