EXHIBIT 19.1
REPORT ON THE OYU TOLGOI
EXPLORATION PROJECT
SOUTH GOBI REGION, MONGOLIA
PREPARED FOR
IVANHOE MINES LTD.
Author:-
D. George Cargill, Ph.D., P.Eng.
Consulting Geological Engineer
JANUARY 11, 2002
[RPA LOGO]
ROSCOE POSTLE ASSOCIATES INC.
TORONTO, ONTARIO.
VANCOUVER, B.C.
ROSCOE POSTLE ASSOCIATES INC.
TABLE OF CONTENTS
PAGE
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SUMMARY........................................................ 1
PROPERTY AND AGREEMENTS.................................... 1
ACCESS, INFRASTRUCTURE AND CLIMATE......................... 2
GEOLOGICAL SETTING......................................... 3
MINERALIZATION............................................. 3
EXPLORATION WORK AND RESULTS............................... 4
MINERAL RESOURCE ESTIMATES................................. 6
PRELIMINARY METALLURGICAL TESTING.......................... 7
EXPLORATION POTENTIAL...................................... 8
CONCLUSIONS................................................ 9
RECOMMENDATIONS............................................ 10
INTRODUCTION................................................... 11
TERMS OF REFERENCE............................................. 12
QUALIFICATIONS................................................. 13
CONDITIONS AND LIMITATIONS..................................... 14
PROPERTY DESCRIPTION, LOCATION AND AGREEMENTS.................. 14
ACCESSIBILITY, CLIMATE, PHYSIOGRAPHY, LOCAL RESOURCES,
INFRASTRUCTURE................................................ 18
EXPLORATION IN MONGOLIA........................................ 20
GEOLOGICAL SETTING............................................. 22
REGIONAL GEOLOGY.......................................... 22
PROPERTY AND LOCAL GEOLOGY................................ 23
ALTERATION................................................ 24
MINERALIZATION................................................. 25
GENERAL DEPOSIT TYPES..................................... 25
SUPERGENE............................................. 25
HYPOGENE.............................................. 27
OYU TOLGOI MINERALIZATION................................. 30
SOUTH OYU............................................. 30
CENTRAL OYU........................................... 30
NORTH OYU............................................. 31
EXPLORATION WORK AND RESULTS................................... 31
HISTORY................................................... 31
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IVANHOE EXPLORATION APPROACH.............................. 33
IP SURVEYS................................................ 35
RESULTS TO DATE........................................... 36
SOUTHWEST OYU......................................... 36
SOUTHWEST OYU ZONE - SOUTHERN EXTENSION............... 39
SOUTH OYU............................................. 39
CENTRAL OYU........................................... 39
OTHER TARGETS......................................... 40
SAMPLING, ASSAYS AND DATA VERIFICATION.................... 40
MINERAL RESOURCE ESTIMATES.................................... 41
CENTRAL OYU MINTERAL RESOURCE ESTIMATE.................... 41
SOUTHWEST OYU MINERAL RESOURCE ESTIMATE................... 43
1999 BHP ESTIMATE......................................... 44
EXPLORATION POTENTIAL......................................... 44
PRELIMINARY METALLURGICAL TESTING............................. 46
CONCLUSIONS................................................... 52
RECOMMENDATIONS............................................... 53
DELINEATION DRILLING.................................. 53
EXPLORATION DRILLING.................................. 53
DRILLING SUMMARY...................................... 54
SOURCES OF INFORMATION........................................ 56
SIGNATURE PAGE
CERTIFICATE OF QUALIFICATIONS
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LIST OF TABLES
PAGE
Table 1. Tabulation of Exploration Licenses 16
Table 2. Selected Characteristics of Gold-Rich Porphyry Copper Deposits 26
Tables 3, 4, 5 Appendix 5
Table 6. Expenditures in US$ from Inception to December 31, 2001 31
Table 7. Southwest Oyu "Discovery Zone" Summary of Significant Intercepts 36
Table 8. BHP's Preliminary Tonnage and Grade Estimate (after Kirwin, 1999) 39
Table 9 Ivanhoe's Preliminary Tonnage and Grade Estimate
(after Forster , 2001) 40
Table 10. Samples For Metallurgical Testing (after Lake, 2001) 46
Table 11. Lakefield Head Assays (after Anon, 2001) 46
Table 12. Copper Bearing and Pyrite Mineralogy (after Sarbutt, 2001) 46
Table 13. Lakefield Cleaner Flotation Results (After Sarbutt, 2001) 47
Table 14. Summary of Planned Drilling 51
LIST OF FIGURES
PAGE
Figure 1. Location Map Appendix 1
Figure 2. Property Map Appendix 1
Figure 3. Tectonics and Selected Deposits Appendix 1
Figure 4. Summary Diagram of Techno-Stratigraphic, Magmatic,
and Mineralization History of the South Gobi Region Appendix 1
Figure 5. Regional and District Geology Appendix 1
Figure 6. Property Bedrock Geology Appendix 1
Figure 7. Generalized Cross Section of a Weathered Porphyry Copper
System Appendix 1
Figure 8. Gold and Copper Content and Tonnages of Principal Gold Rich
Porphyry Copper Deposits. Appendix 1
Figure 9. Generalized Section Showing Intrusive and Alteration
Relationships Around Gold Rich Porphyry Copper Deposits Appendix 1
Figure 10. Exploration Data from Different Levels in the System Appendix 1
Figure 11. Cross Section at Oyu Tolgoi Central Zone Supergene Blanket Appendix 1
Figure 12. Oyu Tolgoi IP Plot Chargeability in 2 mv/v Contours Appendix 1
Figure 13. Oyu Tolgoi South Drill Hole and IP Chargeability Map Appendix 1
Figure 14. Surface Plan, Southwest Oyu Zone Appendix 1
Figure 15 Geological Section, NE to SW, Southwest Oyu Zone Appendix 1
Figure 16. Geological Section, NW to SE, Southwest Oyu Zone Appendix 1
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LIST OF APPENDICES
APPENDIX 1 FIGURES
Figure 1. Location Map
Figure 2. Property Map
Figure 3. Tectonics and Selected Deposits
Figure 4. Summary Diagram of Techno-Stratigraphic, Magmatic,
and Mineralization History of the South Gobi Region
Figure 5. Regional and District Geology
Figure 6. Property Bedrock Geology
Figure 7. Generalized Cross Section of a Weathered Porphyry Copper System
Figure 8. Gold and Copper Content and Tonnages of Principal Gold Rich
Porphyry Copper Deposits
Figure 9. Generalized Section Showing Intrusive and Alteration Relationships
Around Gold Rich Porphyry Copper Deposits
Figure 10. Exploration Data from Different Levels in the System
Figure 11. Cross Section at Oyu Tolgoi Central Zone Supergene Blanket
Figure 12. Oyu Tolgoi IP Plot Chargeability in 2 mv/v Contours
Figure 13. Oyu Tolgoi South Drill Hole and IP Chargeability Map
Figure 14. Surface Plan, Southwest Oyu Zone
Figure 15. Geological Section, NE to SW, Southwest Oyu Zone
Figure 16. Geological Section, NW to SE, Southwest Oyu Zone
APPENDIX 2 ASSAY PROTOCOLS FOR ANALABS MONGOLIA
APPENDIX 3 DOCUMENTS RELATING TO TITLE
1 BHP Ivanhoe Agreement May 5, 2000.
2 Original Certificate of Mineral Exploration #210, BHP Minerals
International EMI (Amended for renewal to 2004).
3 Three certificates of Mineral Exploration for the Modified Mineral
Concession (Amended for Renewal to 2004).
a. 66x1 2001-09-20
b. 66x2 2001-09-21
c. 66x3 2001-09-20
4 Certificate of New Mineral Exploration License 3677 X, Jaukhlant Uul.
5 Summary of Mongolian Mining Law, Canning Management Property Ltd.; October
1999.
6 Lynch Idesh & Mahoney, Legal Opinion of Exploration Licenses, October 22,
2001 (Mongolian Properties Title Report).
7 Central Oyu Boundary, Letter October 1, 2001 Ivanhoe - BHP.
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8 Lynch Idesh & Mahoney, Supplement to "Mongolia Properties Title Report 22;
October, 2001"; February 5, 2002.
9 Lynch Idesh & Mahoney, Supplement to "Mongolia Properties Title Report
dated 22 October 2001"; Water and Surface Rights; February 21, 2002.
APPENDIX 4 SAMPLING, ASSAYS AND VERIFICATION
INTRODUCTION
SAMPLING METHOD AND APPROACH
Table 4.1 Assays From Hole OTRCD 150
SAMPLE PREPARATION, ANALYSES AND SECURITY
DATA VERIFICATION
RPA Samples and Assays
Table 4.2 Comparisons of Specific Gravity
Table 4.3 Check Assays For Copper
Table 4.4 Check Assays For Gold
Table 4.5 Check Assays for Molybdenum
Table 4.6 32 Element ICP Scan of the Pulp Samples
REJECTS FROM RC SAMPLES
Table 4.7 Check Assays of RC Rejects for Copper and Gold
CHECK ASSAYS ON PULPS BY OTHER LABORATORIES
First Set of Outside Check Assays
Second Set of Outside Check Assays
Third Set of Outside check Assays
Figure 4.1 Duplicate Assays at Analabs for Copper
Figure 4.2 Duplicate Assays at Analabs for Gold
Figure 4.3 First Set of Re-Assays for Cu at Chemex
Figure 4.4 (a) First Set of Re-Assays for Au at Chemex
Figure 4.4 (b) First Set of Re-Assays for Au at Bondar Clegg
Figure 4.5 First Set of Re-Assays for Mo at Chemex
Figure 4.6 Second Set of Re-Assays for Cu at Bondar Clegg
Figure 4.7 Second Set of Re-Assays for Au at Bondar Clegg
Figure 4.8 Third Set of Re-Assays for Cu at Bondar Clegg
Figure 4.9 Third Set of Re-Assays for Au at Bondar Clegg
APPENDIX 5 DRILLING SUMMARY TABLES
Table 3. Diamond Drill Holes
Table 4. Ivanhoe - 2000 - Reverse Circulation Drill Holes
Table 5. Ivanhoe - 2001 - Reverse Circulation and Diamond Drill Holes
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SUMMARY
Roscoe Postle Associates Inc. (RPA) has been requested by Mr. Malcolm
Lake, P.Eng. Technical Director of Ivanhoe Mines Ltd. (Ivanhoe), to prepare a
Technical Report on the Oyu Tolgoi Exploration Licenses (OT Licenses) in
Southern Mongolia. This report is prepared in accordance with National
Instrument 43-101 (NI 43-101). It is based on information gathered during a site
visit, discussion with representatives of Ivanhoe, reports of work on the
license by BHP Minerals International Exploration Inc. (BHP) and on published
reports by Mongolian government geologists.
The purpose of this report is to provide an independent review of the
ongoing exploration program on the OT Licenses.
From October 13 to October 23, 2001, RPA's representative, Dr. D.
George Cargill, P.Eng., visited the project site in Mongolia, visited the
Analabs assay laboratory in Ulaanbaatar and reviewed exploration information
from earlier work by BHP and Ivanhoe. RPA found the data collection,
presentation and interpretation by the Ivanhoe geologists to be of the highest
standards and fully in accordance with industry practice.
PROPERTY AND AGREEMENTS
The property is in the South Gobi region of Mongolia. The Option
Agreement between Ivanhoe and BHP, May 5, 2000, covered Mineral Exploration
License 66 X (MEL 66 X). In September 2000, Ivanhoe in conjunction with BHP made
significant reductions in the area of MEL 66 X resulting in four non contiguous
areas within the original license area. The license number 66 X went with the
package of land covering the Oyu Tolgoi occurrence and the other packages
received the license numbers 66 X-l, 66 X-2, and 66 X-3.
As of September 10, 2001, Ivanhoe has obtained new MEL 3677 X
(Jaukhlaut Uul) which covers 109,145 ha and includes 59,743 ha within the
original BHP MEL. Land within the boundary of MEL 66 X is part of the
Ivanhoe-BHP Agreement. The status of
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land outside the boundary is under discussion.
Ivanhoe can earn a 100% interest in the property by expending a minimum
of US$3.0 million by May 2003, paying BHP US$5.0 million and by putting up
US$3.0 million to cover exploration for another three years. BHP will retain a
2% Net Smelter Return Royalty.
The back-in rights can be exercised by BHP after the identification of
a "Significant Mineral Occurrence" (SMO). If the SMO consists of at least 250
million tonnes of 1.0% Cu in a supergene deposit extractable by solvent
extraction-electrowinning (SX-EW) and acid leaching methods, BHP will then have
the right to re-purchase a 40% interest in the SMO. If the SMO consists of at
least 300 million tonnes of hypogene mineralization grading 1.0 % Cu recoverable
by conventional means, BHP will have the right to repurchase a 60% interest in
the SMO. If the back-in rights are exercised, BHP will have to repay in cash
three times the value of exploration expenditures made by Ivanhoe up to the date
of the back-in. If the SMO is located in the Central Oyu, BHP will also have to
repay the $5.0 million dollars originally paid by Ivanhoe to earn its interest.
ACCESS, INFRASTRUCTURE AND CLIMATE
The Oyu Tolgoi License is 560 km by road and track south from
Ulaanbaatar and 350 km west of the nearest railway station and large electric
power line. Ivanhoe has constructed a 1,400 m airstrip which allows the property
to be reached by small aircraft. The average elevation is 1,160 m above sea
level and the property has gently undulating topography with less than 50 m of
relief. There are cold winters (" -38EC) and warm summers (" 28EC) and about 129
mm per year of precipitation. The ground cover is described as a "semi-desert
steppe", and the ground surface is used by local herders. Although there have
been no formal studies of the availability of ground water several drill holes
produce water at depths of 5 m to 10 m.
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GEOLOGICAL SETTING
The property is in the Kazakh Mongol Belt, a mixture of arc and back
arc rocks accreted to southern Mongolia in the early Paleozoic. Much of the Oyu
Tolgoi area is covered by Cretaceous sediments and exposed Siluro-Devonian rocks
are usually basalts and basaltic andesites intruded by feldspar hornblende
porphyries (monzodiorites) which appear to be the mineralizing phase. There is
also a monzonite porphyry with close spatial and temporal relations to the
monzodiorite but which is unmineralized. Post mineral monzonite and syenite
plutons, and rhyolite and andesite dikes cut the bodies of mineralization.
Most of the Oyu Tolgoi Property area is covered by Cretaceous sediments
and outcrops of Paleozoic rocks are sparse. The three areas of known
mineralization, South Oyu which includes the Southwest Oyu discovery, Central
Oyu and North Oyu, are marked by outcrops. At South Oyu detailed mapping and
diamond drilling allow a preliminary three dimensional picture. The zone was
primarily volcanic rocks intruded by a monzodiorite intrusion which carries the
copper and gold. Mineralization is cut by post ore, rhyolite dikes and monzonite
and syenitic plutons.
The alteration at South Oyu consists of early magnetite rich K-silicate
alteration cut by a sericite-chlorite assemblage cut by an advanced argillic
alteration assemblage. This pattern is characteristic of a deep level of
alteration. Alteration at Central and Northern Oyu is argillic and advanced
argillic mineralization characteristic of a much higher level in the porphyry
system.
MINERALIZATION
There are both supergene copper and hypogene copper-gold deposits on
the property. The supergene deposits are similar to the classic supergene
deposits of the southwestern United States. The hypogene copper-gold deposit is
similar to the copper-gold porphyry deposits of the southwest Pacific. Current
information indicates that South Oyu and
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ROSCOE POSTLE ASSOCIATES INC.
Southwest Oyu are hypogene deposits; North Oyu is primarily a hypogene deposit
and Central Oyu is possibly a supergene deposit overlying a zone of hypogene
mineralization. The three areas of known mineralization are North Oyu, Central
Oyu and South Oyu. Alteration and mineralization at South Oyu is primarily
hypogene, while at Central Oyu there is intense supergene alteration
superimposed on the hypogene alteration. The alteration assemblages at South Oyu
and Central Oyu indicate that Central Oyu is at a much higher level (" 1,000 m)
in the porphyry copper system. North Oyu seems to be similar to Central Oyu in
terms of alteration assemblages but lacks extensive supergene alteration.
EXPLORATION WORK AND RESULTS
In 1995 The Magma Copper Company Ltd. (Magma) began a reconnaissance
program for copper which was continued by BHP in 1996. Oyu Tolgoi was recognized
as a leached cap on a porphyry system. In 1997 BHP acquired the exploration
license and drilled 6 holes (1,000 m). In 1998 BHP drilled 17 more holes (2,800
m). In 1999 BHP, after a detailed review, recommended, but did not carry out
additional work.
In 2000 Ivanhoe optioned the Oyu Tolgoi License from BHP and drilled
109 reverse circulation (RC) drill holes to delineate a chalcocite blanket at
Central Oyu. This blanket was not large enough for a stand alone operation in
this location.
In 2001 Ivanhoe started a drilling program comprising RC holes, diamond
drill (DD) holes and diamond drill holes with reverse circulation pre-collars
(RCD) to test supergene and hypogene targets on South Oyu. After making a long
intersection of high grade hypogene copper and gold in OTRCD 150, Ivanhoe paused
the drilling for a number of weeks and carried out induced polarization (IP) and
magnetic surveys over an area 4 km by 3 km which included Oyu North, Central and
South. Ivanhoe has been using the preliminary IP maps which highlighted the high
grade zone intersected in OTRCD 150 as the basis for its ongoing drilling
program. Ivanhoe expanded its diamond drill program and by January 11, 2002
Ivanhoe had completed 23 RC holes for 2,890 m, 3 RCD holes for 1,747 m and 24
diamond drill holes for 13,626.7 m, and drilling is ongoing.
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Drilling in the South Oyu, Southwest Oyu zone, has established a
dike-like body of syenodiorite porphyry at the centre of a significant zone of
copper, gold and erratic molybdenum mineralization. The mineralization is mostly
in altered mafic volcanics, but some phases of the intrusive are also
mineralized. The zone is cut by closely related but poorly mineralized monzonite
porphyry, and much younger post mineral rhyolite and andesite dikes, and plutons
and dikes of syenite porphyry. The higher grade parts of this zone are created
by the superposition of several stages of mineralization.
The most significant hypogene mineralization at the present time is
from the "Discovery Zone" in the Southwest Oyu Zone. The best drill results are
listed below.
CORE
HOLE NO. LENGTH (M) INCLINATION AUG/T CU%
- -------------------------------------------------------------------
150 508 -55degrees 1.17 0.81
160 288 -55degrees 1.68 0.80
161 358 -55degrees 1.70 0.71
162 190 -55degrees 1.76 0.75
166 478 -55degrees 1.38 0.74
171 100 -55degrees 1.29 0.67
172 116 -55degrees 2.35 0.88
173 24 -55degrees 1.32 0.82
174 74 -55degrees 0.45 0.58
175 138 -45degrees 0.35 0.45
176 146 -55degrees 1.49 0.76
177 192 -55degrees 1.10 0.56
178 128 -45degrees 1.01 0.59
179 14 -55degrees 0.32 0.57
180 208 -55degrees 3.29 1.05
183 454 -70degrees 1.71 0.92
184 Incomplete assays
Additional hypogene mineralization has been intersected in South Oyu
and in the extensions of Southwest Oyu but they have not yet been systematically
drill tested.
IP surveys have also produced untested targets for hypogene
mineralization in Central Oyu and at the Far North and Airstrip anomalies.
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Ivanhoe has made a major effort to create a program of uniform core
sampling and logging. They have also instituted programs to get the maximum
amount of information from the core by measuring specific gravity, magnetic
susceptibility, RQD, and fracture orientations on oriented drill cores. As an
initial data verification technique they routinely insert blanks and previously
assayed material into the sample stream. RPA believes that Ivanhoe's approach to
sampling the drill core is consistent with industry standards.
RPA collected and independently assayed samples of drill core at the
site which yielded similar results to those reported by Ivanhoe. RPA also
obtained rejects of RC drilling which yielded assays similar to those obtained
by Ivanhoe.
In addition, RPA examined Ivanhoe's duplicate assays run by Analabs in
Mongolia, and three groups of duplicate assays sent by Ivanhoe to assay
laboratories in Vancouver. The duplicate assays indicate good reproducibility
for copper and acceptable results for gold although Analabs' gold results are
slightly higher than the Vancouver laboratories. Duplicate assays of molybdenum
were inconsistent and more work is needed.
MINERAL RESOURCE ESTIMATES
In November 2000, Ivanhoe estimated a Mineral Resource for the Central
Oyu supergene zone based on 109 RC holes drilled in the summer of 2000. The
Central Oyu supergene copper zone is separate and distinct from the Southwest
Oyu copper-gold zone currently being delineated by Ivanhoe, which is hypogene in
nature.
RPA has reviewed and verified the 2000 Ivanhoe Mineral Resource
estimate for the Central Oyu supergene zone and considers it to be an Inferred
Mineral Resource in accordance with the CIM standards. Although Ivanhoe
considers the Central Oyu supergene zone to be under-explored and therefore
uneconomic for a stand alone mining operation, RPA considers that it has
reasonable prospects for economic extraction in combination with or as a
satellite operation to other mineral deposits.
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The Central Oyu super gene Inferred Resources total 39.2 million tonnes
at an average grade of 0.73% Cu. Drill holes are spaced 100 m to 200 m apart. A
cut-off grade of 0.20% Cu was used. The supergene zone is an essentially
continuous blanket of supergene copper mineralization which covers an area
approximately 1,100 m north-south by 600 m east-west. It extends to a depth of
40 m to 80 m in most places and has been drilled to a maximum depth of about 120
m. In RPA's opinion, the Central Oyu supergene zone Mineral Resource should be
considered a preliminary estimate at this time.
In December 2001, Ivanhoe commissioned an independent Mineral Resource
estimate of the Southwest Oyu zone by AMEC E&C Services Limited (formerly MRDI).
As of the date of this Technical Report, AMEC was in the process of preparing
the estimate. The significant zone of hypogene copper-gold mineralization
discovered at the Southwest Oyo zone is distinct geologically and physically
separate from the nearby Central Oyu zone of supergene mineralization. The
exploration potential of the Southwest Oyu zone is for much larger tonnage at
significant grades of copper and gold than the Central Oyu Mineral Resource
tonnage reported above.
In 1999, BHP prepared a preliminary estimate of tonnes and grade for
the Oyu Tolgoi Project based on only 24 diamond drill holes. Since that time,
another 159 holes have been drilled and, in RPA's view, the 1999 BHP estimate is
completely out of date and not relevant to this Technical Report.
PRELIMINARY METALLURGICAL TESTING
Preliminary metallurgical tests of six composite samples of drill core
by Lakefield Laboratories (Lakefield) in Ontario show good recoveries of copper
and gold by froth flotation from hypogene and supergene mineralization. Some
molybdenum was recovered with the copper concentrates. Lakefield's preliminary
column testing indicated copper extraction in the range of 65% to 82% for a
sample from the chalcocite blanket of Central Oyu and 5% to 6% for a sample from
the covellite zone of Central Oyu.
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Preliminary comminution tests were carried out on seven samples at
MinnovEX Technologies Inc. (MinnovEX) in Toronto. Based on this very limited and
preliminary work, the rock would be classified as "hard", but is significantly
softer than the hardest ores in the MinnovEX database. More testwork is needed
on more widespread and representative samples before final conclusions can be
drawn.
EXPLORATION POTENTIAL
Comparison of results to date with existing models for gold-rich copper
porphyry deposits suggests that there are different levels of hypogene deposit
outcropping on the property.
Central Oyu has a blanket of shallow supergene enriched copper
mineralization defined by RC drilling. The area offers significant exploration
potential for additional deeper supergene blankets. The induced polarization
(IP) anomalies suggest that there may also be potential for hypogene
mineralization beneath the enrichment blankets.
At Southwest Oyu a body of relatively high grade copper-gold-molybdenum
mineralization has been discovered. The pattern of IP anomalies extending to the
southeast, the southwest and the northwest indicate potential for more similar
mineralization.
The IP survey has detected two other target areas further north. One is
situated near the airstrip where a strong induced polarization (IP) anomaly
corresponds to anomalous values detected in 3 RC drill holes. The other one is
situated on the northern rim of a circular IP anomaly.
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CONCLUSIONS
- The Oyu Tolgoi Property contains a gold-rich porphyry copper
deposit (Southwest Oyu Zone) of the circum-Pacific type.
- The Oyu Tolgoi Property has excellent potential for a large
tonnage of hypogene porphyry copper-gold mineralization of similar
grades to those found at Southwest Oyu Zone.
- RPA believes that additional drilling to test the potential at
South Oyu including Southwest Oyu zone, Central Oyu, the Airstrip
Anomaly and the Far North Anomaly is fully justified.
- Ivanhoe's 2000 Mineral Resource estimate of the Central Oyu
supergene mineralization has been reviewed and verified by RPA,
and totals 39.2 million tonnes at 0.73% Cu classified as Inferred
Mineral Resource.
- BHP's 1999 estimate of hypogene and supergene mineralization was
done before the Ivanhoe reverse circulation and diamond drilling
programs and, therefore, is completely out of date.
- Preliminary metallurgical testing shows good recovery for copper
and gold by froth flotation from both hypogene and supergene
mineralization. Additional testing showed good copper recoveries
from a sample from the supergene chalcocite zone by bacterial
column leaching.
- Work is needed to determine where the molybdenum occurs and how to
assay for it. It is also necessary to find out where and how
rhenium occurs with the molybdenum. Rhenium is a potentially
highly valuable byproduct.
- Gold is associated with sulphide minerals in the zones of high
copper values. The gold is a critically important metal in this
deposit and its mode of occurrence and distribution need to be
investigated in detail.
- A systematic compilation and interpretation of all the geological,
geophysical and drilling data is needed to guide future
exploration strategy.
- RPA found the data collection, storage and interpretation systems
followed by Ivanhoe were very high quality and equal to the best
industry practices.
- RPA is of the opinion that all the geologists, foreign and
Mongolian workers on the project, were highly qualified
professionals.
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RECOMMENDATIONS
Based on our field observations and our review of exploration results
to date, RPA makes the following recommendations:
- Carry out a systematic review and integration of all the available
data sets for the property.
- Re-analyze existing drill hole samples for a wider range of
elements. Available samples provide the basis for a
lithogeochemical exploration program for the cost of assays.
- Analyze core samples from the mineralized zone for molybdenum.
- Initiate a detailed study of the mode of occurrence and
distribution of gold.
- Initiate a study of the presence and distribution of rhenium in the
molybdenum.
- Initiate a scoping study to establish what tonnage and grade
constitutes an economic deposit in this location. This study should
determine to what extent a deposit such as Southwest Oyu zone could
be mined using underground mining methods in addition to an open
pit.
- Sample the new types of mineralized zones, such as the
quartz-magnetite breccias, for additional metallurgical testing.
- Carry out a two phase drilling program. The first phase will
require 27 diamond drill holes totaling some 21,000 m, and at a
cost of about US$3.4 million. The second phase, which will be
contingent upon the results of the first phase, will involve a
maximum of 17 drill holes totaling some 13,800 m at a cost of about
US$2.2 million.
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ROSCOE POSTLE ASSOCIATES INC.
INTRODUCTION
Roscoe Postle Associates Inc. (RPA) has been requested by Mr. Malcolm
Lake, P.Eng., Technical Director of Ivanhoe Mines Ltd. (Ivanhoe), to prepare a
Technical Report on the Oyu Tolgoi Exploration Project ("Project") in Southern
Mongolia. This report is prepared in accordance with National Instrument 43-101
(NI 43-101). The purpose of this report is to provide an independent review of
the ongoing exploration work on the Project.
Ivanhoe is a Canadian company listed on the Toronto Stock Exchange
(TSE) and the Australian Stock Exchange (ASX) involved with mineral exploration
and development in Asia, with a corporate office in Vancouver, Canada.
This report is based on information gathered during a site visit,
discussions with representatives of Ivanhoe, reports of work on the license by
BHP Minerals International Exploration Inc. (BHP), now BHP Billiton, and on
published reports by Mongolian Government geologists.
From October 13 to October 23, 2001, RPA's representative, Dr. D.
George Cargill, P.Eng., visited the project site in Mongolia, visited the
Analabs assay laboratory in Ulaanbaatar and reviewed exploration information
from earlier work by Ivanhoe and the previous property holder, BHP. RPA found
the data collection, storage, and interpretation by Ivanhoe to be of the highest
standards and fully in accordance with industry practice.
Ivanhoe's exploration team consists of a few Australian and Canadian
geologists and a group of Mongolian geologists. The expatriate geologists have a
great deal of experience in porphyry copper exploration and delineation
drilling, particularly on porphyry copper-gold deposits of the southwest
Pacific. The Mongolian geologists, who previously worked with Magma and BHP, are
highly trained professionals who are enthusiastically expanding their expertise
in this type of deposit by learning from the expatriate geologists.
The data presented in this report is complete up to January 11, 2002.
The metric system is used throughout and currency is in US$.
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TERMS OF REFERENCE
On September 20, 2001, RPA was contacted by Mr. Malcolm Lake, Technical
Director of Ivanhoe, to submit a proposal for a Technical Review of the Oyu
Tolgoi project as well as field procedures of the current exploration program.
On September 24, 2001, RPA submitted the proposal and on October 1, 2001, RPA
signed an agreement with Ivanhoe to carry out this assignment.
RPA proceeded with this assignment as described below:
- Obtained and reviewed some relevant information prior to the site
visit.
- Carried out a site visit to the Oyu Tolgoi Project (Oct. 13 to Oct.
23, 2001).
- Discussed the ongoing exploration program with appropriate
personnel on site and in Ulaanbaatar.
- Reviewed the exploration methodology and commented on the Quality
Control and Quality Assurance (QA/QC) systems in the current
exploration program. This included a review of the procedures for
core logging, sampling, assay sample preparation, geotechnical data
acquisition and assaying for Cu, Au and Mo.
- Carried out independent sampling and assaying of diamond drill
core. RC chips were shipped to RPA by Ivanhoe for independent
assaying in Canada.
- Assessed the exploration results to date and the mineral potential
of the Oyu Tolgoi Property.
- Collected data and reviewed documents supporting the ownership and
property status. RPA did not do an in-depth review and verification
of the property ownership which requires additional work by a legal
firm (see Appendix 3).
- Recommended additional exploration work in selected areas of the
project.
- Recommended the future direction of exploration and possible
methods of acquisition, storage and processing of exploration data.
- Uploaded the drill hole and sampling database into RPA's system
using Genicom software.
- Plotted drill sections showing geological data and assays.
- Checked and digitized the mineralized zones as interpreted by
Ivanhoe field geologists.
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ROSCOE POSTLE ASSOCIATES INC.
QUALIFICATIONS
Roscoe Postle Associates Inc. (RPA) is an independent firm of
Geological and Mining Consultants with offices in Toronto and in Vancouver.
Since its establishment in 1985, RPA has carried out several hundred consulting
assignments for more than two hundred clients, including major mining companies,
junior mining and exploration companies, financial institutions, governments,
law firms and individual investors. Our clients are principally Canadian,
American and European companies.
Our business primarily involves providing independent opinions on ore
reserves, technical aspects and economics of mining projects, valuation of
mining and exploration properties and prefeasibility work. Our personnel and
associates have worked on projects located in all parts of Canada, the United
States, Russia, Latin America, Australia, and in other countries in Africa and
Asia. For chartered banks and offshore banks, we have carried out a number of
due diligence and project monitoring assignments.
Our personnel are Senior Geologists and Mining Engineers with extensive
experience in the mining and exploration industries. The two principals of the
company, William E. Roscoe, Ph.D., P.Eng. (Geologist), and John T. Postle,
P.Eng. (Mining Engineer), have considerable experience in their respective
fields.
Since 1997, RPA has had a strategic alliance with Hatch Associates
(Hatch) an international engineering and consulting firm based in Mississauga,
Ontario, which specializes in mineral processing, construction and environmental
as well as the business and marketing aspects of mining projects.
D. George Cargill, Ph.D., P.Eng., Consulting Geologist associated with
RPA, prepared the technical report on the Oyu Tolgoi Property. Dr. Cargill's
experience with porphyry-type Cu-Mo-Au mineralization includes:
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ROSCOE POSTLE ASSOCIATES INC.
- Geological consulting to the Island Copper Operating Division both
as an internal consultant for BHP-Utah International Inc. and as an
Independent Consultant.
- Examination of North American porphyry Cu-Mo exploration properties
for potential investment. This was an ongoing process for BHP and
similar work has been done for several other companies as an
Independent Consultant.
- Review of the exploration potential and the exploration methodology
for the porphyry copper properties on northern Vancouver Island for
BHP.
- Review of Mineral Resources and exploration potential of the
Hushamau Deposit for Jordex Exploration.
- Evaluation of the potential of gold deposits for bulk mining in
Brazil, West Africa, East Africa and eastern China.
- Resource estimate, Magushan copper deposit, China
CONDITIONS AND LIMITATIONS
This report has been prepared by RPA for Ivanhoe and shall not be used
nor relied upon by any other party nor for any other purpose without the written
consent of RPA.
In the preparation of this report, RPA relied on certain information.
This includes reports and data supplied by Ivanhoe, data generated by Magma and
BHP, and reports by Lakefield Research. RPA relied on title documents provided
by Ivanhoe and did not investigate mineral title, nor did we investigate surface
rights, water rights or the like.
PROPERTY DESCRIPTION, LOCATION AND AGREEMENTS
The property is in the South Gobi region of Mongolia with its
geographic centre at 106(degree)45'E, 43(degree)37'30"N (Figure 1). It is about
560 km south of the capital city of Ulaanbaatar and less than 100 km north of
the border with China.
The property consists of Mineral Exploration License 210 originally
issued to BHP in February 1997, under the previous version of the Mongolian
mining law (Figure 2). In
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July 1997 when the current Mining Law was proclaimed the original license became
Mineral Exploration License 66 X (MEL 66 X). Essentially the original agreement
received endorsements to bring it under the new Mining Law. BHP made some very
minor changes to the area but it remained about the same. The original agreement
between Ivanhoe and BHP dated May 5, 2000 covered MEL 66 X and the
specifications for the license are outlined in an attachment to the agreement. A
copy of the agreement for MEL 66 X is in Appendix 3.
The option agreement between BHP and Ivanhoe requires a minimum
exploration expenditure of US$3.0 million by May 5, 2003. On completion of this
work commitment Ivanhoe can exercise its option to acquire a 100% interest by
paying BHP US$5.0 million and putting up a US$3.0 million bond to cover
additional exploration expenditures over the subsequent three year period.
Ivanhoe may at its option make the US$5.0 million payment to BHP in two
allotments of US$1.0 million on the Earn-In Date (May 5, 2003) and US$4.0
million on the first anniversary of the Earn-In Date. After all financial and
work obligations have been met by Ivanhoe, BHP will retain a 2% Net Smelter
Returns Royalty and back-in rights.
The back-in rights can be exercised by BHP after the identification of
a "Significant Mineral Occurrence" (SMO). If the SMO consists of at least 250
million tonnes of 1.0% Cu in a supergene deposit extractable by solvent
extraction-electrowinning (SX-EW) and acid leaching methods, BHP will then have
the right to re-purchase a 40% interest in the SMO. If the SMO consists of at
least 300 million tonnes of hypogene mineralization grading 1.0 % Cu recoverable
by conventional means, BHP will have the right to repurchase a 60% interest in
the SMO. If the back-in rights are exercised, BHP will have to repay in cash
three times the value of exploration expenditures made by Ivanhoe up to the date
of the back-in. If the SMO is located in the Central Oyu, BHP will also have to
repay the US$5.0 million dollars originally paid by Ivanhoe to earn its
interest.
In September 2000 Ivanhoe in conjunction with BHP made significant
reductions in the area of MEL 66 X. These reductions were proposed by Ivanhoe
and agreed to by BHP. The reductions created four non-contiguous areas within
the original license area (Table 1).
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The package of land covering the Project retained the designation MEL 66 X and
the other packages received the license numbers MEL 66 X-l, 66 X-2, and 66 X-3
(Figure 2). The new land packages received new certificates but the Oyu Tolgoi
package retained the amended certificate for MEL 66 X. Copies of the new Mineral
Exploration Licenses are included in Appendix 3.
Ivanhoe's applications for the extensions of the terms of the four mineral
exploration licenses: #66 X, 66 X-l, 66 X-2 and 660 X-3 were accepted. The new
expiry date for each of the licenses is February 17, 2004.
As of September 10, 2001 Ivanhoe Mines Mongolia Inc., a wholly owned
subsidiary of Ivanhoe Mines Ltd., received a new mineral exploration license,
MEL 3677 X (Jaukhlant Uul) that is valid for a three year term. This license
covers an area of 109,145 ha (Figure 2) of which 59,743 ha are within the
original BHP MEL #210 and 49,402 ha are outside.
