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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
From: September 17, 2004
IVANHOE MINES LTD.
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(Translation of Registrant's Name into English)
SUITE 654 - 999 CANADA PLACE, VANCOUVER, BRITISH COLUMBIA V6C 3E1
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(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.)
Form 20-F- [ ] Form 40-F- [X]
(Indicate by check mark whether the registrant by furnishing the information
contained in this form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
Yes: [ ] No: [X]
(If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82-___________.)
Enclosed:
Technical Report
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
IVANHOE MINES LTD.
DATE: September 17, 2004 By: /s/ Beverly A. Bartlett
---------------------------
BEVERLY A. BARTLETT
Corporate Secretary
IMPORTANT NOTICE
This report was prepared as a National Instrument 43-101 Technical Report, in
accordance with Form 43-101F1, for Ivanhoe Mines Limited (Ivanhoe) by AMEC
Americas Limited (AMEC). The quality of information, conclusions, and estimates
contained herein is consistent with the level of effort involved in AMEC's
services, based on: i) information available at the time of preparation, ii)
data supplied by outside sources, and iii) the assumptions, conditions, and
qualifications set forth in this report. This report is intended to be used by
Ivanhoe, subject to the terms and conditions of its contract with AMEC. That
contract permits Ivanhoe to file this report as a Technical Report with Canadian
Securities Regulatory Authorities pursuant to provincial securities legislation.
Except for the purposes legislated under provincial securities laws, any other
use of this report by any third party is at that party's sole risk.
[IVANHOE MINES LOGO] IVANHOE MINES LTD.
TECHNICAL REPORT
OYU TOLGOI, MONGOLIA
CONTENTS
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1.0 SUMMARY.............................................................1-1
2.0 INTRODUCTION AND TERMS OF REFERENCE.................................2-1
2.1 Terms of Reference...........................................2-1
3.0 DISCLAIMER..........................................................3-1
4.0 PROPERTY DESCRIPTION AND LOCATION...................................4-1
4.1 Mineral Tenure...............................................4-1
4.2 Permits and Agreements.......................................4-1
4.3 Environmental Impact Assessment..............................4-2
5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE
AND PHYSIOGRAPHY....................................................5-1
5.1 Location.....................................................5-1
5.2 Regional Centres and Infrastructure..........................5-1
5.3 Climate......................................................5-1
5.4 Physiography.................................................5-2
5.5 Seismicity...................................................5-2
5.6 Transportation Infrastructure................................5-2
5.7 Other resources..............................................5-3
6.0 HISTORY.............................................................6-1
7.0 GEOLOGICAL SETTING..................................................7-1
7.1 Regional Geology.............................................7-1
7.2 Oyu Tolgoi Property Geology..................................7-1
7.3 Property Structural Geology..................................7-3
7.4 Southern Oyu Tolgoi Deposits.................................7-5
7.5 Hugo Dummett Deposit.........................................7-9
8.0 DEPOSIT TYPES.......................................................8-1
9.0 MINERALIZATION......................................................9-1
9.1 Southwest Deposit............................................9-1
9.2 South Deposit................................................9-1
9.3 Wedge Zone Deposit...........................................9-2
9.4 Central Deposit..............................................9-2
9.5 Hugo Dummett Deposit.........................................9-3
9.6 Oxidized Zone................................................9-3
10.0 EXPLORATION........................................................10-1
11.0 DRILLING...........................................................11-1
12.0 SAMPLING METHOD AND APPROACH.......................................12-1
13.0 SAMPLE PREPARATION, ANALYSES, AND SECURITY.........................13-1
13.1 Sample Preparation and Shipment.............................13-1
13.2 Assay Method................................................13-2
13.3 QA/QC Program...............................................13-2
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14.0 DATA VERIFICATION..................................................14-1
15.0 ADJACENT PROPERTIES................................................15-1
16.0 MINERAL PROCESSING AND METALLURGICAL TESTING.......................16-1
17.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES.....................17-1
17.1 Geologic Models and Data Analysis...........................17-1
17.2 Evaluation of Extreme Grades................................17-9
17.3 Variography................................................17-10
17.4 Model Set-up...............................................17-14
17.5 Estimation.................................................17-15
17.6 Mineral Resource Classification............................17-21
17.7 Mineral Resource Summary...................................17-22
18.0 OTHER RELEVANT DATA AND INFORMATION................................18-1
19.0 REQUIREMENTS FOR TECHNICAL REPORTS ON PRODUCTION AND DEVELOPMENT
PROPERTIES...........................19-1
20.0 CONCLUSIONS AND RECOMMENDATIONS....................................20-1
21.0 REFERENCES.........................................................21-3
FIGURES
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Figure 4-1: Location Map................................................4-3
Figure 4-2: Oyu Tolgoi Licence in Relation to Neighbouring Tenements....4-4
Figure 5-1: Transportation Infrastructure...............................5-3
Figure 7-1: General Stratigraphic Column for the Oyu Tolgoi Prospect....7-2
Figure 10-1: Gradient Array IP (E-W Lines)..............................10-3
Figure 10-2: Ground Magnetics...........................................10-4
Figure 13-1: SRM Failure Chart..........................................13-3
Figure 13-2: Blank Sample Results for Gold..............................13-4
Figure 13-3: Blank Sample Results for Copper............................13-4
Figure 13-4: Relative Difference Scatter Plot, Southwest and South
Duplicate Samples - Copper (%).............................13-5
Figure 13-5: Relative Difference Scatter Plot, Southwest and South
Duplicate Samples - Gold (g/t).............................13-6
Figure 13-6: Relative Difference Scatter Plot, Central Duplicate
Samples - Copper (%).......................................13-6
Figure 13-7: Relative Difference Scatter Plot, Central Duplicate
Samples - Gold (g/t).......................................13-7
Figure 13-8: Percentile Rank Plots, Southwest and South Duplicate
Data - Copper (%)..........................................13-8
Figure 13-9: Percentile Rank Plots, Central Duplicate Data
- Gold (g/t)...............................................13-8
Figure 13-10: Percentile Rank Plots, Central Duplicate Data
- Copper (%)...............................................13-9
Figure 13-11: Percentile Rank Plots, Central Duplicate Data
- Gold (g/t)...............................................13-9
Figure 17-1: Oyu Tolgoi Southern Deposits Estimation Zones..............17-2
Figure 17-2: Au vs. Cu Composite Data Scatter Plots, Oyu Tolgoi
Southern Deposits..........................................17-7
Figure 17-3: Au and Cu Contact Plots, Augite Basalt (Va) vs. Qmd,
Southwest Deposit..........................................17-9
Figure 17-4: Au and Cu Contact Plots, Gold Shell vs. Background,
Southwest Deposit..........................................17-9
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Figure 17-5: Change-of-Support Grade-Tonnage Plots for Cu Model
and Herco Values, Southwest Deposit Domains...............17-18
Figure 17-6: Change-of-Support Grade-Tonnage Plots for Cu Model
and Herco Values, Cu Shell domains, Central and
South deposits............................................17-19
TABLES
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Table 1-1: Oyu Tolgoi Southern Deposit Mineral Resource Summary -
18 August 2004...............................................1-6
Table 13-1: Percent Difference at the 90th Population Percentile
(% Diff)....................................................13-7
Table 17-1: Statistics - Copper Composites (excluding post mineral
dyke intervals).............................................17-4
Table 17-2: Statistics - Gold Composites (excluding post mineral
dyke intervals).............................................17-5
Table 17-3: Cap Grades for Au Assays, Oyu Tolgoi Southern Deposits.....17-10
Table 17-4: Cu and Au Variogram Parameters for Oyu Tolgoi
Southern Deposits..........................................17-12
Table 17-5: Azimuth and Dip Angles of Rotated Variogram Axes, Oyu
Tolgoi Southern Deposits...................................17-13
Table 17-6: Global Model Mean Grade Values by Domain in each Zone......17-20
Table 17-7: Oyu Tolgoi Southern Deposit Mineral Resource Summary
- 18 August 2004...........................................17-22
Table 17-8: Oyu Tolgoi Southern Deposit Mineral Resource Summary
- 18 August 2004 (at multiple copper equivalent
cutoff grades).............................................17-23
APPENDICES
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A Drillhole List and Plan Views
B Composite Data List
C QA/QC Charts
D EDA Charts
E Variography
F Interpolation Parameters
F Grade Swath Plots
G Block Model Sections and Plans
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OYU TOLGOI, MONGOLIA
1.0 SUMMARY
Ivanhoe Mines Ltd. (Ivanhoe) has asked AMEC Americas Limited (AMEC) to
provide an independent mineral resource estimate and Qualified Person's
review and Technical Report for the Southern deposits of the Oyu Tolgoi
project in Mongolia. The work entailed estimating mineral resources in
conformance with the CIM Mineral Resource and Mineral Reserve
definitions referred to in National Instrument (NI) 43-101, Standards
of Disclosure for Mineral Projects. It also involved the preparation of
a Technical Report as defined in NI 43-101 and in compliance with Form
43-101F1 (the "Technical Reports"). The work represents a significant
change in the level of confidence of the mineral resource since the
last disclosure on these deposits in a Technical Report on the Oyu
Tolgoi project, Mongolia dated February 2003 and repeated in a
Preliminary Assessment on the Oyu Tolgoi project dated January 2004.
