Ivanhoe Mines' (TSX: IVN)(NYSE: IVN)(NASDAQ: IVN) Chief Executive
Officer and founder Robert Friedland said today that the recent
start of pre-stripping of the open-pit that will mine the gold-rich
Southern Oyu and Central Oyu deposits serves to underscore the
early gold production potential of the company's Oyu Tolgoi Project
in southern Mongolia.
"The recent sharp increases in gold and silver prices have
reinforced the importance of having a multi-commodity deposit such
as Oyu Tolgoi," Mr. Friedland added.
"While copper is Oyu Tolgoi's most important metal over the
longer term life of the mine, gold and silver are major
contributors to the launch of value building during the project's
initial years of mining. Revenues from gold and silver will have a
significant positive effect on lowering the average cash cost to
produce a pound of copper during the first five years of mining at
Oyu Tolgoi."
Using current prices of approximately US$1,850/ounce for gold,
US$42/ounce for silver and US$4.00/pound for copper, the estimated
annual contribution of gold and silver to total revenue in the
first five years of production from the open-pit mine at Oyu Tolgoi
would average 44%, with a peak of 53%. The estimates are from the
May 2010 Integrated Development Plan (IDP-10), an independent, NI
43-101 Technical Report.
Based on IDP-10's assumed long-term price of US$850/ounce for
gold, US$13.50/ounce for silver and US$2.00/pound for copper, the
estimated annual contribution of gold and silver would include
peaks of 50% and average 35% of Oyu Tolgoi's total revenues during
the first five years of mining.
Oyu Tolgoi's average annual metal output during the first 10
years of commercial production is expected to exceed 650,000 ounces
of gold, three million ounces of silver and 1.2 billion pounds
(544,000 tonnes) of copper. Peak annual gold production is expected
to reach approximately 1.1 million ounces in year seven.
Mineralization in the Southwest Oyu open-pit deposit is
characterized by high gold content, with gold-copper ratios (grams
of gold per tonne to % copper) of about 1:1 in the main part of the
deposit, rising to 3:1 in the core of the system and at depth.
Development of the open pit will progressively encompass the
Southwest and South Oyu deposits, known as Southern Oyu, and the
adjacent Central Oyu Deposit.
Mr. Friedland said that the open-pit mine is the last major
element of the first phase of the Oyu Tolgoi mining complex to
begin development as work continues around the clock for the
expected start of test production next year.
"Gold-rich ore from the open pit will be the primary feed to the
processing plant during Oyu Tolgoi's first five years of production
of gold, copper and silver. With overall mine construction quickly
advancing toward 50% completion, Oyu Tolgoi's phase-one mine is on
track to begin initial production from the open pit in late 2012
and to ramp up to commercial production in the first half of
2013."
At current metal prices, Oyu Tolgoi would have negative cash
costs to produce copper
At current gold and silver prices, IDP-10 estimated that Oyu
Tolgoi would have negative total cash costs of seven US cents per
pound to produce a pound of payable copper in the first five years
of production. Total cash costs include mine-site costs and all
treatment, refining, transport and royalty costs arising from
product sales.
Using the base-case scenario's long-term prices of US$2.00/pound
for copper, US$850/ounce for gold and US$13.50/ounce for silver,
IDP-10 estimated that Oyu Tolgoi's total cash costs in the first 10
years of production would be 45 cents (US) per pound of payable
copper produced, after gold credits.
Initial ore production from the phase-two Hugo Dummett
underground block-cave mine, being developed in conjunction with
the phase-one open pit, is scheduled to be introduced to the
concentrator in 2015 and to significantly boost overall copper,
gold and silver production at Oyu Tolgoi. Based on resources
identified to 2010, IDP-10 projected 59 years of production under
the report's life-of-mine scenario. Ongoing exploration has
reported additional discoveries that are continuing to expand the
resources at Oyu Tolgoi.
Current independent estimates of Oyu Tolgoi's resources put the
Measured and Indicated gold resources at almost 21 million ounces,
plus an additional 25.4 million ounces in Inferred resources, based
on a 0.60% copper equivalent (CuEq) cut-off.