The location of the Central Oyu exploration area is significant under the
terms and conditions of the Ivanhoe-BHP agreement (Appendix 3) but it was not
completely defined in the agreement. Ivanhoe and BHP have recently defined the
area as:
LONGITUDE LATITUDE
- ------------------------------------------------------
106degrees 50'49.330" 43degrees 00'36.467"
106degrees 51'37.896" 43degrees 00'35.680"
106degrees 51'38.679" 43degrees 01'01.601"
106degrees 51'50.107" 43degrees 01'02.388"
Ivanhoe asked Lynch, Idesh & Mahoney, a law firm in Ulaanbaatar, to comment
on the status of the original license and to advise them on the procedures for
transferring the original license and other licenses from BHP to Ivanhoe
pursuant to the Earn-In Agreement and any amendments to the Earn-In Agreement. A
memorandum dated October 22, 2001 is included in Appendix 3.
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TABLE 1
TABULATION OF EXPLORATION LICENCES
IVANHOE MINES LTD. - OYU TOLGOI PROJECT
MEL CORNER
CO-ORDINATES SURFACE
LONGITUDE (1) LATITUDE (1) AREA
ORIGINAL LICENSE 66 X
106degrees 30'E 43degrees 08'N 135,987 ha
107degrees 0'E 43degrees 08'N
107degrees 0'E 42degrees 50'N
106degrees 30'E 42degrees 50'N
NEW LICENSE 66 X (OYU TOLGOI AREA)
106degrees 47'30" 42degrees 58'30" 8,496 ha
106degrees 47'30" 43degrees 03'00"
106degrees 55'00'E 43degrees '03'00"
106degrees 55'00'E 42degrees 58'30"
NEW LICENSE 66 X -1
106degrees 38'00" 42degrees 54'00" 4,537 ha
106degrees 38'00" 42degrees 57'00"
106degrees 44'00" 42degrees 57'00"
106degrees 44'00" 42degrees 54'00"
NEW LICENSE 66 X -2
106degrees 51'30" 42degrees 55'30" 1,764 ha
106degrees 51'30" 42degrees 57'30"
106degrees 55'00" 42degrees 57'30"
106degrees 55'00" 42degrees 55'30"
NEW LICENSE 66 X -3
106degrees 30'00" 42degrees 54'00" 9,070 ha
106degrees 30'00" 43degrees 00'00"
106degrees 36'00" 43degrees 00'00"
106degrees 36'00" 42degrees 54'00"
NEW LICENSE 3677 X within the original Oyu Tolgoi MEL #210 (Licensed Area)
106degrees 30'00" 42degrees 54'00" 59,743 ha
106degrees 36'00" 42degrees 54'00"
106degrees 36'00" 42degrees 55'30"
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MEL CORNER
CO-ORDINATES SURFACE
LONGITUDE (1) LATITUDE (1) AREA
106degrees 38'00" 42degrees 55'30"
106degrees 38'00" 42degrees 54'00"
106degrees 44'00" 42degrees 54'00"
106degrees 44'00" 42degrees 55'00"
107degrees 00'00" 42degrees 55'00"
107degrees 00'00" 42degrees 47'00"
106degrees 30'00" 42degrees 47'00"
106degrees 30'00" 42degrees 54'00"
NEW LICENSE 3677 X outside the Original Oyu Tolgoi Licensed Area (MEL #210)
106degrees 30'00" 42degrees 47'00" 49,402 ha
107degrees 00'00" 42degrees 47'00"
107degrees 00'00" 43degrees 08'00"
107degrees 05'00" 43degrees 08'00"
107degrees 05'00" 43degrees 04'00"
107degrees 02'00" 43degrees 04'00"
107degrees 02'00" 43degrees 00'00"
107degrees 06'00" 43degrees 00'00"
107degrees 06'00" 42degrees 44'30"
106degrees 30'00" 42degrees 44'30"
106degrees 30'00" 42degrees 47'00"
(1) Latitudes and longitudes quoted above are based on the "Krasovsky
1942" ellipsoid and reflect the locations on Mongolian mineral
tenement licenses
ACCESSIBILITY, CLIMATE, PHYSIOGRAPHY, LOCAL RESOURCES, INFRASTRUCTURE
The Oyu Tolgoi License is 560 km by road and track from the Mongolian
capital of Ulaanbaatar (Figure 1). It is 240 km from the Aimag (state) capital
at Dalanzadgad which is a town of 12,500 people. It has a telephone link with
the capital and its own electric generating and heating plants. There are twice
a week flights from Dalanzadgad to Ulaanbaatar. The property is 350 km west of
the nearest railway station and large electric power line at Sainshand.
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Ivanhoe has constructed a gravel airstrip (1,400 m) at the Project which
allows the property to be reached by small aircraft from Ulaanbaatar
The property is reached by a combination of roads and tracks, or by air.
About 50 km south of Ulaanbaatar the roads change into tracks. There are,
however, large trucks operating on these tracks and heavy loads can be moved
slowly. RPA traveled to the property via a road north of the camp to
Ulaanbaatar. It seemed relatively busy with a number of small vehicles going
past the camp towards the Chinese border.
The property has an average elevation of 1,160 m above sea level. It has a
relatively flat to gently undulating topography with less than 50 m of relief.
Lochingiin (1999) described the cover of the area as a "semi-desert steppe"
where vegetation covers between 20 and 25 % of the ground surface. Livestock
grazing and plant gathering have a strong impact on the amount of plant cover
because growth in this dry region is extremely slow.
Climate information (Lochingiin, 1999) comes from the weather station at
Dalanzadgad. This station reports that, for the five months from November to
March, temperatures range from -2EC to -30EC; for the four months April, May,
September and October, temperatures range from -11 EC to +20EC and for the three
months June, July, and August temperatures range from +5EC to 28EC. The mean
annual precipitation from 1938 to 1960 is 129 mm per year. The area is also very
windy particularly during the spring (March, April, May). There are about 100
days per year described as having a "strong" wind.
Although the weather is severe it is no worse than most of Canada. With
care it should be possible to work on a year round basis.
Surface and water rights are described in the "Supplement to Mongolia
Properties Title Report" of Lynch, Idesh & Mahoney attached in Appendix 3. The
land is used by one or
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more livestock herders. They move their animals from one good pasture to
another. They will move a long way, as far as the next Aimag (or state) looking
for good grazing.
Water rights are held by the Khan Bogd Soum (County) and the operator pays
the Soum annually for water used and for the use of its roads.
Since the nearest power line is 350 km away it will be necessary to
generate power at the site. Quantity and availability of ground water has not
been investigated, although many drill holes are producing water 5 m to 10 m
below the surface and there seems to be abundant water in shallow, hand dug
wells.
Most of the technical work at the property has been done by highly trained
Mongolian geologists supported by Australian and Canadian experts on porphyry
copper-gold deposits. Very good technical people are locally available. The
large open pit porphyry copper mine at Erdnet, northwest of Ulaanbaatar, has
trained a large number of people at different phases of mining.
Since the area is essentially flat there should not be any difficulty in
locating buildings and storage areas for mining operations.
EXPLORATION IN MONGOLIA
Mineral exploration in Mongolia is regulated at the federal and Soum
(County) levels. A more complete summary of the operating environment in
Mongolia is in the Mongolian Properties Title Report of Lynch, Idesh & Mahoney
in Appendix 3. The federal government grants and regulates mineral exploration
and mining licenses. Mineral exploration licenses can be issued to individuals
or legal entities for a 3 year period with provision to be renewed twice, each
for a 2 year period. No expenditure obligations are applicable, however, an
annual license fee is applicable as well as annual reports on work carried out
and environmental protection reports. Work reports are submitted to the federal
government.
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In January after submitting the 2001 work reports, Ivanhoe requested the
extension of the MEL 66 X, 66 X-l, 66 X-2, and 66 X-3 for a second 2 year
period. This extension was granted on February 17, 2002 until February 17, 2004.
It is the second and last extension allowed for exploration licenses. In
February 2004 the MELs will have to be converted to mining licenses.
At the same time Ivanhoe submitted the 2001 work reports they submitted the
2002 work plans and the 2001 environmental clearances from the Khan Bogd Soum.
The 2001 work reports were accepted by the office of Geological and Mining
Cadastral and by the State Inspection Office of Industry and Commerce. Ivanhoe
reported that they had received approval at the same time for the 2002 work
programs on the four licenses. At present Ivanhoe must submit its 2002
Environmental Work Plans to the Khan Bogd Soum before February 17, 2002 and pay
the rent for the exploration license by September 30, 2002.
The new Oyu Tolgoi mining exploration license MEL 3677 X is held in the
name of Ivanhoe Mines Mongolia Inc. The portion of this license that was within
the old BHP MEL #210 is part of the BHP-Ivanhoe agreement. The status of the
part that is outside the old BHP MEL #210 is subject to discussion between BHP
and Ivanhoe. The new license has an anniversary and rent due date of September
10th 2002.
Environmental matters are regulated by the Khan Bogd Soum. The original
environmental protection submission and a total environmental performance bond
were presented by BHP in 1998. In theory this bond should be refunded each year
if the company's performance is satisfactory. Since the projects was ongoing,
however, the Khan Bogd Soum has issued environmental clearances each year
without returning or renewing the bond. The operator of the project, Ivanhoe,
also pays the Khan Bogd Soum for water and road use each year. Payments are
computed at the end of each calendar year on the basis of road and water use.
The environmental performance bond and the payments for water and road use are
very small by North American standards.
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GEOLOGICAL SETTING
REGIONAL GEOLOGY
Yakubchuk et al (2001) place Oyu Tolgoi in the Barga Terrain in the South
Mongolian Belt within the Altaids, an orogenic collage between the Siberian and
North China Cratons (Figure 3). The South Mongolian Belt consists of arc and
back arc rift related rocks accreted to southern Mongolia in the early
Paleozoic. In the Late Paleozoic (Perello et al, in press) southern Mongolia
underwent a period of Basin and Range style rifting, accompanied by bimodal
volcanism. In the Early Mesozoic continental sediments were deposited in thrust
controlled basins. Late Mesozoic geology was dominated by lacustrine
sedimentation and some of the formations are famous sources of vertebrate
fossils. The Late Cretaceous was marked by the onset of arid conditions which
have continued until the present.
The regional geology summarized by Perello et al (2001) consists of
Siluro-Carboniferous sedimentary and volcanic sequences dominated by terrigenous
sediments and intermediate to felsic volcanic rocks. These sequences are
intruded by Devonian syenite and granite and by Carboniferous diorite, granite,
granodiorite, and syenite bodies ranging in size from dikes to batholiths. The
Permian peralkaline granite complex at Hanbogd, about 40 km east of the
property, intrudes Siluro Devonian volcanic and sedimentary rocks (Figures 4 and
5).
The regional structure is complex. It is characterized by sinistral,
strike-slip faults, following northwest to east-west trends. However there are
minor faults following northeast to north-south trends. Lateral fault offsets of
several kilometers are apparent on regional maps and airphotos. Faulting affects
all the rock units except the Permian Hanbogd complex.
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PROPERTY AND LOCAL GEOLOGY
Much of the area around Oyu Tolgoi is covered by Cretaceous sediments
(Figures 4 and 5) which consist of pebbly gravel, sandy silt, sand and clay. It
is a flat-lying sequence with an average thickness of 15 m to 20 m. These
sedimentary units are usually assigned a shallow lacustrine setting and
sequences of similar character which are widespread in the South Gobi region and
believed Late Cretaceous to Paleocene in age. The Siluro-Devonian rocks exposed
at Oyu Tolgoi are mostly basalts and basaltic andesites. Remnant pillow
structures suggest a shallow aqueous deposition. There are outcrops of
tuffaceous siltstone along the southern border of the area and drill
intersections of thinly-laminated to thick bedded, fine grained sandstone,
siltstone carbonaceous claystone, and conglomerate suggest a substantial part of
the section consists of sedimentary rocks. There are post ore syenite plutons in
the south eastern part of the area and smaller syenite bodies occur all over the
area. Other post-mineralization dikes include rhyolite and andesite dikes which
have been traced hundreds of meters along strike.
At the Southwest Oyu zone where there is new detailed mapping (Figure 6),
as well as a great deal of diamond drilling, it is possible to put together a
better three dimensional picture. The zone was primarily intermediate volcanics,
intruded by several phases of the monzo-diorite intrusions which carry the
copper and gold mineralization. There are barren monzonite porphyries closely
spatially associated with the mineralized monzo-diorite. Both the altered
volcanics and some monzo-diorite intrusions are mineralized. Alteration and
mineralization are cut off by post-ore rhyolite dikes and syenite plutons.
The three areas of known mineralization, South Oyu (including Southwest Oyu
zone), Central Oyu and North Oyu, are marked by outcrops. The most detailed
published information on the relations between hydrothermal alteration and
mineralization is by Perello et al. (2001). Their work was based on the mapping
and limited, widely spaced diamond drilling done by BHP. Their picture appears
correct in general but will be greatly modified by detailed mapping and diamond
drill data from Ivanhoe's current program.
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ALTERATION
At South Oyu, Perello et al. (2001) identified three main hydrothermal
events: First was an early phase of magnetite rich, K-silicate alteration which
largely destroyed the original rock textures when minerals are replaced by
K-feldspar and biotite. The intermediate event was retrograde,
magnetite-destructive sericite-chlorite alteration. This event is characterized
by abundant chlorite and sericite with associated copper sulphides and pyrite.
This type of alteration is called pervasive but it may be caused by coalescing
vein envelopes on closely spaced veins. The third event is advanced argillic
alteration associated with easily recognized structures cross-cutting the
intermediate argillic alteration.
At Central Oyu most alteration is in the argillic facies and consists of a
quartz-sericite (argillic) alteration grading into propyllitic mineral
assemblage. Perello et al. (2001), reported early K-silicate alteration relicts
within higher grade alteration. In the center of the argillic alteration there
is a quartz-alunite zone (advanced argillic alteration facies) associated with a
hydrothermal (?) breccia. Subsequent mapping by Ivanhoe has raised questions on
the origin of the breccia but the alteration assemblage has not been changed. To
further complicate the picture at Central Oyu Tolgoi, there is a blanket of
supergene mineralization, chalcocite and covellite, superimposed on the hypogene
alteration and mineralization.
At North Oyu the alteration is in the argillic and advanced argillic facies
similar to the alteration at Central Oyu.
Alteration zoning in high level volcanic environments can be very complex.
The orderly progression of alteration facies, defined in the porphyry copper
deposits of the southwestern United States (Lowell and Guilbert, 1970) tends to
be disrupted. Alteration facies are telescoped, overprinted and change much more
abruptly than they do in the southwestern United States. The alteration patterns
defined by Perello et al (2001), suggest that North and Central Oyu are at a
higher level (" 1000 m) in the alteration system than those at South Oyu. At
this level alteration spreads a significant distance from the hydrothermal
centre. It is easiest to interpret the two areas of mineralization as separate
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intrusive centers but they could be parts of the same sheet separated by
faulting and/or erosion. The shape of the alteration pattern of Central Oyu
Tolgoi suggests that the altered block was tilted so the ground surface
represents an oblique slice through the system.
The patterns at South Oyu suggest centers of alteration at South Oyu Tolgoi
and another at Southwest Oyu. However, these could be the same intrusive center
offset on a northeast trending fault. The mineral assemblages are consistent
with the K-silicate facies which occurs deep in the porphyry system.
MINERALIZATION
The section comprises two parts; the first part describes general porphyry
copper deposit types - supergene and hypogene, in order to provide a background
for interpretation of the Oyu Tolgoi mineralized zones and their potential. The
second part provides a description of the Oyu Tolgoi zones discovered to date,
drawn largely from Perello et al (2001).
GENERAL DEPOSIT TYPES
There are both supergene copper and hypogene copper-gold deposits on the
property. Current information indicates that South Oyu and Southwest Oyu are
strictly hypogene deposits; North Oyu is primarily a hypogene deposit; Central
Oyu is primarily a supergene deposit overlying a zone of hypogene mineralization
(Figures 5 and 6).
SUPERGENE
The initial exploration by Ivanhoe delineated the chalcocite blanket
beneath a leached cap. Supergene enrichment is a complex process and every
enrichment blanket has unique features. Titley (1994) presented the following
summary of the process.
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"Through supergene processes, hypogene copper mineralization
of the shallow levels in the original system was moved downward
to be precipitated at greater concentrations in generally flat
lying discoid "blankets" that are probably conformable with
ancient water tables. The process occurs at high levels in the
original system where pyrite occurs in sufficient abundance to
produce acid and where correspondingly, a great abundance of
fractures allows flow of significant amounts of the supergene
fluids. Production of acid is encouraged by silicification and
advanced argillic alteration which reduces the quantity of
minerals in the rocks with will react with or neutralize acid.
Production of acid results in solution of hypogene copper
sulfides, the copper-bearing, sulfate dominant (oxidized)
solutions moving to an environment where copper and sulfur are
reduced to form chalcocite."
Enrichment processes take place through several stages, each reflecting
changes in base level, perhaps as adjustments to uplift. When compared with
hypogene grades beneath the blankets, enrichment factors of three to six times
in polycyclic enrichment are seen in the enriched ores.
Figure 7, a generalized cross section through a typical southwestern U.S.
weathered porphyry system (Titley, 1994), shows several important points. First
is that movement of the water table can produce two or more blankets separated
by thick beds of lower grade material. It would be interesting to know more
about the zones that the RC holes at Oyu Tolgoi finish in. Are they hypogene
mineralization underlying the blanket or layers of waste within the blanket?
Second, although the generalized system shows that the enrichment blanket is
distributed symmetrically over the disseminated (hypogene) copper
mineralization, real blankets seldom have this pattern. The locations of
supergene blanket are functions of (1) fracturing, (2) post alteration rock
composition, (3) location of groundwater, and (4) flow direction of the
groundwater.
The leached cap and the enrichment blanket mark a zone of hypogene
alteration, but they do not usually exactly correspond with it.
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HYPOGENE
Hypogene copper-gold porphyry deposits have been reviewed by Sillitoe
(1993). He summarized the characteristics of twenty-nine deposits (Table 2 and
Figures 8 and 9). The average gold and copper values for 8 holes at South Oyu
are plotted on Figure 8 to show how they compare to the other deposits. Table 2
compares South Oyu to Sillitoe's other deposits for the nine most important
factors.
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TABLE 2
SELECTED CHARACTERISTICS OF GOLD-RICH PORPHYRY COPPER DEPOSITS
(AFTER SILLITOE, 1993)
IVANHOE MINES LTD. - OYU TOLGOI PROJECT
HOST PETRO- AGE COEVAL CU-AU W. ADVANCED ABUNDANT QUARTZ
NAME, LOCATION AU (t) SETTING Porphyry chemistry (Ma) volcanics K-silicate argilitic magnatite/ stockwork
Goonumbla, NSW, Australia
51 C Qmonz KCA 439 Y Y N N Y
Panguna, Paupua New Guinea 766 IA Di-Qdi CA 439 Y Y N Y Y
Ok Tedi, Papua New Guinea 368 C Monz KCA 3.4 N Y N N Y
Grasberg, Indonesia 703 C Di CA 1.2 Y Y N Y Y
Capang Kiri, Indonesia 81 IA Qdi CA 3 Y Y Y Y Y
Sugai Mak, Indonesia 20 IA Di CA 2.9 Y Y Y Y Y
Mamut, Malaysia 90 IA Qmonz KCA 2.9 N Y N N Y
Kingking, Philippines 122 IA Di CA Mio Y Y N Y Y
Amacan, Philippines 46 IA Qdi CA Mio Y Y N N Y
Dizon, Philippines 98 IA Qdi CA Mio Y Y Y Y Y
Santo Tomas II, Philippines 200 IA Di CA 1.4 N Y N Y Y
Guinaoang, Philippines 200 IA Qdi CA 3.5 Y Y Y Y Y
Lepanto Far Southeast, Philippines 441 IA Qdi CA 3.5(?) Y Y Y Y Y
Galore Creek, BC, Canada 50 AIA Syen A 198 Y Y N Y N
Morrison, BC, Canada 29 C Qdi CA 52 Y Y N Y Y
Bell Copper, BC, Canada 23 C Qdi CA 51 Y Y N Y Y
Mount Milligan, BC, Canada 192 AIA Monz A Jur Y Y N Y N
Mount Polley, BC, Canada 29 AIA Monz A 184 Y Y N Y N
Fish Lake, BC, Canada 24 C Qdi CA 77 Y Y N Y Y
Island Copper, BC, Canada 57 AIA Rhyodac CA 180 Y Y Y Y Y
Afton, BC, Canada 18 AIA Di A 198 Y Y N Y N
Bingham, Utah, U.S.A. 900 C Qmonz KCA 39 Y Y N N Y
Dos Pobres, Arizona, U.S.A. 160 C Gc CA 47-52 Y Y N Y Y
Tanama, Puerto Rico 72 IA Qdi CA 41-44 Y Y N Y Y
Bajo de La Alumbrera, Argentina 211 C Dac KCA 8 Y Y N Y Y
Marte, Chile 66 C Di CA 13 Y Y Y Y Y
Lobo, Chile 128 C Di CA 13 Y Y Y Y Y
Skouries, Greece 51 C Syen A 18 N Y N Y Y
Saindak, Pakistan 28 C Qdi CA 19-20 Y Y N Y Y
Oyu Tolgoi South ? IA Monz ? 411 Y Y N Y Y
ABBREVIATIONS
SETTING: HOST PORPHYRY: PETROCHEMISTRY
AIA accreted island arc Dac dacite A alkalic
C continental margin Di dirote CA calc-alkalic
IA island arc Gd granodiorite KCA high K calc-alkalic
Monz monzonite AGE
Qdi quartz diorite Jur Jurassic
Qmonz quartz monzonite Mio Miocene
Rhyodac rhyodacite
Syen syenite
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Figure 10 shows the variations in lithogeochemical, magnetic susceptibility
and chargeability at different levels in the system. When interpreting the
exploration data from Oyu Tolgoi, it is important to remember that the patterns
from different levels in the system can be very different.
Sillitoe (1993) originally selected gold-rich deposit on the basis of
containing more than 0.4 g/t Au but included a few lower grade deposits which
contained large amounts of gold. He pointed out gold-rich porphyry copper
deposits are not a discrete deposit type but represented the gold-rich end of
the porphyry copper spectrum. There are some characteristics, however, that help
set them apart. Some 80% of the gold-rich deposits contain appreciably more
hydrothermal magnetite. Gold-rich systems have calc-silicates, amphibole,
pyroxene and garnet, in addition to potassium silicate alteration (biotite, K
feldspar) associated with their central ore zones.
Gold-rich porphyry copper deposits occur in volcano-plutonic arcs of all
ages worldwide and are preserved where erosion levels are shallow (<4 km).
Islandarc and continental margins seem equally favorable. Deposits are
associated with a wide range of rock composition, calc-alkalic as well as
alkalic. While only gold-rich deposits accompany alkalic stocks, most gold-rich
deposits accompany low potassium calc-alkalic plutons. Another aspect of
gold-rich porphyry copper deposits not mentioned by Sillitoe (1993) is the
presence of anomalous quantities of rhenium in the associated molybdenite.
Rhenium in sufficient quantities is a valuable byproduct and greatly increases
the value of the molybdenite concentrate. The quantity and distribution of
rhenium in the molybdenite at Southwest Oyu should be established.
Southwest Oyu is a gold-rich porphyry copper deposit as defined by Sillitoe
(1993). It formed in a volcanic-plutonic arc, probably an island arc which was
accreted to southern Mongolia in the early Paleozoic as part of the South
Mongolian Belt. The entire volcanic plutonic arc that hosts the Southwest Oyu
deposit now exists as discrete terrain, the Barga Terrain.
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Oyu Tolgoi mineralization can be divided into deep level, South Oyu which
would correspond to Level C in Figure 9, North Oyu and Central Oyu lie somewhere
between Level A and Level B in Figure 9. North Oyu seems to be deeper than
Central Oyu but there is not a significant difference.
OYU TOLGOI MINERALIZATION
SOUTH OYU
Most Cu-Au-Mo mineralization at Southwest Oyu zone is in intensely veined
(stockwork and sheeted) magnetite-rich, pyrite-poor assemblages dominated by
quartz, chalcopyrite, bornite and traces of molybdenum in andesite and feldspar
hornblende porphyry (monzodiorite). Perello et al. (2001) divided the
mineralization into an early stage, pyrite poor and associated with K-silicate,
mostly biotite, alteration and a second stage which overprints and crosscuts the
first. Molybdenite seems to be associated with the second stage. Distribution of
gold is not understood. The gold has not been observed with microscope or
scanning electron microscope (SEM) methods. The correlation between gold and
copper grades however suggests that it is in the form of attachments to or
inclusions in copper sulphides. This theory is supported by the way gold was
recovered with copper sulphide minerals in Ivanhoe's preliminary metallurgical
work (Lake, personal communication). Molybdenum grades are erratic and the
overall distribution is not understood. Ivanhoe's preliminary metallurgical work
indicates that at least some of the molybdenum is enriched in rhenium (Lake,
personal communication). Highvalues of rhenium in molybdenum is a feature of
some goldrich porphyry copper deposits.
Geochemical analyses run by XRAL Laboratories Ltd. (XRAL) in Toronto for
RPA indicate that the South Oyu mineralization has anomalous values of
molybdenum (21 ppm to 165 ppm), arsenic(<2 ppm to 588 ppm) and silver(1.5 ppm to
2.7 ppm).
CENTRAL OYU
Known copper mineralization is dominated by a supergene copper blanket
(Figure 11). Rock chip samples across the leached cap contain anomalous
concentrations of Cu (0.1%
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to 1.2%), Au (0.05 ppm to 2.68 ppm) and As (200 ppm to 1,740 ppm). Relict
sulphides are mostly pyrite, but include chalcopyrite, bornite, chalcocite and
covellite. Supergene mineralization extends from surface to approximately 120 m
below surface. The uppr 20 m to 40 m of the enrichment blanket is made up of
chalcocite with minor covellite and digenite as coatings on pyrite and traces of
chalcopyrite. The lower parts of the blanket which have lower copper grades are
dominated by covellite. The upper chalcocite and lower covellite zones are a
standard feature of enrichment blankets (Chavez, 2000). Hypogene copper
mineralization consists of tennantite, chalcocite, covellite bornite and traces
of chalcopyrite, arsenosulvanite, and sulvanite. Distribution of gold is not
well known. Most of the system contains <30 ppb Au but there are erratic values
of 0.1 ppm to 1 ppm Au. The best gold values are in the chalcocite zone over an
alunite rich breccia.
Molybdenum mineralization is equally erratic. Anomalousmolybdenum values
(10 ppm to 70 ppm) characterize the zone but samples as high as 0.08% Mo have
been found associated with the alunite rich breccia.
NORTH OYU
Copper mineralization occurs in breccias at depths" 100 m below surface.
Some supergene chalcocite and covellite were observed but the higher grade
intercepts are associated with veins containing pyrite, chalcopyrite, bornite,
tennatite, traces of covellite and chalcocite, which appear to be hypogene. Gold
values are usually low (10 ppb to 30 ppb) but sometimes higher (40 ppb to 90
ppb) in copper-rich zones. Molybdenum values are usually low (<0.0001% Mo).
EXPLORATION WORK AND RESULTS
HISTORY
In 1995 the Magma Copper Company Ltd. (Magma) began a reconnaissance
program which examined more than 60 copper occurrences in all parts of Mongolia.
In 1996,
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Magma was acquired by BHP but the reconnaissance program continued in western
and southern Mongolia. Central Oyu was recognized as a leached capping on a
porphyry copper system in September 1996. A number of old diggings and small
amounts of slags found in the area indicate that there was small scale mining in
ancient (Bronze Age?) times.
In February 1997 a mineral exploration licence "Oyu Tolgoi Exploration
Licence" (MEL 210) covering the area was obtained by BHP. In April of the same
year the South Oyu area was identified as a prospective area. In the summer of
1997 BHP completed a program of mapping, rocks and soil sampling, and IP and
magnetic geophysics. By October 1997 BHP had drilled six diamond drill holes
(1,001.2 m) to test Central Oyu for an enrichment blanket and the hypogene
mineralization at South Oyu for copper mineralization.
In 1998 BHP drilled an additional 17 diamond drill holes (2,800m) to
continue testing the exploration targets defined in 1997. In 1999 BHP completed
a detailed economic review which recommended additional drilling and continued
exploration on the property. BHP did no additional work on the area however.
In 2000, Ivanhoe signed an option to earn a 100% interest in the Oyu Tolgoi
Exploration License from BHP, and completed a RC program consisting of 109 holes
(8,828 m). The program targeted a chalcocite blanket cut by one of BHP's diamond
drill holes. At the end of the RC program Ivanhoe decided that the chalcocite
blanket was neither large enough nor high-grade enough to be economic in this
location. Forster (2000) made an unpublished estimate of the size of the
enrichment blanket (See Mineral Resource Estimates).
In 2001, Ivanhoe began a program which consisted of both RC and diamond
drill holes. It was designed to test South Oyu for a chalcocite blanket and
hypogene mineralization. After the discovery of a high grade hypogene
mineralization in OTRCD 150 in Southwest Oyu zone, Ivanhoe expanded its planned
drill program By December 31, 2001, Ivanhoe had spent about US$4.4 million
(Table 6).
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As of January 11, 2002, Ivanhoe had completed 23 RC holes for 2,890 m, 3
RCD holes for 1,747 m and 24 DD holes for 13,627 m and diamond drilling was in
progress.
TABLE 6
EXPENDITURES IN US$ FROM INCEPTION TO DECEMBER 31, 2001
IVANHOE MINES LTD. - OYU TOLGOI PROJECT
INCEPTION TO MAY 1, 2001 TO DEC. 1, 2001 TO
APRIL 30, 2001 NOV. 30, 2001 DEC. 31, 2001 TOTAL
TOTAL EXPENDITURES
Expenditures 1,107,183 2,415,347 595,695 4,197,194
Overhead 5% 55,359 120,767 29,735 209,860
TOTAL 1,168,542 2,536,114 624,430 4,407,054
EXPENDITURES ALLOCATED
Central Oyu 796,192 77,452 - 0 - 878,472
Outside Central Oyu 366,350 2,458,663 624,430 3,528,582
TOTAL 1,162,542 2,536,114 624,430 4,407,054
METRES DRILLED, RC, RCD AND DD
Central Oyu 6,107 450 ? ?
Outside Central Oyu 2,810 14,285 ? ?
TOTAL 8,917 14,735 1,978 25,630
IVANHOE EXPLORATION APPROACH
The Oyu Tolgoi property contains a copper-gold system of the circum Pacific
type, where high level plutons intrude the volcanic pile. The system is
Paleozoic and, therefore, much older than most systems of this type around the
Pacific Ocean.
Initial drilling results by BHP suggested a broad area of low grade copper
mineralization with smaller zones, both hypogene and supergene, of higher grade
mineralization. The broad zone of low grade mineralization is broken by
northwest and northeast trending faults, post mineralization syenite plutons and
post mineralization rhyolite dikes. The mineralizing event seems to have been
one phase of a long lived intrusive system.
The leached and silicified cap indicates the Central Oyu and North Oyu are
at a much higher level (+/-1,000 m) in the porphyry system than South Oyu and
Southwest Oyu zone.
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The combined anomalous soil geochemistry, IP, geology and RC samples indicates a
major porphyry system in this area. The lateral extent of the intense alteration
suggests the current ground surface is an oblique slice through the original
system. Intrusive plutons associated with this system may not be vertical like
the ones in South Oyu. There are two exploration targets in this area. First is
a deep enrichment zone below the RC holes. Second is a richer hypogene zone
associated with an IP chargeability anomaly.
The large circular structure marked by IP chargeability north of Central
Oyu could be a ring dike in a caldera system. If this is the case mineralization
associated with this structure could offer an important clue to significant
bodies of mineralization. It is important that the Airstrip and Far North
anomalies be tested at an early stage in the drilling program.
In 2000, Ivanhoe carried out a RC program to delineate a chalcocite blanket
intersected in one of BHP's diamond drill holes. This program consisted of 109
RC holes totaling 8,828 m. The 80 m to 130 m holes were targeted to delineate
supergene mineralization that might be amenable to a heap leaching SX-EW process
similar to the one used at Ivanhoe's Monywa copper mine in Myanmar.
In 2001, Ivanhoe drilled 23 RC holes (2,890 m) and, by January 11, 2002,
had completed 3 combined diamond drill (RCD) holes (1,747 m) and 24 diamond
drill (DD) holes (13,627 m). RCD holes start as reverse circulation holes and
change to diamond drill holes. The initial part of the drilling program was with
RC holes to test the supergene and the hypogene potential of the South Oyu area.
A long intersection of high grade hypogene copper and gold mineralization
was encountered in OTRCD 150 (508 m averaging 0.81% Cu and 1.17 g/t Au). Ivanhoe
paused the drilling for a number of weeks and undertook a surface program
magnetic and induced polarization (IP) surveys which covered the three outcrop
areas at North Oyu, Central Oyu and South Oyu an area of roughly 4 km by 3 km.
The magnetics were done in two surveys each covering an area of 2 km by 3 km.
The southern part of the area was surveyed by Ivanhoe on north-south lines, 25 m
apart with stations 5 m apart. The
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northern area was surveyed by a contractor on east-west lines, 50 m apart with
stations at 5 m intervals. In RPA's opinion, these surveys were conducted
according to standard industry practice.
Ivanhoe changed from exploring for a shallow supergene enrichment blanket
with Reverse Circulation (RC) drilling to testing for deep hypogene
mineralization with conventional diamond drilling (DD). The holes begin with
very largediameter drill core (PQ or NTW) and the core size is reduced down the
hole (HQ or BTW). This approach ensures that enough core is acquired for good
samples along the entire length of the hole. Large diamond drill core also
ensures high core recoveries (>90%).
IP SURVEYS
Delta Geoscience Ltd. conducted an extensive IP and resistivity survey of
the Project (Hendrickson, G. A., 2002). Twelve square kilometers were evaluated
with 124 km of initial lines and 122 km of fill-in lines from September 8 to
October 10, 2001. This survey evaluated the extent and strength of known zones
of porphyry-style copper-gold mineralization, and explored the surrounding areas
at depth.In RPA's opinion, this survey was conducted according to standard
industry practice.
Effective penetration of 400 m to 500 m beneath rocks with low
resistivities required a high powered IP system to obtain a good signal to noise
response. This survey used an Iris 10 kw transmitter coupled to a 12 kw motor
generator. Two Iris IP-6 receivers recorded all IP and resistivity data. The IP
survey used a gradient array, which has important advantages in horizontal
resolution and depth of penetration. Basic grid coverage used a current
electrode separation of 3,000 m and a potential electrode separation of 50 m.
Anomalies of interest were evaluated by different current electrode arrays
spaced at 4,000 m, 3,000 m, 1,600 m, 800 m. The average focus depth of the
system is 0.16 of the current electrode separation.
Geophysical data were presented to Ivanhoe as colour contour plans
(1:20,000), colour depth sections (1:20,000), and ASCII files.
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The survey defined four very significant anomalies and several other,
smaller associated anomalies. The main anomalies are: South Oyu, Southwest
Oyuzone, Central Oyu and Far North Oyu (Figures 12 and 13). South Oyu, Southwest
Oyu zone and Central Oyu show a good contrast to background and excellent depth
extent. Far North Oyu shows an IP pattern characteristic of a target buried
beneath a cap of unpolarized material.
Flat lying zones of supergene mineralization are difficult to recognize in
IP surveys designed to detect large buried targets. It is important to evaluate
the tops of significant porphyry systems with smaller arrays designed to search
for supergene mineralization. Responses characteristic of supergene
mineralization were observed in some sections across South Oyu and Central Oyu.
The low resistivities on the north and south flanks of Central Oyu are
typical of advanced argillic alteration(Hendrickson, 2002). These zones of very
low resistivities can mask the IP response of deeper sulphide mineralization.
Southwest Oyuzone does not have significant associated advanced argillic
alteration. Both Southwest Oyuzone and South Oyu are regions of high
resistivity, probably related to silicification along east-west trending
structures.
RESULTS TO DATE
SOUTHWEST OYU
The four drilling campaigns (BHP 1997 and 1998; Ivanhoe 2000 and 2001-2002)
are summarized in Tables 3, 4, and 5 in Appendix 5. Table 5 includes holes
drilled and sampled by Ivanhoe up to January 11, 2002. Summaries of all the
assay results for diamond drilling by BHP and Ivanhoe are presented on Ivanhoe's
website (www@Ivanhoemines.com).
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The most important drilling is Ivanhoe's 20012002 campaign (Figure 13). The
discovery of a wide zone of good grade copper and gold mineralization in hole
OTRCD 150 (508 m of 1.17 g/t Au and 0.81 % Cu) focused attention on the
Southwest Oyu Zone.
The Cu-Au mineralization intersected to date is of the porphyry copper
type. It consists of disseminated sulphides and sulphides related to stockwork
and shatter zones. Individual samples of the mineralization do not follow any
orientation. However, the regions of mineralization have an orientation. Ivanhoe
has explored the orientation of the regions of mineralization by drilling on two
sets of sections at right angles to each other and presenting the results on
both the sections and on plans at right angles to the sections. Ivanhoe's
approach is standard industry practice to establish the shape of the mineralized
body.
