Ivanhoe Mines’ Platreef Discovery and Mine Development, South Africa

https://www.youtube.com/watch?v=NZI8I3FfRkM

November 1, 2017: Shaft 1 reaches a depth of 500 metres below surface

On November 1, 2017, Ivanhoe announced that Shaft 1 had reached a depth of 500 metres below surface – now less than 300 metres from the targeted Flatreef mineralized zone and more than half way to the planned final depth of 980 metres – as development continues at the company’s Platreef Project focused on initial production of platinum, palladium, rhodium, nickel, copper and gold concentrate by 2022.

The 7.25-metre-diameter Shaft 1, which is expected to reach the Flatreef mineralization at a depth of approximately 783 metres in the third quarter of 2018, will be used for initial access to the Flatreef Deposit and early underground development.

Shaft 2 early-works surface construction advancing to box-cut development

Early-works surface construction for Shaft 2 began last May with initial curtain grouting around the box cut. Further work includes the excavation of a surface box cut to a depth of approximately 29 metres and construction of the concrete hitch for the 103-metre-tall concrete headgear (headframe) that will house the shaft’s permanent hoisting facilities and support the shaft collar. The early-works construction is expected to be completed in the third quarter of next year.

Shaft 2 will have an internal diameter of 10 metres and the capacity to hoist six million tonnes per year. The headgear design for the six-million-tonne-per-year permanent hoisting facility has been completed by South Africa-based Murray & Roberts Cementation.

Development work focused on initial production by 2022

The Platreef Project, which contains the Flatreef Deposit, is a Tier One discovery by Ivanhoe Mines’ geologists on the Northern Limb of South Africa’s Bushveld Igneous Complex, the world’s premier platinum producing region.

The Platreef Project, which contains the Flatreef Deposit, is a Tier One discovery by Ivanhoe Mines’ geologists on the Northern Limb of South Africa’s Bushveld Igneous Complex, the world’s premier platinum producing region. Ivanhoe plans to develop the Platreef Mine in three phases: 1) An initial rate of four million tonnes per annum (Mtpa) to establish an operating platform to support future expansions; 2) a doubling of production to eight Mtpa; and 3) expansion to a steady-state 12 Mtpa.

July 31, 2017: Ivanhoe Mines releases positive results of an independent definitive feasibility study for the planned first phase of its Platreef platinum-group elements, nickel, copper and gold mine in South Africa

The independent Platreef DFS covers the first phase of development that would include construction of a state-of-the-art underground mine, concentrator and other associated infrastructure to support initial concentrate production by early 2022. As Phase 1 is being developed and commissioned, there would be opportunities to refine the timing and scope of subsequent phases of expanded production.

Key features of the Platreef DFS include:

  • Indicated Mineral Resources contain an estimated 41.9 million ounces of platinum, palladium, rhodium and gold with an additional 52.8 million ounces of platinum, palladium, rhodium and gold in Inferred Resources.
  • Enhanced Mineral Reserve containing 17.6 million ounces of platinum, palladium, rhodium and gold – an increase of 13% – following stope optimization and mine sequencing work.
  • Development of a large, safe, mechanized, underground mine with an initial four Mtpa concentrator and associated infrastructure.
  • Planned initial average annual production rate of 476,000 ounces (oz.) of platinum, palladium, rhodium and gold (3PE+Au), plus 21 million pounds of nickel and 13 million pounds of copper.
  • Estimated pre-production capital requirement of approximately US$1.5 billion, at a ZAR:USD exchange rate of 13 to 1.
  • Platreef would rank at the bottom of the cash-cost curve, at an estimated US$351 per ounce of 3PE+Au produced, net of by-products and including sustaining capital costs, and US$326 per ounce before sustaining capital costs.
  • After-tax Net Present Value (NPV) of US$916 million, at an 8% discount rate.
  • After-tax Internal Rate of Return (IRR) of 14.2%. The actual return to project equity owners is expected to be higher as a result of the significant amount of project financing which is being raised.

