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Ivanhoe Mines Expects More Silver Production at Oyu Tolgoi Mine

Robert Friedland, Executive Chairman and Chief Executive Officer of Ivanhoe Mines Ltd. (TSX:IVN)(NYSE:IVN)(NASDAQ:IVN), and John Macken, President, said today that the Oyu Tolgoi Mine in southern Mongolia is expected to produce an average of more than three million ounces of silver a year during its first 10 years of commercial production, beginning in 2013.

"Although Oyu Tolgoi is best known for its large and growing deposits of copper and gold, silver forms a significant proportion of the total Oyu Tolgoi resource and Oyu Tolgoi will rank as a very substantial silver producer when commercial production begins in 2013," said Mr. Friedland.

"While we have not routinely itemized the silver content of Oyu Tolgoi's porphyry ore in our discovery reports, the buoyant global silver market has fuelled the interests of investors and has prompted us to more widely circulate the projections for silver production that have been prepared as part of our project planning and development studies."

Construction of Oyu Tolgoi's first phase is ahead of schedule and on track to begin initial production in late 2012.

Oyu Tolgoi could produce an estimated total of 78 million ounces of silver, or 2.4 million kilograms, during the projected 27-year mine life under the Reserve Case outlined in the June 2010 independent Integrated Development Plan (IDP-10) for Oyu Tolgoi. The Reserve Case draws only from the Measured and Indicated resources of Oyu Tolgoi.

During the projected 59-year mine life under the IDP-10's Life-of-Mine Sensitivity Case, total silver production was estimated to be 180 million ounces, or 5.5 million kilograms. Part of the ongoing exploration program at Oyu Tolgoi is designed to upgrade Inferred resources to higher classifications, as has been progressively accomplished through the past 10 years of discovery and resource definition at the project.

Mr. Friedland said that some investors and analysts may not have fully appreciated the significance of Oyu Tolgoi's expected production of such by-product metals as silver and molybdenum.

"The reality is that silver and other by-product revenues will considerably lower the average cash cost to produce a pound of copper or an ounce of gold at Oyu Tolgoi."

Silver currently is trading at more than US$34 an ounce, commanding the highest prices since October 1980.

Silver, gold and molybdenum will be contained in Oyu Tolgoi's copper concentrate

The copper concentrate produced and sold at Oyu Tolgoi will contain significant quantities of by-product gold and silver that will be recovered during the subsequent smelting and refining processes and sold separately.

The average annual production at Oyu Tolgoi during the first 10 years is projected to exceed 1.2 billion pounds (544,000 tonnes) of copper, 650,000 ounces of gold and three million ounces of silver. The mine also is expected to produce 160 million pounds of molybdenum during the 59-year Life-of-Mine Sensitivity Case. Most of the molybdenum at Oyu Tolgoi is contained in the Heruga Deposit, which will be brought into production in later stages of development. Molybdenum currently is trading at approximately US$18 per pound.

Using a copper price of US$2.00 per pound, a gold price of US$850 per ounce and a silver price of US$13.50/oz, the IDP-10 Reserve Case estimated that Oyu Tolgoi's total cash costs in the first 10 years of production would be 45 cents (US) per pound of payable copper produced, after gold credits, during the first 10 years. Total cash costs include mine site costs and all treatment, refining, transport and royalty costs arising from product sales.

Calculated on potentially higher gold prices, the IDP-10 estimated that total cash costs at Oyu Tolgoi in the first 10 years of production could be as low as 25 cents (US) per pound of payable copper at a gold price of US$1,250 per ounce and 12 cents (US) per pound at a gold price of US$1,500 per ounce.

Qualified Person

Disclosures of a technical nature in this release related to IDP-10 estimates and assumptions have been reviewed by Bernard Peters, B. Eng. (Mining), M. AusIMM (201743), employed by AMEC Minproc Limited as Technical Director and a Qualified Person as defined by National Instrument 43-101.

Source: Ivanhoe Mines Ltd.


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