Drilling in this area began on the same northeast trending section as OTRCD
150 and on two parallel sections 100 m northwest and 100 m southeast of the
discovery hole. In addition holes have been drilled at right angles to the
discovery drill hole. Figures 13 shows the collar locations for the drill holes
superimposed on an IP chargeability map. Figure 14 shows the drill pattern in
more detail and the geological interpretation. Figure 15 and 16 show drill
intersections and geolagical interpretations on sections at right angles to each
other.
Drill results suggest that the mineralization is related to a monzodiorite
porphyry stock intruding mafic volcanic rocks. Some geologists believe this
intrusive is coeval with the volcanics. There are zones of breccia both cutting
the monzonite stock and in the altered mineralized volcanic rocks around the
margins of the monzonite. RPAsuggests that the breccia formed a carapace around
the intrusive body. The mineralized zone is both in the intrusive and in the
mafic volcanic wallrocks. The mineralized zone is intruded by barren monzonite
and monzonite porphyry plutons and syenite and rhyolite ikes.
Table 7 is a summary of drill hole intersections in Southwest Oyu zone.
Intersection lengths are controlled by cut-off grades used which can be varied
to produce long lower grade or short higher grade intersections. The drill holes
in Table 7and Figures 15 and 16
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show a wide mineralized zone with a narrower high grade zone within it. The
mineralized zone shows good continuity from about 50 m below surface to a depth
of 600 m. The current drill data suggest that gold to copper ratios and gold and
copper grades increase with depth. Hole OTD 174 cuts the mineralized zone beyond
the limits of the IP anomaly (Figure 13).
TABLE 7
IVANHOE MINES LTD. - OYU TOLGOI PROJECT
SOUTHWEST OYU "DISCOVERY ZONE"
SUMMARY OF SIGNIFICANT INTERCEPTS
HOLE NO. CORE LENGTH INCLINATION AU G/T CU %
150 508 -55degrees 1.17 0.81
160 288 -55degrees 1.68 0.80
161 358 -55 1.70 0.71
162 190 -55 1.76 0.75
166 478 -55 1.38 0.74
171 100 -55 1.29 0.67
172 116 -55 2.35 0.88
173 24 -55 1.32 0.82
174 74 -55 0.45 0.58
175 138 -45 0.35 0.45
176 146 -55 1.49 0.76
177 1.92 -55degrees 1.10 0.56
178 128 -45 1.01 0.59
179 14 -55degrees 0.32 0.57
180 120 -55 3.44 1.37
183 454 -70 1.71 0.92
184 Assays incomplete
Ivanhoe was concerned that abundant magnetite associated with the copper
gold mineralization in some holes might affect the down hole survey instruments.
Ivanhoe changed to using an IDS International gyroscopic logging system for new
holes and re-surveyed earlier deep drill holes. Of the five holes surveyed by
both methods only OTD 180 has shown a significant difference in the location as
detected by the two survey systems.
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SOUTHWEST OYU ZONE - SOUTHERN EXTENSION
The Southern Extension of Southwest Oyu zone was drilled to test a
continuation of the mineralization to the southwest inferred by IP results and
to follow up on BHP' s Hole 005 which intersected 142 m of 0.93 g/t Au and 0.53%
Cu. The results of this drilling are summarized below.
SOUTHWEST OYU ZONE- SOUTHERN EXTENSION
HOLE NO. CORE LENGTH (m) AU G/T CU %
- -------- -------------- ------ ----
165 466 0.31 0.41
167 318 0.52 0.49
168 382 0.30 0.21
SOUTH OYU
Drilling in the South Oyu target area was designed to test adjacent
magnetic and IP anomalies underlying outcrops of copper oxide mineralization. RC
drilling by Ivanhoe outlined an area of higher grade copper oxide and gold
mineralization in shallow holes. The results of the diamond drilling are
summarized below.
More recently OTD 186 was started west of OTD 149 to test a magnetic
anomaly on the flanks of the chargeability anomaly (Figure B). Assays have not
yet been received.
SOUTH OYU ZONE
HOLE NO. CORE LENGTH (m) AU G/T CU %
- -------- -------------- ------ ----
149 76 0.38 0.49
164 120 0.26 0.43
170 88.1 0.16 0.28
186 60 0.52 0.45
CENTRAL OYU
OTD 187 was started in the Central Oyu area to test a zone of Cu-Au
mineralization found by RCD drilling. The hole was laid out trending southwith a
55degrees dip and a planned depth of 750 m. Ivanhoe anticipates that this hole
will intersect a thick zone of chalcocite as well as testing for hypogene
mineralization beneath the supergene blanket.
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OTC 188 is designed to test a zone of >1% Cu mineralization found in RCD
119. This corresponds to a northeast trending linear on the IP chargeability
map.
OTHER TARGETS
IP survey combined with magnetic surveys and reverse circulation (RC)
drilling have established other targets at North Oyu, Airstrip Anomaly and Far
North Oyu.
SAMPLING, ASSAYS AND DATA VERIFICATION
Sampling of the drill core by Ivanhoe is consistent with industry
standards. When RPA visited the exploration site, split core was sent to
Analab's facilities in Ulaanbaatar for crushing, grinding and assaying. Ivanhoe
was routinely adding blanks and duplicates to the sample stream at the site.
In Ulaanbaatar samples were crushed and 500 g splits from the samples were
pulverized. Pulps were assayed by fire assay using an Atomic Absorption (AA)
finish. Base metals, usually copper and molybdenum, were assayed using AA
analysis. Analabs uses internal standards to maintain consistent results.
RPA collected independent samples of drill core which were assayed by XRAL
in Toronto and yielded copper and gold assays similar to those obtained by
Ivanhoe. RPA also obtained from Ivanhoe samples of rejects from RC drilling
which were also assayed at XRAL and yielded assays similar to those obtained by
Ivanhoe.
RPA examined four duplicate sets of assays run by Ivanhoe as a check on the
laboratory's consistency. The first set were duplicate gold assays and copper
assays of quarter core assayed at Analabs. Both types of assay showed excellent
reproducibility.
The second set were duplicates of 56 pulps from RCD samples assayed at
Bondar Clegg. Copper assays were essentially the same; Analabs had higher values
for gold than Chemex and Bondar Clegg; molybdenum assays were similar at Bondar
Clegg and
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Chemex but different at Analabs. The third set was a set of pulps from 26core
samples assayed at Analabs and Bondar Clegg for copper, gold and molybdenum. The
duplicate assays correspond very well for copper. The gold values are acceptable
but are slightly higher than those from the North American laboratories. The
duplicate molybdenum values are inconsistent and additional work is needed. The
fourth set was a set of pulps from 180 core samples analyzed at Analabs and
Bondar Clegg for copper and gold. Duplicate assays for both elements were
acceptable.
Details of the sampling, assaying, check assaying and RPA's checks are
given in Appendices 2 and 4.
MINERAL RESOURCE ESTIMATES
CENTRAL OYU MINTERAL RESOURCE ESTIMATE
In November 2000, Ivanhoe (Forster, 2000) estimated a Mineral Resource for
the Central Oyu supergene zone based on 109 RC holes drilled in the summer of
2000 (Lo Grasso, 2000). This estimate was done for internal corporate purposes
by Charles N. Forster, P.Geo., of Ivanhoe. The Central Oyu supergene copper zone
is separate and distinct from the Southwest Oyu copper-gold zone currently being
delineated by Ivanhoe, which is hypogene in nature.
RPA has reviewed the 2000 Ivanhoe Mineral Resource estimate for the Central
Oyu supergene zone (Table 9), made some minor modifications, and considers it to
be an Inferred Mineral Resource in accordance with the CIM standards (Anon.
2000). Although Ivanhoe considers the Central Oyu supergene zone to be
under-explored and therefore uneconomic for a standalone mining operation, RPA
considers that it has reasonable prospects for economic extraction in
combination with or as a satellite operation to other mineral deposits.
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TABLE 9
IVANHOE MINES LTD. - OYU TOLGOI PROJECT
CENTRAL OYU SUPERGENE MINERAL RESOURCE ESTIMATE
CATEGORY MILLIONS OF TONNES GRADE % TOTAL CU
Inferred 39.2 0.73
Key assumptions, parameters, methods, and other information relevant to the
2000 Ivanhoe Mineral Resource estimate are as follows:
- The database used for the estimate is in keeping with industry
standards.
- D. George Cargill, Ph.D., P.Eng., has reviewed and verified the
Central Oyu Mineral Resource estimate.
- Original assays for total copper were done at Analabs in Ulaanbaatar.
No acid soluble or cyanide soluble copper assays were done but may be
warranted in the future. Lo Grosso (2000) reports that total copper
check assays were done at Indo Assay Lab in Indonesia, and that
results were reported to be acceptable. Checks on assay values over 1%
Cu were within 5% to 10% of the original assays and for assay values
less than 1% were within 10% to 20%. RPA had check assays carried out
at XRAL laboratory in Canada on nine samples from the Central Oyu
zone. The check assays gave reasonable correlation with the original
assays.
- Vertical reverse circulation holes were used for the Ivanhoe Mineral
Resource estimate. Although a few diamond drill holes were within the
resource area, they were not used. The RC holes were spaced 100 m to
200 m apart along east-west section lines 100 m to 200 m apart. The
Central Oyu zone consists of an essentially continuous blanket of
supergene copper mineralization which covers an area approximately
1,100 m north-south by 600 m east-west. In places the supergene zone
consists of two layers (Main and Upper Zones) separated by waste
material. The deeper Main Zone predominates and extends to a depth of
40 m to 80 m in most places. It has been drilled to a maximum depth of
about 120 m.
- For the Mineral Resource estimate, Ivanhoe used a cut-off grade of
0.2% Cu. In RPA's view, this is an appropriate cutoff grade for this
type of resource estimate.
- Ivanhoe used a polygonal estimation method, whereby drill hole
intercepts on plan were assigned an area of influence midway
to adjacent drill holes up to a maximum of 100 m. Polygon areas were
measured by planimeter and multiplied by drill hole intersection
length and by a density factor of 2.3 tonnes per cubic metre to derive
tonnage. This density factor is appropriate. Tonnages were summed and
the grades for each intersection were weighted by tonnage to determine
the average grade of the Mineral Resource.
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- The Oyu Tolgoi Project is still at the exploration stage and it is too
early to assess the possible effect on the resource estimate of
factors such as environmental, permitting, legal, title, taxation,
socio-economic, marketing, political, or other potential issues. At
this time, however, RPA has no reason to believe that any of these
potential issues will be an impediment to development of the Project.
- The geometry of the Central Oyu supergene zone lends itself readily to
open pit mining with a low strip ratio.
- Metallurgical testwork was carried out recently on three samples from
Central Oyu, as discussed in a later section. The copper minerals
reported to be in the samples are enargite, covellite and digenite.
Flotation tests gave good copper recoveries (82%) for sample S4
("chalcocite zone") and sample S6 ("covellite zone"). Column leach and
bottle roll tests on sample S4 gave 62% to 82% copper recovery and on
sample S6 ("covellite zone") gave 5% to 25% copper recovery.
- Infrastructure is sparse in the area of the Oyu Tolgoi Project and any
mining operation would need suitable infrastructure to be developed.
- In RPA's opinion, the Central Oyu supergene zone estimate should be
classified as an Inferred Mineral Resource. It should be considered a
preliminary estimate at this time. It has been done by a manual method
and may be done in future as a computerized block model.
SOUTHWEST OYU MINERAL RESOURCE ESTIMATE
As noted earlier in this Technical Report, significant hypogene copper-gold
mineralization has been discovered at Southwest Oyo. This is distinct
geologically and physically separate from the nearby Central Oyu zone of
supergene mineralization. The two zones are about one kilometre apart. The
exploration potential of Southwest Oyu is for much larger tonnage at significant
grades of copper and gold than the Central Oyu Mineral Resource tonnage reported
above. For this reason, the primary emphasis of the current drilling program is
on Southwest Oyu and the Central Oyu supergene zone is of secondary importance
at this time, although there is exploration potential for hypogene
mineralization beneath it.
In December 2001, Ivanhoe commissioned an independent Mineral Resource
estimate of the Southwest Oyu zone by AMEC E&C Services Limited (formerly MRDI).
As of the date of this Technical Report, AMEC was in the process of preparing
the estimate.
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1999 BMP ESTIMATE
In 1999, BHP prepared a preliminary estimate of tonnes and grade for the
Oyu Tolgoi Project (Kirwin, 1999). This estimate has not been reviewed by RPA.
It was based on only 24 diamond drill holes (3,815 m) and may not qualify as a
Mineral Resource, but has been published in a scientific paper (Perello et al,
2001). Since the time of the BHP estimate, another 109 RC holes (8,913 m) were
drilled in 2000; and 23 RC holes (2,890 m), 3 RCD holes (1,747 m) and 24 diamond
core holes (13,627 m) were drilled in 2001 and 2002. In RPA's view, the 1999 BHP
estimate is completely out of date and not relevant to this Technical Report.
EXPLORATION POTENTIAL
As discussed elsewhere in the report, significant goldrich porphyry copper
mineralization has been discovered on the Oyu Tolgoiproperty. In RPA's opinion
data collected by Ivanhoe and BHP meets industry standards and can be relied
upon to develop an exploration model. In RPA's view there is considerable
potential to expand the known mineralization. The main potential is for higher
grade hypogene sulphide mineralization but potential also exists for more
supergene mineralization.
The Oyu Tolgoi property contains one or more porphyry copper-gold systems
of the circum-Pacific type. Sillitoe (1993) compiled the tonnages and grades for
31 deposits of this type which give an idea of the range of tonnage and grades
(Figure 9). More recent studies have established some larger higher grade
deposits. For example, Pennington et al., (1998) give a tonnage of 1,758 million
tonnes at 112 % Cu, 1.20 g/t Au and 3.25 g/tAg for the Grasberg deposit. One
notable aspect of these deposits is that the cited grades are all average grades
and there are significant zones of gold enrichment in many of them.
Sillitoe's generalized cross section (Figure 10) compiles the geological
characteristics of thirty deposits and provides a useful framework for
interpreting the various pieces of information from the Oyu Tolgoi property.
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The three regions, North Oyu, Central Oyu and South Oyu, can be categorized
on the basis of geology, mineralization and wallrock alteration into two groups.
North Oyu and Central Oyu represent a high level of the system, characterized by
a mixture of argillic and advanced argillic wallrock alteration. They could
correspond to an elevation between Level A and Level B in Figure 10. South Oyu
is characterized by Ksilicate (biotite) alteration and should be in the vicinity
of Level C on Figure 10.
Surface mapping of the zones indicates that copper sulphide mineralization
occurs in both volcanic rocks and in the intrusives. The zones of
mineralization, however, are separated by barren intrusives and cut by barren
dikes.
South Oyu and Southwest Oyu zone (Figure 13) have similar geology,
geophysical patterns and sulphide mineralization. The initial drilling suggests
that the three dimensional geology is also similar and they represent the same
zone offset by a northeast trending fault. The northwest and southwest
chargeability anomalies which extend from Southwest Oyu zone may also be similar
but have a distinctly reduced chargeability response. The area with the best
chance of having mineralization similar to Southwest Oyu zone is South Oyu. The
second best areas would be the northwest and southwest chargeability trends
extending off Southwest Oyu zone. The different character of the chargeability
anomalies could represent less sulphide mineralization or mineralization at a
deeper level.
Central Oyu is characterized by a shallow blanket of supergene alteration
overlying a deeper zone of lower grade hypogene mineralization. There are two
exploration targets in this area. First is a deeper blanket of supergene
alteration. The shallow supergene blanket is defined by shallow RC drill holes
which are believed to end in lower grade hypogene mineralization. Some porphyry
deposits, however, have more than one level of supergene alteration blanket
separated by relatively low grade zones. In the Central Oyu RC drilling program
for supergene mineralization, no tests were made for a deeper enrichment
blanket.
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The second exploration target at Central Oyu is a zone of higher grade
hypogene mineralization within the broad zone of lower grade mineralization. The
first area which might fit this model is a deep IP anomaly. This type of target
is worth pursuing. Some RC drill holes have anomalous copper values below the
supergene blanket. These are excellent geochemical anomalies for hypogene
mineralization. Another exploration approach would be to analyze the chips from
the RC drill holes for a wider range of elements to look for geochemical
pathfinders. Another would be to process the IP and magnetic results. The
combination of IP and rock geochemistry could provide additional targets.
Central Oyu is at the southern end of a large doughnut shaped chargeability
anomaly about 1 km in diameter (Figure 12).
The preliminary evaluation of the IP results identified two strong
anomalies:
- Airstrip Anomaly which is near the airstrip. It has been tested
by three RC holes with anomalous copper values in and near the IP
anomaly.
- Far North Anomaly directly north of the Central Oyu and North Oyu
areas. RC holes near the anomaly do not contain anomalous copper
values.
PRELIMINARY METALLURGICAL TESTING
In August 2001, Ivanhoe sent six composite samples of drill core to
Lakefield Research (Lakefield) for metallurgical testing. The samples came from:
- The "Discovery Zone" Southwest Oyu zone, two samples
- The Bornite Zone, South Oyu
- The Chalcocite, Covellite and Deep CovelliteZones, Central Oyu.
The characteristics of these samples and the metallurgical tests requested
are summarized on Table 10. Table 11 is a summary of the head assays given by
Lakefield. The most significant difference between the Lakefield heads assay and
the Ivanhoe composite assay for the core is for the gold value in sample S-2.
Although Lakefield's
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value is less than half the value obtained by Ivanhoe, it is still the highest
gold value for the six samples.
Lakefield issued a report dated December 12, 2001 summarizing the results
of the froth flotation tests (Sarbutt, 2001). The mineralogy of the six samples
is summarized in Table 13. The main copper bearing mineral in S1 and S-2 is
chalcopyrite. S-3 contains approximately equal amounts of chalcopyrite and
bornite. Sample S4 contains similar amounts of covellite and digenite. The
"Chalcocite Zone" is primarily digenite/covellite. Samples S-5 and S-6 contain
covellite with trace to minor amounts of chalcopyrite, bornite, digenite and
chalcocite. Samples S-4, S-5 and S-6 also contained enargite.
Lakefield believes that all six samples can be classified as "moderately
complex" sulphide ores. The most common texture among the samples is granular
intergrowth with minor amounts of complicated intergrowth textures between the
economic copper minerals, pyrite and non-opaque minerals. In all the samples
minor amounts of copper bearing minerals are fine-grained to very fine-grained
with complex textures (intergrowths, inclusions, veinlets, infills) in pyrite
and non-opaque gangue minerals.
The shape of the mineral textures and their size in all the samples
suggests a primary grind at 60 microns is required to achieve greater than 75%
liberation of the copper bearing minerals. A grind to 30-40 microns is necessary
to liberate the medium-grained locked particles and a grind of less than 20
microns is necessary to liberate the extremely fine grained particles.
Results of selected tests on each of the composites is summarized in Table
12. For the two chalcopyrite samples, S-1 and S-2, concentrate grades of 26% to
30% Cu were achieved with copper recoveries of 81% to 91%. Copper recovery
appears to be related to copper grade. Gold recovery was similar for both
samples at 76% to 77% in the final concentrate and 88% to 90% in the rougher
despite S-2 having twice the gold grade. S-2 has about twice the pyrite content
as S-1 and the similar gold recoveries may be a result of this.
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S-3, a chalcopyrite/bornite sample with low pyrite content gave a high
grade copper concentrate at high recovery. Gold recovery at 66% was also
reasonable given the low head grade.
S-4, with digenite and covellite as the main copper mineralization and
comparatively high pyrite content (10%), responded poorly in the cleaner
flotation and gave a concentrate grade of 20% Cu. There is a strong association
between digenite and pyrite and rimming of the pyrite with digenite.
S-6, with covellite as the major copper mineral and a pyrite content of
10%, responded well with a high grade copper concentrate at a reasonable
recovery.
A concentrate from each sample was submitted for an ICP scan and some
qualitative analysis. Molybdenum content was 0.6% Mo in the S-2 concentrate and
ranged from 0.01% to 0.15% in the other samples. Arsenic content increased from
0.3% to 0.5% As in the concentrates from S-4 and S-6 where enargite had been
noted. Other potential penalty elements, antimony, zinc and mercury, were low.
Lakefield issued a report dated January 17, (Dymov, 2002) summarizing the
results of the preliminary column lach tests for samples S-4 "Chalcocite Zone"
and S-5 "Covellite Zone".
Preliminary bottle-roll tests were conducted on the samples and additional
bacterial Fe(3+) leach tests were conducted on the finely ground residues to
estimate the "ultimate" Cu extraction. Tests were conducted on samples of a 1/2
inch and-10 mesh rock sample at pH 1.3 for 20 days. The results were as follows:
SAMPLE S-4 62% TO 72% COPPER EXTRACTION
- leaving a residue of 0.4% to 0.5% Cu with an acid consumption of 12 to
18 kg/t
- Bacterial/Fe(+3) leach resulted in 93% Cu extraction with a residue
assaying 0.11% Cu.
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SAMPLE S-5 25% TO 10% COPPER EXTRACTION
- leaving residue assaying 0.7% Cu with acid consumption 3 to 6 kg/t
- Bacterial/fe(+3) leach resulted in 59% overall Cu extraction with a
residue assaying 0.3% Cu.
Three columns for each sample were used for the preliminary tests. Columns
used samples crushed to <1/2 in. and <1.0 in. A synthetic raffinate solution was
used to irrigate the columns in a single "pass-through" mode. Columns were
inoculated with a mixed bacterial culture on a daily basis under an ambient
temperature. They were operated for 80 days.
The results indicated a projected copper extraction for sample S-4 in
the range of 65% to 82% Cu but only 5% to 6% Cu for Sample S-5.
Ivanhoe had preliminary comminution tests done in late 2001 and early 2002
on seven samples of Oyu Tolgoi material, mostly andesitic porphyry from the
Southwest Oyu zone. The work was done by MinnovEX Technologies Inc. (MinnovEX)
of Toronto, Canada. In general, the rock would be classified as "hard" based on
the test results on these preliminary samples. However, the rock is
significantly softer than the hardest ores in the MinnovEX database. These
results are preliminary in that they are based on a very small number of
samples. More testwork is required on more widely dispersed and representative
samples before final conclusions on hardness can be drawn.
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TABLE 10
IVANHOE MINES LTD. - OYU TOLGOI PROJECT
SAMPLES FOR METALLURGICAL TESTING (AFTER LAKE, 2001)
DDH/ WEIGHT
SAMPLE INTERVAL(m) ZONE (kg) Cu (%) Au (g/t) TEST WORK
- ------- ----------- ---------------------- ------ ------ -------- -----------
S-1 DDH 150 Southwest Oyu zone 76 0.61 0.75 Flotation
112-115 m Andesite Porphyry
S-2 DDH 150 Southwest Oyu zone 73 1.02 3.95 Flotation
310-350 m Syeno diorite Porphyry
S-3 DDH 149 South Oyu 50 1.84 0.22 Flotation
73-117 m Bornite Zone
S-4 DDH 159 Central Oyu 100 1.46 --- Flotation &
47-79 m Chalcocite Blanket Column
Leach
S-5 DDH 159 Central Oyu 36 0.80 --- Column
110-136 m Covellite Zone Leach
S-6 DDH 159 Central Oyu 36 0.79 0.10 Flotation
1 84-220 m Deep Covellite Zone
TABLE 11
IVANHOE MINES LTD. - OYU TOLGOI PROJECT
LAKEFIELD HEAD ASSAYS (AFTER SARBOTT ET AL, 2001)
ELEMENT S-1 S-2 S-3 S-4 S-5
- -------------- ----- ----- ----- ----- ------
Cu% 0.69 1.06 1.84 1.46 0.81
Cu (ox) as Cu% 0.008 0.007 0.089 0.052 0.019
Au g/t 0.73 1.38 0.22 --- 0.11
Fe % 8.19 3.95 9.95 --- 5.11
S % 1.5 2.91 1.46 7.65 6.19
TABLE 12
IVANHOE MINES LTD. - OYU TOLGOI PROJECT
COPPER BEARING AND PYRITE MINERALOGY (AFTER SARBOTT ET AL, 2001)
APPROX.
SAMPLE CHALCOPYRITE ENARGITE COVELLITE DIGENITE BORNITE CHALCOCITE PYRITE
- ------ ------------ -------- --------- -------- ------- ---------- --------
S-1 3% --- trace trace trace --- 3%
S-2 3% --- --- -- <0.2% --- 6%
S-3 3% --- trace trace 2% trace <1%
S-4 trace 0.2% <1% <2% trace --- 10%
S-5 trace <0.3% 2.5% trace trace --- 10%
S-6 trace <0.3% 2% 0.3% trace trace 10%
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TABLE 13
IVANHOE MINES LTD. - OYU TOLGOI PROJECT
LAKEFIELD CLEANER FLOTATION RESULTS (AFTER SARBOTT ET AL, 2001)
GRIND REGRIND
TEST K(80) K(80) ROUGHER CLEANER WT ASSAY %,g/t % DIST.
NO. SAMPLE MICRON MICRON COLL. Ph Ph PRODUCT % CU AU CU AU
- ----------------------------------------------------------------------------------------------------------------------
51 S1 101 10 NaEX 10.4 10.7 Cu 3rd Cleaner Conc. 2.0 25.9 24.8 84.9 76.6
Cu Rougher Conc 11.2 5.03 5.15 93.5 90.3
Cu Rougher Tailing 88.8 0.04 0.07 6.5 9.7
Head (calc) 100.0 0.60 0.64
50 S2 92 10 NaEX 10.1 10.7 Cu 3rd Cleaner Conc. 3.0 30.4 33.4 91.4 76.1
Cu Rougher Conc 15.7 60.02 7.26 96.0 87.7
Cu Rougher Tailing 84.3 0.047 0.19 4.0 12.3
Head (calc) 100.0 0.99 1.30
39 S3 96 9 3477 11.6 11.8 Cu 3rd Cleaner Conc. 4.0 37.4 3.65 90.1 66.7
Cu Rougher Conc 27.8 5.86 0.68 98.4 86.8
Cu Rougher Tailing 72.2 0.037 0.04 1.6 13.2
Head (calc) 100.0 1.65 0.22
49 S4 71 17 3477 11.9 +12 Cu 3rd Cleaner Conc. 5.5 20.0 1.79 82.1 65.3
Cu Rougher Conc 30.2 4.22 0.43 94.3 86.2
Cu Rougher Tailing 69.8 0.11 0.03 5.7 13.8
Head (calc) 100.0 1.35 0.15
45 S6 97 15 NaEX 9.1 10.5 Cu 3rd Cleaner Conc. 1.3 46.4 1.63 82.9 19.8
Cu Rougher Conc 7.7 8.61 0.51 93.4 37.9
Cu Rougher Tailing 92.3 0.051 0.07 6.6 62.1
Head (calc) 100.0 0.71 0.10
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CONCLUSIONS
- The Property contains a gold-rich porphyry copper deposit (Southwest
Zone) of the circum-Pacific type.
- The Property has excellent potential for a large tonnage of hypogene
porphyry copper-gold mineralization of similar grades to those found
at Southwest Oyu.
- RPA believes that additional drilling to test the potential at
Southwest Oyu zone and South Oyu, Central Oyu, the Airstrip Anomaly
and the Far North Anomaly is fully justified.
- Ivanhoe's 2000 Mineral Resource estimate of the Central Oyu supergene
mineralization has been reviewed and verified by RPA, and totals 39.2
million tonnes at 0.73% Cu classified as Inferred Mineral Resource.
- BHP's 1999 estimate of hypogene and supergene mineralization was done
before the Ivanhoe reverse circulation and diamond drilling programs
and therefore is completely out of date.
- Preliminary metallurgical testing shows good recovery for copper and
gold by froth flotation from both hypogene and supergene
mineralization. Additional testing showed good copper recoveries from
a sample from the supergene chalcocite zone by bacterial column
leaching.
- Work is needed to determine where the molybdenum occurs and how to
assay for it. It is also necessary to find out where and how rhenium
occurs with the molybdenum. Rhenium is a potentially highly valuable
by product.
- Gold is associated with sulphide minerals in the zones of high copper
values. Assays show a strong correlation between gold and copper
grades. The gold is a critically important metal in this deposit and
its mode of occurrence and distribution need to be investigated in
detail.
- A systematic compilation and interpretation of all the geological,
geophysical and drilling data is needed to guide future exploration
strategy.
- RPA found the data collection, storage and interpretation systems
followed by Ivanhoe were very high quality and equal to the best
industry practices.
- RPA is of the opinion that all the geologists, foreign and Mongolian
workers on the project, were highly qualified professionals.
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RECOMMENDATIONS
Based on our field observations and our review of exploration results to
date, RPA makes the following recommendations:
- Carry out a systematic review and integration of all the available
data sets for the property.
- Re-analyse existing drill hole samples for a wider range of elements.
Available samples provide the basis for a lithogeochemical exploration
program for the cost of assays.
- Analyse core samples from the mineralized intervals for molybdenum.
- Initiate a detailed study of the mode of occurrence and distribution
of gold.
- Initiate a study of the presence and distribution of rhenium in the
molybdenum.
- Initiate a scoping study to establish what tonnage and grade
constitutes an economic deposit in this location. This study must
determine if a deposit similar to Southwest Oyu zone could be mined
using underground mining methods.
- Sample the new types of mineralized zones, such as the
quartz-magnetite breccias for additional metallurgical testing.
DELINEATION DRILLING
SOUTHWEST OYU ZONE
- Definite 4 diamond drill holes for 4,800 m
- A vertical hole OTD-189 for 1,200 m to test the high gradeCu-Au zone
at depth and to provide a pilot hole for directional drilling to
delineate deep mineralization.
- Three additional steep angle holes up to 1,200 m to test depth extent
of high grade Cu-Au mineralization
EXPLORATION DRILLING
SOUTHWEST OYU ZONE
- Definite 1 diamond drill hole for 1,000 m
- Contingent 3 diamond drill holes for 2,400 m.
- Approximately 3 holes to test IP anomaly centered under
collar of OTD 180 and 1 to drill parallel at-55 degrees C to
OCD 180 to test the zone that OTD 180 was supposed to test
before it deviated to the east
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SOUTH OYU-SOUTHWEST OYU ZONE
- Definite 4 diamond drill holes for 2,400 m Contingent 4 diamond drill
holes for 4,000 m.
- Approximately 8 holes to test and delineate IP anomaly along strike of
drill hole OTD 167.
SOUTH OYU
- Contingent 3 diamond drill holes for 1,800 m.
- Contingent 2 diamond drill holes for 1,600 m.
Assuming better grades than visual estimates, Ivanhoe would need
5 holes around OTD 186 to define zone of mineralization.
CENTRAL OYU
- Definite 6 diamond drillholes for 3,600 m.
- Definite 4 deep diamond drill holes for 4,800 m
- Contingent 5 diamond drill holes for 4,000 m.
Holes required to test the hypogene potential of the Central Oyu
area.
AIRSTRIP
- Definite 2 diamond drillholes for 1,200 m.
Showing IP and 14 m zone of mineralization in R Chole.
FAR NORTH
- Definite 2 diamond drillholes for 1,200 m.
Large, strong chargeability anomaly and 3 R Choles with no
mineralization.
MISCELLANEOUS TARGETS
- 4 diamond drill holes for 2,000 m.
DRILLING SUMMARY
Definite 21,000 m
Contingent 13,800 m
The costs of diamond drilling in this location as estimated by Ivanhoe are
outlined below.
Direct Drilling US$80.00/m
Total Drilling US$150.00/m
Assaying US$12.00/m
TOTAL DRILLING/ASSAYING COST US$162.00/m
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Using this cost estimate, the first phase of the drilling program(definite
holes) should require 27 diamond drill holes totaling 21,000 m at a cost of
about US$3.4 million dollars. The second phase of the drilling which will be
contingent upon the results of the first will involve a maximum of 17 drill
holes totaling 13,800 m at a cost of about US$2.2 million. The two phases of
drilling and their costs are summarized in Table 14.
TABLE 14
IVANHOE MINES LTD. - OYU TOLGOI PROJECT
SUMMARY OF PLANNED DRILLING
CONTINGENT
DEFINITE DRILLING DRILLING TOTAL DRILLING
AREA (m/# HOLES) (m/# HOLES) (m/ # HOLES)
- -------------------- ----------------- ------------ --------------
DELINEATION DRILLING
SOUTHWEST OYU 4,800(4) 0 4,800(4)
EXPLORATION DRILLING
Southwest Oyu Zone 1,000(1) 2,400(3) 3,400(4)
South-Southwest 2,400(4) 4,000(4) 6,400(8)
South Oyu 0 3,400(5) 3,400(5)
Central Oyu 8,400(10) 4,000(5) 12,400(15)
Airstrip 1,200(2) --- 1,200(2)
FAR NORTH 1,200(2) --- 1,200(2)
Miscellaneous 2,000(4) --- 2,000(4)
SUBTOTAL 21,000(27) 13,800(17) 34,800(44)
Costs @ US$162/m $3,402,000 $2,208,000 $5,610,000
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Report for Ivanhoe Mines Limited.
Anon, 2001, New Drill Results Confirm and Expand Discovery at Turquoise Hill
Copper Gold Project in Mongolia, News Release Nov 26, 2001.
Chavez, W. X., 2000, Supergene Oxidation of Copper Deposits: Zoning and
Distribution of Copper Oxide Minerals; SEG Newsletter, No 41.
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Crane, D. and Planter, C, 2001, Oyu Tolgoi Project, South Gobi - Mongolia,
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Unpublished Letter Report, Lakefield Research.
Forster, C. N., 2000, Mineral Resources for the Oyu Tolgoi Copper - Gold
Deposit, Mongolia: Unpublished Report for Ivanhoe Mines Limited, pp. 1-19.
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Giammatikopoulos, P.O., 2001, Process Mineralogy of 1st Cleaner Concentrates
from F16 (S2), F22 (S3) and F35 (S6) from the Oyu Deposit in Mongolia.
Unpublished Report by Lakefield Research.
Hendrickson, G.A., 2002, Geophysical Report on the Oyu Tolgoi Project Mongolia
for Ivanhoe Mines Ltd., Unpublished Report by Delta Geoscience Ltd.,
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Kirwin, D.J., 1999, Technical Notes concerning BHP's Oyu Tolgoi Prqpct, South
Gobi Mongolia: Unpublished Report Ivanhoe Mines Ltd.
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for Ivanhoe Mines Limited.
Pennington, J., Suwardy, E., and Kavaleris, I., 1998, Grasberg: 'A Vertical Mile
of Copper and Gold Ore': Unpublished paper presented at the Lacey
Symposium, Townsville, Australia.
Perello, J., et al., 2001, Oyu Tolgoi, Mongolia: Siluro-Devonian Porphyry
Cu-Au-(Mo) and High Sulfidation Epithermal Cu Mineralization with a
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SIGNATURE PAGE
REPORT ON OYU TOLGOI EXPLORATION PROJECT SOUTH GOBI, MONGOLIA
PREPARED FOR:
IVANHOE MINES LTD.
PREPARED BY:
________________________________
D. George Cargill, Ph.D., P.Eng.
Consulting Geological Engineer
February 22, 2002 January 11, 2002
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CERTIFICATE OF QUALIFICATIONS
As an author of this report entitled "Report on the Oyu Tolgoi Exploration
Licence South Gobi Region, Mongolia" Prepared for Ivanhoe Mines Ltd. and dated
January 11, 2002, I hereby make the following statements:
A. My name is Donald George Cargill and I am a Consulting Geological
Engineer associates with Roscoe Postle Associates Inc. My office
address is Suite 1210, 55 University Avenue, Toronto, Ontario M5J 2H7.
B. I have received the following degrees in Geological Sciences:
B.A.Sc. 1967 - University of Toronto, Toronto, Ontario
M.Sc. 1970 - Queens University, Kingston, Ontario
Ph.D., 1975 - University of British Columbia, Vancouver, B.C.
C. I am registered as a Professional Engineer in the Provinces of Ontario
and B.C. I am also:
A member of the Canadian Institute of Mining, Metallurgy and Petroleum
(CIM)
A Member of the Prospectors and Developers Association of Canada
(PDAC)
A Fellow of the Society of Economic Geologists
D. I am a qualified person for the purposes of National Instrument
43-101.
E. This report is based on a visit to the Oyu Tolgoi Property in Mongolia
from October 13 to October 23, 2001, on my personal review of
technical reports and other data supplied by the Issuer, on
discussions with the Issuer and its representatives, and on
information available from technical publications. My relevant
experience for the purpose of this report is:
- Geological consulting to the Island Copper Operating
Division both as an internal consultant for BHP-Utah
International Inc. (BHP) and as an Independent Consultant
- Examination of the exploration potential and the exploration
methodology for the porphyry copper properties on northern
Vancouver Island for BHP.
