UPDATE 1-Turquoise Hill cuts Oyu Tolgoi 2014 gold, copper output forecast

Tue Oct 14, 2014 6:43pm EDT
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(Adds background, details on output, costs)

VANCOUVER Oct 14 (Reuters) - Turquoise Hill Resources Ltd on Tuesday reduced its 2014 forecasts for gold and copper production at the massive Oyu Tolgoi copper-gold mine in Mongolia because of delays in mine development in the third quarter.

The miner, which owns some 66 percent of Oyu Tolgoi, said it now expects the mine to produce between 550,000 and 600,000 ounces of gold in concentrates this year, down from the 600,000 to 700,000 ounces it had forecast in August.

It also reduced its expectation for copper concentrate output to between 135,000 tonnes and 150,000 tonnes this year, down from a range of 135,000 tonnes to 160,000 tonnes before.

Turquoise Hill is majority owned by global miner Rio Tinto Plc , which operates the Oyu Tolgoi mine.

Vancouver-headquartered Turquoise Hill is in talks with the Mongolian government, which owns the rest of Oyu Tolgoi, to resolve issues that have delayed the mine's underground expansion.

It gave no further details on the talks in the third-quarter production statement released on Tuesday.

It said Oyu Tolgoi produced 36,600 tonnes of copper and 132,000 ounces of gold in concentrates in the third quarter, in line with the second quarter as higher copper grades offset lower throughput. Throughput fell due to the failure of rake arms in one of the mine's two tailings thickeners, as previously announced.

Operating cash costs are expected to fall by about $130 million this year from a total of $1 billion, Turquoise Hill said, as Oyu Tolgoi, like other miners, focuses on cutting costs at a time of lower metal prices.

Turquoise Hill said it has also reduced expected capital expenditure for the year to about $110 million from $160 million before. (Reporting by Nicole Mordant; editing by Gunna Dickson)