Five months after pouring the first dore bar,
Since March, the mine has produced 2,300 oz. gold and 107,000 oz. silver from 9,800 tonnes of stockpiled material to generate US$1 million in sales revenue. This compares with US$1.3 million spent to get there and an expected US$2 million in underground development costs, which are being covered by internal cash flow anyway.
The stockpile material — 26,000 tonnes of oxides averaging 13.2 grams gold and 600 grams silver per tonne — was derived from a small pit that was excavated to provide portal access to the underground sulphide resource. Since then, 850 metres of underground development have been completed, and a similar amount is expected to be finished by year-end, for 1.5 km of development in all.
By then, underground miners are expected to have reached the targeted rate of 150 tonnes of mill feed daily. Until then, the rate will be maintained by combining development material with the remaining surface stockpile.
At full steam, Eunsun is expected to crank out 50,000 oz. gold and 118,000 oz. silver per year, for at least two years. This assumes an average recovery rate of 95%. (Recovery rates for the oxides have averaged 85%, in line with expectations.)
Cash costs should average US$125-150 per oz., net of silver credits.
Underground drilling continues, mostly to prove up the inferred resource of 251,800 tonnes grading 15 grams gold and 586 grams silver. The resource is based on results from 43 core holes drilled in 2000 and 2001 and is hosted by high-grade shoots in an enclosing low-sulphidation, epithermal vein system.
Ivanhoe is also drill-testing similar prospects nearby and around the deposit itself, having recently cut 6 metres of 29.3 grams gold and 51 grams silver in an area where little exploration has taken place. Toward that end, the mill was designed for easy expansion should any economic deposits be outlined.
In all, the mineralized vein systems cover a cumulative strike length of 3.2 km.
Ivanhoe holds a 90% interest in the project though a Korean subsidiary.
Ivanhoe also operates the Bakyrchik gold mine, in Kazakhstan, where mining renewed last fall after a 5-year production hiatus. The mine began life in 1956 under state ownership and was partly sold to Ivanhoe in 1996, which two years later closed it down because of low gold prices.
In order to test the project’s economics, miners have been tapping ore left over from previous operations, and doing so at the rate of 500 tonnes per day. A decision on whether to switch to the Globoki Log and Sarbas surface deposits at a similar mining rate is expected soon.
The deposits host a combined 2 million tonnes of oxides grading 3 grams per tonne, though selective mining could add a gram to the head grade for a period. The deposits are expected to yield 20,000 ounces of the yellow metal annually.
Ivanhoe owns a 70% interest in the Bakyrchik but is entitled to 100% of the operation’s cash flow until it recoups its initial investment. The remaining stake is held by the government.
In other news, Ivanhoe has added four drill rigs to its Turquoise Hill copper-gold prophyry project in the South Gobi region of Mongolia. Three have been assigned to the newly discovered Far North zone, where two recent holes cut wide swaths of sulphide mineralization starting at 120-150 metres below surface.
Mineralization is hosted by basaltic volcanics that display chalcopyrite, molybdenite and bornite to varying degrees. Assays are pending.
The holes are spaced about 200 metres apart.
The Far North zone is 4 km north of the Southwest Oyu porphyry deposit, where the inferred resource was increased earlier this year to 821 million tonnes grading 0.38% copper and 0.52 gram gold per tonne. The revision represents a 40% increase from the previous estimate and is based on a cutoff grade of 0.3% copper-equivalent.
In addition to gold and silver, Ivanhoe produces Grade A copper cathode at its half-owned S&K mine in Myanmar and iron ore at its wholly owned Savage River mine in Australia. The former produced 25,900 tonnes of cathode last year, while the latter cranked out more than 2 million tonnes of iron ore concentrate and more than 1.8 million tonnes of pellets and chips.
Ivanhoe has 201 million shares outstanding, or 214 million shares on a fully diluted basis. The shares have traded between $1.36 and $3.78 over the past year.
On March 31, the company had about US$6.9 million in working capital. It has since beefed up the asset side of its balance sheet to include US$52 million in cash and US$15 million in securities.
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