Ivanhoe Mines announced its Oyu Tolgoi mine in southern Mongolia is expected to produce more than 3 million oz of silver a year during its first 10 years of commercial production, beginning in 2013.

Construction of Oyu Tolgoi’s first phase is on track to begin initial production in late 2012. According to the company, Oyu Tolgoi could produce an estimated 78 million oz (2.4 million kg) of silver during the projected 27-year mine life under the Reserve Case outlined in the June 2010 Independent Integrated Development Plan for Oyu Tolgoi. The Reserve Case draws only from the measured and indicated resources of Oyu Tolgoi.

Over the projected 59-year mine life under the current development plan, silver production was estimated to be 180 million oz (5.5 million kg). Average annual production at Oyu Tolgoi during the first 10 years is projected to exceed 1.2 billion lb (544,000 mt) of copper, 650,000 oz of gold and 3 million oz of silver.

The mine also is expected to produce 160 million lb of molybdenum. Most of the molybdenum at Oyu Tolgoi is contained in the Heruga deposit, which will be brought into production in later stages of development.

Using a copper price of $2/lb, a gold price of $850/oz and a silver price of $13.50/oz, the current development plan estimated Oyu Tolgoi’s total cash costs would be $0.45/lb of payable copper produced, after gold credits, during the first 10 years. Using potentially higher gold prices, it’s estimated cash costs  in the first 10 years could be as low as $0.25/lb of payable copper at a gold price of $1,250/oz and $0.12/lb at a gold price of $1,500/oz.