Ivanhoe hits high-grade at depth

Vancouver — Deep drilling by Ivanhoe Mines (IVN-T) has resulted in some eyebrow raising numbers coming from the Turquoise Hill copper-gold porphyry discovery in southern Mongolia.

Targeting the Southwest Oyu discovery zone, one of four distinct targets occurring in an area measuring 3 by 2 km, hole 180 cut 802 metres grading 0.56% copper and 0.92 gram gold per tonne. Included in this interval was a 120-metre section running 1.28% copper and 3.44 grams gold from 706 metres down-hole.

Additional drill results confirmed that the gold and copper grades increase with depth. Hole 183 returned 562 metres grading 0.82% copper and 1.44 grams gold, while hole 172 cut 630 metres grading 0.49% copper and 0.78 gram gold.

“This clearly demonstrates the consistency and high-grade nature of the Discovery zone,” says Ivanhoe’s Chairman, Robert Friedland. “The deep, high-grade intercepts in our recent holes indicate that the mineralizing system is getting stronger with depth.”

So far, Ivanhoe has completed 24 holes into the zone, outlining a high-grade core of mineralization over a 1.2-km-by-300-metre area to vertical depths of 600 metres.

Last summer, Ivanhoe discovered a gold-enriched zone of hypogene copper mineralization after testing the depth potential of an earlier hole drilled by BHP Billiton (BHP-N) near the northeastern edge of the Southwest Oyu zone. BHP had intersected a 74-metre-thick zone of sheeted quartz stockwork rich in bornite, chalcopyrite and magnetite grading 1.6% copper and 0.18 gram gold per tonne from 54 to 126 metres of depth, followed by 80 metres of 0.52% copper.

BHP had drilled three other holes, spaced 400 metres apart into Southwest Oyu, as well as a large, northeasterly trending induced-polarization (IP) chargeability anomaly and a coinciding magnetic anomaly. These holes returned intervals of 140 metres grading 0.56% copper and 0.46 gram gold from 82 to 224 metres of depth, 218 metres of 0.5% copper and 0.4 gram gold from 24 to 242 metres, and 36 metres of 0.69% copper and 1.16 grams gold, starting at 113 metres of depth in the footwall of a dipping syenitic intrusion.

Ivanhoe’s discovery hole, OTD-150, was collared at minus 55 and directed toward the northeast. The hole reached a down-hole depth of 591 metres and averaged 0.81% copper and 1.17 grams gold over 508 metres, from 70 to 578 metres of depth. The 508-metre-long intercept included an upper 54 metres grading 0.51% copper and 0.45 gram gold, followed further down-hole by a 278-metre zone grading 1.02% copper and 1.6 grams gold between 188 and 466 metres.

Drilling is continuing with a resource calculation expected later this year.

Based on a May 2000 option agreement with BHP, Ivanhoe must spend US$3 million on exploration by May 2003, before it can elect to acquire a 100% interest in the Turquoise Hill property by making cash payments of US$1 million at the earn-in date and US$4 million one year later. Ivanhoe will also be required to post a US$3-million security bond to cover further exploration obligations over the subsequent four years.

BHP will retain a 2% net smelter return royalty and certain back-in rights to repurchase a participating interest based on the nature and size of the deposit. BHP will have the right to re-purchase a 40% interest if and when “a significant mineral occurrence” contains a potential resource of at least 250 million tonnes of 1% supergene copper, which can be processed using solvent extraction-electrowinning and acid leaching methods.

If a resource of at least 300 million tonnes of hypogene copper grading 1% or more has been defined, which can be processed by conventional means, BHP will have the right to re-purchase a 60% interest in that portion of the project.

If either or both of the back-in rights are exercised, BHP will pay a cash sum equal to three times the value of all exploration expenditures incurred by Ivanhoe, and reimburse Ivanhoe for its purchase payment if the mineral resource should lie in the central Oyu area.