Rio Tinto does not plan to stop mining at the Oyu Tolgoi copper-gold open pit despite declining grades, delays and cost blow outs on the underground expansion of the Mongolian project, the Australian Financial Review wrote Oct. 4.
The company's budgeting and forecast process predicted that the open pit may become cash flow negative in 2020 under some scenarios, according to sources.
The underground expansion, which was originally scheduled for 2012, is now expected to start copper production between May 2022 and June 2023.
According to the report, the company may have to continue operations even if the mine becomes cash flow negative in order to maintain relations with the Mongolian government.
Rio Tinto and its unit Turquoise Hill Resources Ltd., which owns the mine, refused to comment on Oyu Tolgoi's expected grades and if they expect to be cash flow positive in 2020.
The companies are looking to resequence the mine plan to maximize the open pit's cash flow for the next two years, the sources said.
Meanwhile, Rio Tinto and Turquoise Hill have kicked off discussions with lenders to increase Oyu Tolgoi's US$4.4 billion financing package secured in 2015 from a consortium. However, the lenders will ask for better conditions before allotting more money to the project.
