Robert Friedland, founder and Chief Executive Officer of Ivanhoe
Mines (TSX:IVN)(NYSE:IVN)(NASDAQ:IVN) and Chairman of Altynalmas
Gold, and David Woodall, President and Chief Executive Officer of
Altynalmas Gold, announced today at the BMO Capital Markets Global
Metals & Mining Conference that an independent Feasibility
Study estimates Mineral Reserves of 5.76 million ounces of gold at
the Kyzyl Gold Project in northeastern Kazakhstan.
The reserve estimate is based on an underground mining operation
producing an average of 337,000 ounces of gold per year during an
initial mine life of up to 15 years, based on Mineral Resources as
of December 1, 2010.
Other highlights of the Feasiblity Study (Technical Report)
include:
-- The successful completion of performance testing of a metallurgical
process that recovers at least 88% of contained gold.
-- The development of an innovative and proprietary ore treatment process
that produces an environmentally stable, iron arsenate mineral by-
product that meets international environmental standards.
-- An 18% increase in the Indicated Mineral Resources, inclusive of Mineral
Reserves, at the Kyzyl Gold Project, which now contain an estimated 7.35
million ounces of gold as of December 1, 2011. The project also contains
an additional 3.0 million ounces of gold in Inferred Mineral Resources.
The Mineral Resources are within the Bakrychik and Bakyrchik East
deposits.
International mining consultants Roscoe Postle Associates (RPA)
has completed an independent NI 43-101-compliant Technical Report
on the Kyzyl Gold Project based on a Feasibility Study-level report
completed by Fluor Canada and subsequent optimization studies
undertaken by Hatch Mining and Metals Canada. The project
encompasses the re-development of the Bakyrchik underground mine
and the construction of a new processing plant incorporating
fluidized-bed ore-roasting technology and supporting mine
infrastructure.
The Technical Report, based on December 1, 2010, Mineral
Resources, confirms the economics supporting Mineral Reserves, and
describes an extended, 20-year Life-of-Mine Sensitivity Case that
includes additional Indicated and Inferred Resources. Altynalmas
Gold drilling programs focused on converting Inferred Mineral
Resources to Indicated Mineral Resources, before and after the
December 1, 2010, Mineral Resource estimate, have been very
successful, providing confidence in the Life-of-Mine Sensitivity
Case. Inferred Mineral Resources are considered too speculative
geologically to have the economic considerations applied to them
that would allow them to be categorized as Mineral Reserves, and
there is no certainty that the Life-of-Mine Sensitivity Case will
be realized.
"With our successful and continuing resource delineation and
reserve conversion, the confirmation of the gold recovery process
and the support of the Government of Kazakhstan, we are pleased to
be in a position now to start the construction and development of a
state-of-the-art operation that will integrate the best available
technology and launch a new era of gold production in the region,"
Mr. Woodall said.
"Our gold reserves and resources are continuing to grow and we
are confident that the Kyzyl Gold Project can become a substantial,
long-term gold producer."
Altynalmas Gold, a private company developing world-class gold
assets in northeastern Kazakhstan, is 50% owned by Ivanhoe Mines
(TSX:IVN)(NYSE:IVN)(NASDAQ:IVN).
Mineral Reserve estimate as of February 14, 2012
RPA estimated that the current total Probable Mineral Reserves
contained in Lenses 1, 8, 9 and 12 of the Bakyrchik Deposit - one
of several deposits comprising the Kyzyl Gold Project - total 22.21
million tonnes with a grade of 8.06 grams of gold per tonne (g/t),
containing 5.76 million ounces of gold, using a cut-off grade of
3.0 g/t gold and a gold price of US$1,250 per ounce.
