Friedland, chief executive of Canadian-listed Ivanhoe Mines who has presented at the past three Diggers and Dealers forums, said an economic study on the company’s massive Oyu Tolgoi project in Mongolia could expand the project’s production model out to as much as 80 million tonnes of ore per annum.

Previous studies over the deposit were made on a base production plan of 30Mtpa and an expansion case of 50Mtpa.

Friedland said the company planned to release a new economic study on the project that would reduce the project’s risk, improve its development sequence and ultimately make the project even larger.

The plan revolves around expanding the scale of the project’s sub-level caving operations to between 15,000 and 20,000 tonnes per day.

Since his presentation at Diggers in 2005, the first headframe has been installed at Oyu Tolgoi, with development of the 6.5m diameter shaft progressing at 100m per month.

Development of a second 10m-diameter shaft is also on the verge of beginning.

“This is still the richest copper porphyry ever found in the world. It has the highest copper-to-gold ratio, it’s just a spectacular deposit,” Friedland said.

“Our copper productivity should be north of 2 billion pounds per year, and given our gold by-products, it’s possible to generate negative cash costs for a very long time.”

Friedland also outlined recent amendments to the Mongolian Mining Act, which included an overhaul to the country’s taxation and royalty regimes.

“The Government has raised royalties from 2.5% to 5% but made those royalties tax deductible and reduced their corporate income tax to 25%,” he said.

“In our modelling, the increase in royalties is offset by the reduction in income tax.”

The issue of a windfall profit tax is still to be resolved, Friedland said, but stressed that the tax very clearly stated it would not apply to any product smelted inside Mongolia.

Friedland said he wanted people to know that the project was finally in development after years of being touted as the next grand mine.

“Two billion pound per year copper mines don’t grow on trees,” Friedland said.

“Developing a world-class mine is definitely like having a 40kg baby. No one’s ever developed a world-scale mine and complained of an easy birth, so you need an adequate dose of intestinal fortitude to develop a project of this scale.”

On the same day Friedland was addressing the forum, shareholders in Asia Coal were voting to vend Ivanhoe’s Mongolian coal assets into the Canadian-listed company, in a move that would give Ivanhoe control of 92% of the company’s stock.

Asia Coal will be renamed Ivancoal.

Coal exploration by Ivanhoe has traced a coal seam near the Chinese border intermittently through outcrop over a length of around 120km, while one drill hole in particular returned 134m true width of coal from a 150m hole.

Chinese authorities have already built a rail towards the deposit in anticipation of mining.

“Unlike sinking 10m diameter shafts 2km down and building huge concentrators for copper and gold, coal is a quick cashflow business, and the coals we’re finding are high quality direct shipping coals,” Friedland said.

He said Ivanhoe had also identified a coal occurrence near Oyu Tolgoi that the company would look to use to generate electricity for the copper-gold operation.

“Given the high price of hydrocarbon, it’s important to run as much of an all-electric mine as possible.”

Friedland also drew attention to early-stage exploration the company is carrying out in the Cloncurry region of Queensland.

The company is currently drilling two projects it acquired from the ashes of Selwyn Mines.

Described by Friedland as “classic iron oxide-copper-gold systems”, the Amethyst Castle and Swan prospects have reportedly returned very broad intercepts of around 1% copper and 1-2 grams per tonne gold.

In addition, re-assaying of old ore drilled at Amethyst Hill had returned uranium grading up to 1% and copper mineralisation as high as 6%, he said.