- Review of Mineral Resources and exploration potential of the
Hushamau Deposit for Jordex Exploration
- Evaluation of the potential of gold deposits for bulk mining
in Brazil, West Africa, East Africa and eastern China.
- Resource estimate, Magushan copper deposit, China.
59
ROSCOE POSTLE ASSOCIATES INC.
F. I have been practicing as a professional geologist for over thirty
years.
G. I am responsible for all the sections in this Report.
H. I am not aware of any material fact or material change with respect to
the subject matter of this report, which is not reflected in "the
Report" the omission to disclose which makes this report misleading.
I. I am independent of the Issuer applying the tests set out in section
1.5 of National Instrument 43-101.
J. I have read National Instrument 43-101 and Form 43-101F1, and this
report has been prepared in compliance with National Instrument 43-101
and Form 43-101F1.
Dated at Toronto, Ontario
January 11, 2002 D. George Cargill, Ph.D., P.Eng.
Consulting Geological Engineer
60
ROSCOE POSTLE ASSOCIATES INC.
APPENDIX 1
FIGURES
Figure 1. Location Map
Figure 2. Property Map
Figure 3. Tectonics and Selected Deposits
Figure 4. Summary Diagram of Techno-Stratigraphic, Magmatic, and
Mineralization History of the South Gobi Region
Figure 5. Regional and District Geology
Figure 6. Property Bedrock Geology
Figure 7. Generalized Cross Section of a Weathered Porphyry Copper System
Figure 8. Gold and Copper Content and Tonnages of Principal Gold Rich
Porphyry Copper Deposits
Figure 9. Generalized Section Showing Intrusive and Alteration
Relationships Around Gold Rich Porphyry Copper Deposits
Figure 10. Exploration Data from Different Levels in the System
Figure 11. Cross Section at Oyu Tolgoi Central Zone Supergene Blanket
Figure 12. Oyu Tolgoi IP Plot Chargeability in 2 mv/v Contours
Figure 13. Oyu Tolgoi South Drill Hole and IP Chargeability Map
Figure 14. Surface Plan, Southwest Oyu Zone
Figure 15. Geological Section, NE to SW, Southwest Oyu Zone
Figure 16. Geological Section, NW to SE, Southwest Oyu Zone
ROSCOE POSTLE ASSOCIATES INC.
Figure 1
Ivanhoe Mines Ltd.
OYU TOLGOI PROJECT
Mongolia
LOCATION MAP
[LOCATION MAP]
ROSCOE POSTLE ASSOCIATES INC.
Figure 2
Ivanhoe Mines Ltd.
OYU TOLGOI PROJECT
Mongolia
PROPERTY MAP
[PROPERTY MAP]
ROSCOE POSTLE ASSOCIATES INC.
Figure 3
Ivanhoe Mines Ltd.
OYU TOLGOI PROJECT
Mongolia
TECTONICS AND
SELECTED DEPOSITS
(after Kirwin, 1999)
[TECTONICS AND SELECTED DEPOSITS MAP]
ROSCOE POSTLE ASSOCIATES INC.
Figure 4
Ivanhoe Mines Ltd.
OYU TOLGOI PROJECT, MONGOLIA
SUMMARY DIAGRAM OF TECHNO-STRATIGRAPHIC,
MAGMATIC AND MINERALIZATION HISTORY OF THE SOUTH GOBI REGION
(after Perello et al., in press)
[SUMMARY DIAGRAM OF TECHNO-STRATIGRAPHIC GRAPH]
ROSCOE POSTLE ASSOCIATES INC.
Figure 5
Ivanhoe Mines Ltd.
OYU TOLGOI PROJECT
Mongolia
REGIONAL AND
DISTRICT GEOLOGY
(after Perello et al., in press)
[REGIONAL AND DISTRICT GEOLOGY MAP]
ROSCOE POSTLE ASSOCIATES INC.
Figure 6
Ivanhoe Mines Ltd.
OYU TOLGOI PROJECT
Mongolia
PROPERTY
BEDROCK GEOLOGY
(after Crane and Planter, 2001)
[PROPERTY BEDROCK GEOLOGY MAP]
ROSCOE POSTLE ASSOCIATES INC.
Figure 7
Ivanhoe Mines Ltd.
OYU TOLGOI PROJECT, MONGOLIA
GENERALIZED CROSS SECTION OF A WEATHERED PORPHYRY COPPER SYSTEM
(after Titley, 1994)
[GENERALIZED CROSS SECTION MAP]
ROSCOE POSTLE ASSOCIATES INC.
Figure 8
Ivanhoe Mines Ltd.
OYU TOLGOI PROJECT, MONGOLIA
GOLD AND COPPER CONTENT AND TONNAGES OF
PRINCIPAL GOLD RICH PORPHYRY COPPER DEPOSITS
(after Sillitoe, 1993)
[PRINCIPAL GOLD RICH PORPHYRY COPPER MAP]
ROSCOE POSTLE ASSOCIATES INC.
Figure 9
Ivanhoe Mines Ltd.
OYU TOLGOI PROJECT, MONGOLIA
GENERALIZED SECTION SHOWING INTRUSIVE AND
ALTERATION RELATIONSHIPS AROUND GOLD-RICH
PORPHYRY COPPER DEPOSITS
(after Sillitoe, 1993)
[GENERALIZED SECTION SHOWING MAP]
ROSCOE POSTLE ASSOCIATES INC.
Figure 10
Ivanhoe Mines Ltd.
OYU TOLGOI PROJECT, MONGOLIA
EXPLORATION DATA FROM DIFFERENT LEVELS IN THE SYSTEM
(after Sillitoe, 1993)
[EXPLORATION DATA FROM DIFFERENT LEVELS MAP]
ROSCOE POSTLE ASSOCIATES INC.
Figure 11
Ivanhoe Mines Ltd.
OYU TOLGOI PROJECT
Mongolia
CROSS SECTION AT
OYU TOLGOI CENTRAL ZONE
SUPERGENE BLANKET
Looking North
(after Forster, 2000)
[CROSS SECTION SUPERGENE BLANKET MAP]
ROSCOE POSTLE ASSOCIATES INC.
Figure 12
Ivanhoe Mines Ltd.
OYU TOLGOI PROJECT, MONGOLIA
OYU TOLGOI IP PLOT
CHARGEABILITY IN 2 MV/V CONTOURS
(after Delta geoscience, 2001)
[OYU TOLGOI IP PLOT MAP]
ROSCOE POSTLE ASSOCIATES INC.
Figure 13
Ivanhoe Mines Ltd.
OYU TOLGOI PROJECT
Mongolia
OYU TOLGOI SOUTHWEST AND SOUTH
DRILL HOLE AND IP CHARGEABILITY MAP
[DRILL HOLE AND IP CHARGEABILITY MAP]
ROSCOE POSTLE ASSOCIATES INC.
Figure 14
Invahoe Mines Ltd.
OYU TOLGOI PROJECT
Mongolia
SOUTHWEST OYU (NE HALF)
COMPILATION OF GEOLOGY
AND DRILL HOLES AT SURFACE
(after Crane and Panther, 2001)
[COMPILATION OF GEOLOGY MAP]
ROSCOE POSTLE ASSOCIATES INC.
Figure 15
Invahoe Mines Ltd.
OYU TOLGOI PROJECT
Mongolia
SOUTHWEST OYU CROSS SECTION
Looking Northwest
(after Forster 2001)
[SOUTHWEST OYU MAP]
ROSCOE POSTLE ASSOCIATES INC.
Figure 16
Invahoe Mines Ltd.
OYU TOLGOI PROJECT, MONGOLIA
SOUTHWEST OYU CROSS SECTION
Looking Northeast
(after Forster, 2001)
[SOUTHWEST OYU CROSS SECTION MAP]
ROSCOE POSTLE ASSOCIATES INC.
APPENDIX 2
ASSAY PROTOCOLS FOR ANALABS MONGOLIA
ROSCOE POSTLE ASSOCIATES INC.
ASSAY PROTOCOLS FOR ANALABS MONGOLIA
ANALABS MONGOLIA
ANALYTICAL METHODS IN USE FOR IVANHOE
1. Method F630
A 30 g sample is taken and mixed with 150 g of fire assay flux. This is
then fused at 1100 degrees C in a fusion furnace. The litharge in the
flux is reduced to lead and the lead button obtained also contains any
precious metals from the sample. After separation from the slag the
lead button is cupelled at 950 degrees in a muffle furnace. The lead is
oxidized and absorbed into the magnesia cupel using leaving a prill
containing the precious metals. Silver is added to the flux to ensure
that the prill can be handled easily. The prill is then dissolved in
aqua regia and made up to a final volume of 10 ml. After mixing the
samples are read for gold on an atomic absorption sprectometer (AAS)
using the appropriate calibration standards.
2. Method G102/A102
A 0.3 g sample is digested in a flat bottomed vial with hydrochloric,
nitric and perchloric acids to incipient dryness and then made up to a
final volume of 15 ml in 20% hydrochloric acid. After mixing, the
samples are read for molybdenum on AAS.
3. Method G103/A103
A 0.4 g sample is digested in a beaker with the hydrochloric, nitric
and perchloric acids to incipient dryness and then made up to a volume
of 100 ml in a volumetric flask with 10% hydrochloric acid. After
mixing the samples are read for copper on AAS.
The method is the same as above except that a 0.25 g sample is taken
and the final volume is 500 ml.
1
ROSCOE POSTLE ASSOCIATES INC.
4. Method G119/A119
In each rack of 50, 2 standards, 1 blank, 2 replicates and 2
duplicates are used to monitor the quality of the results obtained.
Summary.
2
APPENDIX 3
DOCUMENTS RELATING TO TITLE
1 BHP Ivanhoe Agreement May 5, 2000.
2 Original Certificate of Mineral Exploration #210, BHP Minerals
International EMI (Amended for renewal to 2004).
3 Three certificates of Mineral Exploration for the Modified
Mineral Concession (Amended for Renewal to 2004).
a. 66x1 2001-09-20
b. 66x2 2001-09-21
c. 66x3 2001-09-20
4 Certificate of New Mineral Exploration License 3677 X, Jaukhlant
Uul.
5 Summary of Mongolian Mining Law, Canning Management Property
Ltd.; October 1999.
6 Lynch Idesh & Mahoney, Legal Opinion of Exploration Licenses,
October 22, 2001 (Mongolian Properties Title Report).
7 Central Oyu Boundary, Letter October 1, 2001 Ivanhoe - BHP.
8 Lynch Idesh & Mahoney, Supplement to "Mongolia Properties Title
Report 22; October, 2001"; February 5, 2002.
9 Lynch Idesh & Mahoney, Supplement to "Mongolia Properties Title
Report dated 22 October 2001"; Water and Surface Rights; February
21, 2002.
1
EARN-IN AGREEMENT
(OYU TOLGOI PROJECT, MONGOLIA)
THIS AGREEMENT (the "AGREEMENT") is made effective as of the 5th day of May,
2000 (the "EFFECTIVE DATE"), between:
IVANHOE MINES LTD., a corporation incorporated under the laws of the Yukon
Territory, Canada ("IVANHOE")
and
BHP MINERALS INTERNATIONAL EXPLORATION INC. a company incorporated under
the laws of Delaware, USA ("BHP")
INTRODUCTION
A. BHP is the holder of the exploration license (the "LICENSE") for the
area described in the License (the "LICENSED AREA") associated with the
exploration project commonly referred to as the Oyu Tolgoi Project (the
"PROJECT"). A copy of the License and a description of the Licensed
Area are attached as Exhibit A.
B. Ivanhoe desires to evaluate the Project and determine whether to
acquire an ownership interest in the License and enter into a joint
venture agreement, as provided in this Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises,
covenants and agreements herein set forth, the parties covenant and agree with
each other as follows:
1
GENERAL PROVISIONS
PART 1
INTERPRETATION
DEFINITIONS
1.1 As used in this Agreement, the following terms shall have the meanings
ascribed thereto:
"Additional Earn-In Obligations" has the meaning assigned to it in Section 3.4;
"Back-in Right" has the meaning assigned to it in Section 4.1;
"BHP Royalty" has the meaning assigned to it in Section 3.6;
"Business Day" means a day on which the commercial banks are generally open for
business in Melbourne, Australia and Vancouver, Canada;
"Defaulting Party" has the meaning assigned to it in Section 7.1;
"Dollar" and "$" mean U.S. dollars;
"Earn-in Date" means the last day of the Earn-in Period;
"Earn-in Obligations" means, collectively, the Initial Earn-in Obligations and
the Additional Earn-in Obligations;
"Earn-in Period" means a period of three (3) years commencing from the Effective
Date;
"Existing Data" means maps, drill logs and other drilling data, core tests,
pulps, reports, surveys, assays, analyses, production reports, operations,
technical, accounting and financial records, and other material information
developed by BHP in respect of the Project prior to the date of this Agreement;
"Expenditures" means any costs incurred by Ivanhoe in connection with the
Licensed Area, whether direct or indirect, and for purposes of:
2
(i) prospecting, exploration, and evaluation of the Licensed Area;
(ii) payments of fees, duties, or other charges or deductions to
acquire or maintain any license, permit, or other documents
issued by governmental bodies or other persons granting the
right to use mineral resources and surface lands in the
Licensed Area, and
(iii) other expenses incurred in connection with exploration of the
Licensed Area, or License, including environmental and other
studies, charges incurred for site preparation, engineering,
surveying, permits, equipment rental, third-party contractor
services, construction of roads, costs of equipment and
supplies, labor costs, fees under consulting agreements, and
all direct salary and field expenses of exploration personnel,
and transportation costs.
"First Phase Exploration Program" has the meaning assigned to it in Section 3.1;
"Initial Earn-in Obligations" has the meaning assigned to it in Section 3.1;
"Joint Venture" has the meaning assigned to it in Section 5.1;
"Joint Venture Agreement" has the meaning assigned to it in Section 5.2;
"License" means the exploration license in respect of the Licensed Area, as more
particularly described in Exhibit "A" together with any upgraded mineral tenure
in respect thereof (including, but not limited to, any mining license) granted
pursuant to the provisions of the applicable mining laws of Mongolia;
"Licensed Area" means, at any particular time, the geographical area which is
then subject to the License or other upgraded mineral tenure in respect thereof
granted pursuant to the provisions of the applicable mining laws of Mongolia;
the current area subject to the License is described by the co-ordinates set
forth in Exhibit "A";
"Net smelter return" means the amount received by Ivanhoe from a purchaser in
payment for first saleable product mined from the Licensed Area less costs of
transportation from the mine to the point where payment from the purchaser is
received and less sampling, weighing, treatment, processing, and refining
charges borne by Ivanhoe in connection with
3
the sale of such product. In the event the first saleable products are shipped
to a treatment facility owned or operated by Ivanhoe, the net smelter returns
shall be no less favourable to BHP than if such products had been shipped to a
non-affiliated purchaser.
"Non-Defaulting Party" has the meaning assigned to it in Section 7.1;
"Offer" has the meaning assigned to it in Section 6.1;
"Offeror" has the meaning assigned to it in Section 6.1;
"Offeree" has the meaning assigned to it in Section 6.1;
"Operator" has the meaning assigned to it in Section 5.2(a);
"Outside Areas" has the meaning assigned to it in Section 3.1;
"Second Phase Exploration Program" has the meaning assigned to it in Section
3.5;
"Significant Mineralized Occurrence" means a potential resource or concentration
of copper mineralization in such quantity and quality that extraction of the
mineralization at a profit is reasonably and commercially feasible in the
opinion of both BHP and Ivanhoe, acting in a commercially reasonable manner;
"Standard Terms" has the meaning assigned to it in Section 5.2; and "Subject
Interest" has the meaning assigned to it in Section 6.1.
INTERPRETATION
1.2 For the purposes of this Agreement, except as otherwise expressly
provided:
(a) "this Agreement" means this Agreement, including the exhibits and
schedules hereto, and not any particular part, section or other portion
hereof, and includes any agreement, document or instrument entered
into, made or delivered pursuant to the terms hereof, as the same may,
from time to time, be supplemented or amended and if effect;
4
(b) all references in this Agreement to a designated "part", "section",
"subsection" or other subdivision or to a schedule are references to
the designated part, section, subsection or other subdivision of, or
schedule to, this Agreement;
(c) the words "hereof", "herein", "hereto" and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any
particular part, section, subsection or other subdivision or schedule
unless the context or subject matter otherwise requires;
(d) the division of this Agreement into parts, sections and other portions
and the insertion of headings are for convenience of reference only and
are not intended to interpret, define or limit the scope, extent or
intent of this Agreement or any provision hereof;
(e) unless otherwise provided herein, all references to currency in this
Agreement are to lawful money of the United States of America and all
amounts to be calculated or paid pursuant to this Agreement are to be
calculated in lawful money of the United States of America;
(f) a reference to a statute in this Agreement includes all regulations
made thereunder, all amendments to the statute or regulations in force
from time to time, and any statute or regulation that supplements or
supercedes such statute or regulations;
(g) the singular of any term includes the plural, and vice versa, and the
use of any term is generally applicable to any gender and, where
applicable, a body corporate, firm or other entity, and the word "or"
is not exclusive and the word "including" is not limiting whether or
not non-limiting language (such as "without limitation" or "but not
limited to" or words of similar import) is used with reference thereto;
and
(h) all references to "approval", "authorization" or "consent" in this
Agreement means written approval, authorization or consent.
EXHIBITS
1.3 Attached to and forming part of this Agreement is the following
Exhibit:
1.4 Exhibit "A" - Copy of the License and description of the Licensed Area
1.5 Exhibit "B" - List of Vehicles and Field Equipment
PART 2
EARN-IN RIGHTS
EARN-IN RIGHTS
5
2.1 BHP hereby grants to Ivanhoe the right to earn a one hundred (100%)
participating interest in the License by performing the Earn-in
Obligations with in the Earn-in Period. Provided that Ivanhoe performs
all of the Earn-in Obligations within the Earn-in Period and is not in
material breach of this Agreement, Ivanhoe will be deemed to have
earned a one hundred percent (100%) participating interest in the
License as of the Earn-in Date.
LICENSE REGISTRATION
2.2 BHP will use commercially reasonable efforts to cause the License to be
legally transferred and registered in the name of Ivanhoe as soon as
practicable after Ivanhoe has earned its participating interest in the
License in accordance with Section 2.1.
LICENSE RELINQUISHMENT
2.3 Provided that Ivanhoe is not in default under any terms of this
Agreement, until such time as BHP has complied with its obligation
under Section 2.2 or this Agreement is terminated, whichever is
earlier, BHP will not:
(a) voluntarily relinquish any portion of the Licensed Area
without first consulting with Ivanhoe; or
(b) voluntarily surrender the License without first allowing
Ivanhoe to exercise its right of first refusal under Section
6.1 hereof.
6
PART 3
EARN-IN OBLIGATIONS
INITIAL EARN-IN OBLIGATIONS
3.1 During the Earn-in Period, Ivanhoe will conduct an exploration program
in the Licensed Area involving reconnaissance, diamond drilling and
reverse circulation drilling (the "First Phase Exploration Program") to
examine the chalcocite blanket and test copper-gold mineralization in
the North, South, and Central Oyu and other sections of the Licensed
Area. Ivanhoe agrees to incur the following minimum Expenditures in
connection with its exploration, prospecting, and evaluation of the
Licensed Area within each 12 month work period described below:
WORK PERIOD MINIMUM EXPENDITURES
- ------------------------------------------ --------------------
#1. Effective Date to First Anniversary of
Effective Date $ 500,000
#2. First Anniversary of Effective Date to
Second Anniversary of Effective Date $1,000,000
#3. Second Anniversary of Effective Date
to Third Anniversary of Effective Date $1,500,000
TOTAL $3,000,000
At least one million five hundred thousand dollars, ($1,500,000) of such
Expenditures will be allocated to funding exploration in areas outside the
Central Oyu chalcocite resource area but within the Licensed Area (the "Outside
Areas"), unless the parties agree, based on initial results obtained during this
Program, that the prospectivity of the Outside Areas does not justify allocating
that level of funds to the Outside Areas.
The obligations in this section 3.1 are collectively referred to as the
"Initial Earn-in Obligations".
EXPENDITURES DURING FIRST PHASE EXPLORATION PROGRAM
3.2 (a) Expenditures incurred by or on behalf of Ivanhoe prior to the end
of any designated work period in excess of the minimum required
Expenditures for that work period shall be credited against minimum
Expenditure requirements for the following period. Under no
circumstances shall BHP be obligated to reimburse Ivanhoe for any
Expenditures incurred by Ivanhoe pursuant to this Agreement.
7
(c) Upon Ivanhoe's failure to make such Expenditures
required during any designated work period, BHP may,
by written notice to Ivanhoe, terminate this
Agreement effective upon the end of such designated
work period, and Ivanhoe shall retain no interest
under this Agreement or to the License, but Ivanhoe
shall be obligated to pay BHP the unpaid balance of
Expenditures for such work period and shall remain
liable for its obligations described in this Part 3
(Earn-in Obligations) (except sections 3.4 and 3.5)
and Part 7 (Default and Termination) and all other
obligations and liabilities that expressly survive
the termination of the Agreement.
LICENSE
3.3 During the Earn-in Period, Ivanhoe will, at its sole cost, keep and
maintain title to the License in good standing (including, but not limited to,
paying in a timely manner all required license fees of any nature and promptly
providing copies of all such payments to BHP) and comply with all work programs
required to keep the License in good standing. Ivanhoe will manage all
exploration programs using sound business judgement and in accordance with
generally accepted international mining industry practice. Any necessary
expenditures incurred by Ivanhoe to comply with the laws in Mongolia for the
purpose of maintaining the License will be considered an Expenditure and
credited towards its Initial Earn-in Obligations.
ADDITIONAL EARN-IN OBLIGATIONS
3.4 After fulfilling the Initial earn-in Obligations, Ivanhoe shall fulfil each
of the following additional obligations on the Earn-in Date (collectively,
the "ADDITIONAL EARN-IN OBLIGATIONS") before it will be vested with a one
hundred percent (100%) participating interest in the License, inaccordance
with section 2.1:
(a) pay to BHP the sum of five million dollars ($5,000,000) by wire
transfer; and
(b) deliver to BHP a letter of credit, bank guarantee, or performance bond
in a form and substance and from a bank or other financial or bonding
institution acceptable to BHP to secure the performance by Ivanhoe of
the minimum Expenditures of the Second Phase Exploration Program.
8
Ivanhoe shall have the option of fulfilling the payment obligation under
clause (a) of this section 3.4 by paying BHP one million dollars
($1,000,000) by wire transfer on the Earn-in Date and contemporaneously
providing BHP with a promissory note, in form and substance satisfactory to
BHP, in the amount of four million dollars ($4,000,000) payable in full 12
months after the Earn-in Date, together with an irrevocable letter of
credit or bank guarantee in favor of BHP and in a form and substance and
from a bank or other financial institution acceptable to BHP.
The security provided under clause (b) of this section 3.4 shall be
in the amount of three million dollars ($3,000,000), which amount may, at
the request of Ivanhoe, be reduced each year during the Second Phase
Exploration Program by the amount of Expenditures incurred by Ivanhoe under
such Program during the preceding year.
SECOND PHASE EXPLORATION PROGRAM
3.5 (a) Upon completion of the Earn-in Obligations but subject to the
transfer of the License from BHP to Ivanhoe pursuant to Section 2.2,
Ivanhoe will incur additional Expenditures in the aggregate amount of
three million dollars ($3,000,000) to conduct further exploration in
the Licensed Area (the "Second Phase Exploration Program") over a
period of four (4) years, of which one million five hundred thousand
dollars ($1,500,000) will be allocated to funding exploration in the
Outside Areas, unless the parties agree, based on initial results
obtained during this Program, that the prospectivity of the Outside
Areas does not justify allocating that level of funds to the Outside
Areas.
(b) If Ivanhoe fails to incur all of the Expenditures required under
Section 3.4 (a) in a timely manner, the unexpended balance of such
minimum Expenditure requirement shall be paid to BHP from the security
posted under clause (b) of section 3.4 and BHP shall be entitled to
conduct (or contract with a third party to conduct) exploration in the
Licensed Area to the extent of costs equal to such unexpended balance.
BHP'S ROYALTY INTEREST
3.6 Upon Ivanhoe's deemed earn-in of a one hundred percent (100%)
participating interest pursuant to Section 2.1, BHP will be deemed to
have conveyed its entire beneficial interest in the License to Ivanhoe
save and except a non-participating
9
two percent (2%) net smelter returns royalty (the "BHP Royalty") and
the Back-in Rights described in Part 4.
STAFFING AND EQUIPMENT
3.7 Ivanhoe may, but will not be obliged to (a) offer to employ or contract
one or more of those individuals that are or remain under contract to
BHP in Mongolia and (b) purchase BHP's vehicles and field equipment
associated with the Project described in Exhibit B at fair market
value.
DATA AND REPORTS
3.8 (a) BHP will furnish or make available to Ivanhoe copies of all
Existing Data in its possession or control, and copies of all licenses or
contracts relating to the Licensed Area.
(b) Ivanhoe will deliver to BHP, within 45 days after the end of each
work period referred to in section 3.1 and after each year of the
Second Phase Exploration Program, a report in reasonable detail of
all operations, technical data, and Expenditures of Ivanhoe in the
Licensed Area. Ivanhoe will provide BHP with a general written and
oral review of all operations on or before the first day of March,
June, September, and December of each year during the term of this
Agreement. Ivanhoe will timely deliver to BHP copies of all Ivanhoe
internal geological reports in connection with the Project,
including such information that is non-factual or interpretive,
together with all reports submitted by Ivanhoe to the Government of
Mongolia and any security regulators to which Ivanhoe provides
reports. Ivanhoe will also promptly notify BHP of significant new
discoveries promptly after such information becomes available.
(c) during the term of this Agreement, Ivanhoe grants to BHP full right
and access to geological reports, evaluations, information and
other technical and geological data, and other data and information
obtained through all operations within the Licensed Area and agrees
to forward to BHP all technical data on a timely basis; subject,
however, to subsection 3.8 (d).
(d) Any technical information, geological information, or studies,
reports, mining models, drill hole data, or other geological, or
concerning any property within the Licensed Area and the existence,
location, quantity, or quality of minerals
10
located therein, provided or made available by one Party to the
other under this Agreement or prior to the Effective Date hereof,
is made without warranty and at the sole risk of the receiving
Party, and no warranty, express or implied, is made with respect
to such information, all of which is provided "AS IS". Each Party
shall make its own determinations with respect to the reliability
of such information, and shall have no claim or action against the
other with respect to such information.
AUDIT
3.9 Ivanhoe and BHP shall each be entitled to an independent audit of the
matters covered by any statement of Expenditures, at the expense of the
Party requesting the audit, provided that the audit is conducted by an
international accounting firm of recognized standing. Such accounting
firm shall have access, during normal business hours and upon 3 days
prior notice to the other Party, to all books and records necessary or
useful to perform its audit. The statement of Expenditures shall be
presumed true and correct after the expiration of 90 days after the
date furnished, unless within the 90 day period the Party requests an
audit, specifying with particularity the items to which exception is
taken and the ground for each exception. If the Party requesting the
audit in good faith takes written exception as provided herein, then
the 90 day period shall be suspended until the objection has been
resolved.
INSURANCE
3.10 During the Earn-in Period, Ivanhoe will provide investigation, defense,
and indemnification for BHP against any and all claims and liability of
any nature including for damage, loss, or expense arising from damage
to property or injury or death of any person arising in any way out of,
in connection with, or resulting from the activities, errors or
omissions of Ivanhoe, its directors, officers, employees, contractors,
agents, representatives and invitees in connection with this Agreement.
Ivanhoe will obtain and keep in force comprehensive general liability
insurance, including contractual liability and coverage for the
indemnity in this Agreement, with a limit of liability of not less than
$5,000,000 combined, single limit, written on an occurrence basis,
automobile liability insurance of not less than $5,000,000 per
accident, and workers compensation insurance including voluntary
workers
11
compensation insurance and employer's liability coverages. Each
insurance policy shall be endorsed so as to name BHP as an "additional
insured". Within ten (10) days after the Effective Date, Ivanhoe will
deliver a certificate of such insurance evidencing the naming BHP as an
additional insured. The certificate shall provide for a thirty (30) day
prior notice to BHP of the non-renewal, cancellation or modification of
such insurance.
SAFETY
3.11 Ivanhoe and its authorized representatives will carry out all
operations in the Licensed Area with the highest regard for the safety
of all persons and property and in accordance with generally accepted
international mining industry safety policies and procedures and the
requirements of the laws of Mongolia, including, without limitation,
the Labour Law, the Minerals Law, and laws with respect to protection
of the environment, and Ivanhoe will indemnify and hold harmless BHP,
its directors, officers, employees, agents, and attorneys from and
against all losses, liabilities, claims, demands, damages, expenses,
suits, injury or death arising out of such operations. Failure to do so
will be considered a material breach of this Agreement for which BHP
may terminate this Agreement during the Earn-in Period without penalty
to BHP, and Ivanhoe will have no further rights or interests in the
Licensed Area or the License, and Ivanhoe will remain liable for all
liabilities which it has incurred or which have accrued prior to
termination of this Agreement.
ENVIRONMENTAL
3.12 Ivanhoe and its authorized representatives will carry out all
operations in the Licensed Area with the highest regard for the
protection of the environment and in accordance with generally accepted
international mining industry environmental policies and procedures and
the requirements of the laws of Mongolia, and Ivanhoe will indemnify
and hold harmless BHP, its directors, officers, employees, agents, and
attorneys from and against all losses, liabilities, claims, demands,
damages, expenses, suits, injury or death arising out of such
operations. Failure to do so will be considered a material breach of
this Agreement for which BHP may terminate this Agreement during the
Earn-in Period without penalty to BHP, and Ivanhoe will have no further
right or interest in the Licenses Area or the License, and Ivanhoe
12
will remain liable for all liabilities which it has incurred or which
have accrued prior to termination of this Agreement.
INDEMNIFICATION
3.13 Ivanhoe will indemnify and save BHP, its directors, officers,
employees, agents, and attorneys harmless from and against all losses,
liabilities, claims, demands, damages, expenses, suits, injury or death
arising out of its performance under this Agreement. This
indemnification will survive termination of this Agreement.
NO THIRD PARTY BENEFICIARY RIGHTS
3.14 This Agreement is for the benefit of the Parties and their respective
successors and assigns only, and is not intended to create third party
beneficiary rights in any other Party or in any Government,
governmental organization or agency.
RECLAMATION
3.15 Ivanhoe will be solely responsible for any reclamation which may be
required by the Government of Mongolia for work done by Ivanhoe under
this agreement. Prior to commencing any exploration work in the
Licensed Area, Ivanhoe will provide to BHP a bond or other form of
security in a form and substance and from an institution acceptable to
BHP to cover the first $2 million of any costs for such reclamation.
PART 4
BHP BACK-IN RIGHTS
BACK-IN RIGHTS
4.1 If, at any time prior to the completion of the Second Phase Exploration
Program by Ivanhoe pursuant to section 3.4 (a) or by BHP pursuant to
section 3.5 (b), Ivanhoe or BHP in good faith believes that, based on
exploration results obtained, one or more Significant Mineralized
Occurrences have been identified in the Licensed Area, that party will
promptly notify the other in writing. BHP will have the right (the
"Back-in Right"), exercisable within 60 days after such notice, to
repurchase a participating interest in that portion of the Licensed
Area hosting any Significant Mineralized Occurrence and any extensions
of such Significant Mineralized
13
Occurrence based on the nature and scope of the Significant Mineralized
Occurrence as follows:
(a) if the Significant Mineralized Occurrence contains a potential resource
of copper mineralization of at least 250 million tonnes grading 1.0%
copper or more, which can be processed using the solvent
extraction-electrowinning leaching recovery method, BHP will have a
right to re-purchase a participating interest therein equal to forty
percent (40%);
(b) if the Significant Mineralized Occurrence contains a potential resource
of copper mineralization of at least 300 million tonnes grading 1.0%
copper or more, which can be processed using conventional extraction
methods with or without also using the SX-EW leaching recovery method,
BHP will have a right to repurchase a participating interest therein
which will result in BHP having a participating interest in all such
Significant Mineralized Occurrences equal to sixty percent (60%).
BACK-IN PURCHASE PRICE
4.2 If BHP exercises its Back-in Right:
(a) pursuant to section 4.1 (a), BHP will, upon execution by both parties
of a Joint Venture Agreement, pay to Ivanhoe a cash sum equal to three
times the total amount of Expenditures incurred by Ivanhoe in respect
of the Licensed Area to such date under both Exploration Programs, and
if the Back-in Right is exercised with respect to a Significant
Mineralized Occurrence which lies within the Central Oyu Mineralized
portion of the Licensed Area identified by BHP prior to the effective
date, BHP will also repay all amounts paid by Ivanhoe to fulfill the
Earn-in Obligations under clause (a) of Section 3.4;
(b) pursuant to section 4.1 (b) BHP will, upon execution by both parties of
a Joint Venture Agreement, pay to Ivanhoe a cash sum equal to three
times the total amount of Expenditures in respect of the Licensed Area
under both Exploration Programs to such date, and if the Back-in Right
is exercised with respect to a Significant Mineralized Occurrence which
lies within the Central Oyu Mineralized portion of the Licensed Area
identified by BHP prior to the effective date, BHP will also repay all
amounts paid by Ivanhoe to fulfill the Earn-in Obligations under clause
(a) of Section 3.4. For purposes of clarification, even if there exists
more than one Significant Mineralized Occurrence, BHP will only have to
pay such
14
amount one time in order to acquire the participating interest in all
such Significant Mineralized Occurrences.
(c) the following rights or obligations will be terminated:
(i) any further Earn-in Obligations of Ivanhoe; and
(ii) BHP's right to the BHP Royalty;
And Ivanhoe and BHP will be deemed to have formed the Joint Venture pursuant to
Section 5.1.
PARTS
JOINT VENTURE
FORMATION OF JOINT VENTURE
5.1 If BHP exercises its Back-in Right pursuant to Section 4.1 and
re-purchases a participating interest in a Significant Mineralized
Occurrence, Ivanhoe and BHP will be deemed to have formed a joint
venture (which may, to comply with Mongolian law, need to be a
Mongolian legal entity jointly owned by the Parties) to explore and, if
warranted, develop and operate one or more mines in, respectively, the
Licensed Area or on that portion of the Licensed Area hosting the
Significant Mineralized Occurrence and any extensions (the JOINT
VENTURE"). For purposes of clarification, if there is more than one
Significant Mineralized Occurrence, then the parties contemplate a
separate Joint Venture for each such Significant Mineralized
Occurrence.
JOINT VENTURE AGREEMENT
5.2 Ivanhoe and BHP will, upon the formation of the Joint Venture pursuant
to Section 5.1, execute an agreement (the "JOINT VENTURE AGREEMENT")
having such terms as are customary in the mining industry ("Standard
Terms") for joint ventures of similar nature and size and which will,
in any event, include the following terms:
(a) the party with the larger participating interest will be the operator
of the Joint Venture (the "Operator") provided that if the
participating interests of the parties are equal, BHP will be the
Operator;
(b) subject to applicable law, all licenses necessary to operate the Joint
Venture will be registered from time to time in the name of the Joint
Venture
15
(c) each party to the Joint Venture will contribute, from time to time, its
pro rata share of any expenditures required to operate the Joint
Venture;
(d) any party that fails to contribute its pro rata share of required
expenditures of the Joint Venture will have its participating
interest in the Joint Venture diluted in accordance with a specified
dilution formula;
(e) the net proceeds from any commercial production from the Joint Venture
will be:
(ii) firstly, used to repay any project financing incurred
by both parties to develop the Significant
Mineralized Occurrence and establish commercial
production; and
(iii) secondly, distributed to the parties to the Joint
Venture pro rata to their respective participating
interests therein; and
(f) if, at any time during the Joint Venture, either party receives an
offer to purchase, in whole or in part, directly or indirectly, its
participating interest in the Joint Venture, which the recipient
intends to accept, or if either party intends to sell, in whole or in
part, directly or indirectly, its participating interest in the Joint
Venture, such party shall give the other party a right of first refusal
in respect of the sale of such interest.
(g) if the parties agree to jointly develop a mine in the Licensed Area,
BHP will allow Ivanhoe a reasonable time to obtain project financing
for Ivanhoe's share of the costs of such development.
(h) If, because of Mongolian law, the Parties are required to form a
Mongolian legal entity to pursue exploitation of an Significant
Mineralized Occurrence, they will incorporate, to the extent possible,
the above-mentioned terms into an agreement at the time of formation of
such an entity.
Unless the parties otherwise agree, and subject to the foregoing, the
Standard Terms will be those set out in Form 5A Model Form Exploration,
Development and Mine Operating Agreement, 1996 published by the Rocky Mountain
Mineral Law Foundation.
