Ivanhoe expands Far North with high-grade gold-copper zone

The discovery of deep high-grade copper-gold mineralization in stepout drilling on the Far North zone in Mongolia’s South Gobi region is changing the complexion of the Turquoise Hill project.

Ivanhoe Mines (ivn-t) has discovered an extensive zone of high-grade copper-gold mineralization in widely spaced drilling that extends the boundaries of the Far North deposit some 700 metres beyond the resource model used for a recent independent resource estimate.

Discovered in October 2002, the Far North zone has added 14.4 billion lbs. copper and 1.8 million oz. gold to the Turquoise Hill project (or Oyu Tolgoi, as it is known in Mongolia), based on a February resource estimate prepared by AMEC E&C Services. Turquoise Hill contains an overall resource of 26.8 billion lbs. copper and 18.7 million oz. gold in 2.1 billion tonnes of mineralized rock at a cutoff of 0.3% copper-equivalent.

“I believe Oyu Tolgoi is the largest metal discovery made by a Canadian company since the discovery of Sudbury,” Ivanhoe’s Deputy Chairman Edward Flood told delegates at the recent convention of the Prospectors & Developers Association of Canada, held in Toronto. “This thing is growing everyday. It’s hard for me even to estimate what the ultimate size is going to be, but we’re starting to push on the largest copper deposits in the industry.”

Drilling to date has delineated four co-genetic copper-gold deposits along a 4.5-km-long controlling structure.

The Far North zone contains an inferred resource of 804 million tonnes grading 0.81% copper and 0.07 gram gold, including a higher-grade sweetener of 29 million tonnes grading 2.7% copper and 0.2 gram gold based on a 2% copper-equivalent cutoff.

A new distinctive high-grade zone of chalcopyrite-bornite mineralization has been intersected by 10 holes over a strike length of more than 800 metres, yielding broad intercepts of between 2.5% and 6% copper with strong associated gold values. The gold numbers in the Far North zone have been systematically climbing as Ivanhoe moves farther to the north. The zone is highlighted by hole 367A, which intercepted 164 metres grading 4% copper and 1.42 grams gold per tonne (including 74 metres of 6.02% copper and 2.5 grams gold) starting at a depth of more than 800 metres vertically.

Quartz stockwork

The high-grade mineralization is mainly hosted in a dacitic ash flow tuff consisting of up to 90% quartz stockwork veining, with disseminated-to-coarse chalcopyrite, bornite, chalcocite and minor pyrite.

The new discovery, which remains open in all directions, occurs at a depth ranging from 400 metres (hole 344) to 1,100 metres (hole 383) below surface, with an estimated thickness of between 100 and 200 metres. Based on induced-polarization (IP) and ground magnetic surveys, Ivanhoe believes the zone extends for up to an additional 600 metres to the northeast, where it appears to be cut off by a major east-west-striking post-mineral structure and unmineralized intrusive rocks. Ivanhoe continues to probe the Far North zone using 13 large-capacity rigs.

“Ivanhoe’s newly appointed team, comprising some of the world’s leading mineral engineering firms — AMEC, Ausenco, GRD Minproc and SRK — is investigating options to fast-track development at the Far North zone to provide for an early-stage, high-grade copper and gold mine,” states Ivanhoe Chairman Robert Friedland. This work is being done as part of ongoing scoping and prefeasibility studies.

Ivanhoe retained SRK in December 2002 to review bulk underground mining options for the Far North zone and the deep portions of the original Southwest discovery zone. SRK’s preliminary geotechnical report indicates the Far North zone is potentially amenable to the low-cost block caving underground. Initial indications suggest underground development at Far North could coincide with open-pit mining at the Southwest, South and Central zones. At a higher cutoff of 0.6% copper-equivalent, Far North contains an inferred 489 million tonnes grading 1.08% copper and 0.07 gram gold, or 11.6 billion lbs. copper and 1.2 million oz. gold.

The metallurgy of Far North is quite good, says Flood, and will create a concentrate that runs 38-40% copper.

The Southwest, South and Central zones are separate, geologically distinct deposits, and Ivanhoe hopes to merge them into one large pit some 2.5 km long at an overall stripping ratio of about 1.7-to-1. The Southwest zone contains an indicated resource of 509 million tonnes grading 0.4% copper and 0.59 gram gold, equivalent to 4.5 billion lbs. copper and 9.7 million oz. gold. Additional inferred resources contain another 2 billion lbs. copper and 4.7 million oz. gold in 291 million tonnes grading 0.32% copper and 0.5 gram gold.

‘Classic porphyry’

Flood describes the Southwest discovery zone as a classic island-arc gold-rich copper porphyry, with chalcopyrite-hosted quartz veins and distinctive secondary biotite alteration. “It’s a classic calc-alkaline intrusive rock right up in the centre of a basalt sequence,” says Flood. The Central zone is a similar type of deposit with a high-sulphidation copper overprint, resulting in a large covellite cap and a supergene chalcocite blanket.

Separated from the Central zone by a 0.5-km-long series of faults, the Far North zone is a stratabound copper deposit, with a porphyry source at depth exhibiting the same characteristics of the Southwest zone. Flood says there is an obvious north-trending structural control on all four of the deposits.

The South zone hosts an inferred 270 million tonnes grading 0.39% copper and 0.13 gram gold, equivalent to 2.4 billion lbs. copper and 1.1 million oz. gold, whereas the Central zone contains an inferred resource of 237 million tonnes grading 0.67% copper and 0.18 gram gold, or 3.5 billion lbs. copper and 1.4 million oz. gold.

Development of Turquoise Hill calls for construction of a 120,000-tonne-per-day combined open-pit and underground mine producing some 850 million to 1 billion lbs. copper and 590,000-715,000 oz. gold annually. Flood says capital costs could be as low as US$820 million, owing to the project’s proximity to Chinese construction (Turquoise Hill is only 80 km north of China).

Highlights of recent drilling in the high-grade extension zone in the Far North area are shown in the accompanying table.