Standing pat in a region shunned by most is paying off for
In 1994, when overseas ventures were still fashionable, Ivanhoe (then known as Indochina Goldfields) began amassing an exploration portfolio that has grown to include seven countries in the Asian-Pacific region. Along the way, it fired up the half-owned Monywa copper cathode project in Myanmar, nabbed a 18.1% stake in the Emperor gold mine in Fiji, and became an iron-ore producer in Australia.
These days, Ivanhoe has scaled-back exploration to South Korea, Myanmar and Mongolia in order to conserve cash for producing operations. But reduced exposure does not mean diminished potential.
For instance, in South Korea, Ivanhoe recently turned up bonanza gold and silver values that are sure to keep exploration crews busy for a while yet. The unnamed project lies in the southwestern coastal area, in Cholla province.
More than 5,300 metres in 17 holes drilled to date cut mineralization under three quartz-riddled hills to depths of 200 metres below surface. Highlights include 3 metres (starting at a down-hole depth of 108 metres) grading 120 grams gold and 680 grams silver per tonne.
Mineralization is epithermal in nature and characteristic of a low-sulphidation environment. Gold and silver occur in quartz veins, breccias, stockworks and zones of quartz flooding in flat-lying volcanic sediments. The vein sytems remain open along strike and indicate a strong possibility of continuing at depth, as evidenced by grades in some of the deeper drill-intercepts.
The host rocks consist of variably welded dacitic ash to lithic tuff, ignimbrite, rhyolite lava flows, dome collapse breccia and laharic debris flows. The sequence is crosscut by rhyodacite to rhyolite dykes and displays several hydrothermal alteration overprints.
About 1 km to the north, a fourth hill displays a similar style of mineralization, suggesting that the system continues in that direction. Chip sampling (drilling just got under way) has consistently returned anomalous gold and silver, and a float assayed 23 grams gold and 119 grams silver.
About 30 km away, a separate discovery of four veins is also being explored. Although drilling has returned generally lower grades than the discovery described above, one of the veins has yielded 33 grams gold and 1,730 grams silver in a grab sample.
Here, too, mineralization remains open along strike and at depth, with much of the system untested. An additional 4,000 metres in 20 holes will be drilled by year-end.
Ivanhoe operates in South Korea through its 90%-owned subsidiary, Sun Shin Gold Mining.
Meanwhile, in central Myanmar, geologists are following up an epithermal system as impressive as the South Korean ones. The discovery lies far south of the Monywa mine and 100 km north of the capital city of Yangon.
The prospective area, which measures 3 km long by 2 km wide, is reportedly peppered with visible gold in persistent quartz veins exposed for 400 metres vertically. Trenching across the system has yielded up to 3,475 grams gold over as much as 10 metres.
Regionally, the area is part of the Mergui Slate belt, the central of three parallel structural zones that trend northwesterly across the country. Pebbly mudstones, laminated argillites, phyllites and sericitic schists predominate in the belt, with gold being found typically in mudstones and underlying argillites.
“Essentially, the region is comparable to the Motherlode district in California,” notes Daniel Kunz, president of Ivanhoe.
Ivanhoe is driving 10 adits to assess the veins and near-surface oxide mineralization to depths of 30 metres below surface. Results for four already dug include:
– 14.2 grams gold per tonne over 12.5 metres in adit 1;
– 13.4 grams over 3.4 metres in adit 2;
– 73 grams over 6.6 metres in adit 3; and
– 69 grams over 1.1 metres in adit 4.
Turquoise Hill
In Mongolia, drilling has expanded the size of the Turquoise Hill copper-gold porphyry system. The porphyry was briefly explored by
In 2000, Ivanhoe tested for supergene enrichment by drilling 109 reverse-circulation holes to between 80 and 130 metres below the North, Central, South Oyu prospects. Copper values varied from less than 1% to 1.9% over core widths of 2-131 metres. Highlights include:
– hole 77, which returned 131 metres averaging 0.32% copper and 0.28 gram gold;
– hole 73, which returned 108 metres averaging 0.37% copper and 0.38 gram gold;
– hole 26, which returned 33 metres averaging 1.85% copper and 0.05 gram gold; and
– hole 128, which returned 52 metres averaging 1.22% copper.
Regionally, the Turquoise system sits on the eastern margin of the South Mongolian tectonic zone, adjacent to the East Mongolian fault system. Calc-alkaline magmatism was triggered in the Devonian as a result of northward subduction of the Paleoasian Oceanic plate.
Locally, the system outcrops as hydrothermally altered Devonian volcanic and intrusive rocks in the middle of a 10-km-wide corridor overlain by thin post-mineral Cretaceous and Tertiary sediments. At Central Oyu, chalcocite occurs in a zone of advanced argillite alteration, with northwest-trending structures acting as the controlling factors on mineralization.
Breccias
Mineralization at South Oyu appears in the form of chalcopyrite and bornite in magnetite-rich assemblages, giving elevated copper and gold values. At North Oyu, copper mineralization is mainly associated with hydrothermal breccias, though there are occurences of the supergene minerals chalcocite and covellite.
Follow-up drilling is to begin shortly.
Ivanhoe can earn a 100% interest in the 1,120-sq.-km property by spending US$6 million on exploration and paying BHP US$5 million in cash. BHP retains a back-in right for a participating interest under certain conditions, which, unless exercised, reverts to a 2% net smelter return royalty.
Meanwhile, partner
In addition, Ivanhoe holds properties in Kalimantan and Indonesia, as well as Kazakhstan, where it has a 70% stake in the dormant Bakyrchik gold mine.
In 2000, Ivanhoe and ABM Mining (a private iron-ore miner acquired in late December) generated combined revenue of US$84.8 million. The pair produced 13,350 tonnes copper, 2.19 million tonnes iron ore pellets and 19,400 tonnes iron ore concentrate.
Cathode production at Monywa topped 26,711 tonnes, essentially unchanged from 1999. However, a 19% increase in realized prices, to US$1,806 per tonne, increased Ivanhoe’s share of revenue by 13%, to US$23.3 million.
Cash operating costs averaged US$683 per tonne, bringing total production costs to US$1,476 per tonne. A newly installed organic scrub and neutralization thickener may reduce future unit costs by increasing the mine’s annual production capacity to 30,000 tonnes.
In 2003, if the Letpadaung deposit comes on-stream, Monywa’s production will jump by 125,000 tonnes. The deposit, 6 km from the mine, hosts 1 billion tonnes grading 0.4% copper, based on a cutoff grade of 0.15% copper.
Several Japanese, South Korean and Chinese firms are reportedly interested in financing the US$360-million expansion project. A marketing deal may be included.
Development is subject to financing and government approval.
ABM cranked out 11% more iron ore in 2000 than in 1999. Combined with a 6% increase in realized pellet prices, the company generated 8.7% more in sales, or US$56.6 million.
Ivanhoe plans to increase iron ore production by 30% annually. Accordingly, it will spend US$11.2 million on new crushing and grinding facilities for the Savage River mine in order to satisfy excess capacity at the Port Latta pellet processing plant in Tasmania.
Ivanhoe is also looking to restart its iron mine, integrated pellet plant and related shipping facilities in Norway. A recent feasibility study by Behre Dolbear & Company concluded that the operation could produce 2.25 million tonnes of pellets annually for 16 years and, if warranted, a high-grade magnetite concentrate.
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