Gold resources expanding at Ivanhoe's Kazakh and Australian
subsidiaries
Mr. Friedland said other projects in Ivanhoe Mines' portfolio of
investments also have significant gold resources that are being
prepared for production. Combined gold ounces at Oyu Tolgoi and at
Ivanhoe's principal interests - Altynalmas Gold and Ivanhoe
Australia - total more than 30 million ounces in Measured and
Indicated resources and an additional 31 million ounces in Inferred
resources. These combined resources rank Ivanhoe Mines among the
world's largest gold companies.
Altynalmas Gold, which is 50%-owned by Ivanhoe Mines, recently
reported an updated mineral resource consisting of 6.2 million
ounces of gold in Indicated resources, plus an additional 3.6
million ounces in Inferred resources (based on a cut-off grade of
3.0 grams per tonne gold), at its Kyzyl Gold Project in
northeastern Kazakhstan. Details of Altynalmas Gold's Mineral
Resources are contained in Ivanhoe Mines' news release dated August
3, 2011.
Ivanhoe Australia, which is 62%-owned by Ivanhoe Mines, has
assembled a significant package of copper and gold projects in the
highly mineralized Cloncurry district, near Mount Isa, in
northwestern Queensland. Exploration successes so far have
established a portfolio of gold, copper, molybdenum and rhenium
mineral resources that the company plans to process at the Osborne
concentrator, which is part of the mining complex acquired from
Barrick Australia in 2010. Ivanhoe Australia's combined NI
43-101-compliant gold resources total 2.9 million ounces in
Indicated resources, plus an additional 2.8 million ounces in
Inferred resources, based on a 0.30% copper equivalent (CuEq)
cut-off.
Qualified Person
Disclosures of a scientific or technical nature in this release
have been reviewed by Stephen Torr, P.Geo, an employee of Ivanhoe
Mines and a Qualified Person as defined by National Instrument
43-101.
About Ivanhoe Mines
Ivanhoe Mines (TSX: IVN)(NYSE: IVN)(NASDAQ: IVN) is an
international mining company with operations focused in the Asia
Pacific region. Assets include the company's 66% interest in the
Oyu Tolgoi copper-gold-silver mine development project in southern
Mongolia; its 57% interest in Mongolian coal miner SouthGobi
Resources (TSX: SGQ)(HK: 1878); a 62% interest in Ivanhoe Australia
(TSX: IVA)(ASX: IVA), a copper-gold-uranium-molybdenum-rhenium
exploration and development company; and a 50% interest in
Altynalmas Gold Ltd., a private company developing the Kyzyl Gold
Project in Kazakhstan.
Forward-looking statements
This news release contains forward-looking statements.
Forward-looking statements are statements that relate to future
events such as estimated copper, gold and silver production at Oyu
Tolgoi. In some cases, you can identify forward-looking statements
by terminology such as "may," "should," "expects," "plans,"
"anticipates," "believes," "estimates," "predicts," "potential,"
"continue" or the negative of these terms or other comparable
terminology. These include statements regarding Oyu Tolgoi's
expected production of silver, gold, copper and molybdenum; and
statements regarding the expected start of test production and
commercial production. These statements are only predictions and
involve known and unknown risks, uncertainties and other factors
that may cause our or our industry's actual results, levels of
activity, performance or achievements to be materially different
from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking
statements. While these forward-looking statements, and any
assumptions upon which they are based, are made in good faith and
reflect our current judgment regarding the direction of our
business, actual results almost always will vary, sometimes
materially, from any estimates, predictions, projections,
assumptions or other future performance suggested herein. Readers
are referred to the sections entitled "Risk Factors" in Ivanhoe
Mines' periodic filings with Canadian and US Securities
Commissions.
Contacts: Ivanhoe Mines Ltd. Bill Trenaman Investors
+1.604.688.5755 Ivanhoe Mines Ltd. Bob Williamson Media
+1.604.331.9830 www.ivanhoemines.com
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