The rights would have become exercisable had BHP identified a potential resource of 250 million tonnes of supergene copper mineralization grading at least 1% copper or 300 million tonnes of hypogene copper mineralization grading at least 1% copper.
In May, Ivanhoe tabled an inferred resource of 821 million tonnes grading 0.52 gram gold per tonne and 0.38% copper for the Southwest zone, one of four known areas of mineralization at Turquoise Hill. The estimate employs a cutoff grade of 0.3% copper-equivalent. At a cutoff grade of 0.5% copper-equivalent, the inferred resource falls to 469 million tonnes running 0.7 gram gold and 0.48% copper.
The project is still subject to a 2% net smelter royalty payable to BHP Billiton, and Ivanhoe must pay the major US$4 million in cash under an outstanding promissory note.
Ivanhoe’s in-house engineering review of the current inferred resource block model indicates that open-pit mining would recover about two-thirds of the current resource at a cutoff grade of 0.5% copper-equivalent. Mining would target the resource to a depth of about 500 metres. Below this, the high-grade core appears amenable to high-volume underground mining.
Ivanhoe has a program of infill and stepout drilling under way on the Southwest and Central zones. Deeper drilling will test for an increase in the gold-to-copper ratios. The junior believes the two systems could merge at depth.
Ivanhoe recently signed a contract with Major Pontil Drilling, an Australian subsidiary of Major Drilling of Canada, to complete at least 50,000 metres of diamond drilling. There are now 14 rigs on-site.
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