Ivanhoe Mines said on Monday that construction at its Oyu Tolgoi copper-gold project in Mongolia will be 70 percent complete by the end of 2011, with commercial production seen in the first half of 2013.

Ivanhoe also reported a quarterly profit on Monday, as gains from its coal subsidiary and a settlement of notes receivable outweighed exploration costs, sending shares up more than that 4 percent on the Toronto Stock Exchange.

The company said it spent $2.2 billion on Oyu Tolgoi in the first nine months of 2011, slightly over the budget of $2.1 billion, and that development was 54.4 percent complete at the end of September.

Vancouver-based Ivanhoe, which is led by Robert Friedland and is 48.5 percent owned by global mining giant Rio Tinto , is focused on developing the Oyu Tolgoi project, which is located in Mongolia's South Gobi region and is one of the largest known copper deposits in the world.

In October, Ivanhoe, Rio Tinto and the Mongolian government agreed to maintain their 2009 ownership agreement, ending discussions over possible changes.

The deal gives Ivanhoe a 66 percent stake in project. The Mongolian government holds the remaining 34 percent stake and can increase its stake to 50 percent after 30 years.

Ivanhoe has spent about $3.2 billion on construction at Oyu Tolgoi so far. The company said costs in 2012 are expected to be in line with earlier estimates.

Oyu Tolgoi's average annual output during its first 10 years of commercial production is expected to exceed 650,000 ounces of gold, 3 million ounces of silver and 1.2 billion pounds (544,000 tonnes) of copper.

Shares of Ivanhoe rose 4.43 percent to C$21.67 on Monday morning on the Toronto Stock Exchange. The mining company also has stakes in projects in Kazakhstan and Australia.


Ivanhoe reported net income of $7.3 million, or 1 cent a share, in the third quarter, ended Sept. 30. That compared with a loss of $24.9 million, or 5 cents a share, a year earlier.

Revenue rose to $60.5 million from $6.6 million.

The company said it made preliminary sales agreements in the third quarter for product mined from Oyu Tolgoi. Ivanhoe expects that most of the copper will be delivered to China.