Ivanhoe cranks up South Korean mine

Ivanhoe Mines (IVN-T) has begun milling stockpiled ore at its Eunsan mine in South Korea.

The stockpiled material — 26,000 tonnes of oxidized gold and silver ore averaging 13.2 grams gold and 600 grams silver per tonne — was derived from a small pit that was excavated to provide portal access to underground levels.

Ivanhoe expects to recover 9,000 oz. gold and 400,000 oz. silver from the stockpile during the balance of 2002. Cash costs are estimated at US$30 per oz. gold-equivalent. Cash flow from the small-scale operation are expected to cover capital costs during underground development.

The plan at Eunsan is to ramp-up the blending of stockpiled ore with increasing proportions of higher-grade material from underground. At full steam, daily production from underground is expected to reach 150 tonnes of ore, from which will be extracted, on an annual basis over two years, 50,000 oz. gold and 118,000 oz. silver.

The rate of recovery for precious metals from the oxidized, open-pit ore is 85%; this increases to 95% for underground sulphide ore.

So far, Ivanhoe has completed more than 200 metres of underground development and more than 1.5 km of tunnelling. Crosscuts and raises are planned for this year.

Underground mining of the high-grade oreshoots is expected to begin in September. Cash costs to mine and mill the underground material are pegged at US$125-150 per oz. gold-equivalent; capital and preproduction costs at the mill and open pit will be about US$1.3 million; development costs for underground mining, US$2 million.

A reserve figure is expected in late June.

Based on 43 diamond drill holes in 2000-2001, inferred resources at the main high-grade oreshoot are estimated at 251,800 tonnes grading 15 grams gold and 83.8 grams silver per tonne. Most of the gold and silver is confined to high-grade shoots in the vein system.

Eunsan represents the most advanced of several low-sulphidation, epithermal gold-silver mineralized vein systems on Ivanhoe’s Seongsan project in southwestern Chollanam-Do Province. Ivanhoe holds a 90% interest in the project through a Korean subsidiary.

The property is also home to several other outcropping, low-sulphidation, epithermal gold-silver mineralized systems occurring as veins, breccias, stockworks and silicified zones along a cumulative strike length of at least 3.2 km.

Delineation drilling continues on Ivanhoe’s neighbouring prospects — Kunsan, Moisan, Moisan Extended and Gasado Island. Ultimately, Ivanhoe envisages mining three or more deposits and sending the ore to Eunsan for milling.