Vancouver – Ivanhoe Mines (IVN-T) has decided to have a serious look at the neighbouring mineral licence of Entre Gold (ETG-V) in the southern Gobi Desert of Mongolia.
Ivanhoe has entered into an earn-in/joint venture agreement with Entre to conduct exploration on the portion of the Shivee Tolgoi (Lookout Hill) project that is adjacent to and immediately surrounding the Oyu Tolgoi (Turquoise Hill) copper-gold deposit.
Ivanhoe can earn up to a 70% interest, through stages, in Shivee Tolgoi by spending US$35 million over eight years. Additionally, Ivanhoe will purchase 4.6 million units in Entre at $1.00 each. The units will comprise one common share and a two-year warrant exercisable at $1.10 per share. Assuming full exercise of the warrants, Ivanhoe would own about 17% of Entre and holds the right to maintain that interest through participation in any future financings.
The agreement covers the strategic Copper Flats zone on Entre’s property, which lies along strike and just north of Ivanhoe’s high-grade copper-gold Hugo Dummett zone.
Ivanhoe has cleverly structured its earn-in so that when fully vested, it will hold 80% in minerals below the sub-surface depth of 560 metres. Interestingly, the Hugo Dummett zone plunges northwards towards Entre’s ground, with increasing gold and copper grades. Development plans have outlined an underground, block-caving operation on the higher-grade zone.
Ivanhoe’s initial year spending requirement is US$3 million, with US$2.5 million allocated for drilling and the remainder to geophysics. Upon fulfilling its first year obligations, Ivanhoe will gain a long-term option on any of Entre’s surface rights on Shivee Tolgoi, including usage for Oyu Tolgoi infrastructure.
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