TABLE 1. BAKYRCHIK DEPOSIT MINERAL RESERVE ESTIMATE
As of February 14, 2012
------------------------------------------------------------------
Location Category Tonnes Gold Grade Contained Gold
(million) (g/t) (million ounces)
------------------------------------------------------------------
Lens 1 Probable 15.26 8.64 4.24
Lens 8 Probable 0.68 4.98 0.11
Lens 9 Probable 2.92 6.69 0.63
Lens 12 Probable 3.35 7.27 0.78
------------------------------------------------------------------
Total Probable 22.21 8.06 5.76
------------------------------------------------------------------
Notes:
1. CIM definitions were followed for Mineral Reserves.
2. Mineral Reserves are estimated at a cut-off grade of 3.0 g/t Au.
3. Mineral Reserves are estimated using an average long-term gold price of
US$1,250 per ounce.
4. A minimum mining width of 4.0 m was used.
5. Bulk density is 2.7 t/m3.
6. Numbers may not add due to rounding.
Indicated Mineral Resources as of December 1, 2010, contained in
Lenses 1, 8, 9 and 12 of the Bakyrchik Deposit were converted into
Mineral Reserves for the Feasibility Study. Mineral Reserves were
estimated as of February 14, 2012, in accordance with the
requirements of NI 43-101 and the definitions set out by the
Canadian Institute of Mining, Metallurgy and Petroleum (CIM)
Definition Standards for Mineral Resources and Mineral Reserves.
These Mineral Reserves were used for the Feasibility Study.
In an after-tax economic assessment in the Technical Report, the
base case economic assessment (the Base Case), which is based only
on reserves, estimated a post-tax net present value of US$878
million, using a 5% discount rate and assuming a long-term gold
price of US$1,250 per ounce. The Life-of-Mine Sensitivity Case,
which was undertaken to better reflect the project's successful
drilling undertaken during 2011 to increase the mineral resource
base, calculated an after-tax net present value of US$1,141
million, using the same economical parameters. Highlights of the
economic analysis included in the Technical Report include the
following key parameters:
----------------------------------------------------------------------------
Life-Of-Mine
Base Sensitivity
Case Case
----------------------------------------------------------------------------
Expected mine life 15 years 20 years
----------------------------------------------------------------------------
Total mine-life gold production 5,057,000 oz 6,416,000 oz
----------------------------------------------------------------------------
Average gold price US$1,250/oz US$1,250/oz
----------------------------------------------------------------------------
Annual production rate (tonnes) 1.5 million 1.5 million
----------------------------------------------------------------------------
Metallurgical recovery 88% 88%
----------------------------------------------------------------------------
Average annual production 337,000 oz 321,000 oz
----------------------------------------------------------------------------
Total pre-production capital (Jan
2012 terms) US$1,124 million US$1,124 million
----------------------------------------------------------------------------
Sustaining capital (Jan. 2012 terms) US$149 million US$161 million
----------------------------------------------------------------------------
Maximum cash draw (Jan. 2012 terms) US$1,293 million US$1,293 million
----------------------------------------------------------------------------
All-in operating costs per tonne
milled US$88/tonne US$88/tonne
----------------------------------------------------------------------------
Cash cost per ounce of gold sold US$483/oz US$500/oz
----------------------------------------------------------------------------
Total production cost per ounce of
gold US$759/oz US$722/oz
----------------------------------------------------------------------------
Notes:
1. Cash cost per ounce sold is not a recognized measure under IFRS.
2. The Life-of-Mine Sensitivity Case is a Preliminary Assessment, which is
preliminary in nature as it includes Inferred Mineral Resources that are
considered too speculative geologically to have the economic
considerations applied to them that would enable them to be categorized
as Mineral Reserves. Mineral Resources that are not Mineral Reserves do
not have demonstrated economic viability.
Mineral Resources, inclusive of Mineral Reserves, shown in Table
2 were estimated as of December 1, 2010, in accordance with the
requirements of NI 43-101 and CIM definitions. Although Mineral
Resource estimates have been updated since (see Table 3 below),
this estimate forms the basis of the Mineral Reserve estimate.
