starra line project resource and production

Ivanhoe Australia re-establishes a 30-million-tonne
JORC-compliant Indicated & Inferred copper and gold Mineral
Resource on its Starra Line Project at Cloncurry

Installation of a new concentrator to be studied to return the
Starra Line to production after a five-year hiatus
MELBOURNE, AUSTRALIA – Peter Reeve, Chief Executive Officer of Ivanhoe Australia
(IAL), today announced a JORC-compliant Indicated and Inferred Mineral Resource estimate
of 30 million tonnes at 0.9% copper and 0.8 grams per tonne of gold on its Starra Line
Project near Cloncurry, in northwest Queensland. The resource, containing 274,000 tonnes
of copper and 809,000 ounces of gold, is at the top of the target range estimated in Ivanhoe
Australia’s prospectus in July.
The Starra Line is one of a series of development and exploration projects within Ivanhoe
Australia’s Cloncurry Project, which is within the Eastern Succession of the Mount Isa Inlier
(Figure 1). (Ivanhoe Australia, which trades on the ASX under the symbol IVA, is 83%-
owned by Ivanhoe Mines Ltd. (NYSE, NASDAQ & TSX: IVAN)).
A total of one million ounces of gold and 170,000 tonnes of copper, at average grades of
2.23% copper and 4.56 g/t gold, were produced by previous operators between 1988 and
2003 from four open pits and five shallow, underground mines on the Starra Line (Figures 2
and 3). The resources being declared by Ivanhoe Australia extend below the previously
mined zones of the 222 and 276 ore bodies and are partly accessible through the
established mine infrastructure (Figure 4).
“The Starra Line resource estimate is important because it is just the start of a process that
may bring a drastically under-explored mineral field back into production,” Mr. Reeve said.
Market Release September 9 2008
IVA0001MR - Starra Line.docx Page 2
“Substantial supporting infrastructure exists for the re-commencement of mining on the
Starra Line, should the project studies confirm that we have a viable project. The mineralised
zones identified as part of this resource estimate have a good possibility of extension in
immediately adjacent areas and would provide the basis for a much larger development
project if extension drilling were successful. The entire Starra Line and associated projects
lie on granted mining leases, which also would expedite any future project development.”
Production from mines on the Starra Line, which began in 1988, ended in 2003 when the
concentrator was sold. Ivanhoe Australia will undertake a scoping study to evaluate the
viability of installing a two-million-tonne per annum concentrator to allow operations to
resume on the Starra Line. A new concentrator, which also would be utilised to process
higher grade material from other deposits on the Cloncurry tenements, could be in operation
within two years.
The Starra Line is located on the Western Ironstones, one of two parallel ironstone
structures that trend north-south for more than 30 kilometres (Figure 5).
Re-evaluation of the Starra Line geological and geophysical data has indicated the possible
viability of previously drilled mineralised zones in the ironstone host. The Ivanhoe Australia
resource estimate relates to these mineralized zones.
Additional exploration drilling is underway to determine if viable extensions exist to the
previously mined 222 and 276 ore bodies. The areas currently being drilled have been
targeted to increase the estimated resources and could provide significant upside to
resources declared in the 222 and 276 zones. These zones also would be close to existing
mine infrastructure.
Mr. Reeve said that previous exploration on the Starra Line had not been comprehensive,
with the average depth of earlier drilling being less than 250 metres. Substantial areas
between the various former mines remain untested. “Given that Iron Oxide Copper Gold
(IOCG) systems can have depth extensions of several kilometres, an important opportunity
exists for Ivanhoe Australia to test this system at depth for blind deposits and extensions to
surface structures.”
A parallel ironstone horizon, the Eastern Hematites, has a similar strike length and remains
completely untested at depth and will be the subject of future exploration by Ivanhoe
Australia. These ironstone structures continue south for up to 30 kilometres to an area called
the Southern Extensions, as shown in the accompanying magnetic image in Figure 6. These
tenements provide an opportunity to apply the geological methods and knowledge gained on
the Starra Line over the entire belt, which typifies the regional approach to exploration by the
Ivanhoe Group.
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Large quantities of magnetite and hematite are contained within the host rock, which may
support the production of iron products from the Starra Line. The viability of such products
would depend upon the quality of the iron mineralisation in the area of the ore zone being
mined.
Additional details of the resource estimate prepared by Ivanhoe Australia for the Starra Line
Project are contained in the accompanying approved JORC competent person’s statement.