Dr. Harry Parker, Ch.P.Geol., and Dr. Stephen Juras, P.Geo., directed
the mineral resource estimation work and review of the geological data.
Dr. Juras visited the project site from 24 March 2004 to 24 April 2004
and June 11 2004 to June 30 2004. Dr. Parker visited the site from 1 to
6 April 2004. Dr. Stephen Juras, P.Geo., an employee of AMEC, who
served as the Qualified Person responsible for preparing the earlier
February 2003 Technical Report, served in the same capacity for this
updated version.
The Oyu Tolgoi project consists of copper-gold-molybdenum
mineralization in a mid Paleozoic Cu-Au porphyry system. It is located
in the Aimag (Province) of Omnogov, in the South Gobi region of
Mongolia, about 530 km south of the capital city of Ulaanbaatar and 80
km north of the border with China. The Oyu Tolgoi project comprises
Mining License 6709A, which covers an area of 8,496 ha. Ivanhoe has
been granted the exclusive right to explore within the bounds of its
exploration licence.
Oyu Tolgoi occurs in an early to mid Paleozoic island arc environment
that is part of the Gurvansayhan terrane. The arc terrane is dominated
by basaltic volcanics and intercalated volcanogenic sediments, intruded
by plutonic-size hornblende-bearing granitoids of mainly quartz
monzodiorite to possibly granitic composition. Carboniferous
sedimentary rocks overlie this assemblage. Property geology consists of
massive porphyritic augite basalt, which underlies much of the central
part of the exploration block. Dacitic to andesitic ash flow tuffs,
several hundred metres in thickness, overlie the augite basalt. The
southern edge of a large body of hornblende granodiorite outcrops along
the northern margin of the exploration block. A wide variety of felsic
to mafic dykes are found throughout the exploration block and in drill
holes. These include porphyritic quartz monzodiorite dykes that may be
genetically related to the Cu-Au porphyry systems. Based on satellite
imagery and geophysical interpretations, major structures trend N35E
and N70E.
The Southern Oyu Tolgoi deposits occur in a triangular zone 1.9 km N-S
x 1.5 km E-W at the base of the triangle. This zone encompasses three
porphyry centres, Southwest Oyu
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Tolgoi, Central Oyu Tolgoi and South Oyu Tolgoi. The region lying
between Southwest and South deposits also contains copper sulphide
mineralization and has been named Wedge Zone. The Southwest Oyu deposit
is an Au-rich porphyry system, characterized by a pipe-like geometry,
encompassing a high-grade core ((greater than) 1 g Au/t) about 250 m in
diameter and extending over 700 m vertically. The deposit is centred on
small (metres to tens of metres wide) quartz monzodiorite dykes and
lies between two major northeast-striking, steeply northwest-dipping
faults, West Bounding Fault and the East Bounding Fault. Over 80% of
the deposit is hosted by massive porphyritic basalt. Strong quartz
veining ((greater than) 20% volume) and secondary biotite alteration
define the core of the porphyry system. Cu-Fe sulphide mineralization
in the Southwest Oyu deposit consists mainly of finely disseminated
pyrite-chalcopyrite and minor bornite. Molybdenite is also common but
occurs mainly on late structures.
The South deposit is a copper porphyry deposit, developed in basaltic
volcanics and related small, strongly-sericite altered quartz
monzodiorite dykes. To the southwest, the host rock sequence is
intruded by unmineralized quartz monzodiorite, while to the northeast
it is overlain by weakly to non-mineralized ignimbrite and
northeast-dipping non-mineralized strata of the Lower Sedimentary
Sequence. The deposit lies on a NE-trending structural block bounded by
two sub-parallel faults, the South Fault to the northwest, and the
Solongo Fault to the southeast. It is characterized by secondary
biotite, magnetite and moderate intensity quartz veining (10% by
volume), with strong late-stage overprinting by
sericite-chlorite-smectite (intermediate argillic alteration). The main
sulphide minerals are chalcopyrite and bornite. Unlike the nearby
Southwest Oyu system, it is not gold-rich. Cu-Fe sulphide
mineralization at the South Oyu deposit consists of finely disseminated
pyrite-chalcopyrite and bornite. As at Southwest Oyu, molybdenite
occurs locally on late-stage structures.
The Central Oyu deposit occurs mainly within several phases of quartz
monzodiorite intrusive rocks and associated intrusive/hydrothermal
breccia, with volumetrically subordinate zones of augite basalt. The
quartz monzodiorite (Qmd) dykes occupy over 80 percent of the area and,
in general, comprises at least three intrusive phases. The Central
deposit contains high-sulphidation (covellite-chalcocite-enargite) and
Cu-Au (chalcopyrite-gold) porphyry styles, as well as a chalcocite
enrichment blanket. High-sulphidation (HS) alteration and
mineralization are telescoped onto an underlying gold-rich porphyry
system. Central Oyu deposit contains several styles of mineralization;
volumetrically the most important is finely disseminated
pyrite-covellite-chalcocite. In addition, it is mineralogically complex
and contains minor amounts of chalcopyrite, bornite, enargite,
tetrahedrite and tennantite.
