VANCOUVER - Stock in Turquoise Hill Resources (TSX:TRQ) shot up more than nine per cent Monday after the company announced the signing of an important power purchase agreement for its Oyu Tolgoi copper-gold mine in Mongolia.
The binding power purchase agreement with Inner Mongolia Power Corp. will enable the completion of commissioning of Oyu Tolgoi, leading to the first production of copper-gold concentrate.
On the Toronto Stock Exchange, the company's stock was up 76 cents, or about 9.5 per cent, at $8.83 in early trading Monday.
"The governments of Mongolia and China have been instrumental in helping the parties conclude the commercial components of the agreement," said Kay Priestly, CEO of Turquoise Hill, formerly Ivanhoe Mines.
"With phase-one construction essentially complete, we are on the verge of Oyu Tolgoi becoming a world-class operational mine and delivering long-term benefits to Mongolia," Priestly said.
Within the next few weeks Oyu Tolgoi is expected to begin a seven-week commissioning of the ore-processing equipment, the company said in a statement.
First concentrate production will follow within one month and commercial production is expected to begin three to five months after that.
Turquoise Hill said the agreement confirms that the company has the right to obtain electrical power from inside or outside Mongolia, including China, to meet its initial electrical power requirements for up to four years after Oyu Tolgoi begins commercial production.
It then has the right to build or sub-contract construction of a coal-fired power plant at an appropriate site in Mongolia's South Gobi Region to supply Oyu Tolgoi to supply the project's power needs.
Meanwhile, the company has agreed that all of the project's power requirements would be sourced from within Mongolia no later than four years after the start of commercial production.
Turquoise Hill is an international mining company focused on copper, gold and coal mines in the Asia-Pacific region. The company's primary operation is its 66 per cent interest in the Oyu Tolgoi copper-gold-silver mine in southern Mongolia.
Other assets include a 58 per cent interest in Mongolian coal miner SouthGobi Resources (TSX:SGQ), a 59 per cent interest in copper-gold miner Ivanhoe Australia (TSX:IVA) and a 50 per cent interest in Altynalmas Gold, a private company developing the Kyzyl gold project in Kazakhstan.