TABLE 2. BAKYRCHIK DEPOSIT MINERAL RESOURCE ESTIMATE
INCLUSIVE OF MINERAL RESERVES
As of December 1, 2010
Indicated Inferred
----------------------------------------------------------------------------
Lens Tonnage Gold Grade Contained Gold Tonnage Gold Grade Contained Gold
(000s) (g/t) (ounces x1,000) (000s) (g/t) (ounces x1,000)
----------------------------------------------------------------------------
1 14,200 9.44 4,320 6,130 7.3 1,430
9 3,140 7.57 760 960 6.9 210
12 3,500 8.21 930 2,380 8.2 300
4, 5
and 7 480 4.08 60 90 4.6 14
8 790 5.60 140 100 8.4 29
----------------------------------------------------------------------------
Total 22,160 8.72 6,220 9,680 7.4 2,311
Notes:
1. CIM definitions were followed for Mineral Resources.
2. Mineral Resources are estimated at a cut-off grade of 3.0 g/t Au.
3. Mineral Resources are estimated using an average long-term gold price of
US$1,100 per ounce.
4. The Mineral Resource Estimate uses drill hole data available as of
December 1, 2010.
5. Bulk density is 2.67 t/m3.
6. Numbers may not add due to rounding.
Two-stage fluidized-bed roasting technology recovers 88% of
contained gold
The processing basis of the NI 43-101 Technical Report is the
use of a two-stage, fluidized-bed roasting technology. Altynalmas
Gold adopted this approach following the completion of pilot test
work completed under the supervision of Crescent Technology and
undertaken at Hazen Research's Colorado facilities during the past
three years.
Metallurgical process performance testing demonstrated
recoveries of at least 88% of contained gold. Integral to the
process is the scrubbing of gases liberated from the roasting
process and, in particular, the development of an innovative and
proprietary ore treatment process that produces an environmentally
stable, iron arsenate mineral by-product that meets international
environmental standards. Altynalmas Gold has filed a provisional
patent application with the United States Patent and Trademark
Office and with Kazakh authorities covering this new
technology.
Mineral Resource estimate as of December 1, 2011
Based on drilling results available as of December 1, 2011, RPA
now estimates that inclusive of Mineral Reserves, the Bakyrchik
Gold Deposit consists of 25.9 million tonnes of Indicated Mineral
Resources grading 8.84 grams of gold per tonne (g/t) and containing
7.35 million ounces of gold. RPA also estimates that Inferred
Mineral Resources for Bakyrchik total 6.3 million tonnes grading
7.1 grams of gold per tonne and containing 1.5 million ounces of
gold (Tables 3 and 4).
In the same assessment, RPA estimates that the Bakyrchik East
Gold Deposit contains 7.8 million tonnes of Inferred Mineral
Resources grading 6.3 grams of gold per tonne and containing 1.6
million ounces of gold. The Bakyrchik East Deposit, consisting of
the Globoki Log and Promezhutochny zones, is located 800 metres
east along strike from the eastern edge of the main Bakyrchik
Deposit within the Kyzyl Shear Zone. The gold resources at
Bakyrchik East are hosted in two lenses comprised of more than 20
sub-zones that collectively measure 2,000 metres along strike by
1,500 metres down dip, extending from surface to a depth of 800
metres (Tables 3 and 5).
TABLE 3. KYZYL GOLD PROJECT MINERAL RESOURCE SUMMARY
INCLUSIVE OF MINERAL RESERVES
As of December 1, 2011
Mineral Resource Deposit Tonnes Gold Grade Contained Gold
Classification (million) (g/t) (ounces)
----------------------------------------------------------------------------
Indicated Bakyrchik 25.9 8.84 7,350,000
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Bakyrchik 6.3 7.1 1,450,000
Inferred Bakyrchik East 7.8 6.3 1,570,000
-----------------------------------------------------------
Total Inferred 14.1 6.6 3,020,000
----------------------------------------------------------------------------
The following Notes apply to Tables 3 to 5:
1. CIM definitions were followed for Mineral Resources.
2. Mineral Resources are estimated at a cut-off grade of 3.0 g/t Au.
3. Mineral Resources are estimated using an average long-term gold price of
US$1,250 per ounce.