The Wedge Zone deposit is a newly outlined zone that, in part,
consisted of what was previously described as the South deposit. The
Wedge Zone is the area bound by the NNE striking East Bounding Fault to
the west and the NE striking South and Solongo faults to the southeast.
These structural features outline a triangle or wedge-shape whose apex
is defined by the intersection between the East Bounding Fault and
Solongo Fault in the
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southern part of the property. The deposit is conformably overlain to
the northeast by units of the Lower Sedimentary Sequence. The southern
portion is dominated by weakly altered and mineralized Qmd. Bornite and
chalcopyrite mineralization is hosted in strongly altered ignimbrite
units to the north, and Qmd and lesser augite basalt to the south.
Intensity of alteration (advanced argillic) and sulphide mineralization
is most intense along the eastern side of the East Bounding Fault in
the transition area between SW Oyu and Central Oyu.
The database used to estimate the mineral resources for the Oyu Tolgoi
Southern deposits consists of samples and geological information from
539 core drill holes drilled by Ivanhoe between mid 2002 and June 2004.
Samples from the drill programs were prepared for analysis at an
on-site facility operated by SGS Mongolia LLC (SGS Mongolia). The
samples were then shipped under the custody of Ivanhoe to Ulaanbaatar,
where they were assayed at a facility operated by SGS Mongolia. Data
transfer to the resource database was validated from original
certificates through a 5% check of the database.
Ivanhoe employs a comprehensive QA/QC program. All sampling and QA/QC
work is overseen on behalf of Ivanhoe by Dale A. Sketchley, M.Sc.,
P.Geo. Each sample batch of 20 samples contains four or five quality
control samples. The quality control samples comprise one duplicate
split core sample and one uncrushed field blank, which are inserted
prior to sample preparation; a reject or pulp preparation duplicate,
which is inserted during sample preparation; and one or two standard
reference material (SRM) samples (one (less than) 2% Cu and one
(greater than) 2% Cu if higher-grade mineralization is present based on
visual estimates), which are inserted after sample preparation. A
total of 33 different reference materials have been developed for the
Oyu Tolgoi deposits and are used to monitor the assaying of six
different ore types made up of varying combinations of chalcopyrite,
bornite, primary and supergene chalcocite, enargite, covellite, and
molybdenite.
Ivanhoe strictly monitors the performance of the standard reference
material (SRM) samples as the assay results arrive at site. If a batch
fails based on standard reference material and blank sample tolerance
limits from round-robin programs, it is re-assayed until it passes,
unless the batch is deemed to represent barren intervals. AMEC reviewed
Ivanhoe's QA/QC procedures at site and found them to be strictly
adhered to. Results of field blanks show low incidence of contamination
and confirm negligible contamination in the assay process. Duplicate
performance of core, coarse reject, and pulp duplicates was evaluated
by AMEC and found to be well within the respective accepted ranges. The
current Ivanhoe QA/QC program exceeds industry standards and
demonstrates that the assay process for the Southern deposits samples
is in control.
Infill diamond drilling over the Southern deposits of Oyu Tolgoi
enabled better resolution of the various mineral-hosting and
non-hosting lithologic units, the structural geology (namely the fault
distribution) and the Cu-Au mineralization itself. The higher density
of data and ongoing geologic investigations into the structural
history, intrusive history and alteration zonation enabled Ivanhoe to
create 3-dimensional shapes of key faults and intrusive units.
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Particular useful was the modelling of the Southern deposits Qmd
intrusive units, and the East and West Bounding Faults, South Fault and
Solongo Fault. Comprehensive geologic models were also created of the
post-mineral units: the post-mineral dykes (rhyolite,
hornblende-biotite andesite and biotite granodiorite) and the contact
between the mineralized volcanic sequence and the non-mineralized Lower
Sedimentary sequence. AMEC checked the shapes for interpretational
consistency in section and plan, and found them to have been properly
constructed. The shapes honoured the drill data and appear well
constructed.
To constrain grade interpolation in each of the zones, AMEC created
3-dimensional mineralized envelopes based on gold grades in Southwest
and copper grades in Central, South, Bridge Zone and Wedge Zone. Except
for the Wedge Zone, these were derived by a method of Probability
Assisted Constrained Kriging (PACK) to initially outline a general
shape. Threshold grades were 0.7 g/t for gold and 0.3 to 0.5 % for Cu.
Grade outline selection was done by inspecting contoured probability
values (in increments of 0.05) in MineSight(R). These shapes were then
edited in plan and section views to be consistent with the structural
and lithologic models and the drill assay data so that the boundaries
did not violate data and current geologic understanding of
mineralization controls. Grade shells in the Wedge Zone were manually
drawn at grade thresholds of 0.3% and 0.6% Cu.
The estimates were made from 3-dimensional block models utilizing
commercial mine planning software (MineSight(R)). Industry-accepted
methods were used to create interpolation domains based on mineralized
geology and grade estimation based on ordinary kriging. The assays were
composited into 5 m down-hole composites. The compositing honoured the
domain zone by breaking the composites on the domain code values. The
Oyu Tolgoi estimation plans, or sets of parameters used for estimating
blocks, were designed using a philosophy of restricting the number of
samples for local estimation. AMEC has found this to be an effective
method of reducing smoothing and producing estimates that match the
Discrete Gaussian change-of-support model and ultimately the actual
recovered grade-tonnage distributions. Reasonableness of grade
interpolation was reviewed by visual inspection of sections and plans
displaying block model grades, drill hole composites and geology. Good
agreement was observed. Global and local bias checks in block models,
using nearest-neighbour estimated values versus the ordinary kriged
values, found no evidence of bias.
The mineral resources of the Oyu Tolgoi project were classified using
logic consistent with the CIM definitions referred to in National
Instrument 43-101. Inspection of the model and drill hole data on plans
and sections in the Southwest Gold Zone area, combined with spatial
statistical work and investigation of confidence limits in predicting
planned quarterly production showed good geologic and grade continuity
in areas where sample spacing was about 50 m. When taken together with
all observed factors, AMEC decided that blocks covered by this data
spacing in the Southwest Gold Zone area may be classified as Measured
Mineral Resource. A three-hole rule was used where blocks containing an
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estimate resulting from three or more samples from different holes (all
within 55 m with at least one within 30 m) were classified as Measured
Mineral Resource.
The Indicated Mineral Resource category is supported by the present
drilling grid over most of the remaining part of the Oyu Tolgoi
Southern deposits. The drill spacing is at a nominal 70 m on and
between sections. Geologic and grade continuity is demonstrated by
inspection of the model and drill hole data in plans and sections over
the various zones, combined with spatial statistical work and
investigation of confidence limits in predicting planned annual
production. Considering these factors, AMEC decided that blocks covered
by this data spacing may be classified as Indicated Mineral Resource. A
two-hole rule was used where blocks containing an estimate resulting
from two or more samples from different holes. For the Southwest
deposit the two holes needed to be within 75 m with at least one hole
within 55 m. For the remaining deposits, both holes needed to be within
65 m with at least one hole within 45 m to be classified as Indicated
Mineral Resources.
All interpolated blocks that did not meet the criteria for either
Measured or Indicated Mineral Resources were assigned as Inferred
Mineral Resources if within they fell within 150 m of a drill hole
composite.
