Stock getting rerated , Major shareholder Ivanhoe Australia pleased with its investment.
Grade jump at Ivanhoe's Merlin project
Wednesday August 4, 2010, 2:51 pm
An upgrade of the rhenium and molybdenum resource grade at Ivanhoe Australia Ltd's Merlin deposit in Queensland has boosted the economics of the project, the company says.
Ivanhoe Australia on Wednesday reported a 49 per cent jump in the rhenium resource grade and a 43 per cent increase in the molybdenum resource grade at Merlin, where production is slated to start in the fourth quarter of 2011.
Chief executive Peter Reeve said Merlin, in Qld's Cloncurry region, was swiftly shaping up as "a phenomenal project", with more discoveries expected at depth.
Drilling so far has been shallow and only scratched the surface but the project was already robust and world scale.
With the orebody now being much higher grade, the contained metal is more concentrated, meaning more early cashflow for Ivanhoe Australia.
"We're going to take a couple of million tonnes less out of the ground to get that metal," Mr Reeve told AAP at the sidelines of the Diggers and Dealers mining conference in Kalgoorlie, Western Australia.
"What it means is there is 10 per cent more molybdenum metal and 15 per cent more rhenium metal.
"At the resource level, it's about $350 million more moly metal in the inventory and about $150 million more of rhenium.
"And if you take the fact that we have roughly $US100 a tonne operating costs ... that's a couple of hundred million dollars we won't have to spend," he said.
"So for a company valued at around $1 billion, it's a pretty significant resource."
Mr Reeve said Ivanhoe Australia would be kept busy in the mineral-rich Cloncurry region and was not interested in making a move on molybdenum mining hopeful Moly Mines Ltd, which is working to get the stalled Spinifex Ridge project in WA into production.
Mr Reeve said Ivanhoe Australia was pleased with its investments in Australia's Exco Resources Ltd, a gold miner in South Australia and copper explorer in the Cloncurry region, and gold and copper explorer Emmerson Resources Ltd.
Mr Reeve said Ivanhoe Australia was the only company with a primary rhenium resource in the world.
He said the outlook for the rhenium was extremely positive.
It is the material with the third highest melting point, so was in high demand for use in aerospace turbines.
Mr Reeve said the rhenium price was set to soar from about $US250 per ounce currently.
The molybdenum price is forecast to lift from about $US15 per pound currently to as much as $US40 per pound.
Molybdenum's outlook was tied to steel demand as it is used in specialty steels, Mr Reeve said.
He said the value of Ivanhoe Australia, which is a 90 per cent owned subsidiary of Canadian mining giant Ivanhoe Mines Ltd, was recognised by Australian institutions but small investors were starting to cotton on.
"We're not fully appreciated in Australia," he said.
Mr Reeve will present at the conference later on Wednesday alongside global mining figure and billionaire Robert Friedland, who chairs both Ivanhoe Mines and Ivanhoe Australia.
http://au.biz.yahoo.com/100804/2/2et0q.html
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