Ulaanbaatar, Mongolia – Oyu Tolgoi today announced an update on its performance for the quarter ended 31 March, 2015.
Highlights:
- Strong safety performance with no fatalities and an All Injury Frequency Rate of 0.25 per 200,000 hours worked.
- Signed a 30 year Cooperation Agreement with the Umnugobi Aimag underpinning our desire to build strong long term mutually respectful and beneficial relationships with our local and national stakeholders
- Revenue of US$426.2 million in Q1’15 on sales of 167,700 tonnes of concentrate; Sales exceeded production for Q1’15; Revenue and sales in Q1’15 reflect expected lower quarterly production.
- Open-pit development for 2015 proceeding to schedule with higher-grade material expected to be processed starting Q2’15.
- US$66.4 million paid in taxes for Q1’15; US$78.3 million spent on national procurement over the period, of which US$14.1 million was in the South Gobi region.
Revenue and concentrate sales in Q1’15 decreased 36.4 per cent and 36.2 per cent, respectively, over Q4’14 reflecting the higher sales in that quarter with the run-down of excess stocks, and expected lower quarterly production. Production for the quarter was affected by reduced head grades, the impact of the Lunar New Year holiday – when border and customs operations were closed for an extended period – and lower average London Metal Exchange copper prices.
Andrew Woodley, President and CEO of Oyu Tolgoi, said: “Our first priority – as always – remains safety, and we are pleased to report a strong performance over the first quarter of 2015. We have made progress on key initiatives, like our Critical Risk Management programme, and continue to work hard to ensure the safety of our workforce. We are also working to support a strong safety culture across our industry – for example, through our MoU with the Erdenet Mining Corporation focused on sharing health, safety and environmental best practice.
“We have made solid progress in the quarter, with our productivities continuing to improve, while we had, as projected, lower volumes, impacted by resource – mostly by lower head grades. We are on track to deliver our plan for 2015. We are also focused on reducing our underlying cost base and continuing our productivity drive to ensure we are sustainable business in the long term, and well positioned to compete in the international marketplace.”
The Q1’15 mix of revenue by metals is the result of inventory with higher contained gold (from concentrate produced in 2014) drawn down during the quarter. Despite the Lunar New Year holiday, concentrate sales volumes exceeded production for the quarter. Gross margin at 39.5 per cent for the quarter remained broadly consistent with Q4’14.
Oyu Tolgoi also recently signed a jointly administered Cooperation Agreement (CA) with the Umnugovi aimag, and Khanbogd, Manlai, Bayan-Ovoo and Dalanzadgad soums, collectively making up the Oyu Tolgoi Partner Communities. The agreement focuses on broad-based economic development, social infrastructure, environmental protection and the promotion of cultural heritage. Under the CA, Oyu Tolgoi will provide US$5 million annually into a Development Support Fund for community projects and programmes in the region. The agreement is a major milestone in Oyu Tolgoi building a sustainable long-term relationship with its communities, and a foundation for future growth.
Operational outlook
Open-pit development for 2015 is proceeding to schedule with higher-grade material expected to be processed by the concentrator starting in Q2’15. Turquoise Hill expects production distribution to be relatively similar to 2014 with production levels significantly higher in the second half of 2015. Based on the current mine schedule, Oyu Tolgoi is expected to produce 175,000 to 195,000 tonnes of copper and 600,000 to 700,000 ounces of gold in concentrates in 2015.
Sales contracts have been signed for 100 per cent of Oyu Tolgoi’s expected 2015 concentrate production.
Notes to the editor:
- For the full text of the Turquoise Hill announcement, please visit: http://goo.gl/E0zthX
- Beginning on January 1, 2015, Turquoise Hill began preparing its financial statements in accordance with International Financial Reporting Standards (IFRS); all financial metrics included in the below table are prepared on the newly adopted IFRS basis.
- Oyu Tolgoi Key Financial Metrics (as disclosed by Turquoise Hill):
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