The Rio Tinto Limited (ASX: RIO) share price could come under pressure on Friday after a mixed update on its Oyu Tolgoi mine in Mongolia.
What did Rio Tinto announce?
This morning Rio Tinto revealed that it has completed an updated feasibility study at Oyu Tolgoi and is in the process of submitting this to the Government of Mongolia.
Oyu Tolgoi is one of the largest known copper and gold deposits in the world. It is also regarded as one of the most modern, safe, and sustainable operations in the world.
According to the release, the updated study incorporates a new mine design for Panel 0 of the Hugo Dummett North underground mine. This new design also confirms that the caving method of mining remains valid and that the underground schedule and costs remain within the ranges previously disclosed
However, these ranges include a delay of 21 to 29 months for the first sustainable production, compared to the original feasibility study guidance in 2016. It also includes an increase of US$1.3 billion to US$1.8 billion from the original US$5.3 billion development capital.
Nevertheless, management remains very positive on the mine development.
The company’s Chief Executive of Copper & Diamonds, Arnaud Soirat, commented: “This amended mine design is another positive step in the development of the underground mine which will unlock the most valuable part of Oyu Tolgoi. We remain focused on delivering the underground project safely and within the guidance ranges we have announced on both cost and schedule.”
What now for Rio Tinto?
The company advised that detailed study, design, engineering, and optimisation work is ongoing to support the definitive estimate of Panel 0 for the development of the world-class orebody. This remains due in the second half of 2020.
Though, these estimates are subject to any additional scheduling delays or increases in capital costs arising from the impacts of the ongoing COVID-19 pandemic.
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