The mineralization of the Oyu Tolgoi Southern deposits as of 18 August
2004 is classified as Measured, Indicated and Inferred Mineral
Resources. The resources are shown in Table 1-1, reported at a copper
equivalent cutoff grade. The mineral resource estimate summary has been
split into resources lying above and below a depth of 560 m below
surface (an elevation of 600 m above sea level), which ongoing mine
planning work has identified to be a conservative depth for a
large-scale, open-pit mining operation. The resources above the depth
of 560 m from surface have been estimated using a 0.30% copper
equivalent cutoff grade. Resources lying below a depth of 560 m from
surface (likely mining would be by underground bulk mining methods)
were estimated using a 0.60% copper equivalent cutoff grade.
The equivalent grade was calculated using assumed metal prices for
copper and gold. The assumed prices were US$0.80 for Cu and US$350/oz
for gold. For convenience the formula is:
o CuEq = %Cu + (g/t Au*11.25)/17.64
The contained gold and copper estimates in the following table have not
been adjusted for metallurgical recoveries.
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TABLE 1-1: OYU TOLGOI SOUTHERN DEPOSIT MINERAL RESOURCE SUMMARY - 18 AUGUST 2004
GRADES CONTAINED METAL
------------------------------------ ---------------------------
COPPER GOLD COPPER EQ. COPPER GOLD
MINERAL RESOURCE CATEGORY TONNES (%) (G/T) (%) ('000S LB) (OZ)
====================================================================================================================
Above a depth of 560 m from surface (600 m elevation), 0.30% Copper Equivalent Cut-off
Measured 108,360,000 0.58 0.85 1.13 1,386,000 2,961,000
Indicated 882,070,000 0.47 0.25 0.62 9,140,000 7,090,000
--------------------------------------------------------------------------------------------------------------------
Measured+Indicated 990,430,000 0.48 0.31 0.68 10,481,000 9,871,000
--------------------------------------------------------------------------------------------------------------------
Inferred 259,060,000 0.35 0.20 0.47 1,999,000 1,666,000
====================================================================================================================
Below a depth of 560 m from surface (600 m elevation), 0.60% Copper Equivalent Cut-off
Measured 5,280,000 0.76 2.12 2.11 88,000 360,000
Indicated 65,620,000 0.44 0.99 1.08 637,000 2,089,000
--------------------------------------------------------------------------------------------------------------------
Measured+Indicated 70,900,000 0.47 1.08 1.15 735,000 2,462,000
--------------------------------------------------------------------------------------------------------------------
Inferred 26,200,000 0.41 0.55 0.76 237,000 463,000
====================================================================================================================
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2.0 INTRODUCTION AND TERMS OF REFERENCE
Ivanhoe Mines Ltd. (Ivanhoe) has asked AMEC Americas Limited (AMEC) to
provide an independent mineral resource estimate and Qualified Person's
review and Technical Report for the Southern deposits of the Oyu Tolgoi
project in Mongolia. The work entailed estimating mineral resources in
conformance with the CIM Mineral Resource and Mineral Reserve
definitions referred to in National Instrument (NI) 43-101, Standards
of Disclosure for Mineral Projects. It also involved the preparation of
a Technical Report as defined in NI 43-101 and in compliance with Form
43-101F1 (the "Technical Reports"). The work represents a significant
change in the level of confidence of the mineral resource since the
last disclosure on these deposits in a Technical Report on the Oyu
Tolgoi project, Mongolia data February 2003 and repeated in a
Preliminary Assessment on the Oyu Tolgoi project dated January 2004.
Dr. Stephen Juras, P.Geo., an employee of AMEC, who served as the
Qualified Person responsible for preparing the earlier Technical
Report, served in the same capacity for this updated version.
Information and data for the independent resource estimate were
obtained from Ivanhoe personnel in Vancouver and from the project site
in Mongolia.
Pertinent geological data were reviewed in sufficient detail to prepare
this document. Dr. Harry Parker, Ch.P.Geol., and Dr. Stephen Juras,
P.Geo., directed the mineral resource estimation work and review of the
geological data. Dr. Juras visited the project site from 24 March 2004
to 24 April 2004 and 11 June 2004 to 30 June 2004. Parker visited the
site from 1 to 6 April 2004.
2.1 TERMS OF REFERENCE
The Oyu Tolgoi project consists of a series of Cu-Au mineralized
deposits grouped into the Southern and Northern (Hugo Dummett deposits)
Oyu Tolgoi deposits. The Southern deposits, the focus of this Technical
Report, comprise Southwest Oyu, Central Oyu, and South Oyu deposits.
Throughout this report, these may be termed SW, CO, and SO,
respectively.
All units are in the metric system except contained metal quantities
shown in the mineral resource summary tables, which are also expressed
in troy ounces and pounds.
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3.0 DISCLAIMER
AMEC's review and resource work relied on work and reports done by Dr.
Peter Lewis, P.Geo., of Lewis Geoscience Services Inc. on matters
pertaining to structural geology of the Oyu Tolgoi project. AMEC used
information from this work under the assumption that it was prepared by
a Qualified Person.
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4.0 PROPERTY DESCRIPTION AND LOCATION
The Oyu Tolgoi property hosts a series of copper-gold-molybdenum
mineralized deposits in a Paleozoic porphyry system. It is located in
the Aimag (Province) of Omnogovi in the South Gobi region of Mongolia,
about 570 km south of the capital city of Ulaanbaatar and 80 km north
of the border with China (Figure 4-1). The Oyu Tolgoi property
comprises Mining License 6709A (Figure 4-2), which covers an area of
8,496 ha and is centred at latitude 43 degrees 00'45"N, longitude 106
degrees 51'15"E.
4.1 MINERAL TENURE
Ivanhoe, was granted Mining Licenses for the Oyu Tolgoi property and
three satellite properties on 23 December 2003, in accordance with the
Minerals Law of Mongolia. These licenses give the right to Ivanhoe to
mine within the bounds of the license area. The licenses are valid for
60 years, with an option to Ivanhoe to extend its license for a further
40 years. These licenses were converted exploration licences that were
originally issued to BHP on 17 February 1997.
The exploration licence fees were US$1.50 per hectare in 2002 and 2003
(6th and 7th years of tenure). Thus, Ivanhoe has paid US$12,744 to the
Mongolian government each year since acquiring the property.
The mining license fees are:
o Years 1 - 3: $ 5.00 /ha
o Years 4 & 5: $ 7.50 /ha
o Years 6 on: $10.00 /ha
The Oyu Tolgoi property was legally surveyed in August 2002 by Surtech
International Ltd.
4.2 PERMITS AND AGREEMENTS
Upon transfer of the exploration licence, Ivanhoe agreed to a 2% NSR
royalty with BHP Billiton. However, the 2% NSR has now been acquired by
Ivanhoe. Terms of this transaction require Ivanhoe to pay BHP Billiton
a total of US$37 million in two payments, with the final payment of
US$20 million to be made by February 5, 2004.
Royalties potentially payable to the Mongolian government are governed
by Article 38 of the Minerals Law of Mongolia, which states: "Royalties
shall be equal to 2.5 per cent of the sales value of all products
extracted from the mining claim that are sold, shipped for sale, or
used. Royalties shall be equal to 7.5 per cent of the sales value of
gold extracted from the placer that are sold, shipped for sale, or
used."
