What I think you have to look at is the overall grade and costs in the region. There are several factors that have to be considered. Distance to smelter, method of extraction, grindability/energy useage, market for copper, energy cost, and general extractive metallurgy.
If we compare to Kemess which as a better more skilled labour pool, better proximity to markets, cheap government loans to get started, comparable or better grade, cheaper power, and lower cost to develop, we start to get a different picture. Kemess at 133,000 tons per day just pays the cash cost-bills and not the debt at today's cu-au prices. What will Ivanhoe do?
There are other monster porphyries hanging fire around the world. There is the Pebble of Northern Dynasty in Alaska, there are few in Mexico that were banged about in small companies a few years back, and one with fairly high grades in Argentina. Even the Windy Craggy in BC at 400 million tons of 1.0% copper, was not too shabby.
We know develpoment costs and energy costs will be higher in Mongolia. What we don't know is what the extraction costs will be, the smelting refining costs or marketing/shipping costs. This is why Ivanhoe is waxing effusive about the latest holes. They point to the possibility of a starter pit making the capital cost payoff. If it is to be big enough, and it would have to be some big. The holes are nice but we need a few more.
What Ivahoe is, is an investor perceptions thing, and engineering cruncher. It needs an advanced feasibility and senior money from institutions. They take a far more technical and jaded view than you and I.
EC<:-} |
