“Ivanhoe has a particular philosophy in that we believe that if you want to find a world-class ore body there’s four things you have to do,” Peter Reeves, CEO and MD of Ivanhoe Australia Limited says.
“You have to get a large set of tenements on a great, well-known and historical geological belt. Then you have to find a lot of good quality geologists, then you have to get a lot of funding, and then you have to have the internal fortitude to drill, and drill, and drill.”
Reeves explains that herein lays the secret to success which many other companies can’t master.
“A lot of companies don’t have the ability to capture the funding that the Ivanhoe Group can, and then they don’t have the internal fortitude to actually use the money to drill holes. We have spent $100 million dollars on these fields in the last three years and that’s really unheard of in terms of an amount of money concentrated of one set of tenements,” he says.
IRJ spoke to Reeves about Ivanhoe Australia’s exciting progress on their Cloncurry project and the exciting possibility for future discoveries at the site. This region, situated on the Gulf Savannah just shy of 2000 kilometres from Brisbane, has been a place of mining and exploration for over 100 years. Now Ivanhoe Australia plan to take this historical region to its full potential.
The Cloncurry Project
‘Ivanhoe Australia has an interest in tenements ("IAL Tenements") currently covering an area of over 2,250km2 (including EPM applications) located in the Cloncurry District and has a direct investment in Exco Resources which holds about 4,100km2 of tenements also in the Cloncurry District, of which about 560km2 are held in joint venture with Ivanhoe Australia ("Exco JV Tenements"),’ their website says.
“We have currently got four significant mineral resources in the field since we floated in August last year and we’ve only really just started the exploration, so what we think is much more interesting is that with only a modest amount of drilling thus far, we’ve found and defined these resources so there could be a lot more discoveries to come,” Reeves explains.
“That’s probably the most exciting thing about it; things we haven’t found yet but we believe that we will find.”
Ivanhoe have two big copper and gold projects at Cloncurry; Mount Elliot and the Swan High Grade Zone. The company also has Mount Dore, a copper oxide project, and Starra; an open pit project boasting five high grade copper ore bodies which has been developed by previous companies.
“We’re in the process of developing all those. What we’ve also done is to discover this incredible Merlin project which is molybdenum and uranium,” Reeves says.
“Our company flagship projects are Merlin and Mount Elliot Swan. Merlin is our current one which we will get into production first.”
Ivanhoe’s Merlin Project
On April 21 2009, Ivanhoe Australia announced that the Merlin Project is the world’s highest-grade molybdenum-rhenium deposit.
“The average grade molybdenum project in the world is probably around point one per cent molybdenum. The highest grade project is probably point two per cent molybdenum and our project, if you include the reading, is something like one-and-a -half per cent molybdenum so it’s extremely high-grade. The thing that sets it apart from everything else is that it is the world’s highest-grade molybdenum and uranium mine project that exists,” Reeves says.
“Also the drilling so far hasn’t closed of the size of the mine essentially so it could be a lot larger and we could have indications of molybdenum for a long way north at the moment so it’s very interesting that we’ve one; found the high-grade source and two; got this extensive (outdoor) structure which has got molybdenum all the way along it so that’s probably the most important feature.”
On August 26 2009, Ivanhoe Australia announced that their drilling had intersected a near-surface zone of almost pure molybdenite. Reeves explains that this will enable Ivanhoe Australia to bring the Merlin Project into production very quickly and with very high value ore which they will process in the plant.
“A general base metal mine will have ore to the value of say $50 to $80 dollars per ton of ore before it gets processed, and this project would be something like $500 dollars per ton so it’s extremely high value. It means that you don’t need to put a lot of material in to make the same profit, it means that the capital costs of the processing plant will be very low, it means that the operating costs will be quite low relative to the amount of metal it makes,” he says.
“It becomes a very profitable operation which can get into production quickly and it should make very strong profits for the company.”
Company Growth: The Ivanhoe Australia Way
In keeping with Ivanhoe Australia’s four part philosophy for finding a world-class ore body, the Cloncurry region has been structurally well-developed from day one.
“The site in general is an old mining site so the infrastructure is quite extensive. We have several hundred kilometres of roads that criss-cross through the tenements, we have a two kilometre-long airstrip, we have a camp for about 120 people, we have a power station, we have a series of developed underground mines which could still be reopened in the future if we need and we have good communications and water systems as well,” Reeves explains.
“The borefields that have been in operation for the old sites can still be used to feed these current mills; it’s very well serviced because it’s an old mining site.”
As the company faces the exciting prospect of what they will find next, with a wealth of success already behind them in the Cloncurry region, Reeves says that the Merlin Project is at the forefront of their plans going forward.
“Our short term goal is to get Merlin into production as quickly as we can and I think we’re on track for that,” he says.
“Our longer term company objective is to create the next major base metals company within the Australasian region and we want to do that not by acquisition, but by organic growth, exploration discovery and building new mines. It’s the harder way, but it also creates the greatest value for the shareholders and that’s really what we want to do.”
Reeves also highlights the need for other companies to follow suit and pursue growth the Ivanhoe Australia way.
“Companies have got to focus on exploration as the only way to build proper mining companies. There’s too many who want to acquire and build companies up that way. You can acquire, but only if you believe you can build organically upon what you acquire so the message is to build companies by exploration, have the guts to drill deeply and aggressively, and to get these good tenements together,” he says.
“The difficult thing is to have the strategy and the plan to actually step out and find a piece of ground that you think you can then put a lot of money into and then find multiple resources.”
As Ivanhoe continues to “drill, drill, drill,” and grow to maximise shareholder value, their work in the Cloncurry region and the future of these projects looks extremely promising.