For further information, please contact:
Peter Reeve
CEO
Telephone: 61 3 9090 8800
Email: [email protected]
This information is available on our website: www.ivanhoeaustralia.com
IVA0001MR - Starra Line.docx Page 4
Figure 1: Cloncurry Project Area within the Mount Isa district
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Figure 2: Schematic Long Section, Starra Line Deposits – Mined 1987-2003
Figure 3: Long Section showing drill trace information on Starra Line
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Figure 4: Starra Line – 222 Gold and Copper Pit; Mined 1989-1993
Figure 5: Starra Line Western Ironstone and Eastern Hematites
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Figure 6: Magnetic image showing Potential Strike Extension of the Starra Line for
25 km south from the 222 Mine.
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MINERAL RESOURCE ESTIMATE FOR THE 222 and 276
DEPOSITS ON THE STARRA LINE PROJECT
CLONCURRY - NORTH QUEENSLAND.
A Mineral Resource of 30 million tonnes at 0.9% copper and 0.8g/t gold estimated,
containing approximately 274 thousand tonnes of copper (605 million pounds) and
809 thousand ounces of gold has been estimated for the Starra Line project. This
includes 20 million tonnes at 1.0% copper and 0.8% gold containing 193 thousand
tonnes (425 million pounds) of copper and 546 thousand ounces of gold in Indicated
Resources.
Barry Goss, General Manager – Development of Ivanhoe Australia (IVA) has provided this
statement, which conforms to the Joint Ore Reserves Committee (JORC) Code for reporting
of mineral resource estimates. It relates to a Mineral Resource estimate prepared by Mike
Job of Quantitative Group (QG) for the 222 and 276 deposits on the Starra Line project.
The Starra Line project is host to five high-grade gold-copper deposits on which a series of
open pit and underground mines were developed by previous project owners (these
operations included the 222, 244, 251, 257 and 276 deposits). The host magnetite-rich
ironstones occur as a prominent ridge over a north-south strike distance in excess of 8
kilometres before being obscured by younger sediments to the south and are highly
weathered and eroded to the north.
Resource estimates have been published by previous owners for this project and the
deposits were mined over a 15 year period from 1988 to 2003. At mine closure significant
resources were stated to remain in the 222, 251 and 276 deposits.1 These resources had
been estimated at a cut-off grade of 1.5% copper equivalent (eCu). Since that time the price
of copper and gold have both increased considerably such that a lower cut-off of 0.5% eCu
(Cu% + Aug/t x 0.4 = eCu%) has been chosen to estimate the global resource that may be
exploitable by modern bulk scale mining methods. Prior to the last estimate in January 2003,
large resource tonnages at lower cut-off grades had been published by previous owners with
a similar plan in mind. However the low copper and gold prices of the early 2000’s made this
plan uneconomic.
Ivanhoe has used the results of surface and underground drilling and underground channel
sampling collected since 1976 to define the resource outlines and to estimate the resources.
Assays from holes that now fall within mined voids were removed from the data set prior to
estimation, and the volumes of these voids were removed from subsequent resource
calculations.
Ivanhoe has only estimated resources for the 222 and 276 deposits. At closure of the Starra
Line mines in 2003, the 222 mine was still in operation and plans were in place to reopen the
276 mine, which had closed in 1999 during a transfer of ownership of the project. The
resource previously estimated at the 251 mine was around and directly along strike of old
stopes and requires further study to see if they can be still considered extractable given the
length of closure of this mine.
1 Refer to Table 2
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The 222 and 276 deposits are both still open at depth and the 276 in particular has high
copper grades at depth.
The 222 deposit is noted for having a copper gold grade ratio (Cu %:Au g/t) of less than one
and at high cut-offs this ratio drops below 0.5:1. Past mining focussed on the high grade gold
core zone within magnetite rich ironstone bodies. A broader zone of copper rich sediments
surrounds the ironstones, and this has been interpreted and modelled at a cutoff grade of
approximately 0.5% eCu. The current resource estimate is predicated on the assumption
that a form of bulk mining can be used to extract resources at a low cutoff grade. In the
resource tabulation provided, resource from areas peripheral to previous stoping, has been
separated from resource in virgin, unmined areas. The ability to successfully use bulk mining
methods in areas where previous voids exist is not certain, and detailed assessment will be
required before this resource can be converted to reserve.
Early mining and treatment of the 276 deposit in the upper partly and fully oxidised zone
near the surface was noted to be challenging. Mining again focussed on extracting the
highest grade core zone of the ironstone unit. A five metre wide stope now sits inside a
mineralised zone some 25m wide. The Indicated material near the old stopes in the upper
part of this deposit has been included in this statement and also separately tabulated as it
will require reassessment from underground to see if extraction remains viable. The Inferred
material near the old stopes has not been tabulated separately.
