Ivanhoe tables new study at Monywa

Vancouver — Ivanhoe Mines (IVN-T) reports that a scoping study proposed by Perth-based Ausenco suggests that copper production from the Monywa project in Myanmar could increase by 450% by implementing an expansion plan that integrates the Letpadaung deposit.

The Ausenco plan calls for Monywa’s current production rate of 28,000 tonnes a year to rise to 129,000 tonnes in a number of stages spread over six years. The plan integrates the development of the large Letpadaung deposit with the existing S&K mine operations that consist of the Sabetaung, Sabetaung South and Kyisingtaung deposits. Mining will utilize a conventional open-cut, truck-and-shovel method, followed by the heap leaching of crushed and uncrushed run-of-mine ore, and SX/EW copper recovery.

Average production costs at the S&K mine are US$0.37 per lb. To date, the mine has repaid US$52.5 million of its original US$90 million project loan. The balance is scheduled to be repaid in five semi-annual installments.

“The success of the low-cost copper recovery technology used at the S&K Mine is a major reason why Letpadaung is widely recognized as one of the best undeveloped copper projects in the world,” said Edward Flood, Deputy Chairman of Ivanhoe Mines. “With copper prices rising, we believe that the time is right to begin the long-planned expansion of this world-scale project.”

The Letpadaung deposit is situated about 6 km southeast of the existing S&K operation. Mineralization consists of hypogene chalcocite/diginite, covellite and supergene chalcocite that is associated with a subvolcanic breccia pipe complex.

The total measured and indicated resources at Letpadaung weigh in at 946 million tonnes grading 0.43% copper, using a cut-off grade of 0.15% copper. There is an additional 332 tonnes grading 0.35% copper, using the same cut-off grade in the inferred category.

Capital costs to expand production are estimated at US$315 million spread over six years. Ausenco believes that US$275 million of required capital would be financed internally from the project’s operating cash flow. Based on a copper price of US$0.75 per lb. in the first two years and US$0.80 per lb. thereafter, and using a 10% discount factor, Ausenco calculates the net present value of the project after repayment of capital costs to be US$440 million with an internal rate of return of about 70%. Estimated total production costs, including realization costs, are pegged at US$0.46 per lb. of copper produced.

The Final Development Plan prepared by Austrailian-based Minproc proposed the stand-alone development of the Letpadaung deposit to produce 125,000 tonnes per year of cathode copper with a capital investment of US$389 million.

Since obtaining exploration rights 1994, Ivanhoe has spent about US$23 million on exploration and development at Letpadaung. A total of 533 holes, or 112,000 metres, have been drilled.

The Myanmar Ivanhoe Copper Company (MICCL) owns and operates the Monywa copper project. MICCL is a 50/50 joint venture between Ivanhoe Mines and No. 1 Mining Enterprise, a state-owned company.