4. A minimum mining width of 2.0 metres was used for the Bakrychik Deposit
and with a minimum mining width of 1.5 metres used for the Bakyrchik
East Deposit.
5. Bulk density is 2.67 t/m3.
6. Numbers may not add due to rounding.
The overall Bakyrchik digital drill hole database includes 2,372
historic drill holes totalling 658,954 metres of core, plus 313
recent drill holes by Altynalmas totalling 145,472 metres of core.
Both data sets were verified and validated by RPA and are
acceptable to estimate Mineral Resources.
A subset of the overall database consisting of 905 drill holes
totalling 295,144 metres of core was used to estimate Mineral
Resources at the Bakyrchik Deposit. Historic former Soviet Union
(FSU) drilling accounts for 42% of the total. At the Bakyrchik East
Deposit, 261 drill holes totalling 1,591 metres of core were used
to estimate Mineral Resources. Historic FSU drilling accounts for
90% of the total drilling.
TABLE 4. BAKYRCHIK DEPOSIT MINERAL RESOURCE ESTIMATES
INCLUSIVE OF MINERAL RESERVES
As of December 1, 2011
Indicated Inferred
----------------------------------------------------------------------
Gold Contained Gold Contained
Lens Tonnage Grade Gold Tonnage Grade Gold
(000s) (g/t)(ounces x1,000) (000s) (g/t)(ounces x1,000)
----------------------------------------------------------------------
1 16,700 9.22 4,950 4,320 7.1 990
9 3,560 7.69 880 570 6.5 120
12 4,310 9.51 1,320 1,260 7.3 300
4, 5 and 7 490 4.04 60 90 4.7 14
8 790 5.60 140 100 8.3 28
----------------------------------------------------------------------
Total 25,860 8.84 7,350 6,350 7.1 1,450
TABLE 5. BAKYRCHIK EAST DEPOSIT INFERRED MINERAL RESOURCE
ESTIMATES
As of December 1, 2011
Tonnes Gold Grade Contained Gold
(000s) (g/t) (ounces x1,000)
------------------------------------------------------------------
Promezhutochny 5,100 6.2 1,020
Globoki Log 2,700 6.3 550
------------------------------------------------------------------
Total 7,800 6.3 1,570
A set of cross-sections and plan views were interpreted to
construct three-dimensional wireframe models of the mineralized
lenses using the descriptive logs, a minimum grade of 3.0 grams of
gold per tonne (g/t), and a minimum thickness of 1.5 metres. Prior
to compositing to two-metre lengths, high grades were cut to 35 g/t
gold. Gold grade was estimated using ordinary kriging. Block size
is five metres by five metres by five metres. Bulk density is 2.67
t/m3. Classification into the Indicated and Inferred categories was
completed manually for each lens based on drill-hole spacing, gold
grade continuity and geometric continuity.
The RPA estimate is based on drilling results that were
available to December 1, 2011. The previous estimates were based on
drilling results that were available to January 1, 2010, for the
Bakyrchik Deposit and to July 11, 2011, for the Bakyrchik East
Deposit. The estimated amount of gold contained in the Bakyrchik
Deposit's Indicated Mineral Resources increased by approximately
1.1 million ounces, or 18%, from 6.22 million ounces reported in
August 2011 to 7.35 million ounces as a result of the successful
upgrading of Inferred Mineral Resources. Inferred Mineral Resources
only decreased by approximately 0.6 million ounces, from 3.6
million ounces to 3.0 million ounces, as a result of additional
drilling at depth at the Bakyrchik Deposit and a geological
re-interpretation of the Bakyrchik East Deposit.
