Production resumes at Bakyrchik

The latest crack at bringing the Bakyrchik gold mine in northeastern Kazakstan into commercial production has hit a milestone, as Ivanhoe Mines (IVN-T) has announced that gold production has resumed.

The operation poured its first 4.2-kg gold dore bar on October 31. The mine had been dormant since Ivanhoe acquired its 70% interest in 1996, after a number of efforts to revive the project by Russians, Australians and North Americans.

The latest effort is the second to involve mining financier Robert Friedland. Friedland had a stab at Bakyrchik, through Indochina Goldfields in the mid-1990s. The plan was to re-activate the mine in two phases – an initial underground operation targeting two underground lenses to produce about 100,000 oz. annually, followed by an expansion to 270,000 oz. annually.

Currently running through oxide ore stockpiled from previous mining operations at a rate of 500 tonnes per day, the mine is expected to initially produce about 20,000 oz. of gold annually using the carbon-in-leach recovery method. Open-pit mining of near-surface oxide ore is slated to begin in the second quarter of 2002.

Initially mining will focus on 2 million tonnes of oxide ore in the Globoki Log and Sarbas deposits, which average 3 grams gold per tonne.

Initial mining of 500 tonnes per day will target 2 million tonnes of outcropping oxide ore in the Globoki Log and Sarbas deposits, which average 3 grams gold per tonne. Via selective mining, plus 117,000 tonnes of stockpiled oxide ore, the initial target head grade will be 4 grams gold. The surrounding land package covers several oxide exploration targets that will be mapped and sampled in preparation for subsequent drilling programs.

The company believes the project has the potential to expand to between 40,000 and 50,000 oz. of gold a year from oxide deposits.

Based on a previous feasibility study, oxide resources are pegged at:

• 3.5 million tonnes grading 8.2 grams (or 1.2 million oz.), classified as measured;
• 7.8 million tonnes of 7.68 grams (1.9 million oz.), as indicated; and
• 35 million tonnes of 6.56 grams (or 7.38 million oz), as inferred

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These resources represent only a small percentage of the overall (predominantly sulphide) resources outlined at Bakyrchik. At last report, these stood at 57 million tonnes grading 7 grams gold per tonne, roughly equal to 12.9 million contained ounces.

“We are very pleased to recommence mining operations at Bakyrchik,” said Ivanhoe Mines’ president Daniel Kunz. “While the start-up rate of gold production will be modest, the project has abundant blue-sky potential based on Bakyrchik’s large sulphide gold deposits.”

The gold deposits consist of a series of mineralized lenses in an 11.5-km-long shear zone. The mineralization is hosted by sheared, carbonaceous sediments of the fault zones, and in association with quartz stockworks. The sulphides and carbon are oxidized to depths of 20-40 metres, with a sharp transition to unoxidized rocks.

Ivanhoe holds a 70% interest in Bakyrchik, with the Kazakstani government holding the remainder. However, the company will receive 100% of all cash flow until it has recovered all its invested capital.