Ivanhoe Mines hits high-grade at depth

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

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

The most recent drilling cut new high-grade mineralization in the northern portion of the newly named Hugo Dummett deposit, formerly known as the Far North zone. Highlights include:

• Hole 367F 202 metres grading 2.3% copper and 0.18 gram gold per tonne from 892 metres downhole;
• Hole 367G 844 metres grading 1.52% copper and 0.23 gram gold from 920 metres downhole;
• Hole 449A 189.4 metres grading 2.98% copper and 1.15 gram gold from 1148 metres downhole;
• Hole 455 133 metres grading 1.34% copper and 0.1 gram gold from 866 metres downhole;
• Hole 455A 244 metres grading 3.42% copper and 0.89 gram gold from 934 metres downhole and
• Hole 463 106 metres grading 3.45% copper and 0.13 gram gold from 918 metres downhole.

Holes 449A and 455 both terminated in strong mineralization.

The mineralization is hosted in basalt that are bornite-rich overlying a quartz monzodiorite intrusion. This compares to the chalcocite-rich mineralization seen hiosted in ignimbrite in the southerly portion of the deposit. Quartz stockwork, which replaces up to 90% of the basalt, carries the bulk of the coarse-grained bornite. Underlying the basalt, the quartz monzodiorite is mineralized with fine-grained bornite.

The gold-rich core of the deposit now covers a 1-km by 600 metre area 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 just on the Far North portion of the project has produced the best intersections of copper and gold mineralization that we have ever encountered on the property,” adds Kirwin.

The results are expected to boost the economics of various mining scenarios being evaluated for the project. An independent scoping study, which is looking at the potential for the 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 capital and operating costs alternatives.

The last resource estimate for the Far North deposit came in July, when the company reported an inferred resource of 642.8 million tonnes grading 1.19 percent copper and 0.10 gram of gold.

The latest results extend the deposit some 150 metres beyond the northern limit of its previous estimate. The total strike length is now more than 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, Ivanhoe’s former Executive Vice-President of Development and the former Vice-President of BHP Minerals, the junior has elected to rename the deposit in his honour. Dummett, well known for his contributions to starting up the Canadian diamond industry, died in a highway accident in South Africa a year ago.

So far, Ivanhoe has punched more than 500 holes totalling 215,000 metres into the project. As of July, consulting firm, AMEC estimated that the overall project contained an inferred resource totalling 2.45 billion tonnes grading 0.61% copper and 0.14 gram gold, at a 0.30% copper equivalent cut-off. The indicated resource added another 509 million tonnes grading 0.4% copper and 0.59 grams gold to the project.

Finding large-scale deposits is nothing new to Ivanhoe’s Chairman, Robert Friedland. The flamboyant promoter launched his first minerals venture back in the early 1980’s with Galactic Resources. Friedland 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 to Rio Tinto (RTP-N), just as Galactic descended into the mire of Summitville, a cyanide heap-leach gold project in the state of Colorado. The Summitville mine opened in 1985 and the liners on which the ore was heaped began stretching and collapsing almost immediately resulting in cyanide solution leaking from the pads. Although temporarily closed in 1989 by order of the Colorado state government, the site was reopened the following year. Mining was halted in 1991, and Summitville, the operating company, was declared bankrupt in 1992 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 Voisey’s Bay nickel deposit in Labrador to Inco (N-T) for a hefty $4.3 billion. As co-chairman of the then Diamond Fields, which discovered the deposit, Friedland pocketed a reported $500 million on the deal.

Moving away from discovering and then selling world-class deposits, Friedland has dismissed rumors that Ivanhoe planned to sell the entire project, although it might hive off 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 the Turquoise Hill, which lies 80 km north of the border of China. There are no roads or infrastructure in place, with the exception of a small airstrip at the project site. It’s 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 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.