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 could 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 Sydney Mining Club, Friedland said Ivanhoe will step up its exploration efforts this year in Cloncurry, an established mining district in northwestern Queensland that has produced nearly 1 million oz. gold and 175,000 tonnes 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 sq. km of ground that Ivanhoe acquired in 2003.
“While work on the Swan is more advanced, exploration on some of the other propects is still in the very early stages,” says Bob Williamson, a spokesman for Ivanhoe.
The company saw its shares fall 7 to $10.73 in Toronto the day after news from Cloncurry was released.
Using modern exploration techniques and deep drilling, Ivanhoe is looking for high-grade iron oxide copper and gold deposits that are similar to ones that are being mined nearby by Xstrata (XTA-L, XSRAF-O) subsidiary, Xstrata Nickel.
However, Williamson says a lot more drilling will be needed before the company can say that it has got something worth developing on the property.
Ivanhoe 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 totalling 6,083 metres last year.
Highlights include hole MEHQ1095, which coughed up a 215-metre intercept averaging 0.79% copper and 0.6 gram gold per tonne. Uranium assays for the same drill hole include two 1-metre intercepts grading 0.14% uranium (from 254 metres depth), and 0.22% uranium (from 262 metres). All samples from drilling on the Swan prospect will be analyzed for uranium and rare earth elements.
Exploration efforts this year will include reconnaissance drilling to delineate additional mineralization at the Amethyst Castle and Metal Ridge prospects, located about 10 km west of Swan.
Ivanhoe said it is also anticipating the results of drilling on a 114.5-sq.-km portion of ground at the southern end of its Cloncurry claims, which is being explored by Barrick Gold (ABX-T, ABX-N) under a farm-in deal.
Barrick operates the Osborne copper-gold mine, about 30 km south of Cloncurry’s southern boundaries.
Meanwhile, negotiations are under way 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 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.
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