16
PART 6
RIGHTS OF FIRST REFUSAL
RIGHTS OF FIRST REFUSAL
6.1 a) If, before the end of the Earn-in Period, either BHP or Ivanhoe
receives an offer to purchase, in whole or in part, directly or
indirectly, its interest in the License (the "SUBJECT INTEREST") from a
third party who is not an affiliate, which offer the recipient intends
to accept, or if either BHP or Ivanhoe intends to and can sell, in
whole or in part, directly or indirectly, a Subject Interest to a third
party who is not an affiliate, such party ("OFFERER") shall first offer
the Subject Interest (the "OFFER") to the other party ("OFFEREE") on
terms no less favourable than those in any offer received or intended
to be made.
(c) If, following the end of the Earn-in Period, BHP receives an offer to
purchase, or if it intends to sell, the BHP Royalty, in whole or in
part, to a third party who is not an affiliate, BHP shall first offer
such interest to Ivanhoe on the same terms and conditions as the offer
or the proposed sale, provided however, that in the case of an offer
from a third party, Ivanhoe's costs to exercise this right of first
refusal shall be ten per cent (10%) higher than the offered price
including the cash equivalent of any non-cash consideration.
OFFER
6.2 Any Offer pursuant to Section 6.1 shall:
(a) set out fully and clearly all of the terms and conditions of any
transaction;
(b) if it is made as the result of an offer from a third party, include a
true copy of the offer received and the identity of the offering party;
and
(c) contemplate cash consideration and if the Offer is based on an offer
from a third party which includes non-cash consideration, in whole or
in part, the Offer shall be made on the basis of the cash equivalent of
such non-cash consideration, determined on the basis of a bonafide
arm's length valuation by a qualified valuator, and a coy of such
valuation shall accompany the Offer. If the Offeree, acting reasonably,
disputes such valuation, the valuation shall be reviewed by an
independent third party acceptable to both BHP and Ivanhoe, and such
third party's determination (which shall be delivered with ten (10)
Business Days of submission to the valuator for review) shall be final
and binding upon both parties.
17
TIME FOR ACCEPTANCE
6.3 Offer made as contemplated in Section 6.2 shall be open for acceptance
by the Offeree for a period of 60 days from the date of receipt of the
Offer by the Offeree. If a valuation is being disputed pursuant to
Section 6.2 (c), the period set forth herein shall not commence until
the third party's determination has been made.
"ACCEPTANCE"
6.4 If the Offeree accepts the Offer within the time provided in Section
6.3 by notice in writing to the Offerer in the manner set forth in
Section 10.1, then such acceptance shall constitute a binding agreement
between the Offeror and the Offeree on terms and conditions as
described in Section 6.1, and such transaction shall be completed
within 45 days of the date of such acceptance with each party acting in
good faith in finalizing the documentation related thereto.
"NON-ACCEPTANCE"
6.5 If the Offeree does not accept the Offer within the sixty (60) day
period provided in Section 6.3, the Offeror may complete or proceed
with the transaction regarding the Subject Interest on terms and
conditions as described in Section 6.1 and, where applicable, only to
the party making the original offer to the Offeror as on templated in
Section 6.1. hereof, and in any event such transaction shall be
completed within ninety (90) days from the expiration of rights of the
Offeree to accept such offer, failing which the Offeror must again
comply with the provisions of this Section 6.
PART 7
DEFAULT AND TERMINATION
DEFAULT
7.1 If any part (a "Defaulting Party") is in default of any requirement
herein set forth, the other party may give written notice to the
Defaulting Party specifying the default. The Defaulting Party shall not
lose any rights under this Agreement unless, within thirty (30) days
after the giving of notice of default by the non-defaulting party (the
"Non-Defaulting Party"), the Defaulting Party has failed to cure the
default by the appropriate performance. Upon such failure, the Non-
Defaulting Party shall be entitled to seek any remedy it may have on
account of such default or as may otherwise be provided in this
Agreement. If BHP terminates
18
this Agreement under the provisions of Section 3.2 (b) or 3.5 (b),
Ivanhoe will be released and discharged from all of its liabilities and
obligations hereunder except those liabilities and obligations existing
on the date of termination of the Agreement and except those
liabilities and obligations stated herein to survive termination,
including, without limitation, its obligation to complete all
reclamation required by law or Governmental authorities in connection
with its activities in the Licensed Area or otherwise pursuant to this
Agreement.
TERMINATION
7.2 If Ivanhoe elects to terminate this Agreement prior to completing the
Earn-in Obligations, Ivanhoe will forfeit any right to earn an interest
in the License. In the event that Ivanhoe or BHP elects to terminate
this Agreement during the Earn-in Period, Ivanhoe will ensure that the
License fees have been paid until the next anniversary date of the
License and will remain liable for reclamation of all exploration work
undertaken by it or under its direction in the Licensed Area or
otherwise pursuant to this Agreement.
PARTS
REPRESENTATIONS AND WARRANTIES
REPRESENTATIONS AND WARRANTIES OF BOTH PARTIES
8.1 Each party warrants and represents to the other that:
(a) it is a corporation duly organized and in good standing in its
jurisdiction of incorporation and is qualified to do business and
is in good standing in those jurisdictions where necessary in
order to carry out the purposes of this Agreement;
(b) it has the capacity to enter into and perform this Agreement and
all transactions contemplated herein and that all actions required
to authorize it to enter into and perform this Agreement have been
properly taken;
(c) it will not breach any other agreement or arrangement by entering
into or performing this Agreement; and
(d) this Agreement has been duly executed and delivered by it and is
valid and binding upon it in accordance with its terms.
REPRESENTATIONS OF BHP
8.2 BHP hereby represents and warrants to Ivanhoe that as of the Effective
Date:
19
(a) with respect to the Licensed Area, (i) BHP is in exclusive
possession of the exploration rights for copper thereof; (ii) BHP
has not received any notice of default of any of the terms or
provisions of the License; (iii) BHP has the authority under the
License to perform fully its obligations under this Agreement;
(iv) to BHP's knowledge, the License is valid and is in good
standing; and (v) BHP has no knowledge of any act or omission or
any condition on the Licensed Area which could be considered or
construed as a default under the License;
(b) BHP has delivered to or made available for inspection by Ivanhoe
all Existing Data in its possession or control, and true
and correct copies of all licenses or other contract relating to
the Licensed Area;
(c) to BHP's knowledge, there are no ongoing, pending or threatened
actions, suits, claims or proceedings, affecting, or which could
reasonably be expected to affect, directly or indirectly, the
License or the Licensed Area.
PART 9
CONFIDENTIALITY
CONFIDENTIALITY
9.1 All communications between the parties, and all information and other
materials supplied to or received by any of them from the others which
is either marked "confidential" or is by its nature intended to be for
the knowledge of the recipient alone, and all information concerning
the business transactions and the financial arrangements of the parties
with any person with whom any of them is in a confidential relationship
with regard to the matter in question coming to the knowledge of the
recipient shall be kept confidential by the recipient unless or until
the recipient party can reasonably demonstrate that any such
communication, information and material (i) is, or pat of it is, in the
public domain through no fault of its own, whereupon to the extent that
is in the public domain or (ii) is required to be disclosed by law
regulation or stock exchange rules or in pursuance of employment
duties, in any of which circumstances this obligation shall cease in
relation thereto. The parties shall take all reasonable steps to
minimize the risk of disclosure of confidential information, by
ensuring that only they themselves and such of their employees,
directors and advisers whose functions will require them to possess any
of such information or any potential purchaser of an interest of a
20
party shall have access thereto, and that the latter will be instructed
to treat the same as confidential. The obligations contained in
this Section 9.1 shall endure, even after the termination of this
Agreement, without limit in point of time except and until such
confidential information enters the public domain as set out above.
PART 10
DISPUTE RESOLUTION
EXPENDITURES IN THE OUTSIDE AREAS
10.1 If there is a difference of opinion between BHP and Ivanhoe as to the
prospectivity of the Other Areas after analysis of prior results as
provided in section 3.1 or 3.5, the parties agree to submit those
results to a mutually acceptable, qualified, independent exploration
geologist to make the determination of such prospectivity and to be
bound by the determination of that independent expert.
SIGNIFICANT MINERALIZED OCCURRENCE
10.2 If there is a difference of opinion between BHP and Ivanhoe as to the
size and/or grade of a Significant Mineralized Occurrence for purposes
of section 4.1, the parties agree to submit all relevant exploration
results to a mutually acceptable, qualified, independent mining
engineer to make the determination of such grade and/or size and to be
bound by the determination of that independent expert. In such case,
BHP's Back-in Right shall be exercisable within 60 days of the experts
determination.
21
PART 11
GENERAL
NOTICES
11.1 All notices, requests and other communications required or permitted to
be given under the terms of this Agreement shall be in writing and
shall be sufficiently given to the party to whom it is addressed if
delivered or forwarded by telecopier addressed as follows:
To Ivanhoe:
9th Floor, 200 Burrard Street
Vancouver, British Columbia
Canada V6C 3L6
Fax No.: (604)682-2060
Attention: President
To BHP:
BHP Minerals 1360 Post Oak Blvd., Suite 500
Houston, Texas 77056-3020
Attn: Legal Department
Fax No.: (713)961-8507
Any notice, request, demand or other communication aforesaid shall, if
delivered or sent by telecopier, be deemed to have been given and received on
the day on which it was so received, and if not a Business Day, then on the
Business Day next following the day of delivery. Any party may change its
address for notice in the manner aforesaid.
GOVERNING LAW
11.2 This Agreement shall be governed by and construed in accordance with
the laws of British Columbia, Canada.
HEADINGS
11.3 The headings contained in this Agreement are for convenience of
reference only and shall not affect the interpretation of this
Agreement.
ENTIRE AGREEMENT
11.4 This Agreement constitutes the entire agreement between the parties
relating to the subject matter of this Agreement and supersedes any and
all prior agreements, understands, negotiations and discussions,
whether oral or written, between the parties with respect thereto.
22
AMENDMENT
11.5 No amendment or modification of this Agreement shall be binding unless
in writing and signed by the parties hereto.
TIME OF THE ESSENCE
11.6 Time shall be of the essence of this Agreement.
ENFORCEABILITY
11.7 In the event that any of the provisions of this Agreement should be
invalid, illegal or unenforceable in any respect, the validity,
legality or enforceability of the remaining provisions contained herein
shall not in any way be affected or impaired thereby.
FURTHER ASSURANCES
11.8 The parties shall do, or cause to be done, all such further acts and
things and shall execute, or cause to be executed, all such further
deeds, documents and instruments as may be reasonably necessary for the
purpose of completing the transactions contemplated by this Agreement.
BINDING EFFECT
11.9 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns.
FORCE MAJEURE
11.10 If either party because of Force Majeure is unable to perform its
obligations under this agreement, that party's obligation to perform
which is affected by the Force Majeure shall be suspended to the extent
so affected, provided that:
(a) the non-performing party, within 10 days after the commencement of
the Force Majeure, gives the other party written notice describing
the particulars of the occurrence;
(b) the suspension of performance is of no greater scope than is
required by the Force Majeure; and
(c) the non-performing party uses its best efforts to remedy its
inability to perform.
23
When the non-performing Party is able to resume performance of its
obligations under this Agreement, that Party shall give the other Party written
notice to that effect
"Force Majeure" means any cause or condition beyond the reasonable control of
and without the fault or negligence of the Party claiming Force Majeure which
causes the Party to be unable to perform its obligations, which by exercise of
due foresight such party could not reasonably have been expected to avoid and
which the Party is unable to overcome by the exercise of due diligence. Such an
occurrence may include, but is not limited to: acts of God; labor disputes;
sudden actions of elements, earthquake, fire; actions or inaction by
governmental agencies, inability after diligent effort to obtain workmen or
material; or any other similar cause. Insufficiency of funds does not constitute
Force Majeure.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
date and year first above written.
IVANHOE MINES LTD.
Per: _____________________
Dan Kunz, C.O.O.
Authorized Signatory
BHP MINERALS INTERNATIONAL EXPLORATION INC.
Per: ________________________
Donald J. Schissel
Vice President
Authorized Signatory
24
OYU TOLGOI
EXHIBIT "A"
-DESCRIPTION OF LICENSE AREA-
OYU TOLGOI LICENSE COORDINATES
- -------------------------------------
EAST NORTH BHP LICENSE
- ----------------- ----------------- AREA (HA)
DEGREES MINUTES DEGREES MINUTES MRAM
- ------- ------- ------- ------- -----------
106 30 43 8 135,987.0
107 0 43 8
107 0 42 50
106 30 42 50
[MAP OF OYU TOLGOI]
["MONGOLIAN EXPLORATION LICENSES"]
BHP Minerals International Exploration Inc. 20-Apr-00
London UK
FIXED ASSETS/ RESERVE LEDGER AS OF 31-MAY-99
BRANCH: 0757 LONDON
- -------------------------------------------------------------------------------------------------------------
COST BASIS RENT DEPRECIAT
ID ACQRD -------------------- LIFE ---------------- X
# ITEM ASSET DESCRIPTION INSTL Pds US$ Ms Pds US$ Ms
- -------------------------------------------------------------------------------------------------------------
0757-N. EUROPE & RUSSIA
- -------------------------------------------------------------------------------------------------------------
0.00 0.00 0
- -------------------------------------------------------------------------------------------------------------
MONGOLIA ASSETS
- -------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT Apr-97 18,937.50 30,300.00 36 526.04 841.67 26
Vendor: Special International Inc.
PIMA-II Spectrometer Package with
HP200LX Palmtop Comp.
SPECIMIN Mineral Identification
System
- -------------------------------------------------------------------------------------------------------------
E98.07 SATTELITE PHONE Jun-97 2,970.82 4,872.14 36 82.52 135.34 24
57.315 Vendor: World Wide Satellite Rescue
0.0 Nere World Phone Office
(Voice, Fax and Data Capable)
- -------------------------------------------------------------------------------------------------------------
COMMERCIAL VEHICLE Aug-97 27,967.09 47,264.38 36 776.86 1,312.90 22
Vendor: Khet Ltd
Toyota Landcruiser 80 VX
- -------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT Oct-97 1,727.95 2,782.00 36 48.00 77.28 20
Vendor: Entex
Compaq Dpro 2000 5200/MT
-$US 1,775.00
Compaq P50 1024/768.28
-$US 392.00
HP Deskjet 692c Photo Quality
-$US 297.00
Scanner Keyboard- $US 252.00
2xHP Colour Cartridge F/DJ/DW
660C-$US 56.00
Belkin Cable-$US 10.00
- -------------------------------------------------------------------------------------------------------------
FIELD EQUIPMENT Feb-98 1,994.00 3,250.22 36 55.39 90.28 16
Vendor: Earth Science Systems Ltd.
2xGeo-instrumental Model GSM-2
Magnetic Susceptibility Meter
- -------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT Jun-98 4,031.60 6,571.51 36 111.99 182.54 12
Vendor: Technology Direct (TDT)
Toshiba Tecra 780DVD/8 PII
266 64/8.IGB DVD 13.3" TFT
56K & Toshiba Lithium ION Battery
Pack for Tecra 750CDT
- -------------------------------------------------------------------------------------------------------------
COMMERCIAL VEHICLE Jun-98 25,384.62 42,900.00 36 705.13 1,191.67 12
Vendor: Mongolia Cashbook
Toyota Land Cruiser Jeep GX-80
- -------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
CCUMULATED RESER NET BOOK VALUE
ID -------------------- -------------------
# ITEM ASSET DESCRIPTION Pds US$ Pds US$ COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
0757-N. EUROPE & RUSSIA
- ------------------------------------------------------------------------------------------------------------------------------------
0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
MONGOLIA ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT 13,677.04 21,883.42 5,260.46 8,416.58 S. Diatchkov-Delivered in Tuscon
Vendor: Special International Inc.
PIMA-II Spectrometer Package with
HP200LX Palmtop Comp.
SPECIMIN Mineral Identification
System
- ------------------------------------------------------------------------------------------------------------------------------------
E98.07 SATTELITE PHONE 1,980.48 3,248.16 990.34 1,623.98
57.315 Vendor: World Wide Satellite Rescue
0.0 Nere World Phone Office
(Voice, Fax and Data Capable)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL VEHICLE 17,090.92 28,883.80 10,876.17 18,380.58
Vendor: Khet Ltd
Toyota Landcruiser 80 VX
- ------------------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT 960.00 1,545.60 767.95 1,236.40 D. Hishigsuren, Ulaanbaataar Mongolia
Vendor: Entex
Compaq Dpro 2000 5200/MT
-$US 1,775.00
Compaq P50 1024/768.28
-$US 392.00
HP Deskjet 692c Photo Quality
-$US 297.00
Scanner Keyboard- $US 252.00
2xHP Colour Cartridge F/DJ/DW
660C-$US 56.00
Belkin Cable-$US 10.00
- ------------------------------------------------------------------------------------------------------------------------------------
FIELD EQUIPMENT 886.24 1,444.48 1,107.76 1,805.74
Vendor: Earth Science Systems Ltd.
2xGeo-instrumental Model GSM-2
Magnetic Susceptibility Meter
- ------------------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT 1,343.88 2,190.48 2,687.72 4,381.03 Serguei Diatchkov-Tuscon
Vendor: Technology Direct (TDT)
Toshiba Tecra 780DVD/8 PII
266 64/8.IGB DVD 13.3" TFT
56K & Toshiba Lithium ION Battery
Pack for Tecra 750CDT
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL VEHICLE 8,461.56 14,300.04 16,923.06 28,599.96 Barrie Bolton- Ulaanbaataar
Vendor: Mongolia Cashbook
Toyota Land Cruiser Jeep GX-80
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT Jul-98 3,028.01 4,935.66 36 84.11 137.10 11
Vendor: Cravenplan Computers Ltd
Compaq Armada 7380 DMT 32 MB/
4GB-L2,330.58
Compaq Armada Station-L594.03
Compaq Armada 7300-32MB RAM
Upgrade-L103.40
- ------------------------------------------------------------------------------------------------------------------------------------
FIELD EQUIPMENT Aug-98 6,508.88 11,000.00 36 180.80 305.56 10
Vendor: Mongolia Cashbook
Camp
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL VEHICLE Sep-98 887.57 1,500.00 36 24.65 41.67 9
Vendor: Mongolia Cashbook
Bull Bar for Toyota LC GX-80
- ------------------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT Oct-98 1,028.40 1,738.00 36 28.57 48.28 8
Vendor: Mongolia
- ------------------------------------------------------------------------------------------------------------------------------------
Acer Power 3200, P233 MMX 32 Mb
printer and I-14 Monitor
- ------------------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT Oct-98 1,440.83 2,435.00 36 40.02 67.64 8
Vendor: Mongolian Cashbook
Acer Power 6000, PII-266 MNz 64Mb
Printer
- ------------------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT Oct-98 1,272.19 2,150.00 36 35.34 59.72 8
Vendor: Mongolia Cashbook
I-21 Philips Monitor
- ------------------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT Nov-98 1,837.28 3,105.00 36 51.04 86.25 7
Vendor : Mongolia Cashbook
Canon 3020
- ------------------------------------------------------------------------------------------------------------------------------------
SATELLITE PHONE Nov-98 2,840.24 4,800.00 36 78.90 133.33 7
Vendor: Mongolian Cashbook
Nera World Satellite Phone
- ------------------------------------------------------------------------------------------------------------------------------------
MAP CABINETS Nov-98 2,230.08 3,657.41 52 42.89 70.33 7
Vendor: Capital Links Limited
2 Graphitheque Cabinets AC 1300B
- ------------------------------------------------------------------------------------------------------------------------------------
MAP CABINET Nov-98 990.00 1,692.90 60 16.50 28.22 7
Vendor: GB Office Supplies Limited
Metalico Excel Vertical Planfile
Cabinet- MXLL/ AO170 A/T
- ------------------------------------------------------------------------------------------------------------------------------------
FIXTURES & FITTINGS Aug-98 890.00 1,450.70 60 14.83 24.18 10
Vendor: Animagination Ltd.
2 Layout tables
- ------------------------------------------------------------------------------------------------------------------------------------
FIELD EQUIPMENT Dec-98 807.10 1,364.00 36 22.42 37.89 6
Vendor: Mongolia Cashbook
Explorer Field Refridgerator
- ------------------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT 925.21 1,508.10 2,102.80 3,427.56 Barrie Bolton- Ulaanbaataar
Vendor: Cravenplan Computers Ltd
Compaq Armada 7380 DMT 32 MB/
4GB-L2,330.58
Compaq Armada Station-L594.03
Compaq Armada 7300-32MB RAM
Upgrade-L103.40
- -----------------------------------------------------------------------------------------------------------------------------------
FIELD EQUIPMENT 1,808.00 3,055.60 4,700.88 7,944.40
Vendor: Mongolia Cashbook
Camp
- -----------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL VEHICLE 221.85 375.03 665.72 1,124.97
Vendor: Mongolia Cashbook
Bull Bar for Toyota LC GX-80
- -----------------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT 228.56 386.24 799.84 1,351.76
Vendor: Mongolia
- -----------------------------------------------------------------------------------------------------------------------------------
Acer Power 3200, P233 MMX 32 Mb
printer and I-14 Monitor
- -----------------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT 320.16 541.12 1,120.67 1.893.88
Vendor: Mongolian Cashbook
Acer Power 6000, PII-266 MNz 64Mb
Printer
- -----------------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT 282.72 477.76 989.47 1,672.24
Vendor: Mongolia Cashbook
I-21 Philips Monitor
- -----------------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT 357.28 603.75 1,480.00 2,501.25
Vendor : Mongolia Cashbook
Canon 3020
- -----------------------------------------------------------------------------------------------------------------------------------
SATELLITE PHONE 552.30 933.31 2,287.94 3,866.69
Vendor: Mongolian Cashbook
Nera World Satellite Phone
- -----------------------------------------------------------------------------------------------------------------------------------
MAP CABINETS 300.23 492.31 1,929.85 3,165.10 Barrie Bolton-Ulaanbaataar
Vendor: Capital Links Limited (was London ref: Kirby
2 Graphitheque Cabinets AC 1300B Johnson)
- -----------------------------------------------------------------------------------------------------------------------------------
MAP CABINET 115.50 197.54 874.50 1,495.36
Vendor: GB Office Supplies Limited
Metalico Excel Vertical Planfile
Cabinet- MXLL/ AO170 A/T
- -----------------------------------------------------------------------------------------------------------------------------------
FIXTURES & FITTINGS 148.30 241.80 741.70 1,208.90
Vendor: Animagination Ltd.
2 Layout tables
- -----------------------------------------------------------------------------------------------------------------------------------
FIELD EQUIPMENT 134.52 227.34 672.58 1,136.66
Vendor: Mongolia Cashbook
Explorer Field Refridgerator
- -----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
FIELD EQUIPMENT Dec-98 807.10 1,1364.00 36 22.42 37.89 6
Vendor: Mongolia Cashbook
Explorer Field Refridgerator
- ----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL VEHICLE Mar-99 920.25 1,500.00 36 25.56 41.67 3
Vendor: Mongolia Cashbook
Bull Bar for Toyota LC VX-80
- ----------------------------------------------------------------------------------------------------------------------------
SUB TOTAL 07573150 108,501.51 180,632.92 4,951.41 50,005.95 82,888.23
- ----------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT May-98 2,840.24 4,800.00 36.00 78.90 133.33 13
Vendor: Mongolia Cashbook
Satellite Phone
- ----------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT May-98 2,840.24 4,800.00 36.00 78.90 133.33 13
Vendor: Mongolia Cashbook
Satellite Phone
- ----------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT Oct-98 7,769.62 13,052.96 36 215.82 362.58 8
Vendor: Cravenplan Computers Ltd
HP Designjet 755CM AO Plotter-
L5,686.50
- ----------------------------------------------------------------------------------------------------------------------------
HP Superstore 24E External Dat
Drive-L857.33
Microtek Scanman 6400XL A3
Scanner-L956.24
Plasmon CDR 480E External SCSI
CD Writer-L249.55
Carriage-L20.00
- ----------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT Jan-99 2,831.42 4,785.10 36 78.65 132.92 5
Vendor: Cravenplan Computers Ltd.
Toshiba Tecra 8000 PII 300/64MB/
6GB/13.3 TFT-L2,475.90
3 com 10/100 Etherlink PC Card
3CCFE 575-BT-L93.51
2x3 Com 56K Global Modem PC Card
3CCM 156-UK-L242.01
Carriage-L20.00
- ----------------------------------------------------------------------------------------------------------------------------
SUB TOTAL 0757 3155 16,281.52 27,438.06 452.27 762.16
- ----------------------------------------------------------------------------------------------------------------------------
0.00 0.00 0 0.00
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL N EUROPE & RUSSIA #REF! #REF! #REF! #REF! #REF!
- ----------------------------------------------------------------------------------------------------------------------------
0.00 0.00 0 0.00
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL N EUROPE & RUSSIA #REF! #REF! #REF! #REF! #REF!
- ----------------------------------------------------------------------------------------------------------------------------
GRAND TOTAL #REF! #REF! #REF! #REF! #REF!
- ----------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
FIELD EQUIPMENT 134.52 227.34 672.58 1,136.66
Vendor: Mongolia Cashbook
Explorer Field Refridgerator
- -------------------------------------------------------------------------------------------------------------
COMMERCIAL VEHICLE 76.68 125.01 843.57 1,374.99
Vendor: Mongolia Cashbook
Bull Bar for Toyota LC VX-80
- -------------------------------------------------------------------------------------------------------------
SUB TOTAL 07573150 58,495.56 97,744.69
- -------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT 1,025.70 1,733.29 1,814.54 3,066.71 Jamsrandorj
Vendor: Mongolia Cashbook
Satellite Phone
- -------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT 1,025.70 1,733.29 1,814.54 3,066.71 Sanjdorj
Vendor: Mongolia Cashbook
Satellite Phone
- -------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT 1,726.56 2,900.64 6,043.06 10,152.32
Vendor: Cravenplan Computers Ltd
HP Designjet 755CM AO Plotter-
L5,686.50
- -------------------------------------------------------------------------------------------------------------
HP Superstore 24E External Dat
Drive-L857.33
Microtek Scanman 6400XL A3
Scanner-L956.24
Plasmon CDR 480E External SCSI
CD Writer-L249.55
Carriage-L20.00
- -------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT 393.25 664.60 2,438.17 4,120.50
Vendor: Cravenplan Computers Ltd.
Toshiba Tecra 8000 PII 300/64MB/
6GB/13.3 TFT-L2,475.90
3 com 10/100 Etherlink PC Card
3CCFE 575-BT-L93.51
2x3 Com 56K Global Modem PC Card
3CCM 156-UK-L242.01
Carriage-L20.00
- -------------------------------------------------------------------------------------------------------------
SUB TOTAL 0757 3155 4,171.21 7,031.82 12,110.31 20,406.24
- -------------------------------------------------------------------------------------------------------------
0.00 0.00 0.00
- -------------------------------------------------------------------------------------------------------------
TOTAL N EUROPE & RUSSIA #REF! #REF! #REF! #REF!
- -------------------------------------------------------------------------------------------------------------
0.00 0.00 0.00 0.00
- -------------------------------------------------------------------------------------------------------------
TOTAL N EUROPE & RUSSIA #REF! #REF! #REF! #REF!
- -------------------------------------------------------------------------------------------------------------
GRAND TOTAL #REF! #REF! #REF! #REF!
- -------------------------------------------------------------------------------------------------------------
BHP Minerals International Exploration Inc.
London UK 20-Apr-00
CERTIFICATE OF
MINERAL EXPLORATION LICENSE
#210
February 17, 1997 Ulaanbaatar
On the basis of January 1, 1997 day's statement A-4 of the Minister of Trade &
Industry.
Umnugobi province (city)
Khanbogd subprovince (district)
Oyu Tolgoi location
With co-ordinates of 1. 106degrees 30' - 42degrees 47'
2. 107degrees 00' - 43degrees 08' area with size of
1.350 sq. km
The right to explore the land is granted to
BHP MINERALS INTERNATIONAL
EXPLORATION INC. - CORPORATION'S MONGOLIAN BRANCH
and extended for 2 years period. The size of the exploration area is 135,987
hectare
Extension made by
DIRECTOR S. Enkhtsay/Geology and Mining Cadastral
June 21, 2000 Ulaanbaatar
1-1
MINERAL EXPLORATION 210 (1997-02-17) NUMBER
LICENSE CERTIFICATE
APPENDIX #1
(Invalid without Certificate)
The granted area's size and changes to the license
REGISTRATION THE SIZE OF THE THE SIZE OF THE
THE REASONS OF THE CHANGES TO NUMBER OF THE SURRENDERED AREA REMAINING AREA
# THE LICENSE APPLICATION (HECTARE) (HECTARE)
- -----------------------------------------------------------------------------------------
1. X-066 160000
1997-08-08
2. Second year's license fee was 112112
paid 1998-09-29
From 1998-10-01 to 1999-10-01
3. Certain parts of the license was 107X 22,728 13,598
returned 1998-09-21
4. Third year's license fee was paid - - 135,987
1999-09-21
5. The license holder's name was - - 1999-10-20
changed to BHP Minerals
International Exploration Inc.
Corporation's Branch
6. The license was extended for 2 82X - 135,987
years until February 17, 2002 by 2000-06-21
OGMC director's #259 decision
7. The certain parts of the area was 196X 112,120 8,496
returned 2000-09-18
8. Fourth year's license fee paid
From 2000-10-01 to 2001-10-01
9. Fifth year's license fee paid - - 7485
From 2001 - 10-01 to 2002-10-01 2991-09-20
10. The license was extended for 2 223 X - 8496
years until February 17, 2004 by 2002-01-10
OGMC director's 2002 years
decision # 06
1-2
MINERAL EXPLORATION 210 (1997-02-17) NUMBER
LICENSE CERTIFICATE
APPENDIX 2.1
(Invalid without Certificate)
The co-ordinate changes of the granted license area
# THE REASONS FOR THE CO-ORDINATE CHANGES VALID CO-ORDINATES
- -------------------------------------------------------------------------------------------------------
1. 8,000 (eight thousand) US$ paid as a license fee 1. 106degrees 30'00" 43degrees 08'00"
The payment taken into account from 1997-10-01 2. 107degrees 00'00" 43degrees
3. 107degrees 00'00" 42degrees 47'00"
4. 66X-1 42degrees 47'00"
Registered by Byambaa
degrees degrees 1997-08-08
2. Second year's license fee was paid. The co-ordinates of the license area are the same
From 1998-10-01 to 1999-10-01 1998-09-29
3. Remaining area's coordinates 1. 106degrees 30'00" 42degrees 50'00"
2. 106degrees 30'00" 43degrees 08'00"
3. 107degrees 00'00" 43degrees 08'00"
4. 107degrees 00'00" 42degrees 50'00"
1999-09-21 T. Delgermaa
4. Third year's license fee was paid The co-ordinates of the license area are the same
1999-09-21
5. The license holder's name was changed to BHP 1999-10-20
Minerals International Exploration Inc.
Corporation's Branch
6. The license was extended for 2 years until The co-ordinates of the license area are the same
February 17, 2002 by OGMC director's #259
decision
2000-06-21
7. The remaining area's co-ordinates 1. 106degrees 47'30" 42degrees 58'30"
2. 106degrees 47'30" 43degrees 03'00"
3. 106degrees 47'30" 43degrees 03'00"
4. 106degrees 55'00" 42degrees 58'30"
8. Fourth year's license fee was paid The co-ordinates of the license area are the same
From 2000-10-01 to 2001-10-01
9. Fifth year's license fee paid The co-ordinates of the license area are the same
From 2001-10-01 to 2002-10-01 2001-09-20
1-3
MINERAL EXPLORATION 210 (1997-02-17) NUMBER
LICENSE CERTIFICATE
APPENDIX #2-2
(Invalid without Certificate)
The co-ordinate changes of the granted license area
# THE REASONS FOR THE CO-ORDINATE CHANGES VALID CO-ORDINATES
- ----------------------------------------------------------------------------------------------------
1. The license was extended for 2 years until The co-ordinates of the license area are the same.
February 17, 2004 by OGMC director's 2002 2002-01-10
years decision #06
1-4
CERTIFICATE OF
MINERAL EXPLORATION LICENSE
#66X-1
On the basis of Article 14 of the Minerals Law of Mongolia, from Geology and
Cadastral Office
Umnugobi province (city)
Khanbogd subprovince (district)
Manakht location
4537 hectares contained within the exploration area and
permitted by this license in
accordance with the conditions & principles of the Minerals Law of Mongolia
21/457 number of certificate/passport of
BHP MINERALS INTERNATIONAL
EXPLORATION INC. - CORPORATION'S BRANCH
FOR
3 years period
This certificate has an appendix where any alterations will be recorded, and
without this appendix the certificate is invalid.
OFFICE OF GEOLOGY AND MINING CASASTRAL
OF THE MINERAL RESOURCE AUTHORITY OF MONGOLIA
DIRECTOR S. Enkhtsay
February 17, 1997 Ulaanbaatar
1-5
MINERAL EXPLORATION 66X-1 NUMBER LICENSE CERTIFICATE
APPENDIX #1
(valid without Certificate)
the license
REGISTRATION THE SIZE OF THE THE SIZE OF THE
# THE REASONS OF THE CHANGES TO NUMBER OF THE SURRENDERED AREA REMAINING AREA
THE LICENSE APPLICATION (HECTARE) (HECTARE)
- --------------------------------------------------------------------------------------
1. X-66 (210) license area was 196X - 4537
returned. 2000-09-18
The date when the license was
first granted
1997-02-17
2. Fourth year's license fee paid - - 4537
2000-09-21
3. Fifth year's license fee paid - - 4537
1001-09-20
4. The license was extended for 2 224X - 4537
years until February 17, 2004 by 2002-01-10
OGMC
director's 2002 years
decision # 06
1-6
MINERAL EXPLORATION 66X-1 NUMBER LICENSE CERTIFICATE
APPENDIX #2
(Invalid without Certificate)
The co-ordinate changes of the granted license area
# THE REASONS FOR THE CO-ORDINATE CHANGES VALID CO-ORDINATES
- -----------------------------------------------------------------------------------------------
1. The co-ordinates of the remaining area 1. 106degrees 38'00" 42degrees 54'00"
2. 106degrees 38'00" 42degrees 57'00"
3. 106degrees 44'00" 43degrees 00'00"
4. 106degrees 44'00" 42degrees 54'00"
2000-09-18 Kh. Dagvadorj
2. Fourth year's license fee was paid. The co-ordinates of the license area are the same.
From 2000-10-01 to 2001-10-01 2000-09-21
3. Fifth year's license fee was paid. The co-ordinates of the license area are the same.
From 2001-10-01 to 2002-10-01 2001-09-20
4. The license was extended for 2 years until The co-ordinates of the license area are the same
February 17, 2004 by OGMC director's 2002 2002-01-10
years decision #06
1-7
CERTIFICATE OF
MINERAL EXPLORATION LICENSE
#66X-2
On the basis of Article 14 of the Minerals Law of Mongolia, from Geology and
Cadastral Office
Umnugobi province (city)
Khanbogd subprovince (district)
Manakht location
1764 hectares contained within the exploration area and permitted by this
license in accordance with the conditions & principles of the
Minerals Law of Mongolia
21/457 number of certificate/passport of
BHP MINERALS INTERNATIONAL
EXPLORATION INC. - CORPORATION'S BRANCH
FOR
3 years period
This certificate has an appendix where any alterations will be recorded, and
without this appendix the certificate is invalid.
OFFICE OF GEOLOGY AND MINING CASASTRAL
OF THE MINERAL RESOURCE AUTHORITY OF MONGOLIA
DIRECTOR S. Enkhtsay
1-8
MINERAL EXPLORATION 210 (1997-02-17) NUMBER
LICENSE CERTIFICATE
APPENDIX #1
(Invalid without Certificate)
The granted area's size and changes to the license
THE SIZE OF THE THE SIZE OF THE
# THE REASONS FOR THE REGISTRATION NUMBER SURRENDERED AREA REMAINING AREA
CHANGES TO THE LICENSE OF THE APPLICATION (HECTARE) (HECTARE)
- ------------------------------------------------------------------------------------------
1. X-66 (210) license area 196X - 1764
was returned. 2000-09-18
The date when the
license was first granted
1997-02-17
2. Fourth year's license - - 1764
fee paid 2000-09-21
3. Fifth year's license fee - - 1764
paid 2001-09-20
4. The license was 225 X - 1764
extended for 2 years 2002-01-10
until February 17, 2004
by OGMC director's
2002 years decision #06
1-9
MINERAL EXPLORATION 66X-2 NUMBER LICENSE CERTIFICATE
APPENDIX #2
(Invalid without Certificate)
The granted area's size and changes to the license
# THE REASONS FOR THE CO-ORDINATE CHANGES VALID CO-ORDINATES
- ---------------------------------------------------------------------------------------------
1. The co-ordinates of the remaining area 1. 106degrees 51'30" 42degrees 55'30"
2. 106degrees 51'30" 42degrees 57'30"
3. 106degrees 51'30" 42degrees 57'30"
4. 106degrees 55'00" 42degrees 55'30"
2000-09-28
K. H. Dagvarlorj
2. Fourth year's license fee was paid. The co-ordinates of the license area
From 2000-10-01 to 2001-10-01 are the same
2000-09-21
3. Fifth year's license fee was paid The co-ordinates of the license area
From 2001-10-01 to 2002-10-01 are the same.
