Ivanhoe spreads wings from Monywa

To boldly go where no mining company has gone before is a way of life for Ivanhoe Mines (IVN-T). The company was the first to take on a major mining project in the reclusive nation of Myanmar (formerly Burma), and among the first to venture into Mongolia and Kazakstan after these previously closed nations opened their doors to foreign investment.

Although high-grade gold projects in Myanmar and South Korea are generating the most excitement these days, Ivanhoe is best known for its 50% interest in the Monywa project in Myanmar, which produces cathode copper using the solvent extraction-electrowinning (SX-EW) process. Together with its state-owned partner, the company produces about 28,500 tonnes copper per year from the S&K mine at Monywa.

The partners plan to expand production by developing the large Letpadaung copper deposit, where capital costs of US$390 million are estimated for a 125,000-tonne-per-year operation. Subject to financing and government approval, production at Letpadaung could begin in 2003. Once full production is achieved, Monywa’s S&K and Letpadaung mines are expected to produce 155,000 tonnes of LME Grade A cathode copper each year.

Ivanhoe’s share of production from Monywa in the first quarter of 2001 was 3,479 tonnes, down slightly from the comparable period a year earlier, while its share of copper sales slipped to US$5.2 million from US$5.3 million a year earlier. Cash costs held at US34 per lb.

Ivanhoe’s iron ore assets were acquired through the recent merger with ABM Mining of Australia. As a result of that transaction, ABM shareholders hold about 40% of the voting equity in the merged entity, which has 124.8 million shares outstanding. The largest shareholder of both Ivanhoe and ABM, Robert Friedland, is also the largest shareholder of the merged entity.

ABM produces iron ore products from its wholly owned Savage River mine and Port Latta pellet plant in Tasmania. The company’s operations currently produce at the annual rate of 2.4 million tonnes of iron ore pellets and concentrate. An expansion is under way, aimed at boosting production at Savage River-Port Latta to 2.9 million tonnes per year. Current resources are believed sufficient for 15 years at the expanded rates.

ABM also owns an iron mine and pellet plant (plus shipping facilities) at Kirkenes, Norway. Although this facility is currently dormant, interest from European steel mills could lead to a resumption of operations.

On the exploration front, Ivanhoe continues to explore high-grade discoveries in Myanmar and Korea. Work at the 83%-held Modi Taung project, some 150 km southeast of Mandalay, is focused on a gold vein system discovered late last year. Samples taken from a series of trenches, adits and crosscuts returned gold assays as high as 3,475 grams across 1.3 metres and 321.7 grams across 0.75 metre.

To date, five parallel zones of mineralized vein structures have been identified in a mesothermal slate said to be similar to the gold fields at Bendigo, Australia. Recent work has focused on the SW Zone 3, which has a strike length of at least 600 metres and a vertical interval of at least 300 metres. Vein widths of up to 3 metres have been intersected.

Underground development will continue until mid-September, to be followed by 10,000 metres of drilling.

In South Korea, drilling and trenching are evaluating mineralized systems and delineating other prospective areas. Results so far include 120.13 grams gold and 680 grams silver over 3.05 metres. The vein systems found to date have a cumulative strike length of 3.2 km and remain open along strike.

Ivanhoe holds 90% of the Korean company exploring the project. A resource estimate is expected once the current program is complete. The area is well-serviced with roads, ports and powerlines.

In Mongolia, Ivanhoe has the right to acquire the Turquoise Hill project by spending US$6 million on exploration and paying the vendor US$5 million. The project contains four porphyry zones covering an area measuring 3,000 by 2,000 metres.

A 5,000-metre drilling program is focused on the South Oyu zone, where previous work returned 46 metres averaging 1.4% copper and 0.34 gram gold 300 metres from an earlier hole that hit 76 metres of 1.6% copper and 0.18 gram gold in a hypogene porphyry zone.

In Kazakstan, Ivanhoe plans to resume production at the dormant Bakyrchik gold mine, starting at 20,000 oz. annually, with potential to expand to between 40,000 and 50,000 oz. using existing facilities (T.N.M., June 4-10/01).