Bakyrchik gets green light

Vancouver — Despite metallurgical problems in the sulphide portion of the deposit, annual holding costs of US$2.5 million have Ivanhoe Mines (IVN-T) planning to resume operations this summer at the Bakyrchik gold mine in Kazakhstan.

“We have always viewed Bakyrchik as one of the world’s largest undeveloped gold deposits with the potential to become an important producer,” says Robert Friedland, Ivanhoe’s chairman.

Production is slated to begin at a rate of 20,000 oz. gold annually, with the potential to expand to between 40,000 and 50,000 oz. Ivanhoe will use the existing facilities, including a carbon-in-leach (CIL) plant, which has been maintained on a production-ready basis since 1998.

“This approach allows us to begin fulfilling Bakyrchik’s potential with a modest rate of production from the oxide deposits while we continue to explore options to place the large sulphide gold deposits into commercial production,” adds Friedland.

Using selective open-pit mining, initial development will focus on two million tonnes of outcropping oxide ore in the Globoki Log and Sarbas deposits, which host an average grade of 3 grams gold per tonne.

The mine is located in northeastern Kazakhstan, approximately 1,100 km northeast of the former capital of Almaty. It started production in 1956, providing gold-bearing flux to a copper smelter at Ust-Kamenogorsk and later to smelting facilities in Russia. Five shafts were sunk on the Bakyrchik deposit, which has been explored and developed for mining from a series of underground drifts driven at 40-metre vertical intervals.

Engineering studies envision a 500-tonne-per-day operation, with startup costs coming in at a low US$200,000. Total cash costs to produce 1 oz. gold are expected to be a very respectable US$110. At the current price of about US$280 per oz. gold, the cash margin of a 20,000-oz.-per-year oxide operation is estimated at US$3.4 million. This more than offsets the current annual holding costs of US$2.5 million.

Mineralization occurs in a series of mineralized lenses that lie within a 11.5-km-long shear zone. Hosted within sheared, carbonaceous sediments, the gold deposits comprise both oxide and sulphide minerals associated with quartz stockworks. While the oxide portion represents only a small part of the mineral inventory, most of the gold is contained in disseminated arsenopyrite, which is highly refractory in nature.

Ivanhoe continues to investigate new processing technology to treat the arsenopyrite ores. Its objectives are to improve the project’s rate of gold recovery and reduce the cost of production to enable large-scale, commercial production from the sulphide deposits.

A study of the initiation of small-scale underground mining of Bakyrchik’s sulphide ores (with an average grade of approximately 10 grams per tonne) has indicated that gold production of 40,000 oz. per year is feasible.

The existing crushing, grinding and concentrator circuits could be used to produce a high-grade sulphide-ore concentrate. The study recommends the installation of a Waeltz rotary kiln to remove arsenic, sulphur and carbon from the concentrate, prior to gold extraction in a CIL plant or in a smelter.

In 1996, engineering firm Minproc pegged the measured resource at 4.5 million tonnes grading 8.26 grams gold, using a 3-gram-gold-per-tonne cutoff. Some 7.8 million tonnes grading 7.68 grams gold were put in the indicated category and 35 million tonnes grading 6.56 grams gold went into the inferred category.

Ivanhoe has a 70% interest in Bakyrchik Mining Venture, the company that owns the mine. The government of Kazakhstan holds the other 30%. Ivanhoe is entitled to 100% of all operating cash flows from the mine until it has recovered all of its previously invested capital.