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When the areas were covered by exploration licenses, an environmental
plan accompanied the annual work plans submitted to the relevant soum,
or district (Khanbogd Soum). The original environmental performance
bond was posted in 1998 by BHP and it is still retained by the soum for
the ongoing work. Further requirements for environmental impact
assessment are discussed below.
The soum must also be paid for water and road usage. Payments are
computed at the end of each calendar year based on the extent of use.
Archaeological surveys and excavations have been completed for the
project area by the Institute of Archaeology at the Mongolian Academy
of Science. Archaeological approvals have been granted for disturbance
at the site.
4.3 ENVIRONMENTAL IMPACT ASSESSMENT
Project development for Oyu Tolgoi is currently subject to
environmental impact assessment (EIA) in accordance with Mongolian
environmental laws. The process was initiated with the completion of
the "Oyu Tolgoi project Environmental Baseline Study" in October 2002.
Ivanhoe submitted this document, along with preliminary project
descriptions, to the Ministry for Nature and Environment (MNE) for
screening. MNE has reviewed the documentation and prepared guidelines
for the completion of a detailed EIA.
Sustainability, an Australian consulting firm, is assisting Ivanhoe
with the EIA negotiations with the Mongolian Government and is
coordinating the preparation of the appropriate documentation.
Mongolian law requires a licensed Mongolian consulting firm to prepare
the EIA. Accordingly, Ivanhoe engaged Eco Trade Co Ltd to complete this
work.
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FIGURE 4-1: LOCATION MAP
[LOCATION MAP]
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FIGURE 4-2: OYU TOLGOI LICENCE IN RELATION TO NEIGHBOURING TENEMENTS
[LICENCES IN RELATION TO NEIGHBOURING TENEMENTS MAP]
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5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND
PHYSIOGRAPHY
5.1 LOCATION
The Oyu Tolgoi project is in the Aimag (Province) of Omnogovi, located
in the south Gobi Region of Mongolia. The property is approximately 570
km south of the capital city Ulaanbaatar.
The elevation of the Oyu Tolgoi property ranges from 1,140 m to 1,215 m
above sea level. The topography largely consists of gravel-covered
plains, with low hills along the northern and western lease borders.
Scattered, small rock outcrops and colluvial talus are widespread
within the northern, western and southern parts of the property.
5.2 REGIONAL CENTRES AND INFRASTRUCTURE
There are a number of communities in the South Gobi region. The most
prominent is Dalanzadgad, population 14,000, which is the centre of the
Omnogovi aimag and located 220 km northwest of the Oyu Tolgoi property.
Facilities at Dalanzadgad include a regional hospital, tertiary
technical colleges, domestic airport and a 6 MW capacity coal-fired
power station. Ivanhoe envisions that Dalanzadgad may be suitable as a
regional centre for recruiting and training. The closest community to
the property is Khanbogd, the centre of the Khanbogd soum. Khanbogd has
a population of approximately 2,000 and is located 45 km to the east.
Other communities relatively near to the project include Mandalgovi
(population 13,500), which is capital of the Dundgovi aimag and located
310 km north of the project on the road to Ulaanbaatar, Bayan Ovoo
(population 1,600), 55 km to the west, and Manlai (population 2,400),
150 km to the north.
5.3 CLIMATE
The south Gobi region has a continental, semi-desert climate with cool
springs and autumns, hot summers, and cold winters.
The average annual precipitation is approximately 80 mm, 90% of which
falls in the form of rain with the remainders as snow. Snowfall
accumulations rarely exceed 50 mm. Maximum rainfall events of up to 43
mm have been recorded for short-term storm events. In an average year,
rainfalls on only 25 to 28 days and snowfalls on 10 to 15 days. Local
records indicate that thunderstorms are likely to occur between 2 and 8
days a year at the project area with an average total of 29 hours of
electrical activity annually. An average storm will have up to 83
lightning flashes a minute.
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Temperatures range from an extreme maximum of about 36 degrees C to an
extreme minimum of about -31 degrees C. The air temperature in
wintertime fluctuates between -5 degrees C and -31 degrees C. In the
coldest month, January, the average temperature is -12 degrees C.
Wind is usually present at the site. Very high winds are accompanied by
sand storms that often severely reduce visibility for several hours at
a time. The records obtained from 9 months monitoring at the Oyu Tolgoi
project weather station show that the average wind speed in April is
5.5 m/sec. However, windstorms with gusts of up to 40 m/sec occur for
short periods. Winter snowstorms and blizzards with winds up to 40
m/sec occur in the Gobi region between 5 and 8 days a year. Spring dust
storms are far more frequent and these can continue through June and
July.
5.4 PHYSIOGRAPHY
The region is covered by sparse semi-desert vegetation and is used by
nomadic herders who tend camels, goats and sheep. Several ephemeral
streams cross the lease area and flow for short periods immediately
after rainfall. Water is widely available from shallow wells.
The Oyu Tolgoi property is relatively flat with occasional exposed
bedrock. This topography will be amenable to the construction of the
necessary infrastructure, including tailings storage sites, heap leach
pads, waste disposal, and processing plant sites.
5.5 SEISMICITY
Knight Piesold completed a preliminary seismicity review from the
Global Seismic Hazard Assessment Map, which is normally a reasonable
reference source to conduct this level of review. The map indicates
that the site lies within a very high hazard zone with a 475 year
return period, peak ground acceleration of 0.4 to greater than 0.48 g.
A brief review of the worldwide seismic databases determined that there
is a paucity of records for the Oyu Tolgoi area. A detailed seismic
assessment, including a risk evaluation, will be required to develop
the design criteria and to minimise the design level. While this is
likely to result in a high seismic zoning and high ground acceleration
values for design, the analysis could also result in a downgrading of
one or even two zones.
5.6 TRANSPORTATION INFRASTRUCTURE
Ivanhoe currently accesses the property from Ulaanbaatar either by an
unpaved road, via Mandalgovi (a 12-hour drive under good conditions),
or by air. Ivanhoe has constructed a 1,600 m long gravel airstrip at
the site. The Trans-Mongolian Railway, which crosses the Mongolia-China
border approximately 420 km east of the property, traversing the
country from southeast to northwest through Ulaanbaatar between Russia
and China. The
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Chinese government has upgraded 226 km highway from Gushaan Suhait to
Wuyuan, providing a direct link between the Mongolian border crossing,
80 km south of Oyu Tolgoi, and the Trans-China Railway system (Figure
5-1). Ivanhoe (through Ivanhoe) has entered into negotiations with
Mongolian and Chinese government authorities to extend the highway the
final 80 km to the Oyu Tolgoi project site.
FIGURE 5-1: TRANSPORTATION INFRASTRUCTURE
[TRANSPORTATION INFRASTRUCTURE MAP]
5.7 OTHER RESOURCES
The Mongolia government has previously conducted extensive exploration
for water resources in the south Gobi region and a number of such
resources were discovered. Several possible sources of water lie within
20 to 60 km of the project site.
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6.0 HISTORY
A minor amount of copper was recovered from malachite and chrysocolla
at the South Oyu deposit during the Bronze Age, as indicated by small
circular pits and minor copper smelting slag (Tseveendorj and Garamjav,
1999).
