The Australian arm of billionaire Robert Friedland's Ivanhoe Mines Ltd. (IVN) said Thursday it has produced its first copper and gold from its processing facilities in northwestern Queensland state.

The concentrate was produced at the Osborne plant south of Cloncurry, which Ivanhoe Australia Ltd. (AVA.AU) 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," said Peter Reeve, chief executive of the Ivanhoe Australia.

The Osborne plant was commissioned in January and is expected to handle about 700,000 to 900,000 metric tons of ore this year, rising to between 1.8 million and 2 million tons in 2013, the company said. Roughly 80,000 tons of ore has been stockpiled, a buffer of 20 days mill output, it added.

Ivanhoe Australia, which is 59% owned by Canada's Ivanhoe Mines, acquired the Osborne copper and gold complex in September 2010 and recently began mining.

Friedland, founder and chief executive and Ivanhoe Mines and chairman of Ivanhoe Australia, in February said the parent company was considering selling assets to raise funds for the development of its flagship Oyu Tolgoi copper and gold project in Mongolia. Rio Tinto PLC (RIO) early this year raised its holding in Ivanhoe Mines to 51%.

-By Robb M. Stewart, Dow Jones Newswires; +61 3 9292 2094; robb.stewart@dowjones.com

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