The Australian unit of Ivanhoe Mines Ltd., Ivanhoe Australia Ltd., has generated its very first gold and copper concentrate at its Osborne processing facility bought roughly 18 months ago.

"The commencement of copper-gold production at the Osborne facilities is an important first step in what we envisage will be the creation of a strong cashflow stream for 15 to 20 years," Peter Reeve, chief executive of Ivanhoe Australia Ltd., said on Thursday.

Commissioned in January, the Osborne plant is expected to produce700,000 metric tonnes to 900,000 metric tonnes of ore this 2012, and then increase to 1.8-million metric tonnes to 2 million metric tonnes in 2013. So far, 80,000 metric tonnes of ore has been stockpiled, the company noted, translating to a buffer of 20 days mill output.

Ivanhoe Australia Ltd., 59 per cent owned by Ivanhoe Mines Ltd. of Canada, obtained the Osborne copper and gold complex in north-west Queensland from gold miner Barrick in a deal worth A$17.4 million. The project already had development mines, a two-million-tonne-a-year concentrator, infrastructure and tenements.

With the mining activities at the Osborne and Kulthor underground mines having commenced, work on the Starra decline began in December, Mr Reeve said. The decline development is part of contract mining, with an expected first quarter of 2013 schedule of ore production.

"With our inexpensive acquisition of Osborne, the start of road construction to the Starra copper-gold mines, and our recent exploration success around Osborne and Starra, we believe a long mine life is assured," Mr Reeve said.