Ivanhoe hits high grade at depth

Vancouver — The latest drill results from the Turquoise Hill copper-gold project have enhanced the prospects of mining the massive orebody that lies deep underneath the South Gobi Desert in Mongolia.

Ivanhoe Mines (IVN-T) intersected high-grade mineralization in the northern portion of the Hugo Dummett deposit, formerly known as the Far North zone. Highlights include the following:

— Hole 367F — 202 metres grading 2.3% copper and 0.18 gram gold per tonne at a down-hole depth of 892 metres.

— Hole 367G — 844 metres grading 1.52% copper and 0.23 gram gold at 920 metres down-hole.

— Hole 449A — 189.4 metres of 2.98% copper and 1.15 grams gold at 1,148 metres down-hole.

— Hole 455 — 133 metres of 1.34% copper and 0.1 gram gold at 866 metres down-hole.

— Hole 455A — 244 metres of 3.42% copper and 0.89 gram gold at 934 metres down-hole.

— Hole 463 — 106 metres of 3.45% copper and 0.13 gram gold at 918 metres down-hole.

— Holes 449A and 455 both terminated in strong mineralization.

“We are told by Pollard and Taylor, our internationally recognized consultants, that we’re drilling the highest hypogene copper grades ever reported by any large-scale porphyry deposit in the world,” said Douglas Kirwin, Ivanhoe’s vice-president of exploration. “We’re confident these results will provide the basis for a significant increase in the size and grade of the overall Turquoise Hill deposit.”

The mineralization is hosted in basalt that is bornite-rich and overlies a quartz monzodiorite intrusive. Quartz stockwork, which replaces up to 90% of the basalt, carries the bulk of the coarse-grained bornite. The quartz monzodiorite is mineralized with fine-grained bornite.

The gold-rich core of the deposit now covers an area measuring 1 km by 600 metres and averages 200 metres in thickness.

“After two and a half years of intensive exploration, it is remarkable that our drilling during the past two months on just the Far North portion of the project has produced the best intersections of copper and gold mineralization ever encountered on the property,” said Kirwin.

The results are expected to boost the economics of various mining proposals being evaluated for the project. An independent scoping study, which is looking at the potential for developing the project by both surface and underground mining, is scheduled for release in October. The study will form the basis for a prefeasibility study that will determine a range of alternatives for capital and operating costs.

In July, the Far North deposit was estimated to host an inferred resource of 642.8 million tonnes grading 1.19% copper and 0.1 gram gold. The latest results extend the deposit some 150 metres beyond the northern limit of its previous estimate. The total strike length now exceeds 2.6 km.

Far North is the largest of four deposits discovered by Ivanhoe at Turquoise Hill, and to give special recognition to the work of Hugo Dummett, the company’s former executive vice-president of development, as well as the former vice-president of BHP Minerals, the deposit has been renamed in his honour. Dummett, whose efforts kick-started the Canadian diamond industry, died in a highway accident in South Africa a year ago.

So far, Ivanhoe has sunk more than 500 holes (215,000 metres) on the property. Consulting firm AMEC estimates that the overall project has an inferred resource of 2.45 billion tonnes grading 0.61% copper and 0.14 gram gold, based on a cutoff grade of 0.3% copper-equivalent. The indicated resource adds 509 million tonnes grading 0.4% copper and 0.59 gram gold.

Finding large-scale deposits is nothing new to Ivanhoe Chairman Robert Friedland. The flamboyant promoter launched his first minerals venture, Galactic Resources, in the early 1980s. He took Galactic into various joint ventures, including a share in the Far South East gold project (66 million tonnes grading 0.9% copper and 1.99 grams gold) in the northern Philippines. In 1990, the company sold its stake in Far South East to Rio Tinto (RTP-N) and descended into the mire of Summitville, a cyanide heap-leach gold project in Colorado. When the Summitville mine opened in 1985, the liners on which the ore was heaped began stretching and collapsing, causing cyanide solution to leak from the pads. Although temporarily closed in 1989 by order of the Colorado government, the site was reopened the following year. But in 1991 mining was again halted, and Summitville, the operating company, was subsequently declared bankrupt, with its parent company, Galactic, following suit in 1993. In 1996, Galactic pleaded guilty to 40 counts of violating federal anti-pollution laws and was fined US$20 million.

However, Friedland is probably best known in mining circles for his role in negotiating the 1996 sale of the Voisey’s Bay nickel deposit in Labrador to Inco (N-T) for a hefty $4.3 billion. As co-chairman of Diamond Fields, which discovered the deposit, Friedland pocketed a reported $500 million on the deal.

Friedland has dismissed rumours that Ivanhoe planned to sell the entire project, though it might sell minority interests to one or more state-owned entities in Asia or mining companies.

“We want to be the builder of Turquoise Hill, not the auctioneer,” says Friedland. “This is not Voisey’s Bay all over again.”

Ivanhoe holds a 100% interest in Turquoise Hill, which is 80 km north of the Chinese border. There are no roads or infrastructure in place, with the exception of a small airstrip at the project site. It is a 12-hour journey in a 4-wheel-drive vehicle along a track from Ulaanbaatar, the capital of Mongolia.

At a recent summit meeting between Mongolia and China, the presidents of the two countries pledged to co-operate in the development of Turquoise Hill by expanding infrastructure into the South Gobi region. The Chinese government is making available a US$300-million loan to the Mongolian government for major infrastructure projects, such as new highway and railway links between the two countries.

Authorities in the neighbouring Chinese province of Inner Mongolia have approved the construction and upgrading of a 226-km-long paved highway at the government’s expense. The highway will provide a direct link between the Mongolian border crossing and the Trans-China Railway System. Ivanhoe has initiated discussions with both the Mongolian and Chinese governments to extend the highway the final 80 km to the Turquoise Hill project site.