Ivanhoe Mines Ltd.: New Mineral Resource Estimate Adds 281 Million Tonnes of High-Grade Inferred Resources to the Hugo North Copper-Gold Deposit in Mongolia
ULAANBAATAR, MONGOLIA, Feb 1, 2006 (CCNMatthews via COMTEX) --
John Macken, President of Ivanhoe Mines (TSX:IVN)(NYSE:IVN), announced today that a new Mineral Resource estimate prepared by Ivanhoe under the supervision of AMEC Americas Limited (AMEC), and endorsed by AMEC, has delineated an additional Inferred resource for the northern-most portions of the Hugo North Deposit that is continuing to be expanded by ongoing exploration drilling at Oyu Tolgoi in Mongolia's South Gobi region.
The new estimate, based on eight months of drilling to January 13, 2006, adds:
- At a 0.6% copper equivalent cut-off grade - 281 million tonnes of inferred resources at an average grade of 1.49% copper and 0.51 grams per tonne (g/t) gold (a copper equivalent grade of 1.82%).
- At a higher 2% copper equivalent cut-off grade - 87 million tonnes of inferred resources at an average grade of 2.62% copper and 1.19 g/t gold (a copper equivalent grade of 3.38%).
The Oyu Tolgoi Complex (Ivanhoe's 100% owned Oyu Tolgoi Property and the adjoining Ivanhoe/Entree joint venture Shivee Property) now contains:
- Proven and Probable open-pit reserves of 930 million tonnes, with a grade of 0.50% copper and 0.36 g/t gold, containing 8.9 billion pounds of recovered copper and 7.6 million ounces of recovered gold. The reserve estimate was prepared by GRD Minproc Limited in January 2006 (see Ivanhoe's January 30, 2006, news release) based on Net Smelter Return (NSR) cut-offs equal to a copper equivalent cut-off of 0.3%. The Southern Oyu resources are calculated at a copper equivalent cut-off of 0.3% in the GRD Minproc Mineral Reserve estimate.
- Measured and Indicated resources, inclusive of Proven and Probable reserves, totalling 1.15 billion tonnes grading 1.27% copper and 0.48 g/t gold (a copper equivalent grade of 1.58%), containing 32.2 billion pounds of copper and 17.7 million ounces of gold, at a 0.60% copper equivalent cut-off grade.
- And in addition, Inferred resources of 1.44 billion tonnes grading 1.11% copper and 0.28 g/t gold (a copper equivalent grade of 1.29%), containing approximately 35.3 billion pounds of copper and 13.1 million ounces of gold, at a 0.60% copper equivalent cut-off grade.
The new resource estimate incorporates additional down-dip and in-fill drilling up to 400 metres south of the Oyu Tolgoi property boundary, plus the initial 625-metre strike extension (the Hugo North Extension) that continues in a northeasterly direction on the adjoining Ivanhoe-Entree joint-venture Shivee Tolgoi Property.
On Ivanhoe's 100%-owned Oyu Tolgoi Property, the new estimate adds
- At a 0.6% copper equivalent cut-off grade - 90 million tonnes of inferred resources grading 1.31% copper and 0.46 g/t gold (copper equivalent grade of 1.63%), containing approximately 2.6 billion pounds of copper and 1.3 million ounces of gold.
- At a 2% copper equivalent cut-off grade - 23 million tonnes of high-grade underground inferred resources grading 2.18% copper and 1.44 g/t gold (copper equivalent grade of 3.09%), containing approximately 1.1 billion pounds of copper and 1.1 million ounces of gold.
These Inferred resources are a direct continuation of the Hugo North Indicated resources estimated by AMEC in its Oyu Tolgoi resource estimate in May, 2005 (see Ivanhoe's May 5, 2005, news release) and takes the estimated Hugo North Inferred resources up to the surveyed Oyu Tolgoi/Shivee Tolgoi border.
In addition, the new estimate adds approximately 64 million tonnes of high-grade underground Inferred resources (all below a depth of 560 metres at a 2% copper equivalent cut-off) for the 625-metre Hugo North Extension onto the Ivanhoe-Entree joint-venture Shivee Tolgoi Property.
Based on initial exploration results, the January 2006 resource estimate for the Ivanhoe/Entree joint-venture ground is:
- At a 0.60% copper equivalent cut-off grade - Inferred resources of 190 million tonnes grading 1.57% copper and 0.53 g/t gold (a copper equivalent grade of 1.91%), containing approximately 6.6 billion pounds of copper and 3.2 million ounces of gold.
- At a 2% copper equivalent cut-off grade - Inferred resources of 64 million tonnes grading 2.78% copper and 1.10 g/t gold (a copper equivalent grade of 3.48%), containing approximately 3.9 billion pounds of copper and 2.3 million ounces of gold.
Ivanhoe has the right to earn a participating interest of 80% in all minerals extracted below a sub-surface depth of 560 metres on the Ivanhoe-Entree joint-venture property, and a 70% interest in all minerals extracted from surface to a depth of 560 metres, by spending US$35 million on exploration and/or development of the property over eight years. Ivanhoe has spent approximately US$10 million on the project to date and owns 10.4 million Entree common shares, representing approximately 15% of Entree's outstanding shares. Ivanhoe also owns approximately 2.4 million Entree purchase warrants (1.2 million A warrants and 1.2 million B warrants). Two A warrants are exercisable for one additional Entree common share at an exercise price of CDN$2.75 until July, 2007. Two B warrants are exercisable into one additional Entree common share at an exercise price of CDN$3.00 until July 2007. Assuming the full exercise of the warrants, Ivanhoe will own approximately 16% of Entree's issued and outstanding shares.
Subject to Ivanhoe completing its right to earn a participating interest of 80% in all minerals below a depth of 560 metres and the full exercise of the warrants held by Ivanhoe, Ivanhoe's attributable share of the current Inferred resources on the Ivanhoe/Entree joint-venture ground, at a 0.6% copper equivalent cut-off grade, is approximately 158 million tonnes, containing 5.5 billion pounds of copper and 2.7 million ounces of gold. These totals are in addition to the Mineral Resources and Mineral Reserves contained on Ivanhoe's 100%-owned Oyu Tolgoi Property.
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