Mr Peter Reeve CEO and Mr Robert Friedland chairman of Ivanhoe Australia Limited announced the completion of the Osborne Copper and gold Study and the results of the Preliminary Economic Assessment of the company's Osborne Project in north western Queensland.
Mr Reeve said that "The study confirms our view that Ivanhoe Australia is firmly on track to begin production from the Osborne complex within approximately 5 months in what will be a major milestone in the evolution of our company. A great deal has been accomplished since we purchased Osborne from Barrick Australia one year ago. A principal focus for Ivanhoe Australia now is to achieve producer status through the relaunch of Osborne in March 2012."
He said that "Importantly, the cashflow generated from the operations at Osborne will support the development of our other projects in the Cloncurry field and enable us to continue our aggressive exploration campaign.”
Ivanhoe Australia's goal has been to bring Osborne production on stream as quickly as possible to enable the company to utilize the full benefit of the resulting cashflows. Thanks to the hard work of our dedicated team, we have made significant progress to date on the Osborne Project and soon we will see very positive outcomes.
Ivanhoe Australia's Osborne Copper Gold project is targeting a mine life of approximately 15 to 20 years with a number of prospects identified as potential ore sources across Ivanhoe Australia's tenements. The Preliminary Economic Assessment evaluates ore sources for an initial 4 year period only and was prepared by SRK Consulting with input from Golder Associates and Lewis Mineral Resource Consulting. Ore included in the initial mine plan is to be sourced from the Osborne and Kulthor underground mines, the Osborne open pit and the Starra 276 underground mine.
The Preliminary Economic Assessment identified key features of the planned Osborne Project.
Projected Operational Highlights;
1. Ore to be treated at the existing two-million-tonne per annum Osborne processing facility.
2. Average steady-state annual metal in concentrate production of approximately 21,000 tonnes of copper and approximately 34,000 ounces of gold.
3. Measured and Indicated Mineral Resources of 13.1 million tonnes at 1.4% copper and 0.9 grams per tonne gold and Inferred Mineral Resources of 7.9 million tonnes at 1.3% copper and 1.0 grams per tonne gold.
4. Proposed mill feed of 6.6 million tonnes at 1.3% copper and 0.8 grams per tonne gold.
5. Initial four-year mine plan.
6. Overall copper and gold in concentrate recoveries expected to be approximately 82% and 66% respectively.
Projected Financial Highlights;
1. Total project after tax cashflow of approximately AUD 162 million and project IRR of 51%.
2. Average cash cost, including royalties and after by product credits of USD 1.67 per Ib.
3. Total capital cost of approximately AUD 137 million.
Underground development work at Kulthor and Osborne began in Q2 2011. Access to the Kulthor ore body was achieved in late August 2011. Access to the Kulthor ore body also will enable further work on resource delineation and mine planning to progress.
The extension of the Osborne decline is continuing at depth. Access has been completed to the first of three planned production levels and ore development is underway. Development ore has been stockpiled on the ROM pad. Stockpiled ore and planned production is expected to provide sufficient ore for sustainable mill production from March 2012.An important part of the ongoing work program is seeking to optimize the ore sources and identify higher grade feed. Of particular interest is the potential to extend the Kulthor deposit to the southwest.
