MONGOLIA – Rio Tinto of London, UK, has agreed to support and provide certain funding for the completion of Ivanhoe Mines’ Oyu Tolgoi copper-gold project near the Chinese border. In return, Ivanhoe has shuffled its board and management. Seven directors have resigned, including Ivanhoe founder Robert Friedland. The new board will consist of 13 directors; the seven remaining and six to be nominated by Rio Tinto.
The Ivanhoe executive team has also resigned, effective immediately. Gone are CEO Friedland, president John Macken, CFO Tony Giardini, deputy chairman Peter Meredith, and executive VP Sam Rigall. The executives have also resigned from management posts at Ivanhoe’s subsidiary companies.
Rio Tinto will expedite financing US$3 billion to US$4 billion to be provided by third-party lenders. In the meantime, Rio will supply additional bridge funding of up to US$1.5 billion to keep the project moving forward.
The scheduled start of initial production from an open pit mine at Oyu Tolgoi is during the second half of this year. Production will be ramped up to commercial levels during the first half of 2013 as part of Oyu Tolgoi’s first phase of development. Phase-one work includes operation of the open pit mine and a 100,000-t/d concentrator, infrastructure and a US$900 million investment in underground development in preparation for phase two.
A dedicated, coal-fired electrical power plant is also to be built in Mongolia. The investment agreement requires Oyu Tolgoi to source all of its power requirements from within Mongolia within four years of the start of commercial production (The project plans to use power imported from China during its initial years of operation.)
The second phase of development includes expansion of the concentrator to 160,000 t/d and a start of high grade ore production from the Hugo Dummett underground mine in 2016. Full production of 85,000 t/d will be reached by stages.
The Ivanhoe website at IvanhoeMines.com has a photo and video gallery of the project.