Kincora rides Mongolian copper wave

Kincora Copper (KCC-V) believes that with a bit of patience and a lot of drill work, its Bronze Fox property can become the next big name in Mongolian copper and gold. 

While the project has a long way to go before it is mentioned in the same breath as Ivanhoe Mines (IVN-T, IVN-N) and Rio Tinto’s (RIO-N) famed Oyu Tolgoi copper-gold project, the man at Kincora’s helm does have some experience getting big mines into production.

President and chief executive Igor Kovarsky spent 16 years with Centerra Gold (CG-T), and over that time he helped guide the development of the Kumtor gold mine in Kyrgyzstan, the Boroo Gold Company in Mongolia and the Souker nickel project in Russia.

What drew Kovarsky to the Kincora story was largely location. Bronze Fox sits on the same belt as Oyu Tolgoi and early exploration work has shown that copper and gold mineralization occurs across large expanses of the property. 

Kovarsky explains the project, which lies 140 km northeast of Oyu Tolgoi, is on the same inland arc that runs from the paleo-Asian ocean and is largely composed of the same host rocks at Oyu Tolgoi — namely chalcopyrite.

But with 223 sq. km of claims on its hands, the company has its exploration work cut out for it, if it hopes to stumble across the next Hugo Dummett deposit. 

To get a handle on such an expanse of territory Kincora has zoned in on five key areas that sit within a 35-sq.-km area. 

And while the company is looking to prove up the property’s first compliant resource, it is by no means the first to poke around. 

Its ability to zero in on drilling owes in large part to work done 40 years earlier by Soviet and Mongolian state-sponsored geological teams. These teams drilled 22 holes into the project, and Kovarsky says the data they left behind has been put to good use in proving up tonnage. 

“Our objective is to delineate material right from surface,” Kovarsky explains. “We can see it in places because the Soviets did trenching 40 years ago.”

While it is early, Kovarsky envisions a mine that would begin with a low-grade, near-surface starter pit. Any cash flow generated from the pit would go towards proving up more tonnage. 

Between October and December of last year the company did 2,400 metres of diamond drilling, which lifted the year’s drilling to 12,435 metres across 23 holes. 

None of the narrow intercepts stand out,  but nearly all of the holes intersect mineralization. Twenty-two holes hit copper or gold and 14 returned intersections greater than 1 gram gold per tonne.

The program is targeting Dunlop Fox, West Kasulu, Sophie North and Buchanan Heights. 

Dunlop Fox’s best intercept was 1 metre grading 8.39 grams gold at 88 metres depth. West Kasulu returned lower-grade copper and gold mineralization in all of the holes drilled, Sophie North returned a 1-metre best intercept grading 2.48 grams gold from a 13-metre depth and Buchanan Heights’ highlight intercept was 1 metre grading 1.88% copper and 4.21 grams gold at a 226-metre depth.

Kinkora says the holes drilled at Sophie North and Buchanan Heights showed gold mineralization scattered over a belt stretching 4 km along an east–west strike. 

Kovarsky says the company plans to spend up to $4 million this year on exploration, with the bulk of capital earmarked for a 25-hole drill program planned this March. The new holes, combined with drilling done in 2011, will go into a maiden resource estimate on the project due by year-end. 

“We’re not pioneers here. We’re in a better situation because we know what to do. We’ve learned from our predecessors,” he says. “With Centerra’s Boroo mine [which is also in Mongolia and went into production in 2004] we were the first ones. This way is a better way to do things.”

Kovarsky points out that progress at Oyu Tolgoi also benefits Bronze Fox in terms of large-scale infrastructure. 

The project sits 80 km from power facilities, and a government-planned rail line from the state-owned Tavan Tolgoi mine to the Mongolian city of Sainshand will pass 20 km from the mine site. Rail-line construction is planned to begin this year. 

Kincora has 143.4 million shares outstanding, fully diluted. The company’s share price has traded in a range of 22¢ to 32¢ over the last two months.