‘Unprecedented’ hit at Flatreef PGM deposit

A 90-metre intersection of 4.51 grams per tonne of platinum, palladium, rhodium and gold — plus 0.37% nickel and 0.20% copper — at Ivanhoe Mines’ (TSX: IVN; US-OTC: IVPAF) Flatreef deposit in South Africa has reignited talk of Robert Friedland’s magic touch in the industry.

The intercept included a 40-metre section grading 6.88 grams per tonne of platinum, palladium, rhodium and gold, and 0.51% nickel and 0.21% copper.

Friedland said the 90-metre thickness in hole 6 is “unprecedented at Flatreef,” and, to his knowledge, “without precedent in an underground platinum discovery in South Africa.”

“Knowing that his technical advisors are top-notch, I would be surprised if his latest comment turned out to be hyperbole,” Raymond Goldie, senior mining analyst and vice-president of commodity economics at Salman Partners in Toronto, wrote in an email to The Northern Miner. “I do recall that he was accused of hyperbole regarding the exploration of both Voisey’s Bay and at Oyu Tolgoi — yet he was right!”

The Flatreef underground polymetallic discovery is part of the company’s Platreef project on the Bushveld’s Northern Limb, 280 km northeast of Johannesburg.

The Flatreef resource has a strike length of 6 km and mostly lies within a flat to gently dipping portion of the Platreef mineralized belt at depths of 700 to 1,100 metres below surface. Platreef is a mineralized sequence that can be traced more than 30 km along strike.

The project is located on two contiguous rights — Turfspruit and Macalacaskop — which adjoin Anglo American Platinum’s (US-OTC: AGPPY) Mogalakwena mining operations.

Ivanhoe owns 90% of the Platreef project with a Japanese consortium of Itochu Corp., Japan Oil, Gas and Metals National Corp. (JOGMEC) and JGC Corp. owning the remainder. The partners are working on an integrated development plan based on an underground operation of up to 12 million tonnes a year, using multiple shafts. The study is expected to be completed in late 2013 or early 2014.

The mineralized intercept in hole 6 started at a depth of 803 metres below surface. The hole was collared 360 metres south of where Ivanhoe built its bulk-sample shaft, which recently received approval to proceed from South Africa’s Department of Mineral Resources.

In June the company submitted its mining-right application for the project, which if approved, would allow the company to mine and process minerals from the mining area for up to 30 years. (Extensions can be applied for later.) The government-review process involves assessing the company’s environmental-management program, social and labour plan, and mining-work program.

Ivanhoe modified the ownership structure of the project to include a Broad-Based Black Economic Empowerment (BBBEE) partner representing local communities, women, children and employees. The BBBEE partner will acquire a 26% interest in the project through a private company incorporated in South Africa — BBBEE SPV. The entity will then represent the interests of the Platreef Communities Umbrella Trust (PCUT), the Platreef Women’s and Children’s Trust and the Platreef Equity Participation Trust. The initial beneficiaries of the PCUT will be communities affected by the project.

Once Ivanhoe’s mining rights are approved, the company’s share of the project will fall from 90% to 64%. BBBEE SPV will own 26%, and the Japanese consortium JOGMEC and JGC Corp. will hold 10%.

Platreef has 214 million tonnes of indicated resources grading 4.1 grams per tonne platinum, palladium, gold and rhodium, 0.34% nickel and 0.17% copper for 28.5 million contained oz. platinum, palladium gold and rhodium, 1.6 billion lb. nickel and 794 million lb. copper. Inferred resources add 415 million tonnes grading 3.5 grams per tonne platinum, palladium, gold and rhodium, 0.33% nickel and 0.16% copper, for another 47.2 million contained oz. platinum palladium, gold and rhodium, 3 billion lb. nickel and 1.5 billion lb. copper. The cut-off grade used for indicated and inferred resources was 2 grams per tonne platinum, palladium, gold and rhodium.

Ivanhoe last traded at $2.28 per share within a 52-week range of $1.29 to $5.45. The company, formerly named Ivanplats, has 569 million shares outstanding.