Ivanhoe cuts new zone at Turquoise Hill

Ivanhoe Mines (IVN-T) has three drill rigs headed to the Central Oyu zone on its Turquoise Hill (Oyu Tolgoi) copper-gold porphyry project in the south Gobi Desert of Mongolia, after cutting a new zone of copper-gold mineralization.

Recently completed hole 187 collared on the Central Oyu zone cut two broad zones of gold-rich porphyry copper mineralization. A lower 102-metre (beginning at a down-hole depth of 334 metres) section of the hole grades 1.4 grams gold per tonne and 0.84% copper in basaltic volcanic rocks. Higher in the hole, a 138-metre interval (from 90 m) runs 0.42 grams gold plus 0.57% copper.

The hole was collared about 1.2 km northeast of hole 150, the discovery hole at Southwest Oyu, which reached a down-hole depth of 591 metres and averaged 0.81% copper and 1.17 grams gold over 508 metres, from 70 to 578 metres of depth. The 508-metre-long intercept included an upper 54 metres grading 0.51% copper and 0.45 gram gold, followed further down-hole by a 278-metre zone grading 1.02% copper and 1.6 grams gold between 188 and 466 metres.

Central Oyu is a 0.5-by-1-km induced polarization (IP) anomaly north of Turquoise Hill’s Southwest and South zones. Ivanhoe believes that the Central and Southwest Oyu zones may represent the first of several gold-rich copper porphyry zones originating from the same mineralizing source at depth. There remain several untested anomalies in the 12-sq.-km central core of the project.

Previous shallow drilling at Central Oyu delineated a supergene-enriched chalcocite and copper oxide blanket varying in thickness from 30 to 60 metres. The oxide zone returned supergene copper grades averaging 0.79%. Prior to hole 187, the hypogene zone at Central Oyu had been tested just a single drill hole, no. 159, which was drilled 1.2 km northeast of the Southwest discovery hole to a depth of 450 metres. The hole returned 375 metres of chalcocite-covellite mineralization grading 0.69% copper from 47 to 422 metres. The upper part of the intercept averaged 1.5% copper and 0.22 gram gold across 30 metres.

Moving on to the Southwest Oyu discovery zone, delineation drilling has extended porphyry-style gold and copper mineralization by about 150 metres to a true vertical depth of at least 750 metres. The zone is defined as a “grade shell” running 1 gram gold.

Hole 185 cut 400 metres (from 498 m) of 1.31 grams gold and 0.56% copper, including 160 (from 600 m) metres running 2.17 grams gold and 0.73% copper. The high-grade monzodiorite zone remains open at depth.

Hole 184, a steep hole drilled at the Discovery zone to test the extent and grade around the monzodiorite, returned 216 metres (from 456 m) of 1.88 grams gold and 0.97% copper, including 50 metres (from 622 m) of 2.3 grams gold and 1.16% copper.

Hole 189, a 322-metre vertical hole drilled at the Discovery zone to test for high-grade gold-copper mineralization at depth above hole 180 (120 metres grading 1.28% copper and 3.44 grams gold from 706 metres down-hole), cut 200 metres (from 112 m) of hypogene mineralization averaging 1.90 grams gold and 0.77% copper.

Ivanhoe says that the recent deep holes on the Discovery zone confirm that the gold-to-copper ratio increases with depth. The upper part of the deposit runs about 1 gram gold to 1% copper, while the deeper portion has a ratio of about 2.5-3.0 to 1.

The high-grade Discovery zone is situated at the northern extremity of Southwest Oyu, an anomaly measuring 1.2 km by 350 metres.

A resource estimate for the Southwest Oyu discovery zone, by MRDI Canada is expected in the coming weeks. Further deep drilling at Southwest Oyu will wait until the arrival of state-of-the-art navigational drilling equipment, which will allow more accurate delineation of the deeper portions of the high-grade porphyry zone.

Ivanhoe will now shift its delineation drilling efforts to the Far Southwest and Central zones for several weeks with the goal finalizing a preliminary mineral inventory for the Discovery Zone.

Previous drilling by BHP Billiton (BHP-N) on the Far Southwest Oyu zone returned 142 metres (from 68 m) of 0.93 gram gold and 0.53% copper. Three Ivanhoe follow-up holes last fall, were highlighted by 466 metres (from 62 m) running 0.31 grams gold and 0.41% copper.

In February, Ivanhoe assumed 100% ownership of the Turquoise Hill project after completing US$3 million worth of exploration and paying BHP Billiton US$5 million. The company remains contractually committed to spending a further US$3 million on a second phase of exploration.

BHP retains a 2% net smelter return royalty and certain back-in rights to re-purchase a 40-60% participating interest based on the nature and size of the deposit defined prior to the completion of the second phase.

Ivanhoe recently more than doubled its landholdings in southern Mongolia to about 33,600 sq. km.