The Oyu Tolgoi district was explored by a joint Mongolian and Russian
regional geochemical survey during the 1980s, when the Central Oyu area
was identified as a molybdenum anomaly. Dondog Garamjav (now senior
geologist with Ivanhoe Mines Mongolia) first visited Oyu Tolgoi in 1983
and found evidence of alteration and copper mineralization at South
Oyu. In September 1996 he brought a team of Magma Copper geologists to
the area, who identified a porphyry copper leached cap nearby.
Exploration tenements were secured in late 1996.
During the 1997 field season, BHP, which had acquired Magma Copper,
carried out geological, geochemical and geophysical surveys and
completed a six-hole diamond-drilling program of 1,102 m (Perello,
2001). This program was designed to test the potential for secondary
chalcocite mineralization at Central Oyu and for hypogene copper-gold
mineralization at South Oyu. Drill hole OTD3 at Central Oyu intersected
10 m of 1.89% copper from 20 m below surface, and drill hole 4 at South
Oyu encountered 70 m of 1.65% copper and 0.15 g/t gold at a depth of 56
m. A second drilling program of 17 widely spaced, relatively shallow
holes (2,800 m total) was completed in 1998. Based on the results of
this drilling, BHP in 1999 estimated a preliminary resource of 438 Mt
averaging 0.52% copper and 0.25 ppm gold (Perello, 2001).
BHP shut down its exploration in Mongolia in mid-1999 and offered its
properties for joint venture. Ivanhoe visited Oyu Tolgoi in May 1999
and made an agreement to acquire 100% interest in the property, subject
to a 2% Net Smelter Royalty (NSR). Ivanhoe completed all of its earn-in
requirements by June 2002 and became the owner of the property. In
November 2003 Ivanhoe acquired the 2% NSR royalty retained by BHP
Minerals International Exploration, a subsidiary of BHP.
Ivanhoe carried out 8,000 m of reverse circulation (RC) drilling in
2000, mainly at Central Oyu, to explore the chalcocite blanket
discovered earlier by BHP. Based on this drilling, Ivanhoe estimated an
indicated resource of 31.7 Mt at 0.80% copper and an additional
inferred resource of 11.2 Mt grading 0.78% copper (Cargill, 2002). In
2001, Ivanhoe continued RC drilling, mostly in the South Oyu area, to
test possible oxide resources, and then completed three diamond drill
holes to test the deep hypogene copper-gold potential. Hole 150
intersected 508 m of chalcopyrite-rich mineralization grading 0.81% Cu
and 1.17 g/t Au. Hole 159 intersected a 49 m thick chalcocite blanket
grading 1.17% Cu and 0.21 g/t Au, followed by 252 m of hypogene
covellite mineralization grading 0.61% Cu and 0.11 g/t Au.
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These three holes were sufficiently encouraging for Ivanhoe to mount a
major follow-up drill program. In late 2002, drilling in the far
northern section of the property intersected 638 m of
bornite-chalcopyrite-rich mineralization in hole 270, starting at a
depth of 222 m. This hole marked the discovery of the Hugo Dummett
deposit.
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7.0 GEOLOGICAL SETTING
7.1 REGIONAL GEOLOGY
Oyu Tolgoi occurs in an early to mid Paleozoic island arc environment,
which is part of the Gurvansayhan terrane (Badarch et al., 2002). This
terrane hosts several other South Gobi porphyry deposits, including
Tsagaan Survarga (140 km northwest of Oyu Tolgoi). The terrane is
composed of lower to mid Paleozoic metasediments and island arc basalts
that rest upon a lower Paleozoic ophiolite complex. The structure of
the terrane is complex and is dominated by imbricate thrust sheets,
dismembered blocks and melanges (Badarch et al., 2002). Devonian to
Carboniferous diorite and monzodiorite intrusive complexes appear to be
spatially (and genetically?) associated with a major northeast-trending
suture zone termed the East Mongolian Fault Zone. This suture, thought
to be active from mid Paleozoic to Mesozoic times, forms the southern
boundary of the Gurvansayhan terrane. On the northwest margin of the
Gurvansayhan terrane (100 to 130 km northwest of Oyu Tolgoi) several
other Cu-Au porphyry systems and high-sulphidation alteration zones
occur in an east-northeast-trending belt (e.g., Kharmagtai, Shuteen).
The arc terrane, at 50 km scale around Oyu Tolgoi, is dominated by
basaltic volcanics and intercalated volcanogenic sediments, intruded by
plutonic-size hornblende-bearing granitoids of mainly quartz
monzodiorite to possibly granitic composition. Carboniferous
sedimentary rocks (identified by plant fossils) overlie this
assemblage, including parts of the Oyu Tolgoi exploration area. In
addition, the largest magmatic system near Oyu Tolgoi (7 km from
porphyry alteration) is the Lower Permian, Na-alkalic Hanbogd Complex.
The Hanbogd Complex appears to comprise two adjacent sub-circular
intrusions up to 35 km in diameter, possibly emplaced along N70E
structures. Satellite imagery reveals a concentric structure, which
correlates to abundant pegmatite dykes. The pegmatites are enriched in
Rare Earth elements and Zr. The Hanbogd Complex has a flat roof, as
indicated by numerous basaltic wall rock roof pendants, and may
therefore have a "pancake" or lopolithic structure.
7.2 OYU TOLGOI PROPERTY GEOLOGY
A tentative hardrock stratigraphy based mainly on extensive trenching
(total ~20kms), drilling data, as well as detailed mapping of all
outcrops in the exploration block (1:5000 scale), is shown in Figure
7-1. The stratigraphy is divided into 3 broad sequences, from oldest to
youngest:
1. Late Devonian basaltic to dacitic volcanic rocks (Volcanic Arc
sequence)
2. Late Devonian sedimentary rocks with intercalated basaltic flow
breccia (Lower sedimentary-volcanic sequence)
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FIGURE 7-1: GENERAL STRATIGRAPHIC COLUMN FOR THE OYU TOLGOI PROSPECT
[EXPLORATION BLOCK STRATIGRAPHY GRAPHIC]
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3. Late Tournaisian-Early Visean terrigenous to shallow marine
sedimentary rocks, with andesitic ash flow tuffs and lava,
carbonaceous shale and coaly layers, overlain by a thick sequence
of basaltic tuff (Upper sedimentary-volcanic sequence).
A wide variety of felsic to mafic dykes is found throughout the
exploration block and in drill holes. Post-mineral dykes comprise
basalt, hornblende-biotite andesite, rhyolite and biotite granodiorite.
Hornblende-biotite andesite dykes may be co-magmatic with andesitic
ignimbrite, and intrude this unit (the lower part of the Upper
sedimentary-volcanic sequence), but do generally do not intrude
overlying sedimentary units. Rhyolite and basalt dykes intrude the
Carboniferous sedimentary rocks but not the overlying basaltic tuffs.
Copper-gold porphyry and related systems in the exploration area are
related to phenocryst-rich quartz monzodiorite intrusions that range in
size from meter-wide tabular dykes to larger intrusions with plan
dimensions in kilometres. The quartz monzodiorites may be co-magmatic
with dacitic ash flow tuff, and may be Late Devonian in age.
