Ivanhoe extends strike length at Kamoa North Bonanza Zone

Earlier this year, Ivanhoe Mines (TSX: IVN; US-OTC: IVPAF) discovered a shallow, thick zone of bonanza-grade copper mineralization on its Kamoa-Kakula mining licence in the Democratic Republic of Congo (DRC), with drill hole 1450 returning 13.05% copper over 22 metres. The discovery at Kamoa North was christened the Kamoa North Bonanza Zone.

On May 2, Ivanhoe released assay results from ten new holes and announced that drilling had extended the zone’s strike length to at least 350 metres, with a width measuring up to 60 metres.

Highlights include drill hole 1486, which cut 17 metres of 15.84% copper starting 215 metres downhole; 14 metres of 18.48% copper starting at 208 metres downhole in 1497; and 21 metres of 13.32% copper from 211 metres downhole in 1504.

Assays for another 11 holes are pending.

“After more than ten years of exploration on the 400-sq.-km Kamoa-Kakula licence area, it is highly encouraging that we still are making new discoveries of thick zones of massive sulphide, with copper grades in excess of 18%,” David Broughton, Ivanhoe’s senior advisor, exploration and geology, says in a press release.

The company says that an east-west lineament, which is believed to represent the controlling growth structure, can be traced in aeromagnetic data for up to 20 km, across the western side of the Kamoa-Kakula mining licence and onto Ivanhoe’s adjoining Western Foreland exploration licences.

Given the shallow depth and high-grade mineralization, the Kamoa North Bonanza Zone could be accessed in a relatively short time-frame by way of a surface box-cut and decline, similar to those at the Kakula and Kansoko deposits, Ivanhoe says.

The Kamoa North Bonanza Zone is about 18 km north of initial mine and milling facilities at Ivanhoe’s Kakula deposit, and about 8 km north of Kansoko, another planned mine on the licence area.

Material mined at Kamoa North could be processed at a nearby, standalone plant, the company says, or it could be hauled to the plant that will be built at Kakula.

“Kamoa North is a unique opportunity to potentially enhance the project’s initial cash flows,” Robert Friedland, Ivanhoe’s founder and executive co-chairman, says in the May 2 news release. “Our objective now is to move quickly to an initial resource estimate, providing the basis for our engineers to assess the impact that early mining and processing of the bonanza-grade material will have on the project’s economics.”

Kakula will be the first of many mines put into production on the Kamoa-Kakula licence, and Ivanhoe forecasts its grades will average 6.8% copper over the first five years of production and 6.4% copper over the first decade.

The Kamoa-Kakula project is about 25 km west of the mining centre of Kolwezi. Ivanhoe, which owns 39.6% of the joint venture, and Zijin Mining, which owns the same percentage, are co-funding development. Other shareholders in the project are Crystal River Global Ltd. with 0.8% and the DRC government, which owns 20%.

News of the extended strike length sent Ivanhoe’s shares up 25¢, or 8%, to $3.40 per share.

Ivanhoe shares are trading in a 52-week range of $2.00 to $3.59. The company has a $3.5-billion market capitalization.

Andrew Mikitchook of BMO Capital Markets has a price target of $9.00 per share and an outperform rating.

“The impact of Kamoa North will most likely be to provide very high-grade mineralization to the front of the mine plan,” Mikitchook comments in a research note. “This increases early cash flows, accelerates payback, increases net present value and takes pressure off the Kakula mine ramp-up. Ivanhoe is advancing plans for a shallow ramp into Kakula North.”