Ivanhoe Mines indirectly owns 64% of the Platreef Project through its subsidiary, Ivanplats, and is directing all mine development work. The South African beneficiaries of the approved broad-based, black economic empowerment structure have a 26% stake in the Platreef Project. The remaining 10% is owned by a Japanese consortium of ITOCHU Corporation; Japan Oil, Gas and Metals National Corporation; and Japan Gas Corporation.

The Platreef DFS was prepared for Ivanhoe Mines by principal consultant DRA Global, with economic analysis led by OreWin, and specialized sub-consultants including Amec Foster Wheeler, Stantec Consulting, Murray & Roberts Cementation, SRK Consulting, Golder Associates and Digby Wells Environmental. The full technical report will be filed on SEDAR at www.sedar.com and on the Ivanhoe Mines website at www.ivanhoemines.com within 45 days of the issuance of this news release.

Platreef DFS results.

ItemUnitsTotal / Average Life of Mine
Mined and processed
Mineral Reserves
Platinum
Palladium
Gold
Rhodium
3PE+Au
Copper
Nickel

Million tonnes
g/t
g/t
g/t
g/t
g/t
%
%

125
1.95
2.01
0.30
0.14
4.40
0.17
0.34
Key financial results
Life of mine
Pre-production capital
Peak funding
Mine-site cash cost
Total cash cost after credits
All-in cash cost after credits
Site operating costs
After-tax NPV8%
After-tax IRR
Project payback period

Years
US$ million
US$ million
US$ per ounce 3PE+Au
US$ per ounce 3PE+Au
US$ per ounce 3PE+Au
US$ per tonne milled
US$ million
%
years

32
1,544
1,485
399
326
351
48.79
916
14.2
5.3
  1. The economic analysis is based on Probable Mineral Reserves only.
  2. 3PE+Au = platinum, palladium, rhodium and gold.
  3. Metal prices used in the Mineral Reserve estimate are as follows: US$1,600/oz platinum, US$815/oz palladium, US$1,300/oz gold, US$1,500/oz rhodium, US$8.90/lb nickel and US$3.00/lb copper.
  4. A declining Net Smelter Return (NSR) cut-off of US$155/tonne–$80/tonne was used in the Mineral Reserve estimate.
  5. Metal price assumptions used for the DFS economic analysis are as follows: US$1,250/oz platinum, US$825/oz palladium, US$1,300/oz gold, US$1,000/oz rhodium, US$7.60/lb nickel and US$3.00/lb copper.
  6. All-in cash costs include sustaining capital costs.

Mine development work focused on resources in Flatreef underground discovery

The Flatreef Deposit, with a strike length of six kilometres, predominantly lies within a flat to gently dipping portion of the Platreef mineralized belt at relatively shallow depths of approximately 700 to 1,100 metres below surface.

The Flatreef Deposit is characterized by its very large vertical thicknesses of high-grade mineralization and the platinum-to-palladium ratio of approximately 1:1, which is significantly higher than other PGMs discoveries on the Northern Limb of the Bushveld. The grade shells used to constrain mineralization in the Flatreef Indicated Resource area have average true thicknesses of approximately 24 metres at a 2 g/t 2PE+Au (platinum-palladium-gold) cut-off grade.

On May 11, 2016, Ivanhoe Mines announced a substantial increase in Indicated and Inferred Mineral Resources at the Platreef Project. The updated estimate is for Mineral Resources amenable to underground mining methods within Platreef's Flatreef Deposit. It is the first update of the overall resource estimate to be issued in more than three years. The new estimate includes the Turfspruit Cyclic Unit (TCU), which hosts the majority of the Flatreef Mineral Resources, and also two additional underground zones of mineralization – the Footwall (FW) and the Bikkuri (BIK) – that occur in close proximity to the TCU.

