Ivanhoe takes stake in Pacific Minerals

Vancouver — A US$3 million investment in Pacific Minerals (PMZ-V) paves the way for Ivanhoe Mines (IVN-T) to earn a majority interest in both the 217 gold project and the JBS platinum-palladium project in China.

Ivanhoe agreed to pick up 5.1 million units in the junior at a priced of 90 each. A unit holds one share and one warrant, which is exercisable at $1 for a two-year period. Out of the proceeds, US$1 million will go towards advancing each of the projects.

In return, Ivanhoe will have the right to acquire a 60% interest in the 217 property by completing a full feasibility study. At that point, Pacific Mineral’s will hold a 36.5% carried interest. Ivanhoe can then earn 76.5% of the property by arranging production financing; leaving Pacific Minerals with a 20% carried interest.

The 36-sq-km 217 property lies 650-km northwest of Beijing near the southeastern border with Mongolia, and only 160 km south of Ivanhoe Mine’s new copper-gold discovery at Turquoise Hill. Earlier this year, Pacific Minerals picked up a 96.5% stake in the project by agreeing to pay $750,000 over three years. The property has been drill tested by 10 widely spaced drill holes. All the holes cut mineralization with the best result yielding 1.28 gram gold over 273 metres.

At the JBS property, Ivanhoe can earn half of Pacific Minerals’ 70% interest by completing a full feasibility study. The company can then earn another 15%, bringing its total to 50%, by arranging project financing.

Pacific Minerals is currently in the midst of a 2,500-metre underground drill program on the nickel-copper-platinum-palladium property in southwestern China. Based on Chinese government resource calculations, the JBS deposit marks the largest platinum group metals resource known in the southwestern part of the country. The property hosts two mineralized zones with a combined strike length of 3.4-km and width varying from 200-to-600 metres. Previous drilling by the Chinese Government has defined a drill-indicated resource of 33 million tonnes grading 1.10 grams palladium, 0.42 grams platinum, 0.15% nickel and 0.14% copper. Included in this resource is a higher-grade portion of 9.4 million tonnes averaging 1.77 grams palladium, 0.90 grams platinum, 0.21% nickel and 0.21% copper. The zone was never sampled for gold or any other platinum group elements.

The junior’s first drill program is designed to test a 500-metre section of reported high-grade material previously discovered by locals.

Pacific Minerals has also granted Ivanhoe the first right of refusal to joint venture in on any other mineral property interest it acquires in China (excluding properties in Anhui Province), for a period of 10 years. The two companies will contribute equally on the first US$1 million spent, with the property interest available from the Chinese partner divided equally between them. Once US$1 million is spent on each property, Ivanhoe will have the option to acquire 60% of Pacific’s interest by completing a feasibility study. On completion of the study, Ivanhoe will have the option to acquire a further 20% of Pacific Mineral’s interest by arranging the funding necessary to take the project to production.