7.3 PROPERTY STRUCTURAL GEOLOGY
Structural features found within the Oyu Tolgoi project area were
studied and described by Dr. Peter Lewis, P.Geo., of Lewis Geocience
Inc. in numerous Ivanhoe reports. AMEC used material from these reports
as well as personal communication with their author.
Structural features on the Oyu Tolgoi project area developed during
deformation events ranging in age from at least the Late Paleozoic to
present. Four distinct episodes of deformation are supported, with
common reactivation of earlier formed features by later events.
The alignment of deposits at Oyu Tolgoi strongly indicates control by a
deep NNE-striking fault or fracture zone. This feature may be
responsible for localizing ascent of productive magmas along the trend
defined by the positions of the deposits. Such a feature would likely
have been a long-lived structure with a pre-mineral movement history.
The manifestation of this fault at shallow crustal levels is limited to
low-displacement faults, dyke shapes, and the distribution and form of
the deposits.
7.3.1 PRE-MINERALIZATION FAULTING
Stratigraphic distribution patterns in the project area strongly
suggest that WNW-striking, moderately N-dipping faults were active
synchronous with deposition of the Lower sedimentary sequence. Faults
showing evidence of syn-sedimentary movement include the 110 Fault
(Hugo Dummett deposit area) and the Central Fault (between Hugo Dummett
and Central deposits). Kinematics history of these structures is poorly
constrained but data are consistent with extensional faulting during
NNE-oriented extension.
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7.3.2 SYN-MINERALIZATION DEFORMATION
Quartz +/- sulphide veins in most of the deposit areas show at least a
moderate degree of preferred orientation. In the Southern deposits,
maximum concentrations of vein orientations strike north to northwest,
and dip steeply to the west. These orientations are consistent with
formation within a structural regime with a W to SW axis of extension.
The Hugo deposits do not share these orientations: at Hugo South, veins
show little or no preferred orientation, while at Hugo North maximum
concentrations of veins are sub-parallel to stratigraphic contacts.
Crosscutting relationships in drill core indicate that in the Southwest
and South Oyu deposit areas, northwest-striking, sub-vertical faults
were active during mineralization. These faults contain kinematic
indicators (asymmetric gouge fabrics, secondary fault surfaces)
implying sinistral, sub-horizontal movement. This displacement
direction is compatible with the vein orientations in the Southern
deposits; however, it cannot be proved that the kinematic indicators
formed synchronous with the veins, and not during a post-mineral period
of fault re-activation.
Orientations of mineralized veins, combined with the kinematic history
of syn-mineralization faulting imply that mineralization in the project
area formed within a WSW-ENE extensional setting.
7.3.3 POST-MINERALIZATION NNE FOLDING AND RELATED FAULTING
Abundant NNE-trending folds are defined by bedding measurements from
oriented drill core within the bedded Lower and Upper sedimentary
sequences. These are particularly well documented in the eastern Hugo
deposit area, but likely to occur throughout the concession. On a
larger scale, gradual changes in the orientations of ignimbrite unit
contacts also define an open, NNE-trending flexure approximately
coinciding with the axis of the Hugo deposits. This folding indicates
that the deposit area was subject to a period of WNW-ESE shortening in
Carboniferous or younger time.
At Hugo Dummett, several NNE-striking, east-dipping faults occur as
zones of gouge and breccia up to several meters wide within and along
the margins of the deposit. These faults likely formed during the
post-mineralization folding event to accommodate strain
incompatibilities arising from the contrasting rheology of the units
enclosing the deposit.
The timing of NNE folding is constrained by the Carboniferous age of
the youngest folded strata, and the Cretaceous age of regional units
lacking this evidence of this folding. There is no direct evidence that
the numerous pre-existing faults in the deposit area were reactivated
during the NNE folding event, and most have an orientation that would
be unfavourable for reactivation within the structural regime
accompanying folding.
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7.3.4 LATE JURASSIC/EARLY CRETACEOUS FAULTING AND FOLDING
Approximately 40 km to the south of the Oyu Tolgoi project area, a
period of extensional rifting commencing in late Jurassic to early
Cretaceous time resulted in formation of the NE-trending East Gobi
Basin (Johnson et al., 2001). Although there is no direct evidence that
this extensional deformation reached Oyu Tolgoi, the presence of a
Cretaceous chalcocite blanket at Central Oyu is consistent with
extension-related exhumation of the deposit area during this event.
Broad reversals in plunge direction of NNE trending folds at Hugo
Dummett, and fold interference patterns in the SE part of the project
area are consistent with a late set of NW trending folds superimposed
on the NNE folds. The NW fold orientation is compatible with folding
during Jurassic - Cretaceous extensional event, although no direct age
constraints exist at Oyu Tolgoi. As well, the NNE-striking dextral
shear zone in the NW corner of the concession is kinematically
compatible with the Early Cretaceous structural regime.
7.4 SOUTHERN OYU TOLGOI DEPOSITS
The Southern Oyu Tolgoi deposits occur in a triangular zone 1.9 km N-S
x 1.5 km E-W at the base of the triangle. This zone encompasses three
porphyry centres, Southwest Oyu Tolgoi, Central Oyu Tolgoi, and South
Oyu Tolgoi. The region lying between Southwest and South deposits also
contains copper sulphide mineralization, and has been named Wedge Zone.
7.4.1 SOUTHWEST DEPOSIT
The Southwest deposit is an Au-rich porphyry system, characterized by a
pipe-like geometry, encompassing a high-grade core ((greater than) 0.7
g Au/t) about 250 m in diameter and extending over 700 m vertically.
The deposit is centred on small (metres to tens of metres wide) quartz
monzodiorite dykes and lies between two major northeast-striking,
steeply northwest-dipping faults, West Bounding Fault and the East
Bounding Fault. Over 80% of the deposit is hosted by massive
porphyritic augite basalt. Strong quartz veining ((greater than) 20%
volume) and secondary biotite alteration define the core of the
porphyry system. There is no outward sericite zone; instead, weak
epidote occurs at about a 600 m radius. The high-grade core is enclosed
by a large low-grade ore shell (0.3% Cu; 0.3 g Au/t) 600 m x 2,000 m in
area. The system is low sulphide ((less than) 5%), and the Cu-Au is
related to chalcopyrite. Bornite is minor ((less than) 20%). Moderate
to strong hydrothermal magnetite and gypsum-anhydrite mineralization
are characteristic.
The porphyry system is related to several generations of porphyritic
quartz monzodiorite (Qmd) dykes intruding massive porphyritic augite
basalt. The earliest Qmd dykes (OT-Qmd) occur in the high-grade core of
the deposit; they are small (metres to tens of metres wide) and may be
discontinuous between drill holes. The OT-Qmd dykes are strongly
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quartz-veined ((greater than) 20% by volume) and exhibit intense
sericite alteration that overprints and obscures early K-silicate
alteration (mainly biotite). Detailed logging suggests that the OT-Qmd
is a multiply injected dyke swarm intruded as high-temperature quartz
veining and K-silicate alteration developed, with later dykes
entraining early quartz vein clasts (but not sulphide mineralization).