Indicated Mineral Resources now contain an estimated 42.0 million ounces of PGMs plus gold – a gain of 45% – with an additional 52.8 million ounces in Inferred Resources, at the base case cut-off grade of 2 grams/tonne. At a cut-off grade of 1 gram/tonne, Indicated Mineral Resources now contain an estimated 58.8 million ounces of PGMs plus gold, and an additional 94.3 million ounces in Inferred Resources.

The updated Mineral Resource estimate was prepared by Ivanhoe Mines under the direction of Dr. Harry Parker, RM SME of Amec Foster Wheeler E&C Services Inc (Amec Foster Wheeler). Dr. Parker and Mr. Timothy Kuhl RM SME, also of Amec Foster Wheeler, have independently confirmed the Mineral Resource estimate and are the Qualified Persons for the estimate, which has an effective date of April 22, 2016.

Click here to view Platreef Project - 2016 Resource Technical Report, June 2016

Platreef Mineral Resource - all mineralized zones (2.0 g/t base case).

Indicated Mineral Resources - Tonnage and Grades
Cut-off Grade (3PE+Au)MtPt (g/t)Pd (g/t)Au (g/t)Rh (g/t)3PE+Au (g/t)Cu (%)Ni (%)
3.0 g/t2042.112.110.340.144.70.180.35
2.0 g/t3461.681.700.280.113.770.160.32
1.0 g/t7161.111.160.190.082.550.130.26
Indicated Mineral Resources - Contained Metal
Cut-off Grade (3PE+Au)Pt (Moz)Pd (Moz)Au (Moz)Rh (Moz)3PE+Au (Moz)Cu (Mlbs)Ni (Mlbs)
3.0 g/t13.8613.862.230.9230.868001 597
2.0 g/t18.6618.943.121.2341.951 2262 438
1.0 g/t25.6326.814.491.8258.752 0764 108
Inferred Mineral Resources - Tonnage and Grades
Cut-off Grade (3PE+Au)MtPt (g/t)Pd (g/t)Au (g/t)Rh (g/t)3PE+Au (g/t)Cu (%)Ni (%)
3.0 g/t2251.911.930.320.134.290.170.35
2.0 g/t5061.421.460.260.103.240.160.31
1.0 g/t14310.880.940.170.072.050.130.25
Inferred Mineral Resources - Contained Metal
Cut-off Grade (3PE+Au)Pt (Moz)Pd (Moz)Au (Moz)Rh (Moz)3PE+Au (Moz)Cu (Mlbs)Ni (Mlbs)
3.0 g/t13.7813.962.330.9431.018651, 736
2.0 g/t23.1723.784.261.5652.771,7753, 440
1.0 g/t40.3843.017.813.0694.274,1297,759
  1. Mineral Resources have an effective date of April 22, 2016. The Qualified Persons for the estimate are Dr. Harry Parker, RM SME, and Timothy Kuhl, RM SME, who are employees of Amec Foster Wheeler E&C Services Inc. and independent of Ivanhoe. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
  2. The 2 g/t 3PE+Au cut-off is considered the base case estimate and is highlighted. The rows are not additive.
  3. Mineral Resources are reported on a 100% basis. Mineral Resources are stated from approximately -200 m to 650 m elevation (from 500 m to 1,350 m depth). Indicated Mineral Resources are drilled on approximately 100 x 100 m spacing (locally 150 m spacing); Inferred Mineral Resources are drilled on 400 x 400 m (locally to 400 x 200 m and 200 x 200 m) spacing.
  4. Mineral Resources have been estimated on an externally undiluted basis and without consideration for mining recovery. Dilution and mining recoveries will vary with the geometry (dip, thickness, faulting and or irregularities in contacts) of the mineralization and the eventual mining method used.
  5. Reasonable prospects for eventual economic extraction were determined using the following assumptions. Assumed commodity prices are Pt: $1,600/oz, Pd: $815/oz, Au: $1,300/oz, Rh: $1,500/oz, Cu: $3.00/lb and Ni: $8.90/lb. It has been assumed that payable metals would be 82% from a smelter/refinery and that mining costs (average $34.27/t) and process, G&A, and concentrate transport costs (average $15.83/t of mill feed for a 4 Mtpa operation) would be covered. The processing recoveries vary with block grade but typically would be 80%-90% for Pt, Pd and Rh; 70-90% for Au, 60-90% for Cu, and 65-75% for Ni.
  6. 3PE+Au = Pt + Pd + Rh + Au.
  7. Totals may not sum due to rounding.

