Ivanhoe continues Mongolian shopping spree (March 13, 2002)

Spurred on by encouraging results at the Turquoise Hill copper-gold project, Ivanhoe Mines (IVN-T) has inked two deals to add to its expanding stable of exploration projects in southern Mongolia.

The deals call for Ivanhoe to earn an 80% stake in each of the Shuteen and Turquoise Ridges (Ovoot Hyar) prospects. Combined, the prospects comprise 353 sq, km about 120 km north of Ivanhoe’s initial gold and copper discovery at the Turquoise Hill.

Ivanhoe says that the prospects exhibit similar geological characteristics and lie in the same copper-rich belt that containing the Turquoise Hill and the Kharmagtai prospect about 120 km to the north. The belt is also host to four other gold-copper porphyry prospects acquired last October, namely Oyut Ovoo, Saran Uul, Oyut Ulaan and Chandman Uul.

To earn its interests from two private companies, Ivanhoe must spend US$1.5 million on exploration over three years on the Shuteen project, plus US$500,000 over one year on the Turquoise Ridges project. Also under the deal, Ivanhoe is granted the right of first refusal to purchase the remaining 20% interests in each of the licences.

In a separate deal, Ivanhoe will trade a 10% stake in the Kharmagtai exploration licence to a private company, in return for all of that company’s Kharmagtai exploration data. In the mid-to-late 1990s, the private company spent about US$5 million on exploration in the Kharmagtai region. Ivanhoe acquired Kharmagtai from a Mongolian company last December.

The 93-sq.-km Shuteen licence sits about 100 km east of Kharmagtai. Previous rock chip sampling of poorly exposed quartz veins returned several anomalous gold values. One 300-metre-long vein varying between 1 and 2 metres wide returned between 10 and 57 grams gold per tonne. Grab samples from outcrops of thoroughly leached hydrothermal breccia zones in the southern portion of the prospect returned anomalous copper and molybdenum.

The property contains a 20-sq.-km alteration zone and ring structure believed to be related to an intensely leached, sub-volcanic, high-sulphidation, breccia-pipe complex, or to a porphyry copper deposit with numerous breccia pipes. There are also possibilities for distal zones hosting replacement or vein-type gold deposits.

The prospect remains un-drilled.

The Turquoise Ridges licence covers 193 sq. km about 10 km east of Kharmagtai, and hosts widespread gold and copper mineralized porphyritic intrusions. Trenching in the mid-1990s cut significant gold values, including 8 grams gold over 30 metres and 6 grams over 15 metres. Grab samples from mineralization in an alteration zone returned up to 82.4 grams. Detailed geological mapping over a 10-by-6-km area identified altered and mineralized structures with significant gold values.

The Kharmagtai exploration licence covers 67 sq. km. Scout drilling in the mid-1990s cut significant near-surface, gold-copper mineralization in quartz stockwork zones running about 200 metres in strike length. Four widely spaced holes extended the mineralization a depth, one hole to 150 metres. Drill results ranged from 0.71 to 2 grams gold over widths of 34 metres to 64 metres. Results from two surface trenches were highlighted by 70 metres averaging 2.7 grams gold. Copper assays are not available. The mineralized stockwork sits on the northern edge of a magnetic anomaly, which is coincident with the axis of an induced polarization anomaly.

A single to test a coincident magnetic and chargeability anomaly returned consistent mineralization over 72 metres, grading 3.1 grams gold and 1.9% copper. A re-evaluation of the geophysical data indicates similar signatures to those present at the Southwest Oyu Tolgoi.

Elsewhere in the region, the company has acquired another 16,000 sq. km of licences surrounding the Turquoise Hill, Kharmagtai, Shuteen and Turquoise Ridges. The company now holds some 48,000 sq. km, mostly in the major northeast-trending South Gobi porphyry belt, and is waiting for approval on applications for another 4,000 sq. km.

Ivanhoe has a comprehensive reconnaissance exploration program underway across the South Gobi region. Detailed geological mapping, geochemical and geophysical surveys are aimed at defining drill targets for the second quarter of this year.

An preliminary independent resource audit for the northern portion of the Southwest Oyu Discovery Zone at Turquoise Hill contains an estimated, inferred resource of 588 million tonnes grading 0.53 grams gold and 0.41% copper. The estimate is based on a cut-off grade above a 0.30% copper equivalent.

The resource, which extends to depths of up to 900 metres below surface, would be recoverable by conventional open-pit mining methods, with an estimated overall strip ratio around 1.8 to 1.

Not included in the estimate are four nearby, related mineralized zones. Thos zones are currently being drilled and are expected to add significantly to the overall resource.

An internal scoping study is looking at development options at Turquoise Hill. The study will examine the potential for the development of the Discovery Zone plus a subsequent expansion of to encompass other known mineralized zones, including the Far Southwest Oyu and Central Zones.

To help cover exploration and development costs on its properties, Ivanhoe also announced that it has arranged a bought deal of up to $65 million in common shares at $3.25 apiece with a syndicate of underwriters lead by Griffiths McBurney & Partners and HSBC Securities and includes Haywood Securities. The offering comes with a minimum purchase by the underwriters of $39 million. The deal is slated to close April 3, 2002.