Exploration drilling ongoing
Altynalmas Gold is continuing its drilling program designed to
expand and upgrade the NI 43-101-compliant Inferred and Indicated
Resource estimate at the Kyzyl Gold Project. Total exploration
drilling for 2011 amounted to 84,552 metres, of which 62,562 metres
were drilled on the Bakyrchik Mining Licence #737. During the
second quarter of 2011, drilling began on the satellite deposits
within the Kyzyl Gold Project's Exploration Licence #27, resulting
in the drilling of 21,990 metres. Assay results from the 2011
Exploration Licence drilling are pending. Exploration drilling in
2012 is budgeted to be 40,000 metres.
The gold deposits at the Kyzyl Gold Project consist of a series
of mineralized lenses, or lodes, lying within the large Kyzyl Shear
Zone. Gold mineralization is hosted within sheared, carbonaceous
sediments of the fault zones and principally is contained within
arsenopyrite sulphide mineralization occurring in association with
quartz stockworks, which crosscut and parallel the foliation of the
sediments.
Recent significant drill intercepts of high-grade gold
mineralization, which approximate true widths and confirm the
higher-grade zones within the Bakyrchik resource wireframes,
include:
-- 27.0 metres @ 16.42 (g/t) gold and 22.0 metres @ 18.69 g/t gold in Lens
1;
-- 5.0 metres @ 9.71 g/t gold in Lens 9;
-- 3.0 metres @ 46.20 g/t gold and 13.0 metres @ 8.68 g/t gold in Lens 12;
and,
-- 5.0 metres @ 13.39 g/t gold and 3.0 metres @ 5.68 g/t gold in Globoki
Log at Bakrychik East.
Notes:
1. Intersection grades are a composite of one-metre assays calculated from
length-weighted assays over a minimum three-metre intersection length
using a 2.0 g/t gold cut-off. A maximum of three metres of waste or
lower grade material also may be included in the composite.
2. No high assay values have been cut.
3. Interval widths generally are equivalent to true widths.
A complete summary of recent drill results, maps and drill
sections is available on the Altynalmas Gold Project page on
Ivanhoe Mines' website at www.IvanhoeMines.com.
Quality assurance, quality control and data verification
Altynalmas Gold's exploration drill core was drilled HQ size
(63.5-mm-diameter core) using western drill strings. Triple tube
HQ3 (61.1-mm-diameter core) was used within, and on the shoulders,
of the mineralized zone. Recoveries generally are greater than 95%
within the mineralized zones.
Assaying of Altynalmas Gold's samples was completed at ALS
Minerals, an independent, ISO-credited laboratory in Vancouver,
Canada, using fire assay fusion, followed by a gravimetric analysis
procedure. Quality assurance and quality control is independently
monitored and audited by RPA with a quality-control program, which
includes the use of matrix matched assay standard reference
samples, blanks, duplicates, repeats and internal ALS Minerals
quality-assurance procedures.
In RPA's opinion, the Altynalmas Gold historical drill-hole
database recompilation and QA/QC processes have been thorough and
well documented. Altynalmas Gold personnel have put a significant
effort into validation of FSU gold assay values sourced from
borehole logs, assay certificates and plotted values. In RPA's
opinion, the main limitations on verifying data from the various
sources are the lack of available FSU core to examine, as well as
the lack of FSU QA/QC documentation. Recoveries for FSU reportedly
averaged approximately 73% in mineralized zones for surface
holes.
Qualified persons
Disclosures of a scientific or technical nature in this release
have been approved by Ian Blakley, P. Geo., Vice President -
Exploration of Altynalmas Gold and a "Qualified Person" for the
purpose of National Instrument 43-101.
The Mineral Resources for the Kyzyl Gold Project disclosed in
this news release have been prepared by David Ross, P.Geo., an
employee of RPA and independent of Ivanhoe Mines. Mr. Ross is a
"Qualified Person" for the purpose of National Instrument 43-101.