Data from 307 drill hole intersections, which contained 7,054m of core within the plus >0.5%
eCu intersections, were used to define the 222 resources and 276 drill holes, containing
6,686m of core within the plus >0.5% eCu intersections, were used to define the 276
resource.
No Measured Resources have been estimated at present although past estimates had 42%
of the resources classified as Measured. The current conservative approach is due to the
previous estimate being done while the mines were operating at a higher cut-off grade
compared to the current situation where Ivanhoe are using a lower cut-off grade.
IVA0001MR - Starra Line.docx Page 10
Resources have been classified by QG under the Joint Ore Reserve Committee
(JORC) code as follows:
Table 1: Mineral Resource Estimates for Starra Line deposits as at June 30, 2008
above a cut-off grade 0.5% eCu (Cu% + 0.4 x Aug/t = eCu%).
Deposit Resource
Category
Tonnes
(million) Cu (%) Au (g/t) Cu
(‘000 Tonnes)
Au
(‘000 oz)
222 Measured
222 Indicated 4.4 0.6 1.0 26 143
222 (mine) Indicated 2.7 0.7 0.8 19 74
222 Inferred 5.5 0.6 0.7 31 123
sub total 13 0.6 0.8 76 340
276 Measured
276 Indicated 12 1.1 0.8 131 301
276 (mine) Indicated 1.4 1.2 0.6 16 28
276 Inferred 4.3 1.2 1.0 50 140
sub total 17 1.1 0.8 198 469
Measured
subtotal Indicated 16 1.0 0.9 158 444
subtotal (mine) Indicated 4 0.9 0.8 35 102
subtotal Indicated 20 1.0 0.8 193 546
Inferred 10 0.8 0.8 81 263
Total 30 0.9 0.8 274 809
JORC advises that resource estimates be rounded to one or two significant figures, grades
have therefore been rounded to one decimal place and tonnes to the nearest 0.1 (1 in
subtotals) million. Note that this causes rounding errors to occur in the total figure and metal
content. The total contained metal has been rounded directly from the estimate, and is not
simply the product of the rounded tonnages and grades presented in this table. Tonnages
listed as (mine) are those resources close to old workings, where the economic extraction of
those resources will require detailed assessment, including the impact of the old workings.
Data verification
The Starra Line deposits have been the subject to a number of drilling campaigns over a
plus 30 year period and mining over a 15 year period.
Core from earlier campaigns along with paper logs and assay results from external and on
site laboratories have been cross checked by Ivanhoe Australia and Ivanhoe Mines staff.
Errors that have been identified have been corrected.
However it must be recognised that what would have been best practise in the 1970’s, 80’s
and 90’s, with regard to QA and QC systems, may no longer be considered best practise in
a modern exploration company.
Importantly in this case the deposits have been mined over a 15 year period and a good
record of mine to mill reconciliation information is available that indicates that the drilling data
was robust in being able to define areas for mining and to estimate the tonnes and grade
available.
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Table 2: LAST PUBLICLY RELEASED HISTORICAL RESOURCE ESTIMATES
DEPOSIT CUT-OFF CATEGORY TONNAGE
MT
GRADE
COMMENT
% CU g/t AU
SELWYN MINES INFORMATION MEMEORANDUM JANUARY 20035
Starra2 Line
Deposits
1.5 % Cu
Eq1
Measured 3.52 0.93 1.70 Block Model estimate.
Included the 222, 251 and 276
Deposits
Indicated 3.37 1.16 1.82
Sub-total 6.88 1.04 1.76
Inferred 1.36 1.17 2.04
TOTAL 8.24 1.06 1.80
Competent Persons Statement
The information in this announcement that relates to exploration results for the Starra Line
project, is based on information compiled by Barry J. Goss, who is a full time employee of
Ivanhoe Australia and a Fellow of the Australasian Institute of Mining and Metallurgy. Barry
J. Goss has sufficient experience which is relevant to the style of mineralisation and type of
deposit under consideration and to the activity which he is undertaking to qualify as a
'Competent Person' as defined in the JORC code. Barry J. Goss consents to the inclusion in
the announcement of the matters based on this information in the form and context in which
it appears.
The information in this announcement that relates to Ivanhoe Australia's mineral resource
estimates for the Starra Line project, is based on information compiled by Mike Job, who is a
full time employee of Quantitative Group and a Member of the Australasian Institute of
Mining and Metallurgy. Mike Job has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the activity which he is
undertaking to qualify as a 'Competent Person' as defined in the JORC code. Mike Job
consents to the inclusion in the announcement of the matters based on this information in
the form and context in which it appears.