Friedland looks beyond Oyu Tolgoi

Vancouver – Looking beyond its flagship Oyu Tolgoi property in Mongolia, Robert Friedland’s Ivanhoe Mines (IVN-T, IVN-N) says it has found a series of related iron oxide copper-gold systems, some of which have associated uranium at its Cloncurry project in Australia.

Along with properties in China and Myanmar, Cloncurry is among non core assets that may be sold to raise capital for Oyu Tolgoi, either before or after Ivanhoe and strategic partner Rio Tinto (RTP-N, RIO-L), strike a deal with Mongolia to develop the mine.

In a recent speech to the Sydey Mining Club, Mr. Friedland said Ivanhoe will step up its exploration efforts this year in Cloncurry, an established mining district in northwesten Queensland that has produced nearly one million oz of gold and 175,000 tonnes of copper historically.

The pledge follows the discovery of copper, gold and uranium mineralization at the Swan, Amethyst, Castle Mount, and Metal Ridge prospects, which are located within 1,450 square kilometres of ground which Ivanhoe acquired in 2003.

“While Swan is an advanced stage project, some of the others are in the very early phases of exploration,” said Bob Williamson, a spokesman for Vancouver-based Ivanhoe, which saw its shares fall 7 cents to $10.73 in Toronto on January 18, the day after news from Cloncurry was released.

Utilizing modern exploration techniques and deep drilling, the company is looking for high grade iron oxide copper and gold deposits that are similar to ones that are being mined nearby by Xstrata Nickel (XTA-L, XSRAF-O) and others.

However, Mr. Williamson said a lot more drilling will be needed before the company can say with any degree of confidence that it has got something worth developing on the property.

The company plans to follow up on previous exploration work, using closely-spaced diamond drilling to define a copper-gold resource on the Swan prospect, where the company completed 12 diamond drill holes 6,083 metres last year.

Highlights include hole MEHQ1095, which coughed up a 215-metre intercept averaging 0.79% copper and 0.60 grams gold per tonne. Uranium assays for the same drill hole, include two one-metre intercepts grading 0.14% uranium from 254 to 255 metres, and 0.22% uranium from 262 to 263 metres. All samples from drilling on the Swan prospect will be analyzed for uranium and rare earth elements, the company said.

Exploration efforts this year will include reconnaissance drilling to delineate additional mineralization at the Amethyst Castle and Metal Ridge prospects, which are located about 10 kilometres to the west of Swan.

Ivanhoe said it is also anticipating the results of drilling on a 114.5-square kilometre portion of ground at the southern end of its Cloncurry claims, which is being explored by Barrick Gold’s (ABX-T, ABX-N) under a farm-in deal.

Barrick operates the Osborne copper-gold mine, which is located about 30 kilometres to the south of Cloncurry’s southern boundaries.

Meanwhile, negotiations are underway now between Ivanhoe and Rio Tinto representatives and a designated working group of Mongolian government officials assigned by the cabinet to produce a draft investment agreement that is needed to spur development of Oyu Tolgoi.

Once it is approved by cabinet, any draft agreement would then be submitted to parliament for ratification.

However, as parliament is not scheduled to resume until the spring, following a winter break, tax rates, royalties and other legal frameworks in the investment agreement may not be ratified for some time.