Spurred on by encouraging results at the Turquoise Hill copper-gold project,
Under the agreements, Ivanhoe can earn an 80% stake in each of the Shuteen and Turquoise Ridges (Ovoot Hyar) prospects. Combined, the prospects comprise 353 sq. km; they are situated 120 km north of Ivanhoe’s initial gold and copper discovery at the Turquoise Hill.
Ivanhoe says that the prospects exhibit similar geological characteristics and lie in the same copper-rich belt containing the Turquoise Hill and the Kharmagtai prospect, 120 km to the north. The belt is also host to four other gold-copper porphyry prospects acquired last October, namely Oyut Ovoo, Saran Uul, Oyut Ulaan and Chandman Uul.
In a separate deal, Ivanhoe will trade a 10% stake in the Kharmagtai exploration licence to a private company in return for all of that company’s Kharmagtai exploration data. In the mid-to-late 1990s, the private company spent US$5 million on exploration in the Kharmagtai region. Ivanhoe acquired Kharmagtai from a Mongolian company last December.
The 93-sq.-km Shuteen licence sits 100 km east of Kharmagtai. Previous rock chip sampling of poorly exposed quartz veins returned several anomalous gold values. One 300-metre-long vein varying between 1 and 2 metres wide returned between 10 and 57 grams gold per tonne. Grab samples from outcrops of thoroughly leached hydrothermal breccia zones in the southern portion of the prospect returned anomalous copper and molybdenum values.
The Shuteen property contains a 20-sq.-km alteration zone and ring structure believed to be related to an intensely leached, sub-volcanic, high-sulphidation, breccia-pipe complex, or to a porphyry copper deposit with numerous breccia pipes. There are also possibilities for distal zones hosting replacement or vein-type gold deposits.
The prospect remains un-drilled.
The 193-sq.-km Turquoise Ridges licence is 10 km east of Kharmagtai. It hosts to widespread gold-and-copper-mineralized porphyritic intrusions. Trenching in the mid-1990s cut significant gold values, including 8 grams gold over 30 metres and 6 grams over 15 metres. Grab samples from mineralization in an alteration zone returned up to 82.4 grams. Geological mapping over a 10-by-6-km area identified altered and mineralized structures with significant gold values.
The Kharmagtai exploration licence covers 67 sq. km. Scout drilling in the mid-1990s cut significant near-surface, gold-copper mineralization in quartz stockwork zones with a strike length of about 200 metres. Four widely spaced holes extended the mineralization at depth, with one hole drilled to 150 metres. Drill results ranged from 0.71 to 2 grams gold over widths of 34-64 metres. Results from two surface trenches were highlighted by 70 metres averaging 2.7 grams gold. Copper assays are not available. The mineralized stockwork sits on the northern edge of a magnetic anomaly, which is coincident with the axis of an induced-polarization (IP) anomaly.
A previous hole designed to test a coincident magnetic and chargeability anomaly returned consistent mineralization over 72 metres, grading 3.1 grams gold and 1.9% copper. A re-evaluation of the geophysical data by Ivanhoe suggests signatures are similar to those at Southwest Oyu Tolgoi.
Elsewhere in the region, the company has acquired another 16,000 sq. km of licences surrounding Turquoise Hill, Kharmagtai, Shuteen and Turquoise Ridges. The company now holds some 48,000 sq. km, mostly in the northeast-trending South Gobi porphyry belt, and is waiting for approval on applications for another 4,000 sq. km.
Meanwhile, the company has received a preliminary independent resource estimate for the northern portion of the Southwest Oyu Discovery zone at Turquoise Hill. The estimate pegs the inferred resource at 588 million tonnes grading 0.53 gram gold and 0.41% copper. The estimate is based on a cutoff grade of 0.30% copper-equivalent. At a cutoff of 0.40% copper-equivalent, the inferred resource drops to 458 million tonnes running 0.62 gram gold and 0.46% copper.
The resource, which extends to depths of up to 900 metres below surface, would be recoverable by conventional open-pit mining methods, with an estimated overall stripping ratio of around 1.8-to-1.
The high-grade Discovery zone sits on the northern end of the Southwest Oyu IP chargeability anomaly, which extends 1,200 metres north-south and 350 metres east-west. Ivanhoe has two drills testing the high-grade potential of the southern extension of the zone at depth. Previous drilling on the southwestern extension cut 466 metres of 0.41% copper and 0.31 gram gold in hole 165, 318 metres of 0.49% copper and 0.52 gram gold in hole 167, and 382 metres of 0.21% copper and 0.3 gram gold in hole 168.
Not included in the estimate are four nearby, related mineralized zones: Central Oyu, North Oyu, South Oyu and Far Southwest Oyu. Those zones are currently being drilled and are expected to add significantly to the overall resource.
An internal scoping study is looking at development options at Turquoise Hill. The study will examine the potential for development of the Discovery zone plus a subsequent expansion to encompass other zones, including Far Southwest Oyu and Central.
A reconnaissance program is in progress in the South Gobi region. It consists of geological mapping and geochemical and geophysical surveys, which are defining drill targets for the second quarter.
To help cover exploration and development costs on its properties, Ivanhoe has arranged a bought deal of up to $65 million worth of common shares at $3.25 apiece. The deal, which includes a minimum purchase by underwriters of $39 million, is slated to close in early April.
In February, Ivanhoe assumed ownership of the Turquoise Hill project, 80 km north of the Chinese border, after completing US$3 million worth of exploration and paying BHP Billiton US$5 million. The company remains contractually obligated to spending a further US$3 million on a second phase of exploration.
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