Ivanhoe accelerates Mongolian exploration

Impressed by results to date, Ivanhoe Mines (IVN-T) has decided to drill another 16,000 metres at its Turquoise Hill copper-gold porphyry project in southern Mongolia.

Situated 560 km south of the capital city of Ulaanbaatar, the property covers 238 sq. km of the Gobi Desert. The boundary between the South Mongolian and South Gobi tectonic units lies nearby, giving rise to a regional geology characterized by Paleozoic volcanic, sedimentary and intrusive rocks overlain by Mesozoic-aged sedimentary rocks.

Locally, the property is underlain by a Silurian-Devonian sequence of bedded andesitic and basaltic flows interbedded with fine-to-coarse-grained volcaniclastic sedimentary rocks. Several feldspar porphyries intrude the sequence as stocks and dykes, as do syenitic granitoids and rhyolitic-to-andesitic dykes.

In 1996, BHP (now BHP-Billiton) began exploring the region for copper, eventually discovering four copper-gold porphyry prospects in an area measuring 3 km long by 2 km wide. However, in 1999, the major reduced its worldwide exploration budget, and the property was subsequently optioned to Ivanhoe.

In 2000, Ivanhoe began following up BHP’s drilling by sinking 109 reverse-circulation (RC) holes in the North, Central, South Oyu prospects. The results proved as encouraging as those obtained by BHP, ranging from less than 1% copper to 1.9% over 2-131 metres.

Drilling was renewed in May, leading to the recent intersection of an impressive 508 metres of hypogene mineralization in the Southwest Oyu zone. The interval, from core-hole OTD-150 and beginning 70 metres below surface, averaged 1.17 grams gold per tonne, 0.81% copper and 0.01% molybdenum, including more than 1% copper, 1.5 grams gold and 0.02% moly over 278 metres.

Mineralization is characterized by finely disseminated chalcopyrite, pyrite and magnetite overprinted by intense quartz, chalcopyrite and magnetite stockworks. The overlying oxides carried copper and gold as well, with 33 metres averaging 0.38% of the former and 0.38 gram of the latter.

More recently, hole OTD-159, collared 1.2 km to the northeast in the Central Oyu zone, yielded similarly encouraging results but from a different style of mineralization. The core hole twinned an earlier RC hole that bottomed at 130 metres below surface.

Starting at a down-hole depth of 47 metres, the hole averaged 0.69% copper and 0.14 gram gold over 375 metres. Owing to supergene enrichment, the first 49 metres of the interval carried 1.17% copper and 0.21 gram gold.

Molybdenum assays are pending.

Unlike hole 150, hole 159 displayed a mixture of supergene and hypogene mineralization, with the first 49 metres predominated by chalcocite and the following 58 metres mixed with primary covellite. The final 204 metres of the interval was predominantly covellite. Also, the surface oxides were less mineralized, with 7 metres (from 8 to 15 metres) carrying 0.42% copper and 0.02 gram gold.

Based on results to date, Ivanhoe believes the entire porphyry system has the potential to host more than 1 billion tonnes of copper, gold and molybdenum mineralization. Half of this may be contained at Southwest Oyu alone.

Three drill rigs are now turning on the property, with another two expected in the coming weeks. Holes will be collared in the Southwest, Central and South Oyu areas to test for hypogene mineralization to depths of 500 metres below surface.

Ivanhoe can earn a 100% interest in the project by spending US$6 million on exploration over seven years and paying US$5 million to BHP-Billiton. The major retains a back-in right, which, if not exercised, automatically converts to a 2% net smelter return.