Platreef’s Indicated Resources shown in green; Inferred Resources in blue; areas of resource expansion indicated with diagonal lines; exploration target areas in beige. Additional detail on the exploration target areas is shown in Figure 2.

Exploration targets provide upside in adjoining areas

Potential for additional UMT-TCU mineralization within targets for further exploration

Exploration potential exists immediately outside the area of Inferred Mineral Resources that has not been explored by Ivanhoe. Amec Foster Wheeler has defined four targets for further exploration (exploration targets) in areas that are contiguous with the current Mineral Resource areas that are shown below.

Target 1 could contain 150 to 250 million tonnes grading 1.2 to 1.9 g/t Pt, 1.2 to 1.9 g/t Pd, 0.19 to 0.32 g/t Au, 0.08 to 0.14 g/t Rh, (2.6 to 4.3 g/t 3PE+Au), 0.11 to 0.19% Cu and 0.23 to 0.38% Ni over an area of 4.1 km2. The tonnage and grades are based on intersections of 2.0 g/t 3PE+Au mineralization in drill holes located adjacent to the target.

Target 2 could contain 50 to 90 million tonnes grading 1.3 to 2.1 g/t Pt, 1.4 to 2.3 g/t Pd, 0.19 to 0.31 g/t Au, 0.11 to 0.18 g/t Rh, (2.9 to 4.9 g/t 3PE+Au), 0.11 to 0.19% Cu and 0.23 to 0.39% Ni over an area of 3.9 km2. The tonnage and grades are based on intersections of 2.0 g/t 3PE+Au mineralization in drill holes located adjacent to the target.

Target 3 could contain 5 to 10 million tonnes grading 1.3 to 2.2 g/t Pt, 1.1 to 1.9 g/t Pd, 0.20 to 0.34 g/t Au, 0.10 to 0.17 g/t Rh, ( 2.7 to 4.6 g/t 3PE+Au), 0.11 to 0.18% Cu and 0.23 to 0.38% Ni over an area of 0.5 km2. The tonnage and grades are based on intersections of 2.0 g/t 3PE+Au mineralization in drill holes located adjacent to the target.

Target 4 could contain 40 to 60 million tonnes grading 1.3 to 2.2 g/t Pt, 1.5 to 2.5 g/t Pd, 0.18 to 0.30 g/t Au, 0.12 to 0.20 g/t Rh, (3.1 to 5.2 g/t 3PE+Au), 0.10 to 0.17% Cu and 0.22 to 0.36% Ni over an area of 1.5 km2. The tonnage and grades are based on intersections of 2.0 g/t 3PE+Au mineralization in drill holes located adjacent to the target.

The potential quantity and grade of these exploration targets is conceptual in nature. There has been insufficient exploration and/or study to define these exploration targets as Mineral Resources. It is uncertain if additional exploration will result in these exploration targets being delineated as a Mineral Resource.

In addition, there are approximately 48 km2 of unexplored ground beyond these exploration target areas on the property under which the prospective stratigraphy is projected to lie. It is not possible to estimate a range of tonnages and grades for this ground with current information. There is excellent potential for mineralization to significantly increase with further step-out drilling to the southwest.

Mineralization at the Platreef Project is open to expansion to the south and west, beyond the area of the current Mineral Resources. Indicated Resources are shown in green and Inferred Resources are shown in blue.

Ivanhoe Mines’ exploration geologists receive the 2016 Colin Spence Award for excellence in global mineral exploration for the Flatreef Discovery of platinum-group metals in South Africa