On the northwest and east side of the high-grade core, large quartz
monzodiorite dykes with moderate to strong sericite alteration and weak
sulphide mineralization are intruded in N25E to N70E directions. These
dykes are regarded as intra- to post-mineral, but although they delimit
the high-grade core of the deposit, they generally are not observed to
cut high-grade mineralization. Hence, the role of these dykes may be to
provide a structural focus for the late mineralizing fluids. They also
host sporadic gold-rich base metal veins at a radius of about 600 m
from the centre of the high-grade zone. The east side of the deposit is
interpreted from ground-magnetics and drill data to comprise an
N25E-trending 80 NW-dipping structural zone intruded by the late quartz
monzodiorite dykes. Since these dykes dip to the northwest, they
underlie the high-grade orebody at depths (greater than) 800 m.
Although weakly copper-mineralized, the N25E dyke zone exhibits Au:Cu
ratios of (less than) 1 (Au in g/t, Cu in %), a characteristic of the
adjacent South deposit rather than the Southwest deposit.
In the core of SW Oyu, early K-silicate alteration and quartz veining
was followed by volumetrically minor implosion breccias characterized
by shard-like, angular clasts of quartz vein, OT-Qmd and
biotite-altered basalt wall rock clasts. These breccias contain early
chalcopyrite as clasts or mineralized fragments, but also exhibit late
pyrite-chalcopyrite mineralization in their matrix. A highly irregular
xenolithic quartz monzodiorite (i.e., entraining the breccia clasts)
intrudes the implosion breccia. This intrusion varies from relatively
unaltered to intensely altered and exhibits spectacular zones of coarse
minerals including biotite, muscovite, tourmaline, pyrite and albite.
These alteration assemblages show an evolution to strong hydrolytic
alteration in the core of the deposit, coupled with final stages of
mineralization and quartz monzodiorite intrusion.
Fault geometry and kinematics, vein orientations, and deposit geometry
at SW Oyu imply a structural model invoking deposit formation in a
dilational fault transfer zone. This zone is delineated by the West
Bounding Fault on the NW, and the East Bounding Fault on the SE. As
sinistral displacement on the West Bounding Fault decreases southward,
movement is transferred across the deposit area to the East Bounding
Fault, forming a zone of dilation between the two major faults. The
steep W to SW dips of the dominant vein sets within the SW deposit area
are compatible with a shallowly east-plunging axis of extension. This
easterly plunge is also evident in bedding orientations to the east of
the deposit, and may be an artefact of post-mineralization tilting or
folding.
Post mineral dykes are common in SW Oyu and comprise rhyolite and
hornblende andesite dykes. The rhyolite dykes tend to have EW and WNW
strikes in the deposit core,
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and NE strikes when emplaced along the bounding faults. Hornblende
andesite dykes strike ENE, except where they intrude along the
NE-striking West Bounding Fault.
7.4.2 SOUTH DEPOSIT
The South deposit is a copper porphyry deposit, developed in basaltic
volcanics and related small, strongly-sericite altered quartz
monzodiorite dykes. To the southwest, the host rock sequence is
intruded by unmineralized quartz monzodiorite, while to the northeast
it is overlain by weakly to non-mineralized ignimbrite and
northeast-dipping non-mineralized strata of the Lower Sedimentary
Sequence. The deposit lies on a NE-trending structural block bounded by
two sub-parallel faults, the South Fault to the northwest, and the
Solongo Fault to the southeast. The South Fault includes two splays
cutting into the adjacent fault block to the north, and is interpreted
to merge with the East Bounding Fault to the south. Both of the
NE-striking bounding faults juxtapose significantly higher
stratigraphic levels against the augite basalt hosting the deposit,
defining a horst geometry in the deposit area. Their orientation
implies that if they were present during mineralization, they would
likely have accommodated dominantly sinistral strike-slip displacement.
South Oyu is characterized by secondary biotite, magnetite and moderate
intensity quartz veining (10% by volume), with strong late-stage
overprinting by sericite-chlorite-smectite (intermediate argillic
alteration). The main sulphide minerals are chalcopyrite and bornite.
Unlike the nearby Southwest system, gold mineralization at South Oyu is
distinctly lower grade. Surface exposures suggest that the deposit may
contain a tabular, northwest-striking core zone dominated by sheeted
veins, grading outward into peripheral weaker stockworks. This core
zone may be localized within a zone of extension linking the bounding
faults to the northwest and southeast, which formed to accommodate
internal strain within the hosting fault block.
The South deposit is intruded by numerous post-mineral dykes: rhyolite,
basalt and subordinate hornblende-biotite andesite. The post-mineral
dykes are usually small (metres) but may occupy up to 50% of the rock
volume. However one major east-west trending, rhyolite dyke is up to 50
m thick in places. Dyke orientations are similar to those in the SW
deposit.
7.4.3 WEDGE ZONE DEPOSIT
The Wedge Zone deposit is a newly outlined zone that, in part,
consisted of what was previously described as the South deposit. The
Wedge Zone is the area bound by the NNE striking East Bounding Fault to
the west and the NE striking South and Solongo faults to the southeast.
These structural features outline a triangle or wedge-shape whose apex
is defined by the intersection between the East Bounding Fault and
Solongo Fault in the southern part of the property. The deposit is
conformably overlain to the northeast by units
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of the Lower Sedimentary Sequence. The southern portion is dominated by
weakly altered and mineralized Qmd. The dominant volcanic unit
preserved here is the Dacite ash flow tuff or ignimbrite unit. Augite
basalt is present at depth but its extent is limited due to the Qmd
intrusions.
Mineralization is hosted in strongly altered ignimbrite units to the
north, and Qmd and lesser augite basalt to the south. Intensity of
alteration and sulphide mineralization is most intense along the
eastern side of the East Bounding Fault in the transition area between
SW Oyu and Central Oyu (called the Bridge Zone) west of the same fault.
Current data show similar alteration styles and mineralogy to that seen
in ignimbrite units in the Hugo Dummett South deposit. That is strong
advanced argillic alteration.
The Wedge Zone is intruded by post-mineral dykes: EWE striking rhyolite
dykes and NNE striking biotite granodiorite dykes are the most common.
The latter occur in a rather narrow zone, parallel and just east of the
East Bounding Fault.
7.4.4 CENTRAL DEPOSIT
The Central Oyu deposit occurs mainly within several phases of quartz
monzodiorite intrusive rocks and associated intrusive/hydrothermal
breccia, with volumetrically subordinate zones of augite basalt. The
quartz monzodiorite (Qmd) dykes occupy over 80 percent of the area but
have a complex geometry, and consequently their distribution and
structural controls are poorly understood. In general, three Qmd
intrusive phases can be recognized, based on quartz vein intensity and
intrusive relationships. The earliest phase exhibit the highest
intensity of quartz veining, whereas late Qmd dykes are relatively
unaltered and poorly quartz-veined. The Central Oyu deposit area is
overlain to the east by non-mineralized Lower Sedimentary Sequence
conglomerate, mudstone, and siltstone beds. Wide zones of breccia and
foliated breccia occur along the basal contact of these sedimentary
units.
Most contacts between the Qmd units and volcanic rocks are intrusive,
although minor faulting occurs locally along some contacts.
Post-mineralization faults can be identified as minor zones of breccia
and cataclasite in some drill holes, but it is not possible to
correlate these intersections between drill holes to define continuous
fault surfaces. