Turquoise Hill Resources, formerly Ivanhoe Mines, reported in mid-August 2012 that overall construction of the first phase of development of the Oyu Tolgoi copper-gold-silver project in the South Gobi region of Mongolia reached 90% completion at the end of the second quarter of 2012 and had advanced to 94% completion by the end of July. Total capital invested in first-phase construction to the end of second quarter was approximately $5.2 billion. Turquoise Hill holds a 66% interest in the project. The government of Mongolia holds the remaining 34%.

                Phase-one Oyu Tolgoi mine production will be from the Southern Oyu open-pit. A concentrator, with related facilities and necessary infrastructure to support an initial throughput of 100,000 mt/d, is being constructed to process the ore. Initial production of copper-gold-silver concentrate is expected in the second half of 2012, and commercial production is expected to begin in the first half of 2013.

                Pre-stripping of overburden to gain access to ore in the open-pit was completed during the second quarter. Pre-commissioning of the primary crusher, overland conveyor, and coarse-ore stockpile circuits was progressing on schedule, with the first ore delivered to the crusher in July 2012.

                Construction of the concentrator was 95% complete at the end of the second quarter and ahead of schedule. Line No. 1 of the concentrator was on track to be completed and pre-commissioned in the third quarter; Line No. 2 was on track to be completed and pre-commissioned in the fourth quarter. Commissioning of the concentrator with ore will depend on the availability of electrical power from China and successful completion of final mechanical components.

                Underground lateral development at the Hugo North Deposit at Oyu Tolgoi was suspended in February 2012 as planned to enable the upgrading of hoisting equipment at Shaft No. 1. Underground lateral development was scheduled to resume in September. Construction of Shaft No. 2 at the Hugo North Deposit was progressing well, and the headframe had reached its final height of 96 m. The headframe and ancillary buildings were 95% complete at the end of the second quarter and ahead of schedule. The shaft had reached a depth of approximately 460 m below surface.

                Long-term sales contracts have been signed for 75% of the Oyu Tolgoi project’s concentrate production for the first three years. Including renewals, 50% of concentrate production is contracted for 10 years.