Ivanhoe Australia eyes Mount Elliott’s riches

Ivanhoe Australia’s (IVA-T, IVA-A) acquisition in September 2010 of the Osborne copper-gold processing complex in northwestern Queensland will help transform the company into a significant base metal producer, and much of its mill feed is likely to come from its flagship Mount Elliot copper-gold project 70 km north, a scoping study has found. 

Osborne resumed production of copper and gold concentrate in late February.

Mount Elliot, which the company believes is one of the largest copper-gold mineralized systems ever discovered in Australia, is a large-scale system that is made up of the previously operated Mount Elliot underground mine and the South West Anomaly (SWAN), South West Elliott and Corbould zones.

A scoping study released in mid-April indicates that the original Mount Elliot underground mine can be mined by open pit and provide the Osborne mill with an additional four years of feed. The study also found that the open-pit resource can be mined independently of the SWAN resource and is to be based on recovered pillars from historical underground operations at Mount Elliott. 

The open pit would have a “mining inventory” of 7.8 million tonnes grading 1.51% copper and 0.75 gram gold per tonne, and the feed would be trucked to the Osborne processing complex. 

The study estimates capital expenditures of A$95 million, or US$99 million, with a total life-of-mine production of 108,000 tonnes copper and 152,000 oz. gold, and C1 cash costs of about US$1.85 per lb. copper.

The scoping study also looks at two options for mining Mount Elliott’s high-grade SWAN zone: as a sub-level, open-stope mining operation, and as a large-scale, block-cave mine. 

Under the first option, initial mining inventory is estimated at 25.9 million tonnes grading 0.90% copper and 0.56 gram gold for a nine-year mine life processing 3 million tonnes of ore per year. Development could take three years with capital expenditure of A$478 million and total life-of-mine production of 215,000 tonnes copper and 392,000 oz. gold. C1 cash costs could work out to US$1.20 per lb. copper.

The second option of a block-cave method would process 12 million tonnes of throughput per year for a 14-year mine life, with an initial mining inventory of 134.6 million tonnes grading 0.45% copper and 0.29 gram gold. Development could take five years, capital expenditures could reach A$1.18 billion and total life-of-mine production could support 560,000 tonnes copper and 1.07 million oz. gold. C1 cash costs could amount to US$0.91 per lb. copper.

“All options have significant upside, given the exploration potential at depth in the Mount Elliott system and regionally to the north,” the company says in a press release announcing the results of the scoping study. “A major outcome of the study is that more drilling is required in the SWAN high-grade zone to extend the resources and increase the resource quality and continuity.”

Several SWAN-style, near-mine targets on the property have been found using magnetic, gravity and local sub-audio magnetic surveys, the company adds.

Ivanhoe Australia, in which Ivanhoe Mines (IVN-T, IVN-N, IVN-Q) holds a 59% stake, also says the Mount Elliott system has the potential to grow significantly with further drilling at depth. The mineralization at SWAN and at Mount Elliott is associated with hydrothermal magnetite and the deposits are underlain by a large, untested magnetic anomaly. 

Mining started at Mount Elliott in 1899, and mining and on-site smelting of high-grade copper-gold ores continued until the 1920s. Between 1909 and 1919, the mine produced 24,800 tonnes copper and 34,000 oz. gold. It was reopened with a modern decline mine in 1993 and ore treatment continued until 2003, when it was closed owing to low copper and gold prices. Ivanhoe Australia estimates that between 1993 and 2003 the mine produced 5.06 million tonnes of ore at 2.90% copper and 1.5 grams gold.