Kincora seeks to ride 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 ways to go before it is mentioned in the same breath as Ivanhoe Mines (IVN-T, IVN-N) and Rio Tinto’s (RIO-N, RIO-L) famed Oyu Tolgoi copper and gold project, the man at the helm of Kinkora 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 helped to 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 Olyu Tolgoi and early exploration work has shown that copper and gold mineralization occurs across large expanses of the property.

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

But with roughly 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.

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 first compliant resource at the property, it is by no means the first to poke around.

Indeed its ability to zero in on the zones it is currently drilling is in large part due to the work done some 40 years ago by Soviet and Mongolian state-sponsored geological teams. Those teams drilled 22 holes into the project and Kovarsky says the data they left behind has been put to good use in helping to guide Kincora in its ambition to prove 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 still early days, Kovarsky envisions a future mine that would begin by mining a lower grade, near surface starter pit. Any cash flow generated from the pit would go towards trying to prove up significantly more tonnage.

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

While no particular intercept stands out, as they are quite narrow nearly all of the holes did intersect mineralization. In total 22 holes hit copper and or gold with 14 of those returning intersections of greater than 1 gram gold per tonne.

The key areas that were targeted by the program are known as Dunlop Fox, West Kasulu, Sophie North and Buchanan Heights

Dunlop Fox’s best intercept was 1 metre grading 8.39 grams gold at the 88 metre depth. West Kasulu returned lower grade copper and gold mineralization in all of the holes drilled; Sophie North returned a best intercept of 1 metre grading 2.48grams gold from a depth of 13 metres and Buchanan Heights’ highlight intercept was 1 metre grading1.88% copper and 4.21 grams gold at a depth of 226 metres.

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.

For 2012 Kovarsky says the company plans to invest between $3 and $4 million on exploration with the bulk of that capital going into a 25 hole drill program that is set to get underway in March. Those new holes, combined with drilling done in 2011, will go into a maiden resource estimate on the project due out by the end of this year.

“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 being made at Olyu Tolgoi also benefits Bronze Fox in terms of such large scale infrastructure being put in.

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. The rail line is set to go into construction this year.

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