2001-09-20
4. The license was extended for 2 years until The co-ordinates of the license area
February 17, 2004 by OGMC director's 2002 are the same
years decision # 06 2002-02-10
1-10
CERTIFICATE OF
MINERAL EXPLORATION LICENSE
#66X-3
On the basis of Article 14 of the Minerals Law of Mongolia, from geologyand
Cadastral Office
Umnugobi province (city)
Khanbogd subprovince (district)
UlaanUul location
9070 hectares contained within the exploration area and permitted
by this license in accordance with the conditions & principles of
the Mineral Law of Mongolia
21/457 number certificate/passport of
BHP MINERALS INTERNATIONAL
EXPLORATION INC. - CORPORATION'S MONGOLIAN BRANCH
3 years period.
This certificate has an appendix where any alterations will be recorded, and
without this appendix the certificate is invalid.
OFFICE OF GEOLOGY AND MINING CADASTRAL
OF THE MINERAL RESOURCE AUTHORITY OF MONGOLIA
DIRECTOR S. Enkhtsay
February 17, 1997 Ulaanbaatar
1-11
MINERAL EXPLORATION #66X-3 NUMBER LICENSE CERTIFICATE
APPENDIX #1
(Invalid without Certificate)
The granted area's size and changes to the license
REGISTRATION THE SIZE OF THE THE SIZE OF THE
# THE REASONS OF THE CHANGES TO NUMBER OF THE SURRENDERED AREA REMAINING AREA
THE LICENSE APPLICATION (HECTARE) (HECTARE)
- ----------------------------------------------------------------------------------------
1. X-66 (210) license area was 196X - 9070
returned.
The date when the license was 2000-09-18
first granted
1997-02-17
2. Fourth year's license fee payment - - 9070
2000-09-21
3. Fifth year's license fee payment - - 9070
2000-09-20
4. The license was extended for 2 226X - 9070
years until February 17, 2004 by 2002-01-10
OGMC director's 2002 years
decision #06
1-12
MINERAL EXPLORATION 66X-3 NUMBER LICENSE CERTIFICATE
APPENDIX #2
(Invalid without Certificate)
The co-ordinate changes of the granted license area
# THE REASONS FOR THE CO-ORDINATE CHANGES VALID CO-ORDINATES
- ---------------------------------------------------------------------------------------------------
1. The co-ordinates of the remaining area 1. 106degrees 30'00" 42degrees 54'00"
2. 106degrees 30'00" 43degrees 00'00"
3. 106degrees 36'00" 43degrees 00'00"
4. 106degrees 36'00 43degrees 54'00"
2000-09-18 Kh. Dagvadorj
degrees
2. Fourth year's license fee was paid. The co-ordinates of the license area are the same.
From 2000-10-01 to 2001-10-01 2000-09-21
3. Fifth year's license fee was paid. The co-ordinates of the license area are the same.
From 2001-10-01 to 2002-10-01 2001-09-20
4. The license was extended for 2 years until The co-ordinates of the license area are the same.
February 17, 2004 by OGMC director's 2002 2002-01-10
years decision #06
1-13
CERTIFICATE OF
MINERAL EXPLORATION LICENSE
#3677 X
On the basis of Article 14 of the Minerals Law of Mongolia, from geology and
Cadastral Office
Umnugobi province (city)
Khanbogd subprovince (district)
Jaukhlant Uul location
109145 hectares contained within the exploration area and permitted by
this license in accordance with the conditions & principles of the
Minerals Law of Mongolia
21/1380 number certificate/passport of
IVANHOE MINES MONGOLIA INC. CO. LTD.
for
3 years period.
This certificate has an appendix where any alterations will be recoded, and
without this appendix the certificate is invalid.
OFFICE OF GEOLOGY AND MINING CADASTRAL
OF THE MINERAL RESOURCE AUTHORITY OF MONGOLIA
DIRECTOR Kh. Kherlen
September 10, 2001 Ulaanbaatar
1-14
MINERAL EXPLORATION 3677X NUMBER LICENSE CERTIFICATE
APPENDIX #1
(Invalid without Certificate)
The granted area's size and changes to the license
THE SIZE OF
THE SIZE OF THE THE REMAINING
# THE REASONS OF THE CHANGES TO REGISTRATION NUMBER OF THE SURRENDERED AREA AREA
THE LICENSE APPLICATION (HECTARE) (HECTARE)
- ----------------------------------------------------------------------------------------------
1. First granted 4616X 109145
2001-09-10
1-15
MINERAL EXPLORATION 3677X NUMBER LICENSE CERTIFICATE
APPENDIX #2
(Invalid without Certificate)
The co-ordinate changes of the granted license area
# THE REASONS FOR CO-ORDINATE CHANGES VALID CO-ORDINATES
- ----------------------------------------------------------------------------------------------------------------
1. The first co-ordinates of the area 1. 106 degrees 30'00" 42 degrees 54'00"
2. 106 degrees 30'00" 42 degrees 54'00"
3. 106 degrees 36'00" 42 degrees 55'30"
4. 106 degrees 38'00 42 degrees 55'30"
5. 106 degrees 38'00" 42 degrees 54'00"
6. 106 degrees 44'00" 42 degrees 54'00"
7. 106 degrees 44'00" 42 degrees 55'30"
8. 107 degrees 00'00" 42 degrees 55'30"
9. 107 degrees 00'00" 43 degrees 08'00"
10. 107 degrees 05'00" 43 degrees 08'00"
11. 107 degrees 05'00" 43 degrees 04'00"
12. 107 degrees 02'00" 43 degrees 04'00"
13. 107 degrees 02'00" 43 degrees 00'00"
14. 107 degrees 06'00" 43 degrees 00'00"
15. 107 degrees 06'00" 42 degrees 44'30"
16. 107 degrees 30'00" 42 degrees 44'30"
2001-09-10 D. Gerelgua
1-16
MONGOLIAN MINING LAW
1.61 OVERVIEW
The Mineral Resources Authority of Mongolia (MRAM) carries out the functions of
administering mining and mineral related functions for the Government. It is an
arm of the Ministry of Agriculture and Industry.
A new Minerals Law for Mongolia was proclaimed on 1 July 1997. It was
specifically promulgated and announced at a World Bank sponsored Investors
Conference at that time. It provides that all minerals are the property of the
state and that the State shall issue exploration and mining licences.
The Law replaced one that was enacted in 1994. The previous Law had been
produced locally with the help of overseas experts and an Aid programme. It is
understood that it was an United States orientated Law with a bias towards
environmental matters.
The new Mining Law was the result of a World Bank funded study by a Canadian
lawyer and two US experts. As a result, the law resembles some Canadian
provinces' mining laws. On speaking to the Canadian lawyer, he indicated that
Western Australia's Mining Act was also referred to in their deliberations. It
does not contain matters alien to anybody who has been involved in the Western
Australian Mining Act.
1.62 COMMENTS ON THE MINING LAW AND PROCEDURES
The following comments are based on the author's experience and observations. No
guarantee can be given to their accuracy, but they are the result of 20 months
of observation of the Mongolian system and society.
The workings of the Law seem to be honestly based, with no evidence of
corruption. Many "examples" brought to my attention over a period have been
proved to be hyperbole and plainly wrong.
The main problems to date seemed to have stemmed from the large number of small
Mining Licences (in existence before the current law) that have had to be
documented and bought into the new law. The licenses cover placer deposits,
generally follow river valleys and are complex shapes and of uncertain actual
position.
1-1
The problem of "single ownership only" is overcome by foreign companies by
either having good international standard agreements with the original holder,
or transferring them to their own name. BHP and most international companies
favour the latter, and Rio Tinto have utilised the former method.
October, 1998 will see a large amount of ground become vacant, as the first year
of many Exploration Licenses is completed and the rental charge doubles.
Mongolian companies that rushed to peg large tracts a year ago will either have
to Joint Venture or cut down their holdings to be able to afford to keep them.
The registration system will be strained over this period.
1.63 THE MONGOLIAN MINISTRY OF AGRICULTURE AND INDUSTRY IN THE CONTEXT OF
MINING MANAGEMENT.
The Mineral Resource Authority of Mongolia (MRAM) is divided into three main
work areas viz, the Geological Office, the Mining Office and the Office of
Geological and Mining Cadastre (OGMC). The Authority is responsible for the
operation and regulation of the entire mining sector in Mongolia. The MRAM
operated from Ulaanbaatar and has no regional centres.
1-2
STATE SECRETARY
Ministry of Agriculture and
Industry
Mr. B. Zrikkan
HEAD
Mineral Resource Authority
of Mongolia
Mr. D. Jargalsaikhan
DIRECTOR DIRECTOR DIRECTOR
Mining Office Office of Geological and Office of Geology
Mr. T. S. Enkhbold Mining Cadaster Mr. O. Chuluun
LICENSE REGISTRY TEAM CARTOGRAPHIC REGISTRY TECHNICAL UNIT
x 2 staff TEAM x 2 staff
x 4 permanent staff
x 3 temporary staff
1.64 MINING LEGISLATIVE FRAMEWORK
The following are the main features of the mining Law:
- A first come first serve principle applies
- An individual or legal entity may prospect without a license,
however, notification to the OGMC and local administrate body
must be given.
- Exploration Licenses (exploration activities) and Mining
Licenses (productive and developmental mining) are the only
two tenure types issued in Mongolia.
- Exploration Licenses can be issued to an individual or legal
entity for a three-year period with provision to be renewed
for two 2-year periods. Maximum area is 400,000 hectares.
- Mining Licences can only be issued to a legal entity formed
and operating under Mongolian law for a sixty (60) year period
with provision to be renewed for a further period of 40 years.
- Licenses may only be granted to one person and guarantees
exclusive mining rights. Licenses can be transferred and
pledged (mortgaged) without restrictions.
- The head of the OGMC shall within ten days after receiving a
license application notify the applicant as to whether the
application can succeed and where appropriate receive a
license fee (rent) and issue license certificate.
1-3
- No expenditure obligations are applicable, however an annual
license (rental) fee is applicable as well as annual reports
on work carried out and environmental protection reports.
- A 30% maximum corporate tax applies (began in 1998).
- A royalty of 2.5% of sales value for all minerals applies.
- A stability agreement can be made between the Government and a
licensee providing for a stable tax regime throughout the term
of the agreement.
- The following classifications of land are not open for license
applications:
i. Reserved Areas - to bring order and accuracy to the
license register or to resolve boundary disputes the
authority may establish a reserved area for up to three (3)
years.
ii. Special Needs Lands - created under the Land law for
purposes normally associated with
environmental/conservation requirements; in the event an
existing license is affected the State has an obligation to
compensate the licensee; and
iii. an area subject to a valid license.
1.65 REGULATORY AND POLICY ISSUES
SCHEDULE OF FORMS
Some eleven forms are in existence which facilitates the lodgement of
applications for exploration and mining licenses, extensions, transfers and
surrenders of titles. In some instances, additional forms exist for the purpose
of supplying more detailed information relating to applicants, e.g. address in
Mongolia, director details and tax information.
SCHEDULE OF FEES
Some nine provisions exist for payment of fees relating to applications for
various matters, e.g. license applications, pledge applications, transfer
applications, boundary disputes, etc.
The schedule of fees are separated into two categories viz. Exploration Licenses
or Mining Licenses. The applicable fees for exploration licenses are dependent
upon the nationality of the applicant as rates differ for Mongolian entities to
foreign entities whereas mining license fees are the same for both.
1-4
LICENSE REGISTER
The license register comprises various sub-components and is not a single
register system. Each time a license is issued, details are recorded in a
subsidiary register that only has provision for endorsement of information up
until the time of grant.
CARTOGRAPHIC REGISTER
All applications and granted licenses are shown on 1:100,000 working
transparencies.
There is an arrangement with a private company to provide computer generated
digital data. This is generally up to two months out of date, but is readily
available.
The OGMC has plans to introduce a graphic-based digital system, similar to the
Western Australian Tengraph system, and is proceeding slowly in that direction.
Topographic maps at the same scale prepared some 20 years ago are used
separately by cartographic officers to verify/clarify the applicants' intention
to apply for specific land.
LICENSE APPLICATION PROCESS
Specific times and days are set aside by OGMC for viewing public plans and
lodging documents (usually Fridays p.m.).
Monies for fees are to be submitted to the OGMC account number at the State
central treasury and documentation submitted to the OGMC should be accompanied
by a bank receipt (proof of payment).
Annual license fees (rental) are only payable if license application is granted
and must be paid within 10 days of receiving notice of intended grant. Fees are:
EXPLORATION LICENSE MINING LICENSE
------------------- --------------
YEARS YEARS
- ----- -----
1 US$0.05/nectare 1-3 US$5.00/hectare
2-3 US$0.10/hectare 4-5 US$7.50/hectare
4-5 US$1.00/hectare 6-100 US$10.00/hectare
6-7 US$1.50/hectare
1-5
All notification letters from OBMC are hand delivered to addresses in Mongolia
(letter boxes do not exist and only limited post boxes are utilised).
Notification of grant of an exploration licence will occur within ten working
days following registration and for a mining license twenty working days.
LICENSE TRANSFER PROCESS:
Licenses can be transferred as a result of agreements or through legal processes
such as inheritance, merger or bankruptcy.
If a partial transfer is applied for the land being transferred will become the
subject of a freshly issued license to the transferee. The retained and
transferred coordinates are to be shown in the application for transfer so that
license certificates can be appropriately endorsed.
The transfer is effective on its recording which is done within 15 days from
lodgment providing no defects exists.
A transfer by pledgee is subjected to this same process however, additional
documents are to be submitted in accordance with Article 43(2).
PLEDGE PROCESS
To provide security for the financing of investments license holders may pledge
(mortgage) their licenses by civil law.
The pledge agreement becomes effective upon its recording. The same procedure
for recording is used as provided for with transfers.
The license certificate is held by the lending party (pledgee) with all
transfers being prevented unless the pledgee authorized in writing.
1-6
DISCHARGE OF PLEDGE
The discharge of pledge is recorded and the License Certificate suitably
endorsed and returned to the license holder.
LICENSE SURRENDER PROCESS
Surrenders may be lodged in whole or in part. The description used in a partial
surrender must conform with normal statutory requirements concerning shape
(Articles 13 and 17 refer).
A 'cooling off' period of two years exists whereby the previous license holder
cannot reapply for the same ground after lodging a surrender.
A surrender is recorded on the date the license register is endorsed, which
should occur promptly after receipt of an application for a surrender.
1-7
1-1
International Trade Centre
Law Offices Suite 500
LYNCH, IDESH & MAHONEY Baga Toiruu 37 B
Mail Central PO Box 348
Ulaanbaatar 13 Mongolia
Phone 976.11.325.344
Fax 976.11.325.358
URL http://mongolialaw.com
Writer's mobile phone 976.9911.5298
Email mongolialaw@magicnet.mn or
lynch @mongolialaw.com
To: Ivanhoe Mines Ltd
Ed Rochette
From: Lynch, Idesh & Mahoney
Date: 22 October 2001
Subj: BHP Exploration Licenses - Title Report
You have asked us to furnish you with a title report concerning the minerals
exploration license (the Original License) that is the subject of the Earnln
Agreement dated 5 May 2000 between Ivanhoe Mines Ltd, a corporation organized
under the laws of the Yukon territory, Canada (Ivanhoe), and BHP Minerals
International Exploration Inc, a corporation organized under the laws of
Delaware, USA (BHP). More specifically, you have asked us to advise you as to
the status of the Original License and three other licenses (the Other Licenses)
within the area covered by the Original License (the Original License Area)
issued to BHP following BHP's relinquishment of certain portions of the Original
License. You have also asked us to advise you as to procedures for transferring
the Original License and Other Licenses (as well as licenses that may hereafter
be issued to BHP covering areas within the Original License Area) from BHP to
Ivanhoe pursuant to the Earnln Agreement and any amendments to the Earnln
Agreement.
SECTION 1 THE ORIGINAL LICENSE
The Original License (number 210) was issued to "the Mongolian Branch of BHP
Minerals, a USA company" by the Minister of Agriculture and Industry of Mongolia
(MAI) on 17 February 1997 based on Order A-4 of the MAI dated 7 January 1997. A
copy
2-2
of the Original License (and an English translation), showing endorsements
through 21 September 2000, is attached hereto as Exhibit A.
The face of the Original License states that the Original License Area covered
an area of 1,350 square kilometres (sq km) or 135,000 hectares.
Following the effective date of the present Minerals Law of Mongolia (MLM) on 1
July 1997, and pursuant to the requirements of the Law on Implementation of the
MLM that became effective on that same date, BHP re-registered the Original
License on 8 August 1997. As of that date the license number of the Original
License was changed to 66X. The size of the Original License Area was shown on
the first endorsement page of the Original License as 160,000 hectares.
Effective as of 21 September 1999, the first endorsement page of the Original
License certificate shows that BHP relinquished 22,728 hectares from the
Original License Area and that the balance of hectares remaining was 13,598. It
appears that this was a mistake. The next entry on the first endorsement page
(also dated 21 September 1999) concerning renewal of the license shows the
balance as 135,987 hectares.
On 21 June 2000 the Original License was extended for a term of two years to 17
February 2002. Note that the term of the license was deemed to have commenced on
the date the Original License was issued, not the 8 August 1997 date that the
license was re-registered.
On 18 September 2000, BHP relinquished an additional 112,120 hectares from the
Original License, leaving a balance of 8,496 hectares.
SECTION 2 THE BRANCH VS SUBSIDIARY ISSUE
For home jurisdiction tax reasons, and in accordance with the normal practice of
many mining companies with international operations, BHP initially sought to
establish two branch offices in Mongolia to hold its exploration licenses.
Neither the then Board of Foreign Investment (now known as the Foreign
Investment and Foreign Trade Agency (FIFTA)) nor the State Registration
Authority (SRA) understood the distinction between a branch and a subsidiary and
they each issued certificates evidencing the establishment of BHP Minerals
International Exploration Inc (the Delaware corporation) as a Mongolian limited
liability company (XXK) with foreign investment from the USA.
In the fall of 1999, following a period of about nine months of discussions and
negotiations, FIFTA and the SRA issued certificates evidencing the termination
of the status of the two BHP entities in Mongolia as XXKs and the recognition of
each such entity as a BHP branch, retroactive to the dates of their respective
establishments. In the case of BHP Minerals International Exploration Inc, that
date was 11 January 1997.
3-3
On 20 October 1999 the Original License was endorsed to show the change of name
of the license holder from "the Mongolian Branch of BHP Minerals, a USA company"
to "a Branch of BHP Minerals International Exploration Inc Corporation". The
change was made retroactive to 11 January 1997. For purposes of our title
report, we are assuming that this change involved a clarification, not a
transfer of ownership, and that the two names refer to the same entity.
SECTION 3 THE OTHER LICENSES
The Other Licenses are evidenced by certificates issued by the Head of the
Office of Geology and Mining Cadastre (OGMC) of the Mineral Resources Authority
of Mongolia (MRAM) to reflect areas within the Original License Area remaining
after the relinquishment of parts of the Original License on 18 September 2000.
We do not have any document evidencing the issuance of anew license to BHP
following relinquishment of the 22,728 hectares on 21 September 1999. Copies of
each of the three Other Licenses (and English translations), showing
endorsements through 21 September 2000, are attached hereto as Exhibits B, C and
D, respectively.
The following table shows certain information concerning the Original License
and the Other Licenses.
LICENSE DATE (A) HECTARES HECTARES
RELINQUISHED REMAINING
66X 17 Feb 1997 158,715 (B)
21 Sep 1999 22,728 135,987
18 Sep 2000 112,120 8,496
66X-1 18 Sep 2000 4,537
66X-2 18 Sep 2000 1,764
66X-3 18 Sep 2000 9,070
- ------------------
(A) All dates, other than the date of the Original License (17 February
1997), are relinquishment dates. The effective date of each of the Other
Licenses is 17 February 1997.
4-4
(B) This figure is fictitious and was arrived at by working backwards from
the figure of 135,987 and adding in the 22,728 hectares that were
relinquished on 21 September 1999. The Original License shows on the
face of the certificate that the License Area was 1,350 sq km or 135,000
hectares. The License Area figure shown in item 1 on the first
endorsement of the Original License is 160,000 hectares. We cannot
account for these anomalies. We have been advised by Doug McGay that the
135,987 hectare figure shown in item 4 of the first endorsement page of
the Original License as of 21 September 1999 is the benchmark figure he
is using. All subsequent entries showing relinquishment of parts of the
Original License Area, and the parts remaining following such
relinquishment (including the areas shown for the Other Licenses), are
consistent with this figure.
SECTION 4 SUMMARY
We have not checked the coordinates of the Original License or the Other License
for accuracy.
On 19 October 2001 we examined the Original License and Other License records on
file at the Cadastre Office. This examination disclosed that, as of that date,
neither the Original License nor any of the Other Licenses had any recorded
liens or encumbrances. Our examination also disclosed that the applicable
license fees with respect to each of the Original License and Other Licenses for
the period 1 October 2001 through 1 October 2002 were paid on 20 September 2001.
THE EARN-IN AGREEMENT
For purposes of this report, we will assume that Ivanhoe has earned its
participating interest in the Original License and Other Licenses in accordance
with Section 2.1 of the Earn-In Agreement and that BHP is obligated to transfer
these licenses to Ivanhoe. The Original License and the Other Licenses will
hereinafter be referred to collectively as the Licenses.
The Earn-In Agreement is silent regarding assignments. Thus assignments are
neither specifically authorized nor prohibited. The laws governing the Earn-In
Agreement are the laws of British Columbia. We do not know the extent to which
such laws would affect Ivanhoe's assignment rights. Thus BHP may take the
position that the transfers may only be made to Ivanhoe Mines Limited. On the
other hand BHP may have no problem with agreeing to the transfer being made to
an Ivanhoe subsidiary (or even to some other entity). We are assuming that
Ivanhoe wishes to have the Licenses transferred to Ivanhoe Mines Mongolia Inc
XXK (Ivanhoe Mongolia).
4-5
TRANSFER PROCEDURES AND REQUIREMENTS
The Licenses may be transferred pursuant to the terms of the Earn-ln Agreement
or BHP and Ivanhoe may enter into a separate agreement with respect to the
transfer of the Licenses. Since the relevant agreement must be filed with the
OGMC, the parties may prefer to use a separate agreement so as not to make the
Earn-In Agreement a matter of public record.
Either BHP or Ivanhoe Mongolia may file an application with the OGMC to record
the transfer of the Licenses and the transfer will become effective as of the
date and time of recording of the transfer with the OGMC.
The application for transfer must be in a form approved by the OGMC, must
contain the following information, and must be accompanied by the following
documents:
- The License number, date of issuance, and the name of the License holder
as indicated in the records of the OGMC.
- A copy of the transfer agreement (presumably a signed copy although the
law is not specific in this regard).
- A document evidencing Ivanhoe Mongolia's eligibility to hold the
transferred Licenses in accordance with Article 1.1 of the Minerals Law
of Mongolia (MLM), i.e. evidence that Ivanhoe Mongolia has been duly
organized as a limited liability company under the laws of Mongolia.
Although it is not specifically required, we suggest that the document
should also state that Ivanhoe Mongolia is currently in good standing as
a limited liability company.
- A document confirming Ivanhoe Mongolia's acceptance of all rights [sic]
and obligations under the Licenses.
- Evidence of payment of the applicable processing fee (20,000 Mongolian
Togrogs with respect to each license). The fee is deposited in the MRAM
account at the Trade & Development Bank. The bank then issues a receipt
as evidence of payment.
The Head of the OGMC must notify the applicant of acceptance or rejection of the
application for transfer within 15 business days following receipt of the
application.
Following the recording of the transfer of the Licenses, the relevant
authorities will publish a notice of the transfer.
/s/ Lynch, Idesh & Mahoney
Ivanhoe Mines (Mongolia) Inc.
3rd Floor, Building 8
Ikh Zasag Chu[ILLEGIBLE]
Sukhbeatar District
Ulaanbaatar, Mongolia
Phone [978] 11-310-785-312-179 Fax (978) 11-312-337
Email: [ILLEGIBLE]
October 1st 2001
Serger A, Diakov
Asian Geoctative Search Group Leader
BHP World Exploration Inc.
1400-1111 West Gorgia Street.
Vancouver. B.C., Canada
Voc-4M3
Re: Central Oyu Boundary
Dear Sergei,
Attached please find a map showing the boundary of Central Oyu per the Ivanhoe
Mines BHP Agreement on Oyu Tolgoi and our discussions of October 1st, 2001. The
boundary is defined by Northings 4763595N (BHP Line 4+00S) and 4764395N (BHP
Line 4+00N) and Eastings 650526E (BHP Line 5+00W) and 651626E (BHP Line 6+00E)
The easting and northing coordinates are based upon preliminary GPS survey data
converting the BHP coordinates into UTM coordinates using a WGS84 projection.
The GPS survey has been redone in the past 6 weeks using survey quality
instruments hence new coordinates will be issued for the BHP lines. However, us
the BHP lines are physically marked in the field we will define the boundary
based on these lines assigning GPS based, UTM coordinates to them at a later
date.
If this meets with your approval, please acknowledge by signature one copy of
the attached map and this covering letter and return to Ivanhoe Mines Ltd.
Attention Beverly Barlett, per the attached card.
Sincerly
Charles N. Forster, P. Geo,
Acknowledged and Accepted;
Sergel A. Dlakov
BHP World Exploration Inc. Date
[MAP SHOWING THE BOUNDARY OF CENTRAL OYU PER THE IVANHOE MINES]
Supplemental Title Report
Page 4-1 of 56
Law Offices
LYNCH, IDESH & MAHONEY
International Trade Centre
Suite 500
Baga Toiruu 37 B
Mail PO Box 279
Ulaanbaatar, Mongolia
210646-A
Phone 976.11.325.344
Fax 976.11.325.358
URL http://mongolialaw.com
Writer's mobile phone 976.9911.5298
Email mongolialaw@magicnet.mn or
lynch@mongolialaw.com
To: Steve Roberstson David
Redford Goodmans
Copy to: Beverly Bartlett
Ed Rochette
Ivanhoe Mines Limited
From: Maury Lynch
Lynch, Idesh & Mahoney
Date: 5 February 2002
Subj: Supplement to Mongolia Properties Title Report
dated 22 October 2001
We refer to the Counsel Questionnaire attached to Beverly Bartlett's
email of January 18th and to our title report dated 22 October 2001.
Following are the questions presented in the Counsel Questionnaire and
our responses. We have broken down some of the questions into two or
more parts and numbered all of the questions sequentially.
PREFACE
Since 1990 Mongolia has been in transition from state socialism and a
planned economy to political democracy and a free market economy. Much
progress has been made in this transition - but Mongolia still has a
long way to go, particularly with respect to the rule of law. There are
many laws on the books, but in many instances they are neither
understood nor enforced. For decades Mongolians have looked to the
Minister (and his clerks) as the sources of the "law". This has changed
on paper- but often not in practice.
Supplemental Title Report
Page 4-2 of 57
With respect to most day-to-day activities, the apparatchiksare the law. This
situation is gradually changing- but at a slow, evolutionary pace.
We have separated our report into two parts. The first part (this report) covers
matters that are basically governed by the Minerals Law of Mongolia (MLM) that
was enacted in 1997. The second part concerns water and surface rights. These
issues are addressed in the MLM to some extent, but other laws must also be
taken into account.
The MLM was drafted by a team headed by a US lawyer, John Williams, with funding
provided by the World Bank. The Mongolian side was represented by
D Jargalsaikhan, a very able government official who was then (and still is)
Head of the Minerals Resources Authority of Mongolia (MRAM). With
Jargalsaikhan's guiding hand, John's text was shepherded through the Mongolian
Parliament without being torn to shreds by the MPs representing various interest
groups. The result is what we consider to be the best law on the books in
Mongolia. It is logical and internally consistent (a rare instance in Mongolian
laws) and reflects policies that have worked well in Chile and other South
American countries.
But the MLM is now under siege. Last year, the apparatchiks at the Ministry of
Industry and Trade (MIT - the Ministry to which the MRAM reports), operating in
the closet with no input from the private sector, proposed amendments to the MLM
that would have been counter-productive, to say the least. The American
Mongolian Business Group (AMBG) and the Mongolian National Mining Association
(MNMA), with significant financial support from Ivanhoe, sponsored a conference
in August to consider the advisability of amending the MLM, with specific
reference to the proposed MIT amendments. John Williams was the principal
speaker. John's basic theme was that the MLM was generally regarded as one of
the best (if not the best) minerals law in Asia and that it would be
counter-productive to adopt the amendments proposed by the MIT. As a result of
the conference, which was attended by many government officials and MPs, the
proposed amendments were shelved.
Last week, a new set of MIT proposed amendments emerged. We are in the process
of translating them.
The MLM has been amended three times. The changes were largely technical and,
with one exception, relatively minor. The exception concerns royalty payments.
Under the original MLM, the royalty rate with respect to the extraction of all
minerals was 2.5%. The government is desperate for money. Alluvial gold placer
mining operations (essentially the only gold mining activity in Mongolia at the
moment) are very profitable. So the MLM has been amended (effective as of 10
January 2002) to raise the royalty rate with respect to gold extracted from
alluvial deposits to 7.5%. The definition of "alluvial deposit" poses some
problems but for purposes of this report the issues are academic.
Our responses to the questions are based on the MLM. Many of the more important
issues (such as environmental matters, water, and surface rights) will involve
dealing with the Governors of aimags and soums (essentially equivalent to states
(the aimags)
Supplemental Title Report
Page 4-3 of 58
and counties (the soums) in the US) in the South Gobi region of Mongolia. Many
of these Governors will have little, if any, knowledge of the intricacies of the
MLM.
With the above-noted factors as background, we respond to your questions as
follows.
1. Please describe the nature and extent of lvanhoe's rights on the property
covered by its mining exploration licenses in Mongolia and those BHP
exploration licenses covered by the May 5, 2000 Earn-in Agreement.
For purposes of this report we will assume that the BHP exploration licenses
have been transferred to Ivanhoe Mines Mongolia Inc XXK, a limited liability
company organized under the laws of Mongolia (Ivanhoe Mongolia). Ivanhoe
Mongolia is a wholly owned subsidiary of Ivanhoe Mines Mongolia Inc, a
corporation organized under the laws of the British Virgin Islands (Ivanhoe
BVI). Ivanhoe BVI is a wholly owned subsidiary of Ivanhoe Mines Ltd, a
corporation organized under the laws of the Yukon Territory, Canada (Ivanhoe
Yukon).
The four BHP exploration licenses are subject to the terms and conditions of an
Earn-In Agreement dated 5 May 2000 between BHP Minerals International
Exploration Inc, a corporation organized under the laws of the State of
Delaware, USA, and Ivanhoe Yukon.
The Ivanhoe Licenses were all acquired subsequent to 5 May 2000
2. What do the mineral exploration licenses entitle Ivanhoe to do with the
property?
An exploration license holder has the following rights:
- the exclusive right to conduct exploration for minerals within the
boundaries of the exploration claim in accordance with the MLM;
- the exclusive right to obtain a mining license for any part of the
exploration area upon fulfilling the terms and conditions of the
MLM;
- the right to transfer or pledge all or part of an exploration
license in accordance with the terms and conditions of the MLM;
- the right to obtain two extensions of the term of the exploration
license for two (2) years each, upon fulfilling the terms and
conditions of the MLM;
- the right to have access to, entry on, and transit through, the
exploration area and the right to construct temporary structures
necessary for conducting exploration activities;
Supplemental Title Report
Page 4-4 of 59
- the right of entry to and transit through the land adjacent to the
exploration area for the purpose of gaining access and entry to the
exploration area;
- the right of entry to and transit through land owned or used by
other persons in order to exercise the rights described above. This
right shall be determined by a contract between the license holder
and the landowner or land-user in accordance with the provisions of
the Civil Law of Mongolia.
In addition, exploration license holders must disclose to the State Professional
Inspection Organization the quantity and quality of all minerals recovered as a
result of preliminary work done during exploration activities and, upon approval
by the State Professional Inspection Organization, license holders may sell such
minerals. In such case, the exploration license holders must pay royalties and
other relevant taxes as if they were mining license holders.
In all other cases, exploration license holders may sell samples and other
products recovered during exploration activities only after obtaining a mining
license or surrendering the entire exploration claim. The meaning of this latter
phrase in this context is not clear but it is so provided in the law.
3. We understand that there is a minimum annual fee that must be paid in
order to keep the exploration license in good standing. Is this correct?
Exploration license fees are payable with respect to each hectare included
within the exploration area at the following rates:
- US$ 0.05 for the first year, and US$ 0.1 for each of the second and
third years of the term of the license;
- US$ 1.00 for each of the fourth and fifth years of the term of the
license;
- US$ 1.50 for each of the sixth and seventh years of the term of the
license.
License fees are payable as follows:
- License fees for the first year must be paid within ten (10)
business days after the license holder receives the notice of
approval of the licerse application.
- License fees for subsequent years are payable annually in advance,
on or before the anniversary date of the issuance of the license.
- The amount of the license fee is calculated on the basis of the
measurements of the license area as registered in the register of
licenses of the Office of the geological Mining Cadastre (OGMC) and
the amount of the fee does not change for the particular year.
Supplemental Title Report
Page 4-5 of 60
- No exploration license fees are payable with respect to a mining
area located within an exploration area .
- The license fee is deemed paid upon receipt by the OGMC of documents
certifying the payment of the fees.
- A license holder is obliged to timely pay applicable license fees
and no notice or invoice with respect to such fees is sent to the
licenseholder.
4. Are there any other minimum requirements to be met in order to keep the
licenses?
A license holder may not commence exploration or mining operations without first
obtaining written approvals from relevant environmental protection authorities.
After consultation with the environmental inspection agency and local
administrative bodies, exploration license holders must prepare an environmental
protection plan within thirty (30) days following receipt of an exploration
license.
The environmental protection plan must provide for measures to ensure that
pollution of the environment as a result of the exploration activity does not
exceed maximum limits and that the exploration area will be rehabilitated by
means of backfilling, plugging and cultivation to allow future utilization of
the disturbed land for public purposes.
The environmental protection plan must be submitted to and approved by the
Governor of the relevant soum or district where the exploration claim is
located. The Governor of the soum or district must make a decision with respect
to the plan within ten (10) business days following receipt of the plan, and
notify the license holder of the decision by an official letter.
Upon approval of the environmental protection plan, the license holder must
provide a copy of the plan to the local environmental inspection organization
and State Professional Inspection Organization.
The license holder must record all instances of adverse environmental impact
resulting from the exploration activity and submit annual reports with respect
to the environmental protection plan to the Governor of the relevant aimag or
capital city and soum or district. These reports must contain information on
measures taken to protect the environment and on the possible impact on the
environment of new exploration machinery and technology, and proposed amendments
to the environmental protection plan. All amendments to the environmental
protection plan must be approved by the Governor of the relevant soum or
district.
A license holder must provide officials in charge of monitoring implementation
of the laws on environmental protection, and local administrative body
representatives, with an opportunity to enter the exploration area to conduct
monitoring activities on the site.
Supplemental Title Report
Page 4-6 of 61
To ensure the discharge of its responsibilities with respect to environmental
protection, an exploration license holder must deposit an amount equal to 50 %
of its environmental protection budget in a special bank account established by
the Governor of the relevant soum or district. This deposit will be refunded to
the license holder upon full implementation of its environmental protection
plan.
If a license holder fails to fully implement the measures provided for in the
environmental protection plan, the Governor of the relevant soum or district
shall use the deposit as a source of funds to enable the license holder to
complete these measures, and if the deposit is not enough to cover the costs of
environmental protection and rehabilitation activities, the license holder must
provide the required additional funds.
License Extensions
Exploration license holders applying for a license extension must submit for
approval to the Governor of the relevant soum or district, prior to the
expiration of the exploration license, either their revised environmental
protection plan or a new environmental protection plan.
Mining license holders applying for a license extension must submit to the State
central administrative body in charge of environment a new environmental impact
assessment and a new environmental protection plan.
The State central administrative body in charge of environment may require the
license holder to amend the environmental impact assessment and environmental
protection plan to reflect impacts from the use of new machinery or technology
or environmental impact not foreseen in the approved environmental impact
assessment or environmental protection plan.
Local Buildings and Structures
License holders must fully compensate owners and users of private and public
residential dwellings, wells, winter huts, other structures, and historic and
cultural landmarks, for damages caused to these structures by exploration or
mining operations, including, if necessary, relocation costs.
Relations with local administrative bodies
License holders must consult with, and coordinate their activities with, local
administrative bodies in connection with environmental protection,
infrastructure development and employment development. If a licaise holder deems
it necessary, it may request the local administrative body to organize a public
debate in furtherance of these objectives.
