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Shares in Turquoise Hill (TSE:TRQ) rose sharply on Tuesday after the company announced better than expected revenues amid declining production at its massive Oyu Tolgoi copper and gold mine in Mongolia.

By the close in New York Turquoise Hill stock was changing hands at $2.81, up 6.2% on the day, bringing its year-to-date gains to more than 21%.

The Vancouver-based company said in a statement copper production at Oyu Tolgoi fell 16.3% during the first quarter compared to the final quarter 2016 while gold production declined 49%. Turquoise Hill said the drop was expected due to lower grade and recoveries at the lower end of the grade recovery curve.

Sales went in the other direction and the company recorded revenue of $237.5 million in Q1 which was 5.7% higher than Q4 last year reflecting a higher average selling price for copper and higher volumes of copper in concentrates sold. The Oyu Tolgoi concentrator amassed record average daily throughput for the quarter of 112,100 tonnes, up 5.1% compared to the December quarter.

Turquoise Hill is forecasting lower output at the open pit compared to last year of 130,000 – 160,000 tonnes of copper in concentrates during 2017. Gold in concentrate output of 100,000 ounces – 140,000 ounces is forecast for the full year.

$136.4 million was spent on the Oyu Tolgoi underground expansion during the quarter and the company awarded several large contracts during the quarter, with the largest for the decline material handling system.

More than $363 million has been spent on construction of the new mine so far and capital commitments for the year is an additional $872 million. Total capital outlay is around $5.3 billion with first production from the underground operation expected mid-2020.

Oyu Tolgoi is expected to be world’s third-largest copper mine at peak production in 2025 with output of over 550,000 tonnes per year.

Turquoise Hill owns a 66% interest in Oyu Tolgoi in the Gobi Desert close to Mongolia’s border with China with the government of the Asian nation holding the rest. Turquoise Hill is controlled by Anglo-Australian giant Rio Tinto (LON:RIO).

Frik Els