Vancouver – As part of its non-core asset divestiture plan, Ivanhoe Mine’s (IVN-T) has arranged for the sale of the Savage River iron ore mine in northwestern Tasmania, Australia.
The sale to London-based Stemcor Holdings will see the Ivanhoe receiving a purchase price of US$21.5 million, in two initial payments, plus five annual contingent payments based on iron ore pellet prices. The company could realize a total sale price upwards of US$150 million should pellet-price settlements rise as expected in 2005 and onwards. The current Nibrasco-JSM (Japanese Steel Mills) price is US$38.10 per tonne with many of the world’s larger producers anticipated to be looking at price increases in the range of 50-to-90%.
Ivanhoe has operated Savage River since 1997, producing 2.1 million tonnes of pellets in 2004. Production has recently been impacted by a shortage of high-grade ore from the Centre Pit South due to a pit wall failure. A redesign of the mining plan is seeing the development of two smaller pits on either side of the failed zone. As a result, 2005 production is forecast at 2 million tonnes, with the overall mining life of the operation being reduced by about six months.
Sufficient reserves have been outlined in the open pits for production until at least 2009. With anticipated strong iron prices, a feasibility study is examining an underground, block-caving operation beneath the North pit.
About 28 million tonnes of proven and probable ore reserves remain at the North and Centre pits and at the South deposit, plus additional measured and indicated resources of about 200 million tonnes.
The deposits at Savage River occur as sub-vertical, north-south striking magnetite lodes within a schist-serpentinite sequence. Magnetite occurs in massive to layered zones, in some instances disseminated, ranging texturally from fine-grained to coarse-crystalline.
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