A license holder may select and employ a representative from among the local
residents to coordinate all matters involving the local administrative body.
Supplemental Title Report
Page 4-7 of 62
License holders shall employ citizens of Mongolia in their exploration and
mining operations on a priority basis.
In conducting their operations license holders must comply with applicable
health and safety laws.
5. Your memorandum of October 22, 2001 indicates that the original license
will expire on February 17, 2002. Does this same expiration date apply to
the new licenses?
The BHP Licenses were deemed to have been granted on 17 February 1997. The first
extension of these licenses will expire on 17 February 2002. It is our
understanding that Ivanhoe personnel have extended the terms of these licenses
to 17 February 2004. Unless the MLM is amended, there will be no further
extension of these licenses available
The expiration dates of the Ivanhoe Licenses will depend on their respective
dates of issuance.
6. We understand that exploration licenses can be extended in two year
increments up to an aggregate maximum of seven years.
That is correct. The initial term is 3 years. The 2 permitted extension terms
are for 2 years each.
7. Are there any requirements that must be met in order for the government to
grant a renewal of the licenses and what, if any, additional limitations
would be added to a renewal license?
Not less than thirty (30) days prior to the expiration of an exploration
license, the license holder may apply for an extension of the term of the
license by filing with the OGMC an application for such extension on the
standard form published by the OGMC The following documents must be attached to
the application:
- the exploration license certificate;
- receipts for license fee payments made by the license holder;
- a certificate of inspection evidencing implementation of the license
holder's environmental protection plan.
Within ten (10) business days following the receipt of an application for
extension, the OGMC must verify whether the license holder has complied with
conditions for maintaining its eligibility to hold a license and shall record
this fact in the license register book. If the OGMC determines that the license
holder has complied with these conditions, it will extend the term of the
exploration license and record the extension in
Supplemental Title Report
Page 4-8 of 63
the license register book. The license that has been extended will then be
returned to the license holder.
Immediately following the grant of an extension of an exploration license, the
OGMC must notify the Geological and Mining Development Agency (GMDA) and publish
an official notice informing the public of the granting of the extension.
Environmental Matters
Exploration license holders applying for a license extension must submit for
approval to the Governor of the relevant soum or district, prior to the
expiration of the exploration license, either their revised environmental
protection plan or a new environmental protection plan.
As for "additional limitations", do you mean "would" or "could"?
The MLM presently in effect strictly limits the extent to which the government
may impose new requirements or limitations on renewals. As noted in the Preface,
last summer there were proposed amendments to the MLM that would have given the
apparatchiks more discretionary power in this regard. We are closely monitoring
this issue.
8. We understand that an exploration license can be converted into a mining
license. What requirements must be met in order to obtain a mining
license?
The holder of an exploration license has an exclusive right to obtain a mining
license for any part of the exploration area upon fulfilling the terms and
conditions of the MLM.
A mining license may only be held by a legal person formed and operating under
the laws of Mongolia.
The applicant must set forth the coordinates of all corners of the requested
mining area in degrees, minutes and seconds on a standard map approved by the
OGMC and attach the map to the application.
A requested mining area must meet the following requirements:
- it must have the shape of a polygon with borders that are straight
lines, not less than 500 meters in length, oriented north-south and
east-west;
- it must not overlap with a reserved area or special needs land;
- it must not overlap with an area covered by a valid license or an
area requested in a pending application for a license.
Supplemental Title Report
Page 4-9 of 64
The borders of a mining license area may deviate from straight lines in the case
of borders that intersect with:
- national borders;
- a reserved area; or
- a special needs land area,
Natural geographic features, such as lakes and ponds, may be excluded from the
mining area.
An applicant for a mining license must submit an application to the OGMC on the
standard form approved by the OGMC. The following documents must be attached to
the application:
- the applicant's name, mailing address for official correspondence,
phone and fax numbers and a certificate containing the name of its
officer authorized to make decisions;
- a certificate of valid existence as a business entity in Mongolia
issued by the appropriate registration agency;
- a map of the area prepared in accordance with the requirements of
the MLM;
- a document showing that the applicant has paid the application
processing fee.
Upon the receipt of a complete application, the OGMC official responsible for
the application register shall register the application in the application
register and specify the record number, date, hour and minute of filing on each
page, and issue the applicant a receipt acknowledging the filing of the
application and payment of the applicable fee.
Immediately following the recording of an application, the OGMC must determine
by a preliminary screening whether the application and attached documents meet
the requirements of the MLM. If an application fails to meet the requirements,
the OGMC must notify the applicant of the defects in the application and record
the notice in the application register book, whereupon the application will be
deemed to be removed from the application register.
Within two (2) business days after the registration of an application for a
mining license, the OGMC shall determine:
- in the case of an application submitted by an exploration license
holder covering the requested mining area, whether such area is located
entirely within the boundaries of the area covered by the exploration
license;
Supplemental Title Report
Page 4-10 of 65
- whether the requested mining area overlaps with any area already
subject to a valid license or any area that is the subject of a
pending license application; and
- whether the requested mining area overlaps with a reserved area or a
special needs land.
Within twenty (20) business days following the registration of an application
for a mining license, the head of the OGMC must make one of the following
decisions and notify the applicant accordingly:
- in the case of an application submitted by the exploration license
holder covering the requested area, that an exclusive mining license
has been granted to the applicant and require the applicant to
timely pay the applicable fee for the first year of the license as
provided in this law;
- if the requested area does not overlap with any part of a special
needs land with prohibition on mining, or any area subject to a
valid license, or any area requested in a pending application for a
license filed and registered prior to the application, that the
requested mining area is granted and the applicant is required to
pay the applicable fee for the first year of the license;
- if the requested area overlaps in any way with a special needs land
with prohibition on mining, or any area subject to a valid license,
or any area requested in a pending application for a license filed
and registered prior to the application, that the application is
rejected and deemed to be removed from the register.
Within three (3) business days following payment of the license fee for the
first year, the OGMC must issue a mining license to the applicant for a term of
sixty (60) years and shall register the license and mining area in the license
register.
A license certificate shall contain date of issuance, the name of the license
holder, the coordinates of the granted area, and an attachment in which all
subsequent changes with respect to the license shall be recorded.
Within seven (7) business days following the decision to grant a mining license,
the OGMC shall notify the State Professional Inspection Organization and GMDA
and publish an official notice informing the public of the granting of the
license.
Environmental Matters
An environmental impact assessment and an environmental protection plan may be
prepared by a mining license holder before and must be prepared as soon as
possible after receiving a mining license.
The environmental impact assessment must identify the possible adverse
environmental impact from the proposed mining operations on land, water, air,
plant, animal, and human
Supplemental Title Report
Page 4-11 of 66
life and include preventive measures to avoid and minimize such adverse impact.
The environmental protection plan must contain measures to ensure that mining
operations are conducted in ways least damaging to the environment. The plan
must also identify preventive measures to protect air and water quality, and
human, animal and plant life from the adverse effects of mining operations in
accordance with the regulations adopted by the State central administrative body
in charge of the environment.
The environmental protection plan must include measures with the respect to the
following issues:
- storage and control of toxic and potentially toxic substances and
materials;
- protection, utilization and conservation of surface water and
groundwater;
- if necessary, construction, utilization and safekeeping of tailings
dams; and
- other measures as may be appropriate for the particular type of a
mining operation.
The environmental protection plan must also provide for post-mining
rehabilitation measures through backfilling, plugging, and cultivation to allow
future utilization of the disturbed land for public purposes.
The environmental impact assessment and environmental protection plan must be
submitted to the State central administrative body in charge of environment and
to the Governor of the relevant soum or district. The State central
administrative body in charge of environment shall review these documents and
notify the license holder of its decision within thirty (30) days after
receiving such documents.
Upon approval of the environmental impact assessment and the environmental
protection plan, the license holder must deliver the documents to the local
environmental monitoring organization where the mineral deposit is located.
Mining license holders must record all instances of adverse environmental impact
resulting from mining activity and prepare and send a copy of annual reports on
the implementation of the environment protection plan to the State central
administrative body in charge of environment, the Governor of any relevantaimag
or capital city and soum or district, and the State Professional Inspection
Organization, respectively. These reports must contain information on measures
taken to protect the environment and on the possible impact on the environment
of new machinery and technology, or the expansion of mining operations, and
proposed amendments to the environmental impact assessment and environmental
protection plan.
Amendments to the environmental protection plan may be made only after approval
by
Supplemental Title Report
Page 4-12 of 67
the State central administrative body in charge of environment.
A mining license holder must provide local and State central administrative
bodies and officials in charge of monitoring implementation of legislation on
environmental protection, an opportunity to enter the mining claim area and to
conduct monitoring activities on the site.
To ensure the discharge of its responsibilities with respect to environmental
protection, a mining license holder must deposit an amount equal to 50% of its
environmental protection budget for a particular year in a special bank account
established by the Governor of the relevant soum or district. This deposit shall
be refunded to the license holder upon full implementation of the environmental
protection plan.
If a mining license holder fails to fully implement the measures provided for in
the environmental protection plan, the Governor of the relevant soum or district
may use the deposit to enable the license holder to complete these measures, and
if the deposit is not enough to cover the costs of environmental protection and
rehabilitation activities, the license holder must provide the required
additional funds.
9. What are the likely limitations attached to such a license - for instance
will certain minerals be excluded from the licenses?
The MLM does not apply to water, petroleum or natural gas. To our knowledge,
there are no other limitations with respect to the minerals that may be
extracted.
10. We understand that an initial mining license will typically be granted for
an initial term of 60 years. Please verify.
That is correct.
11. What restrictions are there on the use of the property, eg. environmental
limitations, that could affect Ivanhoe's ability to conduct exploration on
the property?
In addition to the general obligations described above, if a special needs land
overlaps entirely or in part with a territory covered by a valid license, thus
precluding further exploration or mining in such overlapping area, the State
administrative body that decided to establish the special needs land must
compensate the license holder.
The amount of such compensation, and the time for payment, must be agreed to by
the State administrative body that decided to establish the special needs land
that affected license holder. If the parties fail to reach agreement, then the
amount of compensation and time for payment shall be determined by a neutral
party in accordance with "internationally recognized methods". The license
holder has the right to resume its activities if the compensation is not timely
paid in full.
Supplemental Title Report
Page 4-13 of 68
Although not strictly a restriction, we are including in response to this
question information with respect to the reporting requirements of an
exploration license holder.
An exploration license holder must submit a plan of exploration activities
within thirty (30) days after the grant of the exploration license.
An annual report on exploration activities for the previous year must be
submitted in the form approved by the Office of Geology within thirty (30) days
following the year end The report must contain information on the amount of work
completed and expenses incurred in prospecting, geophysical and geochemical
work, drilling and other activities, information with respect to the labor
force, and the results of the exploration work. A map showing where the work was
done must be attached to the report.
The GMDA will accept estimates of ore reserves submitted in the report based on
an opinion from a qualified expert and shall record such ore reserves in the
national register of reserves.
An exploration license holder must also submit information reports with respect
to safe operations. It is not clear what the specific requirements are in this
connection.
12. Will there be any royalties payable to or other rights in favour of the
Mongolian Government in respect of minerals mined from the property?
A mining license holder must pay royalties to the treasuries of central and
local administrative bodies on the sales value of all products extracted from
the mining claim that are sold, shipped for sale, or used.
The sales value will be determined as follows:
- with respect to exported products, sales value is the average
monthly price of the products, or similar products, based on
regularly published international market prices or on "recognized
principles of international trade";
- with respect to products sold or used on the domestic market, the
sales value is based on the domestic market price for the particular
or similar product; and
- with respect to products sold on international or domestic markets,
where it is impossible to determine market prices, the sales value
shall be based on the revenue derived from the sale of the products
as declared by the license holder.
Except for the royalty applicable to gold extracted from alluvialdeposits
(7.5%), royalties are payable at the rate of 2.5 percent of the sales value of
all products extracted from a mining claim that are sold, shipped for sale, or
used.
Supplemental Title Report
Page 4-14 of 69
Royalties with respect to extracted products that are sold, shipped for sale or
used during a calendar quarter are payable before the end of the next succeeding
quarter.
A mining license holder must submit to the State Professional Inspection
Organization a quarterly report indicating the quantity of products extracted
and sold, shipped for sale, or used during the relevant quarter, the total value
of the sales, and the basis of evaluation.
Supplemental Title Report
Page 4-15 of 70
International Trade Centre
Suite 500
Baga Toiruu 37 B
Law Offices Mail PO Box 279
LYNCH, IDESH & MAHONEY Ulaanbaatar, Mongolia
210646-A
Phone 976.11.325.344
Fax 976.11.325.358
URL http://mongolialaw.com
Writer's mobile phone 976.9911.5298
Email mongolialaw@magicnet.mn or
lynch@mongolialaw.com
To: Steve Roberstson
David Redford
Goodmans
Copy to: Beverly Bartlett
Ed Rochette
Ivanhoe Mines Limited
From: Maury Lynch
Lynch, Idesh & Mahoney
Date: 21 February 2002
Subj: Supplement to Mongolia Properties Title Report
dated 22 October 2001 - Water and Surface Rights
WATER RIGHTS - BACKGROUND
Mongolia's size is approximately three times the size of France. The population
of Mongolia is approximately 2.6 million, of which 800,000 to 1 million live in
the capitol, Ulaanbaatar. The country is divided into 21 aimags (roughly
equivalent to provinces in Canada). The aimags, in turn, are subdivided into
soums (roughly equivalent to Canadian townships). The largest aimag in area- and
the smallest in population- is Omnigovi. Omnigovi is located in the heart of the
Gobi desert in the southern part of Mongolia that borders on China. The
Turquoise Hill property is located in Omnigovi aimag.
Omnigovi lies in the heart of what may be described as a highly sensitive
ecologida environment. The area is semi-arid and hosts a wide variety of
wildlife, including camels, wild horses and antelope. The ecosystem is both
fragile and high profile and is one of Mongolia's major tourist attractions as
well as a prime exploration target for paleontologists. In sum, activities that
may impact this sensitive environment must be conducted with great care and will
be monitored by interested parties and organizations from around the world.
It is our understanding (subject to confirmation) that there are a number of
underground aquifers within a radius of about 400Km of Turquoise Hill and that
it is anticipated that these aquifers have sufficient water to supply the
requirements of the proposed mining facilities. We will assume for present
purposes that this is the case. The legal question presented is who will control
and regulate the access to, and exploitation of, these water reserves.
WATER RIGHTS - THE LEGAL FRAMEWORK
We start with Article 16.10 of the Minerals Law of Mongolia (1991) which
provides that the holder of a mining license has "the right to use water,
subject to compliance with applicable laws". Water rights are governed by the
Water Law of Mongolia (1995). Control and regulation of access to, and
exploitation of, water reserves are exercised at three levels:
- the Government of Mongolia (GOM);
- the Government of the aimag in which the water reserves are located;
and
- the Governments of the soums in which such water reserves are located.
Before proceeding, we should put certain aspects of the relationships among
these governing entities in perspective in our context. The population of
Omnigovi aimag is roughly 46,000. The population of this aimag's capitol city,
Dalanzadgad, is roughly 13,000. The average population of the soums is more
likely than not to be measured in the hundreds. The governments of the aimags
and soums are essentially equivalent to town meetings (Hurals).
The Water Law has detailed provisions governing the respective rights of the
aimag and soum governors to control various aspects of water use. We have
concluded that it would serve no useful purpose to outline these micro details
in this context. The critical overriding provision is Article 19.4 of the Water
Law which provides in effect that decisions with respect to the use of water by
"business entities of national or regional significance" shall be made by the
Ministry of the Environment in consultation with the relevant aimag Hural (in
this case the Omnigovi Hural). It seems clear that use of the limited water
resources from available aquifers (both under and outside of the mining claim)
will be decided on the basis of comprehensive studies by qualified professionals
and negotiations among Ivanhoe, the GOM, and relevant local authorities
conducted within the framework of Article 19.4 of the Water Law.
SURFACE RIGHTS
Article 16.7 of the Minerals Law provides in effect that the holder of a mining
license has the right of entry to and transit through the mining claim area and
the right to construct necessary structures and to conduct other activities
related to its mining operations. Article 16.10 provides that the license holder
has the right of entry to and transit through land used by others pursuant to
contracts between the license holder and such other parties concluded in
accordance with the provisions of the Civil Law of Mongolia.
The Land Law of Mongolia (1995) governs land use rights. As in the case of water
rights, there is a similar three tier hierarchy of control over various aspects
of land use (GOM, aimag and soum). Although there is no functional equivalent in
the Land Law of Article 19.4 of the Water Law, in our view it seems clear that,
in the case of "business entities of national or regional significance" (and
Turquoise Hll certainly qualifies as such), the regulatory powers of the aimag
and soum authorities will be subordinated to the overriding national or regional
interest. We expect that appropriate land use rights will be granted pursuant to
contracts negotiated with relevant local authorities. We also expect that
representatives of the GOM will participate in these negotiations to ensure that
the national interest is taken into account.
Fee simple ownership rights in land are not recognized in Mongolia. Land
use rights may be granted for up to a period of 60 years, with subsequent
extensions of up to (in the aggregate) an additional 40 years.
ROSCOE POSTLE ASSOCIATES INC.
APPENDIX 4 SAMPLING ASSAYS
AND VERIFICATION
TABLE OF CONTENTS - APPENDIX 4
PAGE
INTRODUCTION............................................................... 1
SAMPLING METHOD AND APPROACH............................................... 1
SAMPLE PREPARATION, ANALYSES AND SECURITY.................................. 9
DATA VERIFICATION.......................................................... 11
RPA Samples and Assays................................................ 11
Rejects from RC Samples............................................... 17
CHECK ASSAYS ON PULPS BY OTHER LABORATORIES........................... 18
FIRST SET OF OUTSIDE CHECK ASSAYS................................. 18
SECOND SET OF OUTSIDE CHECK ASSAYS................................ 18
THIRD SET OF OUTSIDE CHECK ASSAYS................................. 19
LIST OF TABLES
PAGE
TABLE 4.1 Ivanhoe Mines Ltd. - Oyu Tolgoi Project Assays From Hole OTRCD 150................ 3
TABLE 4.2 Ivanhoe Mines Ltd. - Oyu Tolgoi Project Comparisons of Specific Gravity........... l2
TABLE 4.3 Ivanhoe Mines Ltd. - Oyu Tolgoi Project Check Assays For Copper.................... 13
TABLE 4.4 Ivanhoe Mines Ltd. - Oyu Tolgoi Project Check Assays For Gold...................... 14
TABLE 4.5 Ivanhoe Mines Ltd. - Oyu Tolgoi Project Check Assays for Molybdenum.............. 15
TABLE 4.6 Ivanhoe Mines Ltd. - Oyu Tolgoi Project 32 Element ICP
Scan of the Pulp Samples................................................... 16
Table 4.7 Ivanhoe Mines Ltd.- Oyu Tolgoi Project Check Assays of RC..........................
Rejects for Copper and Gold................................................ 17
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ROSCOE POSTLE ASSOCIATES INC.
LIST OF FIGURES
AFTER PAGE
FIGURE 4.1 Duplicate Assays at Analabs for Copper..................................................... 19
FIGURE 4.2 Duplicate Assays at Analabs for Gold....................................................... 19
FIGURE 4.3 First Set of Re-Assays for Cu at Chemex.................................................... 19
FIGURE 4.4 (a) First Set of Re-Assays for Au at Chemex............................................... 19
FIGURE 4.4 (b) First Set of Re-Assays for Au at Bondar Clegg......................................... 19
FIGURE 4.5 First Set of Re-Assays for Mo at Chemex.................................................... 19
FIGURE 4.6 Second Set of Re-Assays for Cu at Bondar Clegg............................................. 19
FIGURE 4.7 Second Set of Re-Assays for Au at Bondar Clegg............................................. 19
FIGURE 4.8 Third Set of Re-Assays for Cu at Bondar Clegg.............................................. 19
FIGURE 4.9 Third Set of Re-Assays for Au at Bondar Clegg............................................. 19
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ROSCOE POSTLE ASSOCIATES INC.
INTRODUCTION
Appendix 4 covers three topics. For ease of reading, these are listed below
with material included in each section.
Sampling Method and Approach
- Sampling methods
- Sample Quality
- Factors used to establish sample intervals
- Individual samples with values and estimated true width
Sample Preparation, Analyses and Security
- Aspects of sample preparation carried out by employees of Ivanhoe.
- Details on sample preparation and laboratory methods.
- Summary of Quality Control measures.
- Statement of author's opinion on sampling, sample preparation and
analytical procedures.
Data Verification
- RPA Samples and Assays
- Rejects from RC Samples
- Check Assays on Pulps by Other Laboratories
- First set of Outside Check Assays
- Second Set of Outside Check Assays
- Third Set of Outside Check Assays
SAMPLING METHOD AND APPROACH
Both diamond drilling and RC drilling have been done in the Oyu Tolgoi
Project. Diamond drill core provides the most significant samples from the
property and forms the bulk of all of the database to date. The drilling
strategy/approach (pattern) at Southwest Oyu is changing from an exploration
pattern to a deposit delineation pattern. At the moment most of the holes are
drilled as angle holes at about 100 m spacing on sets of sections at right
angles to each other. A diamond drill hole starts with very large diameter core
(PQ and NTW) and is reduced about 100 m below the collar to smaller diameter
core (HQ and BTW). Core recoveries are usually >90% so the core is providing a
good sample
1
ROSCOE POSTLE ASSOCIATES INC.
of the rock. Core sampling is routinely a 2 m core length, an industry standard
for a porphyry deposit. Ivanhoe occasionally takes 1 m samples at points where
core sizes change to accommodate contact with barren post-ore rhyolite dikes.
The first steps in core handling are to clean the core, fit the core back
together, measure core recovery, and take RQD measurements. Fracture types and
orientations are measured for the oriented core. Specific gravity measurements
are taken for each rock type and all mineralization types in the drill hole.
Magnetic susceptibility measurements are taken for each sample interval. The
geologist logging the gedogy of a specific hole is responsible for ensuring that
the geotechnical data are accurate and complete.
Core is cut along a line marked on the core by the geotechnical team. The
sampler removes 2 m intervals of half core cut from the same side and places
samples into bags with sample book tickets. The sample number is marked on a
block placed in the core box at the beginning of each sample interval. After
sampling, the core is washed and placed on tables for logging and photography.
One geologist is responsible for geological logging of each drill hole.
There are boards with specimens representing all rock types, alteration
assemblages and various stages of mineralization to use for reference and
consistency. The geologists collect specimens showing different grades of copper
mineralization of individual mineralization types. Uniformity of logging is the
responsibility of Garamjav, the senior Mongolian geologist. Each geologist is
responsible for entering his data into the digital database and for ensuring it
is correct. In RPA's opinion the core recovery, logging and sampling meets or
exceeds industry standards.
Table 4.1 is a list of all the assays from the "Discovery Hole" OTRCD 150
included as an example of the type of data being generated. RPA has examined the
assays from OTRCD 150 to OTRCD 183 as well as most of the assays from OTRCD 184.
Ivanhoe has a summary of every diamond drill hole drilled by BHP or by Ivanhoe
in 2000, 2001 and up to 2002 presented on their website (www.ivanhoemines.com).
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ROSCOE POSTLE ASSOCIATES INC.
TABLE 4.1 IVANHOE MINES LTD. - OYU TOLGOI PROJECT
ASSAYS FROM HOLE OTRCD 150
DEPTH
FROM DEPTH TO Au Cu
HOLE NO. SAMPLE (m) (m) (g/t) (%)
- -----------------------------------------------------------------------------------------
OTRCD150 MO11761 0 1 0.15 0.614
OTRCD150 MO11762 1 2 0.13 0.396
OTRCD150 MO11763 2 3 0.11 0.274
OTRCD150 MO11764 3 4 0.08 0.378
OTRCD150 MO11765 4 5 0.38 0.518
OTRCD150 MO11766 5 6 0.96 0.426
OTRCD150 MO11767 6 7 1.45 0.347
OTRCD150 MO11768 7 8 0.5 0.413
OTRCD150 MO11769 8 9 0.57 0.406
OTRCD150 MO11770 9 10 0.36 0.308
OTRCD150 MO11771 10 11 0.35 0.241
OTRCD150 MO11772 11 12 0.19 0.352
OTRCD150 MO11773 12 13 0.52 0.397
OTRCD150 MO11774 13 14 0.66 0.344
OTRCD150 MO11775 14 15 0.33 0.311
OTRCD150 MO11776 15 16 0.47 0.345
OTRCD150 MO11777 16 17 0.58 0.418
OTRCD150 MO11778 17 18 0.7 0.588
OTRCD150 MO11779 18 19 0.38 0.287
OTRCD150 MO11780 19 20 0.15 0.398
OTRCD150 MO11781 20 21 0.08 0.345
OTRCD150 MO11782 21 22 0.05 0.275
OTRCD150 MO11783 22 23 0.07 0.321
OTRCD150 MO11784 23 24 0.1 0.404
OTRCD150 MO11785 24 25 0.08 0.318
OTRCD150 MO11786 25 26 0.11 0.488
OTRCD150 MO11787 26 27 0.07 0.329
OTRCD150 MO11788 27 28 0.24 0.468
OTRCD150 MO11789 28 29 0.33 0.37
OTRCD150 MO11790 29 30 0.2 0.381
OTRCD150 MO11791 30 31 1.43 0.354
OTRCD150 MO11792 31 32 0.45 0.365
OTRCD150 MO11793 32 33 0.17 0.367
OTRCD150 MO11794 33 34 0.03 0.0893
OTRCD150 MO11795 34 35 0.09 0.0293
OTRCD150 MO11796 35 36 0.03 0.0201
OTRCD150 MO11797 36 37 0.03 0.0267
OTRCD150 MO11798 37 38 0.03 0.0878
OTRCD150 MO11799 38 39 0.03 0.0257
OTRCD150 MO11800 39 40 0.03 0.0292
OTRCD150 MO11801 40 41 0.04 0.0498
OTRCD150 MO11802 41 42 0.03 0.0791
OTRCD150 MO11803 42 43 0.01 0.0292
OTRCD150 MO11804 43 44 0.02 0.0376
OTRCD150 MO11805 44 45 -0.01 0.0173
OTRCD150 MO11806 45 46 0.02 0.0873
OTRCD150 MO11807 46 47 0.01 0.0495
OTRCD150 MO11808 47 48 0.03 0.0811
OTRCD150 MO11809 48 49 0.01 0.0242
OTRCD150 MO11810 49 50 0.01 0.0194
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ROSCOE POSTLE ASSOCIATES INC.
TABLE 4.1 IVANHOE MINES LTD. - OYU TOLGOI PROJECT
ASSAYS FROM HOLE OTRCD 150
DEPTH
FROM DEPTH TO Au Cu
HOLE NO. SAMPLE (m) (m) (g/t) (%)
- -----------------------------------------------------------------------------------------
OTRCD150 MO11811 50 51 0.03 0.0907
OTRCD150 MO11812 51 52 0.01 0.039
OTRCD150 MO11813 52 53 -0.01 0.0127
OTRCD150 MO11814 53 54 0.01 0.0332
OTRCD150 MO11815 54 55 -0.01 0.0107
OTRCD150 MO11816 55 56 0.01 0.0318
OTRCD150 MO11817 56 57 -0.01 0.0085
OTRCD150 MO11818 57 58 0.3 0.353
OTRCD150 MO11819 58 59 0.32 0.456
OTRCD150 MO11820 59 60 0.14 0.1745
OTRCD150 MO11821 60 62 0.08 0.0888
OTRCD150 MO11822 62 64 1.18 0.0013
OTRCD150 MO11823 64 66 0.04 0.0429
OTRCD150 MO11824 66 68 0.12 0.109
OTRCD150 MO11825 68 70 0.11 0.1535
OTRCD150 MO11826 70 72 0.29 0.343
OTRCD150 MO11827 72 74 0.32 0.662
OTRCD150 MO11828 74 76 0.31 0.598
OTRCD150 MO11829 76 78 0.57 0.652
OTRCD150 MO11830 78 80 0.4 0.614
OTRCD150 MO11831 80 82 0.29 0.463
OTRCD150 MO11832 82 84 0.01 0.0019
OTRCD150 MO11833 84 86 0.66 0.954
OTRCD150 MO11834 86 88 0.32 0.382
OTRCD150 MO11835 88 90 0.26 0.332
OTRCD150 MO11836 90 92 0.65 0.835
OTRCD150 MO11837 92 94 0.29 0.406
OTRCD150 MO11838 94 96 0.24 0.361
OTRCD150 MO11839 96 98 0.56 0.837
OTRCD150 MO11840 98 100 0.61 0.678
OTRCD150 MO11841 100 102 0.49 0.507
OTRCD150 MO11842 102 104 0.72 0.738
OTRCD150 MO11843 104 106 0.6 0.463
OTRCD150 MO11844 106 108 0.44 0.447
OTRCD150 MO11845 108 110 0.38 0.482
OTRCD150 MO11846 110 112 0.47 0.478
OTRCD150 MO11847 112 114 0.65 0.592
OTRCD150 MO11848 114 116 0.82 0.574
OTRCD150 MO11849 116 118 0.56 0.409
OTRCD150 MO11850 118 120 0.55 0.43
OTRCD150 MO11851 120 122 0.4 0.28
OTRCD150 MO11852 122 124 0.41 0.32
OTRCD150 MO11853 124 126 0.73 0.74
OTRCD150 MO11854 126 128 0.43 0.41
OTRCD150 MO11855 128 130 0.94 1.13
OTRCD150 MO11856 130 132 0.75 0.53
OTRCD150 MO11857 132 134 0.53 0.38
OTRCD150 MO11858 134 136 1.08 0.82
OTRCD150 MO11859 136 138 0.83 0.7
OTRCD150 MO11860 138 140 0.85 0.97
OTRCD150 MO11861 140 142 0.8 0.54
4
ROSCOE POSTLE ASSOCIATES INC.
TABLE 4.1 IVANHOE MINES LTD. - OYU TOLGOI PROJECT
ASSAYS FROM HOLE OTRCD 150
DEPTH
FROM DEPTH TO Au Cu
HOLE NO. SAMPLE (m) (m) (g/t) (%)
- ------------------------------------------------------------------------------------------
OTRCD150 MO11862 142 144 0.71 0.55
OTRCD150 MO11863 144 146 0.77 0.84
OTRCD150 MO11864 146 148 0.65 0.49
OTRCD150 MO11865 148 150 0.99 0.94
OTRCD150 MO11866 150 152 0.42 0.37
OTRCD150 MO11867 152 154 0.6 0.56
OTRCD150 MO11868 154 156 0.69 0.72
OTRCD150 MO11869 156 158 0.67 0.54
OTRCD150 MO11870 158 160 1.13 1.14
OTRCD150 MO11871 160 162 1.24 1.41
OTRCD150 MO11872 162 164 1.04 0.82
OTRCD150 MO11873 164 166 2.1 0.52
OTRCD150 MO11874 166 168 1.11 0.82
OTRCD150 MO11875 168 170 0.64 0.38
OTRCD150 MO11876 170 172 0.96 0.55
OTRCD150 MO11877 172 174 0.94 0.67
OTRCD150 MO11878 174 176 1.09 0.66
OTRCD150 MO11879 176 178 0.8 0.48
OTRCD150 MO11880 178 180 1.47 0.76
OTRCD150 MO11881 180 182 0.55 0.35
OTRCD150 MO11882 182 184 0.68 0.4
OTRCD150 MO11883 184 186 0.96 0.48
OTRCD150 MO11884 186 188 0.97 0.43
OTRCD150 MO11885 188 190 2.35 0.43
OTRCD150 MO11886 190 192 1.4 0.6
OTRCD150 MO11887 192 194 1.86 0.84
OTRCD150 MO11888 194 196 1.19 0.45
OTRCD150 MO11889 196 198 1.9 0.4
OTRCD150 MO11890 198 200 2.7 1.41
OTRCD150 MO11891 200 202 1.47 0.51
OTRCD150 MO11892 202 204 1.41 0.59
OTRCD150 MO11893 204 206 1.36 0.57
OTRCD150 MO11894 206 208 1.76 0.71
OTRCD150 MO11895 208 210 1.11 0.58
OTRCD150 MO11896 210 212 2.45 0.8
OTRCD150 MO11897 212 214 2.1 0.69
OTRCD150 MO11898 214 216 1.59 0.4
OTRCD150 MO11899 216 218 1.12 0.3
OTRCD150 MO11900 218 220 1.55 0.47
OTRCD150 MO11901 220 222 1.54 0.64
OTRCD150 MO11902 222 224 2.25 0.71
OTRCD150 MO11903 224 226 1.9 0.83
OTRCD150 MO11904 226 228 3.5 1.98
OTRCD150 MO11905 228 230 1.02 0.45
OTRCD150 MO11906 230 232 1.69 0.82
OTRCD150 MO11907 232 234 1.12 0.54
OTRCD150 MO11908 234 236 1.03 0.64
OTRCD150 MO11909 236 238 0.33 0.44
OTRCD150 MO11910 238 240 1.41 0.67
OTRCD150 MO11911 240 242 1.61 1.14
OTRCD150 MO11912 242 244 1.6 0.85
5
ROSCOE POSTLE ASSOCIATES INC.
TABLE 4.1 IVANHOE MINES LTD. - OYU TOLGOI PROJECT
ASSAYS FROM HOLE OTRCD 150
DEPTH
FROM DEPTH TO Au Cu
HOLE NO. SAMPLE (m) (m) (g/t) (%)
- ------------------------------------------------------------------------------------------
OTRCD150 MO11913 244 246 0.84 0.4
OTRCD150 MO11914 246 248 1.75 0.81
OTRCD150 MO11915 248 250 2.6 1.25
OTRCD150 MO11916 250 252 2.5 1.08
OTRCD150 MO11917 252 254 1.05 0.44
OTRCD150 MO11918 254 256 1.4 0.58
OTRCD150 MO11919 256 258 1.07 0.44
OTRCD150 MO11920 258 260 1.77 0.74
OTRCD150 MO11921 260 262 3.45 1.47
OTRCD150 MO11922 262 264 1 0.64
OTRCD150 MO11923 264 266 1.55 0.93
OTRCD150 MO11924 266 268 0.31 0.29
OTRCD150 MO11925 268 270 1.75 1.31
OTRCD150 MO11926 270 272 1.31 0.83
OTRCD150 MO11927 272 274 0.91 0.49
OTRCD150 MO11928 274 276 0.95 0.55
OTRCD150 MO11929 276 278 1.06 0.53
OTRCD150 MO11930 278 280 1.63 0.79
OTRCD150 MO11931 280 282 1.48 0.88
OTRCD150 MO11932 282 284 1.81 0.9
OTRCD150 MO11933 284 286 1.69 1.24
OTRCD150 MO11934 286 288 1.78 1.22
OTRCD150 MO11935 288 290 2 1.56
OTRCD150 MO11936 290 292 1.4 1.06
OTRCD150 MO11937 292 294 1.38 1.11
OTRCD150 MO11938 294 296 1.62 1.18
OTRCD150 MO11939 296 298 1.89 2.77
OTRCD150 MO11940 298 300 2.3 2.33
OTRCD150 MO11941 300 302 0.83 1.28
OTRCD150 MO11942 302 304 0.36 1.31
OTRCD150 MO11943 304 306 0.54 1.28
OTRCD150 MO11944 306 308 0.28 1.32
OTRCD150 MO11945 308 310 0.04 0.1
OTRCD150 MO11946 310 312 3.35 1.78
OTRCD150 MO11947 312 314 1.34 1.11
OTRCD150 MO11948 314 316 1.93 1.29
OTRCD150 MO11949 316 318 2.85 1.81
OTRCD150 MO11950 318 320 1.47 0.91
OTRCD150 MO11951 320 322 2.05 1.08
OTRCD150 MO11952 322 324 1.49 1.05
OTRCD150 MO11953 324 326 3.2 1.24
OTRCD150 MO11954 326 328 2.4 1.36
OTRCD150 MO11955 328 330 1.54 1.56
OTRCD150 MO11956 330 332 1.67 1.78
OTRCD150 MO11957 332 334 0.64 0.7
OTRCD150 MO11958 334 336 1.18 0.77
OTRCD150 MO11959 336 338 1.17 1.06
OTRCD150 MO11960 338 340 0.86 1.28
OTRCD150 MO11961 340 342 0.39 1.55
OTRCD150 MO11962 342 344 0.97 1.46
OTRCD150 MO11963 344 346 1.65 1.28
6
ROSCOE POSTLE ASSOCIATES INC.
