Investing.com -- Shares in Jacobs Engineering Group Inc (NYSE:JEC) jumped more than 2% on Wednesday, after the Pasadena, California-based international technical professional services landed a contract to provide engineering, procurement and construction management (EPCM) services for the next stage in the development of the Oyu Tolgoi copper and gold mine in Mongolia.
The announcement comes less than six weeks after Rio Tinto (LON:RIO), Turquoise Hill Resources and the Government of Mongolia approved development of the $5.3 billion underground mine, which was completed on schedule in less than two years in 2013. Since then, more than 440,000 tons of copper have been sold, according to Rio Tinto, with expectations for annual production to average 560,000 tons per year between 2025 and 2030. Jacobs will be responsible for EPCM services to execute the materials handling systems for the new underground mine, associated surface and infrastructure. Jacobs officials expect the project to be completed within a five-to seven-year period.
"We are very proud to be associated with what is a landmark project for Oyu Tolgoi, Mongolia and the global mining landscape," said Steve Demetriou, CEO Jacobs Engineering. "The Oyu Tolgoi Underground Project is one of the largest mining projects worldwide. We are excited at the opportunity to contribute significant value to our client and the nation of Mongolia."
The Oyu Tolgoi mine in the South Gobi region of Mongolia, is located approximately 550 kilometers south of Ulaanbaatar, the nation's capital. First draw bell production from the underground mine, which has an average grade of 1.66%, is expected in 2020, Jacobs Engineering said. The average grade is approximately three times higher than its counterpart from an open pit. On average, the gold from the underground mine has a grade of 0.35 per ton.
On the Comex division of the New York Mercantile Exchange, Gold for August delivery traded between $1,245.50 and $1,267.50 an ounce before settling at $1,262.75, up $15.75 or 1.26%. Copper for July delivery inched up 0.010 or 0.44% to $2.061 a pound. Copper futures rebounded on Wednesday, one day after plunging by more than 3% to three-week lows.
Shares in Jacobs Engineering rose more than 2% on Wednesday to an intraday high of 52.99, before closing at 52.61, up 0.84 or 1.62%.