Ivernia ups Cano resource, Magellan stake

A program of reverse circulation drilling on the Cano prospect, adjacent to the Magellan project near Wiluna in Western Australia, has outlined a significant mineral resource for Ireland-based Ivernia West (IVW-T).

Cano’s total resources are pegged at 3.8 million tonnes grading 5.5% lead, at a cutoff grade of 3% lead. More than 3.5 million tonnes fall in the measured category. The resource estimate is based on 57 drill holes totalling 1,711 metres.

The Cano deposit is believed to represent an ancient carbonate-hosted, base metal deposit enriched in secondary lead minerals through extensive weathering causing dissolution and volume reduction of the precursor carbonate rocks and oxidation of primary base-metal sulphide minerals.

At last count, the Magellan project held proven and probable reserves of 8.5 million tonnes grading 7.12% lead. Measured resources stand at 5.4 million tonnes running 8.1% lead and 5 million tonnes of indicated material runs 5.5% lead; both resources are at a cutoff grade of 3% lead.

In early 2001, a final feasibility study indicated capital cost of US$26.1 million to develop the Magellan project. A proposed open-pit operation would mine about 1 million tonnes of oxidized lead ore annually over nine years. Onsite processing would entail conventional milling and flotation. Lead recoveries are projected to average 83% to produce a concentrate averaging 70% lead. On-site batch refining of the concentrate would produce about 55,000 tonnes of 99.97% pure soft lead metal per year. All-inclusive operating costs are put at US$19 per tonne of ore or US$329 per tonne of marketable lead metal.

At a 7.5% discount rate, the project’s after-tax net present value is US$21.4 million. The study envisaged 70% debt financing, with the remainder from equity. The study was based on a lead price of US$525 per tonne and a U.S. exchange rate of $1.82.

With all required approvals in hand, construction would take about 1 year before production could begin.

During the second half of 2001, Ivernia upped its stake in Magellan by 4.2% to 95.8%. The company plans to grab full ownership of the project by paying another A$2.0 million in 2003.

Ivernia’s president and CEO David Hough said, “We are encouraged by our ability to expand the mineral resources adjacent to the proposed Magellan project pit so quickly and at such a low cost. We believe that the lead mineralization, hosted within the Cano prospect and other prospects adjacent to the planned Magellan pit, has the potential to add to the mineral resource already defined at Magellan and could significantly enhance the already robust economic potential of the Project. We have confidence that the Magellan Project will provide considerable future growth potential for the company and plan to continue to invest in its ownership and development.”