The Mineral Resources have been classified in accordance with CIM
Definition Standards for Mineral Resources and Mineral Reserves,
(November 2010). Mr. Ross has read and approved the contents of
this news release as it pertains to the disclosed mineral resource
estimate.
The Feasibility Study Technical Report was prepared by RPA. for
Altynalmas Gold Ltd. under the supervision of Jason Cox, P. Eng.,
an employee of RPA and independent of Ivanhoe Mines. Mr. Cox is a
"Qualified Person" for the purpose of National Instrument 43-101.
The Mineral Reserves have been classified in accordance with CIM
Definition Standards for Mineral Resources and Mineral Reserves,
(November 2010). Mr. Cox has read and approved the contents of this
news release as it pertains to the disclosed mineral reserve
estimate.
NI 43-101 Technical Report
The Feasibility Study Technical Report for the Kyzyl Gold
Project was prepared to Canada's NI 43-101 reporting standards.
Details surrounding the key assumptions, parameters and methods
used to estimate the mineral resources and reserves surrounding the
resource and reserve estimates, as well as information relating to
the Qualified Persons data verification procedures, are found in
the 43-101F1 Technical Report for the Project, a copy of which will
be filed on SEDAR within 45 days and available at www.sedar.com and
on Ivanhoe's website at www.IvanhoeMines.com.
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 mine development project in southern
Mongolia; its 58% interest in Mongolian coal miner SouthGobi
Resources (TSX:SGQ)(HK:1878); a 59% 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, a private company developing the Kyzyl Gold
Project in Kazakhstan.
Ivanhoe Mines' shares are listed on the New York, NASDAQ and
Toronto stock exchanges under the symbol IVN.
Information contacts
Forward-Looking Statements
Certain statements made herein, including statements relating to
matters that are not historical facts and statements of our
beliefs, intentions and expectations about developments, results
and events which will or may occur in the future, constitute
"forward-looking information" within the meaning of applicable
Canadian securities legislation and "forward-looking statements"
within the meaning of the "safe harbor" provisions of the United
States Private Securities Litigation Reform Act of 1995.
Forward-looking information and statements are typically identified
by words such as "anticipate," "could," "should," "expect," "seek,"
"may," "intend," "likely," "plan," "estimate," "will," "believe"
and similar expressions suggesting future outcomes or statements
regarding an outlook. These include, but are not limited to,
statements respecting Altynalmas Gold's planned development work
and the timing for completion of the planned feasibility study.
All such forward-looking information and statements are based on
certain assumptions and analyses made by Ivanhoe Mines' management
in light of their experience and perception of historical trends,
current conditions and expected future developments, as well as
other factors management believes are appropriate in the
circumstances. These statements, however, are subject to a variety
of risks and uncertainties and other factors that could cause
actual events or results to differ materially from those projected
in the forward-looking information or statements. Important factors
that could cause actual results to differ from these
forward-looking statements include those described under the
heading "Risks and Uncertainties" elsewhere in the company's most
recent MD&A. The reader is cautioned not to place undue
reliance on forward-looking information or statements.
This release also contains references to estimates of mineral
resources. The estimation of resources is inherently uncertain and
involves subjective judgments about many relevant factors. The
accuracy of any such estimates is a function of the quantity and
quality of available data, and of the assumptions made and
judgments used in engineering and geological interpretation, which
may prove to be unreliable. There can be no assurance that these
estimates will be accurate or that such mineral resources can be
mined or processed profitably. Mineral resources that are not
mineral reserves do not have demonstrated economic viability.
Contacts: Ivanhoe Mines Ltd. - Investors Bill Trenamen
+1.604.688.5755 Ivanhoe Mines Ltd. - Media Bob Williamson
+1.604.331.9830 www.ivanhoemines.com
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