TABLE 4.1 IVANHOE MINES LTD. - OYU TOLGOI PROJECT
ASSAYS FROM HOLE OTRCD 150
DEPTH
FROM DEPTH TO Au Cu
HOLE NO. SAMPLE (m) (m) (g/t) (%)
- ------------------------------------------------------------------------------------------
OTRCD150 MO11964 346 348 1.81 1.14
OTRCD150 MO11965 348 350 0.96 1.22
OTRCD150 MO11966 350 352 1.32 1.02
OTRCD150 MO11967 352 354 1.4 0.86
OTRCD150 MO11968 354 356 1.87 1.19
OTRCD150 MO11969 356 358 1.16 0.7
OTRCD150 MO11970 358 360 2.1 1.55
OTRCD150 MO11971 360 362 2.9 1.54
OTRCD150 MO11972 362 364 4.2 2.59
OTRCD150 MO11973 364 366 2.3 1.84
OTRCD150 MO11974 366 368 1.93 1.49
OTRCD150 MO11975 368 370 2.25 1.97
OTRCD150 MO11976 370 372 1.11 1.5
OTRCD150 MO11977 372 374 1.18 1.21
OTRCD150 MO11978 374 376 1.01 1.04
OTRCD150 MO11979 376 378 1.25 1.09
OTRCD150 MO11980 378 380 0.75 1.04
OTRCD150 MO11981 380 382 2.15 1.5
OTRCD150 MO11982 382 384 0.48 1.04
OTRCD150 MO11983 384 386 0.74 0.8
OTRCD150 MO11984 386 388 1.98 0.7
OTRCD150 MO11985 388 390 0.75 1.08
OTRCD150 MO11986 390 392 1.18 1.2
OTRCD150 MO11987 392 394 0.91 1.34
OTRCD150 MO11988 394 396 1.16 0.95
OTRCD150 MO11989 396 398 0.92 0.82
OTRCD150 MO11990 398 400 0.61 0.72
OTRCD150 MO11991 400 402 0.89 1.06
OTRCD150 MO11992 402 404 1.08 1.09
OTRCD150 MO11993 404 406 1.81 1.27
OTRCD150 MO11994 406 408 0.29 0.97
OTRCD150 MO11995 408 410 1.25 0.91
OTRCD150 MO11996 410 412 1.4 0.99
OTRCD150 MO11997 412 414 1.48 1.07
OTRCD150 MO11998 414 416 2.45 1.65
OTRCD150 MO11999 416 418 2.1 1.19
OTRCD150 MO12000 418 420 2.2 1.37
OTRCD150 MO12001 420 422 1.71 1.03
OTRCD150 MO12002 422 424 1.5 0.86
OTRCD150 MO12003 424 426 1.87 1.17
OTRCD150 MO12004 426 428 1.27 0.76
OTRCD150 MO12005 428 430 1.54 0.99
OTRCD150 MO12006 430 432 2.3 1.08
OTRCD150 MO12007 432 434 1.43 0.68
OTRCD150 MO12008 434 436 1.45 0.84
OTRCD150 MO12009 436 438 2.1 1.22
OTRCD150 MO12010 438 440 3.3 1.36
OTRCD150 MO12011 440 442 2.5 1.12
OTRCD150 MO12012 442 444 3.35 1.34
OTRCD150 MO12013 444 446 0.75 0.66
OTRCD150 MO12014 446 448 1.81 0.97
7
ROSCOE POSTLE ASSOCIATES INC.
TABLE 4.1 IVANHOE MINES LTD. - OYU TOLGOI PROJECT
ASSAYS FROM HOLE OTRCD 150
DEPTH
FROM DEPTH TO Au Cu
HOLE NO. SAMPLE (m) (m) (g/t) (%)
- -------------------------------------------------------------------------------------------
OTRCD150 MO12015 448 450 2.8 1.64
OTRCD150 MO12016 450 452 1.07 0.57
OTRCD150 MO12017 452 454 0.36 0.2
OTRCD150 MO12018 454 456 3.25 0.79
OTRCD150 MO12019 456 458 2.4 0.65
OTRCD150 MO12020 458 460 2 0.81
OTRCD150 MO12021 460 462 2.85 1.55
OTRCD150 MO12022 462 464 1.56 0.65
OTRCD150 MO12023 464 466 1.68 0.83
OTRCD150 MO12024 466 468 0.89 0.42
OTRCD150 MO12025 468 470 0.94 0.52
OTRCD150 MO12026 470 472 0.67 0.53
OTRCD150 MO12027 472 474 0.73 0.5
OTRCD150 MO12028 474 476 1.01 0.97
OTRCD150 MO12029 476 478 1.42 1.21
OTRCD150 MO12030 478 480 0.62 0.54
OTRCD150 MO12031 480 482 0.55 0.39
OTRCD150 MO12032 482 484 1.11 0.68
OTRCD150 MO12033 484 486 1.03 0.85
OTRCD150 MO12034 486 488 0.7 0.52
OTRCD150 MO12035 488 490 1.84 1.17
OTRCD150 MO12036 490 492 0.98 0.58
OTRCD150 MO12037 492 494 0.68 0.46
OTRCD150 MO12038 494 496 0.93 0.72
OTRCD150 MO12039 496 498 1.12 0.74
OTRCD150 MO12040 498 500 0.16 0.03
OTRCD150 MO12041 500 502 0.51 0.31
OTRCD150 MO12042 502 504 0.01 0.01
OTRCD150 MO12043 504 506 0.31 0.17
OTRCD150 MO12044 506 508 0.54 0.37
OTRCD150 MO12045 508 510 1.87 1.02
OTRCD150 MO12046 510 512 1.21 1.21
OTRCD150 MO12047 512 514 0.91 0.82
OTRCD150 MO12048 514 516 0.46 0.46
OTRCD150 MO12049 516 518 0.45 0.36
OTRCD150 MO12050 518 520 0.33 0.33
OTRCD150 MO12051 520 522 0.41 0.31
OTRCD150 MO12052 522 524 0.38 0.34
OTRCD150 MO12053 524 526 -0.01 0.01
OTRCD150 MO12054 526 528 0.03 -0.01
OTRCD150 MO12055 528 530 0.27 0.15
OTRCD150 MO12056 530 532 0.7 0.48
OTRCD150 MO12057 532 534 0.35 0.27
OTRCD150 MO12058 534 536 0.57 0.5
OTRCD150 MO12059 536 538 0.93 1.07
OTRCD150 MO12060 538 540 0.41 0.46
OTRCD150 MO12061 540 542 0.44 0.36
OTRCD150 MO12062 542 544 0.6 0.66
OTRCD150 MO12063 544 546 0.84 0.75
OTRCD150 MO12064 546 548 0.53 -0.01
OTRCD150 MO12065 548 550 0.27 0.36
8
ROSCOE POSTLE ASSOCIATES INC.
TABLE 4.1 IVANHOE MINES LTD. - OYU TOLGOI PROJECT
ASSAYS FROM HOLE OTRCD 150
DEPTH
FROM DEPTH TO Au Cu
HOLE NO. SAMPLE (m) (m) (g/t) (%)
- -------------------------------------------------------------------------------------------
OTRCD150 MO12066 550 552 0.4 0.51
OTRCD150 MO12067 552 554 0.32 0.57
OTRCD150 MO12068 554 556 0.32 0.63
OTRCD150 MO12069 556 558 0.28 0.5
OTRCD150 MO12070 558 560 0.22 0.38
OTRCD150 MO12071 560 562 0.7 0.83
OTRCD150 MO12072 562 564 0.31 0.7
OTRCD150 MO12073 564 566 0.24 0.69
OTRCD150 MO12074 566 568 0.34 0.53
OTRCD150 MO12075 568 570 0.19 0.6
OTRCD150 MO12076 570 572 0.5 0.67
OTRCD150 MO12077 572 574 0.34 0.57
OTRCD150 MO12078 574 576 0.37 0.51
OTRCD150 MO12079 576 578 0.38 0.62
OTRCD150 MO12080 578 580 0.05 0.1
OTRCD150 MO12081 580 582 0.03 0.07
OTRCD150 MO12082 582 584 0.03 0.05
OTRCD150 MO12083 584 586 0.03 0.04
OTRCD150 MO12084 586 588 0.04 0.03
OTRCD150 MO12085 588 590.7 0.02 -0.01
SAMPLE PREPARATION, ANALYSES AND SECURITY
At the time of RPA' s visit Ivanhoe' s procedure was to ship samples of
half core from the site to Ulaanbaatar for additional preparation in Analab's
facility. All sampling and preparation at the exploration site was done by
Ivanhoe employees. For quality control at the exploration site, blanks and
duplicate samples are inserted so that 1 sample in 20 is either a blank or a
duplicate, alternately. Blanks are made from core of a post ore rhyolii dike.
Duplicates are made from quartered core from a previously assayed interval.
The entire sample is crushed to a coarse sand size. This material is split
with a riffle splitter to provide a 500 g sample which is pulverized to 90%<70
microns. One sample in 20 is wet sieved to ensure that the particle size stays
constant. Analabs uses a computer program to select random samples for duplicate
assays. Ivanhoe plans to move the sample preparation step from Ulaanbaatar to
the exploration site when the necessary machinery
9
ROSCOE POSTLE ASSOCIATES INC.
arrives at the site.
From the 500 g pulverized sample, a 30 g sample is split out for fire assay
and smaller samples are digested in acid for Atomic Absorption analysis of
copper, molybdenum and other metals. The complete assay protocols used by
Analabs are included in Appendix 2.
Analabs Mongolia is a branch of Analabs Pty. Ltd., an Australian analytical
Laboratory with twenty-six laboratories in Australia and Southeast Asia. It is
RPA's understanding that Analabs has subsequently been purchased by SGS Group, a
large international analytical company.
Analabs maintains its internal accuracy by repeating analyses on a routine
basis. It utilizes a randomizing computer program for duplicating samples. The
laboratory produces QA/AC reports on a monthly basis so clients can have an
ongoing check of the quality of their assays. This laboratory also participates
in round robin assaying by all of the Analabs laboratories to maintain an
internal check on accuracy.
Ivanhoe had not requested the QA/QC reports at the time of RPA's visit, so
they were not available for inspection. The most recent Analabs round robin in
May 2001 assayed two standard samples of gold: IRR48/A with a fire assay value
of 2.56 ppm (standard deviation (SD) 0.09) and a Aqua Regia value of 2.56 ppm
(SD 0.18), and IRR48/B with a fire assay value of 0.87 ppm (SD 0.05) and an Aqua
Regia value of 0.85 ppm (SD 0.05). Analabs Mongolia obtained average values of
2.85 ppm for IRR48/A and 0.94 ppm for IRR48/B using fire assays. Both values
were too high to be acceptable to Analabs at that time. Since then, subsequent
batches of gold check assays at other labs from the Southwest Oyu drilling, have
been acceptable, as discussed later. It would be useful to have standard samples
analyzed by Analabs on a routine basis.
RPA examined a set of 101 duplicate copper analyses and 96 duplicate gold
analyses done by Analabs of samples from Oyu Tolgoi. Figure 4.1 shows the
distribution of the values of both copper and gold on a Thompson-Howarth plot.
The values for variance and the distribution on the graph indicate that the
Analabs reproducibility for both
10
ROSCOE POSTLE ASSOCIATES INC.
copper and gold is acceptable, in RPA's view.
RPA believes that sampling and sample preparation methods are consistent
with industry standards. Analytical procedures obtain reproducible values for
copper and gold. When the values obtained by Analabs are compared to values
obtained by other laboratories from the same pulps (next section) the copper
results are good, the gold results are acceptable and the molybdenum results
need additional work.
DATA VERIFICATION
RPA approached data verification in three ways. First, we collected samples
of drill core and the corresponding pulps and sections in Mongolia and brought
them to Canada for analyses at XRAL in Toronto. Second, RPA obtained rejects of
RCD samples and brought them to Canada to be re-analyzed. Third, RPA reviewed
the results of check assays done on pulps of RC or diamond drill core samples
done by Bondar-Clegg and Chemex Laboratories in Vancouver.
RPA SAMPLES AND ASSAYS
At the site, RPA collected seven samples of drill core, each about 15 cm
long, from seven, 1 m and 2 m sample intervals in OTRCD 149, 150 and OTD 159.
From the Analabs warehouse in Ulaanbaatar, RPA obtained reject and pulp samples
corresponding to five of the core samples. In two instances the reject and pulp
samples were for intervals close to the core sample interval. At XRAL (SGS) in
Toronto the specific gravity was measured using water displacement for each core
sample. All core samples, reject samples and pulp samples were assayed for Au,
Cu and Mo. In addition the pulp samples were analyzed for 32 elements using an
ICP process.
RPA specific gravity measurements are compared with Ivanhoes in Table 4.2.
11
ROSCOE POSTLE ASSOCIATES INC.
TABLE 4.2 IVANHOE MINES LTD. - OYU TOLGOI PROJECT COMPARISONS OF SPECIFIC
GRAVITY
RPA SAMPLES IVANHOE SAMPLES
n = 7 n = 930
- ----------------------------------------------------
Range 2.71 - 2.94 2.64 - 2.90
Average 2.82 2.77
Standard Deviation n/a 0.13
Without weighing the 930 samples by rock type, this is a good correspondence.
Tables 4.3, 4.4 and 4.5 list the XRAL assay values for the RPA core
rejects and pulp samples along with the values obtained by Analabs. For the
copper assays the XRAL values are close to the Analabs assays values for the
pulps and for the rejects. For core samples the XRAL values are the same order
of magnitude as the Analabs assays but do not correspond as well with them. This
is to be expected since RPA core samples are 15 cm long half core sample and the
samples Ivanhoe submitted to Analabs are 1 m or 2 m long half core samples.
Except for one sample, the XRAL gold assays of the reject and pulp
samples correspond with the Analabs value, although the Analabs gold values tend
to be somewhat higher. For Sample 11886, the Analabs value for the reject is
double the XRAL assays.
The XRAL values for core are in the same order of magnitude as the
Analab values, except for Sample 11849, but differ due to different core sample
sizes, as noted above for copper.
The molybdenum values are too low for a meaningful comparison among the
XRAL assays and there are no Analabs Mo assays to compare with.
The RPA check samples confirm that copper and gold are present in the
Ivanhoe core in the amounts indicated in the Analabs assays.
12
ROSCOE POSTLE ASSOCIATES INC.
TABLE 4.3 IVANHOE MINES LTD. - OYU TOLGOI PROJECT CHECK ASSAYS FOR COPPER
IVANHOE
SAMPLES AT
RPA SAMPLES AT XRAL CANADA ANALABS
DRILL HOLE NO. AND SAMPLE Cu % Cu % Cu %
INTERVAL NO. CORE REJECT PULP Cu %
- -------------------------------------------------------------------------
OTRCD 150
116 - 118 m 11849 0.29 - - 0.41
124 - 126 m 11853 - 0.60 0.74 0.74
190 - 192 m 11886 0.44 0.59 0.68 0.60
336 - 338 m 11959 0.84 0.87 1.10 1.06
OTD 159
55 - 56 m 13050 1.79 1.13 1.27 1.23
115 - 116 m 13110 1.02 0.86 0.86 0.76
180 - 182 m 13149 0.89 0.62 0.60 0.55
OTRCD 149
73 - 75 m 11595 2.81 - - 1.96
62 - 63 m 11589 - 0.40 0.43 0.42
13
ROSCOE POSTLE ASSOCIATES INC.
TABLE 4.4 IVANHOE MINES LTD. - OYU TOLGOI PROJECT CHECK ASSAYS FOR GOLD
IVANHOE
SAMPLES AT
RPA SAMPLES AT XRAL CANADA ANALABS
DRILL HOLE NO. AND SAMPLE Au (ppb) Au (ppb) Au (ppb)
INTERVAL NO. CORE REJECT PULP Au (ppb)
- ------------------------------------------------------------------------------
OTRCD 150
116 - 118 m 11849 242 - - 6,560
124 - 126 m 11853 - 450 624 730
190 - 192 m 11886 693 668 618 1,400
336 - 338 m 11959 514 775 1,070 1,170
OTD 159
55 - 56 m 13050 251 71 152 220
115 - 116 m 13110 62 119 97 140
180 - 182 m 13149 45 34 52 60
OTRCD 149
62 - 63 m 11589 - 14 34 30
73 - 75 m 11595 171 - - 310
14
ROSCOE POSTLE ASSOCIATES INC.
TABLE 4.5 IVANHOE MINES LTD. - OYU TOLGOI PROJECT CHECK ASSAYS FOR MOLYBDENUM
INDEPENDENT ASSAYS ANALABS
XRAL TORONTO ASSAY
DRILL HOLE NO. SAMPLE Mo (%) Mo (%) Mo (%)
ASSAY NO. CORE REJECT PULP Mo (%)
- ------------------------------------------------------------
OT 150
116 - 118 m 11849 <0.01 - - -
124 - 126 m 11853 - <0.01 <0.01 -
190 - 192 m 11886 <0.01 <0.01 <0.01 -
336 - 338 m 11959 0.02 0.02 0.02 -
OT 159
55 - 56 m 13050 0.03 0.01 0.01 -
115 - 116 m 13110 <0.01 0.01 0.01 -
180 - 182 m 13149 <0.01 <0.01 <0.01 -
OT 149
73 - 75 m 11595 0.01 - - -
62 - 63 m 11589 - <0.01 <0.01 -
Table 4.6 lists the ICP analyses of 7 pulp samples for 32 elements.
Three of the seven samples contain significant amounts of arsenic, ranging from
29 ppm to 588 ppm. The samples with the As anomalies are all from Hole OTRCD
159.
All of the pulps are geochemically anomalous in molybdenum. In addition
to its possible commercial value, molybdenum might make a useful tracer for
copper-gold mineralization in soil and/or rock samples away from zones of known
mineralization as an exploration tool.
All the pulps were also anomalous in silver but it is probably too
mobile to serve as a tracer element.
TABLE 4.6 IVANHOE MINES LTD. - OYU TOLGOI PROJECT 32 ELEMENT
ICP SCAN OF THE PULP SAMPLES
ELEMENT Mo 11853 Mo 11886 Mo 11959 Mo 13050 Mo 13110 Mo 13149 Mo 11589
- ------------------------------------------------------------------------------------
Be ppm <0.5 <0.5 <0.5 <0.5 <0.5 <0.5 <0.5
Na % 0.08 0.05 0.04 0.02 0.01 0.02 0.04
Mg % 3.6 3.67 0.18 <0.01 <0.01 0.02 0.29
Al % 2.96 2.75 0.59 0.3 0.33 0.58 1.61
P % 0.14 0.13 <0.04 <0.01 <0.01 <0.01 0.05
15
ROSCOE POSTLE ASSOCIATES INC.
K % 0.48 0.44 0.43 0.19 0.13 0.36 0.32
Ca % 2.12 1.61 0.21 0.02 <0.01 0.01 0.17
Sc ppm 20.3 18.1 <0.5 <0.5 <0.5 0.8 <0.5
Ti % 0.12 0.25 <0.01 <0.01 <0.01 <0.01 <0.01
V ppm 265 229 6 20 22 11 19
Cr ppm 131 60 107 100 91 61 23
Mn ppm 922 912 43 15 11 13 930
Fe % 8.61 6.81 2.57 8.84 4.43 4.1 4.86
Co ppm 41 34 5 27 63 40 10
Ni ppm 44 25 4 12 19 23 6
Cu ppm 7100 6330 >10000 >10000 8780 5970 4200
Zn ppm 97.9 83.9 189 30.1 22.6 62.2 134
As ppm <3 <3 <3 29 588 97 <3
Sr ppm 49.5 25.2 23.3 30.4 13.2 8.2 22.6
Y ppm 11.4 11.9 2.7 0.5 0.6 0.8 3.4
Zr ppm 2.5 1.3 1.7 1.3 0.8 1.9 7
Mo ppm 32 23 165 139 114 42 21
Ag ppm 2.1 1.9 2.1 >10 2.7 1.6 1.5
Cd ppm <1 <1 <1 <1 5 <1 <1
Sn ppm <10 <10 <10 <10 <10 <10 <10
Sb ppm <5 <5 <5 <5 <5 <5 <5
Ba ppm 7 8 27 4 6 132 97
La ppm 0.7 0.7 5.3 <0.5 <0.5 <0.5 1.6
W ppm <10 <10 <10 <10 <10 <10 <10
Pb ppm 8 8 35 29 16 8 25
Bi ppm *INF *INF *INF *INF *INF *INF *INF
Li ppm 33 32 2 <1 <1 1 13
Note: *INF Composition of Sample makes detection impossible with this method.
16
ROSCOE POSTLE ASSOCIATES INC.
REJECTS FROM RC SAMPLES
RPA obtained rejects from 14 samples from the RC portion of RCD OTRCD
159. These samples were assayed for Cu, Au and Mo at XRAL in Toronto. All of the
samples had corresponding values from Analabs for copper and 11 of the samples
had been previously assayed for gold at Analabs. Results are shown in Table 4.7.
While the small number of samples does not allow meaningful statistical
comparison, the values from Analabs and XRAL appear to correspond very well.
TABLE 4.7 IVANHOE MINES LTD. - OYU TOLGOI PROJECT CHECK
ASSAYS OF RC REJECTS FOR COPPER AND GOLD
Au (ppb) Cu (%) Mo (%)
SAMPLES XRAL ANALABS XRAL ANALABS XRAL ANALABS
- --------------------------------------------------------------
Mo5887 13 ND 0.19 0.104 0.01 ND
Mo5888 15 ND 0.23 0.182 0.01 ND
Mo5889 13 ND 0.29 0.29 0.02 ND
Mo5911 95 ND 1.25 1.27 <0.01 ND
Mo5912 238 ND 1.4 1.42 <0.01 ND
Mo5922 99 ND 1.04 1.03 <0.01 ND
Mo5923 82 ND 0.77 0.691 <0.01 ND
Mo5928 87 ND 0.75 0.659 <0.01 ND
Mo5929 114 ND 0.75 0.658 0.04 ND
Mo5935 44 ND 0.56 0.482 0.02 ND
Mo5936 74 ND 0.76 0.72 0.01 ND
Mo9901 18 30 0.3 0.285 <0.01 ND
Mo9902 6 30 0.27 0.265 <001 ND
Mo9903 7 10 0.5 0.516 <0.01 ND
DUP-Mo5887 12 0.19 0.01
DUP-M09902 7 0.27 <0.01
17
ROSCOE POSTLE ASSOCIATES INC.
CHECK ASSAYS ON PULPS BY OTHER LABORATORIES
Ivanhoe sent batches of pulps to Bondar Clegg and Chemex Laboratories
in Vancouver for check assays on the original Analabs assays. RPA has examined
the results of three batches of pulps that were check assayed in Vancouver.
The initial comparison was made on 56 pulps from RC samples, which were
assayed at Analabs, Bondar Clegg and Chemex for gold and molybdenum and at
Analabs and Chemex for copper.
FIRST SET OF OUTSIDE CHECK ASSAYS
The results of these analyses are shown in Figures 4.2, 4.3, and 4.4.
Copper analyses at Analabs, Chemex and Bondar Clegg gave essentially the same
results. The gold values at Analabs are systematically higher than either Chemex
or Bondar Clegg. The gold values at Bondar Clegg and Analabs are closer compared
to those at Chemex.
For molybdenum, Bondar Clegg and Chemex give similar results, however,
both sets are very different from those at Analabs. There is so much variance in
the molybdenum assays between Analabs and the Vancouver labs that RPA wonders if
the pulps were thoroughly mixed before they were re-sampled in Mongolia. If the
pulp samples were not thoroughly mixed, but the split sent to Vancouver was
carefully mixed by the first lab before a split was sent to the second lab the
Vancouver labs would have similar results, but may be different from those
obtained in Mongolia. More work is needed on the molybdenum assays at Analabs.
SECOND SET OF OUTSIDE CHECK ASSAYS
The second set of assay comparisons was made with 26 pulp samples from
diamond drill core analyzed at Analabs and Bonder Clegg. Results are summarized
in Figure 4.6. Analabs tends to get higher gold assays for values >1 g/t but
most sample pairs show little variance. Copper assays are evenly distributed
above and below zero difference some 91% of the values show less than" 10%
variance.
18
ROSCOE POSTLE ASSOCIATES INC.
Molybdenum assays for these samples are widely scattered. Once again
incomplete sample mixing could contribute to the problem or it may be just an
inappropriate assay technique. More work is needed.
THIRD SET OF OUTSIDE CHECK ASSAYS
The third set of duplicate samples consists of 81 pulps from split core
samples assayed at Analabs in Mongolia and Bondar Clegg in Vancouver for copper
and gold. The correlation coefficients for gold and copper are 0.71 and 0.78.
Figures 4.8 and 4.9 show Thompson and Howarth Plots of the copper and gold
duplicates. Copper values show a symmetrical distribution around zero
difference. Although there are a few outliers the bulk of the samples fit into
an acceptable distribution. The gold values show an tight distribution around
zero.
In the three sets of outside check assays for gold the correlation
between the values obtained by Analabs and the outside laboratories has steadily
improved.
19
ROSCOE POSTLE ASSOCIATES INC.
[GRAPH OF DUPLICATE COPPER ASSAYS AT ANALABS]
1
ROSCOE POSTLE ASSOCIATES INC.
[GRAPH OF DUPLICATE GOLD ASSAYS AT ANALABS]
2
ROSCOE POSTLE ASSOCIATES INC.
[GRAPH OF FIRST SET OF 54 Cu RE-ASSAYS, CHEMEX]
3
ROSCOE POSTLE ASSOCIATES INC.
[GRAPH OF FIRST SET OF 56 Au RE-ASSAYS, CHEMEX]
4
ROSCOE POSTLE ASSOCIATES INC.
[GRAPH OF FIRST SET OF 56 Au RE-ASSAYS AT BONDAR CLEGG]
5
ROSCOE POSTLE ASSOCIATES INC.
[GRAPH OF FIRST SET OF 26 Mo RE-ASSAYS AT CHEMEX]
6
ROSCOE POSTLE ASSOCIATES INC.
[GRAPH OF SECOND SET OF 23 Cu RE-ASSAYS AT BONDAR CLEGG]
7
ROSCOE POSTLE ASSOCIATES INC.
[GRAPH OF SECOND SET OF 23 Au RE-ASSAYS AT BONDAR CLEGG]
8
ROSCOE POSTLE ASSOCIATES INC.
[GRAPH OF THIRD SET OF 72 Cu RE-ASSAYS AT BONDAR CLEGG]
9
ROSCOE POSTLE ASSOCIATES INC.
[GRAPH OF THIRD SET OF 72 Au RE-ASSAYS AT BONDAR CLEGG]
10
ROSCOE POSTLE ASSOCIATES INC.
APPENDIX 5 DRILLING SUMMARY TABLES
LIST OF TABLES
PAGE
TABLE 3 BHP DIAMOND DRILL HOLES Ivanhoe Mines Ltd. Oyu Tolgoi Project .......... 1
TABLE 4 REVERSE CIRCULATION DRILLING PROGRAM ...................................
Ivanhoe Mines Ltd. Oyu Tolgoi Project................................... 2
TABLE 5 "IVANHOE 2001 REVERSE CIRCULATION, .....................................
REVERSE CIRCULATION / DIAMOND, AND DIAMOND .............................
DRILLING PROGRAMS" Ivanhoe Mines Ltd. Oyu Tolgoi Project ............... 4
i
ROSCOE POSTLE ASSOCIATES INC.
TABLE 3 BHP DIAMOND DRILL HOLES IVANHOE MINES LTD. OYU TOLGOI PROJECT
ELEVATION LENGTH
HOLE NUMBER EASTING NORTHING m AMSL (m)
OTD001 651028 4763885 1126 136
OTD002 650357 4764995 1136 99
OTD003 651029 4764044 1129 186
OTD004 651258 4762854 1130 251
OTD005 650309 4762668 1128 208
OTD006 651026 4764990 1124 121
OTD007 651046 4762641 1126 280
OTD008 651642 4763034 1122 100
OTD009 650525 4763000 1132 243
OTD010 650826 4763300 1125 153
OTD011 650381 4763196 1133 100
OTD012 651080 4763411 1122 142
OTD013 651275 4764296 1121 201
OTD014 651275 4764695 1121 145
OTD015 651774 4764295 1115 101
OTD016 650630 4763995 1129 76
OTD017 650633 4764392 1129 121
OTD018 651271 4763739 1119 200
OTD019 650830 4762697 1128 157
OTD020 651026 4763092 1123 250
OTD021 651626 4762541 1120 134
OTD022 651629 4762299 1119 160
OTD023 651325 4762496 1122 251
1
ROSCOE POSTLE ASSOCIATES INC.
TABLE 4 REVERSE CIRCULATION DRILLING PROGRAM IVANHOE MINES LTD. OYU TOLGOI
PROJECT
ELEVATION LENGTH
HOLE NUMBER EASTING NORTHING m AMSL (m)
OTRC024 650386 4763542 1131 85
OTRC025 651038 4764046 1127 133
OTRC026 651026 4764093 1125 108
OTRC027 651026 4764292 1125 79
OTRC028 651025 4764492 1124 103
OTRC029 651231 4764493 1122 108
OTRC030 651224 4764297 1122 115
OTRC031 651223 4764096 1120 100
OTRC032 651224 4763893 1120 111
OTRC033 651225 4763692 1120 123
OTRC034 651026 4763693 1122 113
OTRC035 650828 4763692 1124 86
OTRC036 650827 4763889 1127 60
OTRC037 650824 4764092 1125 133
OTRC038 650826 4764293 1127 69
OTRC039 650825 4764492 1126 108
OTRC040 651022 4764579 1128 100
OTRC041 651429 4764492 1121 70
OTRC042 651473 4764294 1119 48
OTRC043 651425 4764093 1118 48
OTRC044 651424 4763892 1118 63
OTRC045 651422 4763691 1118 60
OTRC046 650726 4764092 1126 78
OTRC047 650822 4763994 1129 88
OTRC048 650829 4764190 1125 68
OTRC049 650936 4764093 1126 88
OTRC050 650935 4763988 1132 100
OTRC051 651024 4764191 1123 86
OTRC052 651120 4764103 1123 83
OTRC053 651006 4763876 1127 108
OTRC054 651022 4763800 1124 83
OTRC055 651398 4763246 1120 80
OTRC056 650420 4763392 1131 58
OTRC057 650724 4763891 1129 73
OTRC058 650722 4763992 1128 108
OTRC059 650526 4764793 1132 53
OTRC060 650527 4764993 1132 93
OTRC061 650527 4765192 1129 78
OTRC062 650328 4765195 1133 80
OTRC063 650325 4764999 1137 80
OTRC064 650326 4764793 1134 78
OTRC065 650125 4764791 1137 58
OTRC066 650120 4764992 1137 68
OTRC067 650116 4765195 1138 58
OTRC068 650526 4763593 1130 78
OTRC069 650723 4763592 1125 118
OTRC070 651268 4763556 1119 53
OTRC071 651430 4763594 1118 48
OTRC072 651907 4763917 1118 48
OTRC073 650427 4762688 1131 133
OTRC074 650424 4762495 1127 83
OTRC075 650226 4762495 1123 64
2
ROSCOE POSTLE ASSOCIATES INC.
TABLE 4 REVERSE CIRCULATION DRILLING PROGRAM IVANHOE MINES LTD. OYU TOLGOI
PROJECT
ELEVATION LENGTH
HOLE NUMBER EASTING NORTHING m AMSL (m)
OTRC076 650029 4762693 1124 86
OTRC077 650424 4762890 1132 131
OTRC078 650029 4762494 1123 54
OTRC079 650226 4762892 1129 88
OTRC080 650026 4762889 1126 58
OTRC081 650014 4762272 1124 58
OTRC082 651026 4764692 1124 118
OTRC083 651025 4764892 1125 102
OTRC084 651227 4764887 1122 88
OTRC085 651423 4764894 1121 58
OTRC086 651424 4764685 1170 73
OTRC087 651025 4764128 1124 69
OTRC088 651023 4763831 1124 60
OTRC089 651110 4763875 1123 73
OTRC090 651122 4763984 1125 73
OTRC091 650827 4764694 1128 123
OTRC092 650822 4764884 1129 103
OTRC093 650935 4764190 1124 88
OTRC094 651127 4764193 1122 130
OTRC095 651224 4764194 1121 103
OTRC096 650723 4764188 1127 78
OTRC097 650930 4763884 1126 73
OTRC098 650925 4764889 1126 38
OTRC099 650724 4764695 1130 30
OTRC100 650822 4764787 1127 108
OTRC101 650826 4764992 1129 60
OTRC102 650621 4764781 1131 88
OTRC103 651945 4765165 1117 38
OTRC104 651881 4764683 1117 48
OTRC105 650956 4762866 1126 108
OTRC106 651249 4762575 1124 68
OTRC107 650830 4762499 1129 58
OTRC108 650652 4762694 1130 87
OTRC109 650923 4763805 1125 60
OTRC110 651222 4763800 1120 88
OTRC111 651119 4763803 1122 98
OTRC112 651334 4763896 1118 63
OTRC113 650875 4764048 1127 83
OTRC114 651010 4763993 1133 108
OTRC115 651174 4763998 1122 58
OTRC116 652039 4763415 1127 58
OTRC117 650724 4764695 1130 67
OTRC118 650697 4764998 1129 78
OTRC119 650603 4764684 1132 113
OTRC120 650695 4765394 1127 53
OTRC121 651003 4765392 1126 48
OTRC122 651299 4765400 1121 48
OTRC123 650603 4763893 1129 58
OTRC124 650402 4762293 1124 63
OTRC125 651998 4762745 1118 60
OTRC126 650532 4764704 1133 108
OTRC127 650304 4764701 1133 73
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ROSCOE POSTLE ASSOCIATES INC.
TABLE 4 REVERSE CIRCULATION DRILLING PROGRAM IVANHOE MINES LTD. OYU TOLGOI
PROJECT
ELEVATION LENGTH
HOLE NUMBER EASTING NORTHING m AMSL (m)
OTRC128 651320 4764195 1120 110
OTRC129 651323 4764090 1119 83
OTRC130 651321 4763791 1118 83
OTRC131 650336 4764184 1137 73
OTRC132 650154 4763852 1137 58
OTRC133 652023 4762576 1118 108
TABLE 5 "IVANHOE 2001 REVERSE CIRCULATION, REVERSE CIRCULATION / DIAMOND, AND
DIAMOND DRILLING PROGRAMS" IVANHOE MINES LTD. OYU TOLGOI PROJECT
ELEVATION LENGTH
HOLE NUMBER EASTING NORTHING m AMSL (m)
RC DRILLING OTRC137 650889 4762792 1126 122
OTRC138 650881 4762932 1125 155
OTRC139 650815 4762859 1127 134
OTRC140 650750 4762781 1129 95
OTRC141 651178 4762986 1124 135
OTRC142 651340 4762939 1125 100
OTRC143 651410 4763015 1123 145
OTRC144 651522 4762917 1124 145
OTRC145 651456 4762841 1125 125
OTRC146 651572 4762974 1123 150
OTRC147 651634 4762826 1123 175
OTRC148 651328 4762688 1124 114
OTRC151 651141 4762759 1128 105
OTRC152 651438 4762821 1126 107
OTRC153 651603 4762785 1124 134
OTRC154 650843 4762965 1126 138
OTRC155 650907 4763042 1125 78
OTRC156 650931 4763152 1125 78
OTRC157 650672 4762845 1129 91
OTRC158 650533 4762831 1131 176
RCD DRILLING OTRCD149 651290 4762900 1129 405
OTRCD150 650621 4763038 1131 591
OTRCD169 650553 4762940 1132 751
D DRILLING OTD159 651132 4764193 1121 450
OTD160 650694 4763140 1129 461
OTD161 650774 4763082 1127 472
OTD162 650629 4763187 1130 363
OTD163 650550 4762936 1132 489
OTD164 651376 4762983 1124 517
OTD165 650384 4762700 1131 531
OTD166 650712 4762980 1130 600
OTD167 650086 4762520 1121 415
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ROSCOE POSTLE ASSOCIATES INC.
TABLE 5 "IVANHOE 2001 REVERSE CIRCULATION, REVERSE CIRCULATION / DIAMOND, AND
DIAMOND DRILLING PROGRAMS" IVANHOE MINES LTD. OYU TOLGOI PROJECT
ELEVATION LENGTH
HOLE NUMBER EASTING NORTHING m AMSL (m)
OTD168 650183 4762853 1175 550
OTD170 650890 4762680 1127 535
OTD171 650556 4763084 1131 614
OTD172 650484 4762991 1130 600
OTD173 650635 4762886 1130 700
OTD174 650845 4763184 1126 600
OTD175 650739.20 4763193.50 1129.10 461.3
OTD176 650625.89 4763267.60 1126.90 674.9
OTD177 650518.00 4763218.00 1130.20 591.6
OTD178 650742.00 4763193.00 1129.00 488.8
OTD179 650762.30 476238.70 1126.20 490.4
OTD180 640334.00 4762766.80 1129.10 1000
OTD181 650912.00 4763279.10 1122.10 700
OTD182 649928.00 4763015.00 1130.0 600
OTD183 650871.81 4763100.60 1125.00 1000
OTD184 640545.20 4763103.20 1130.60 600
OTD185 650395.00 4763304.00 1131.00 ?
5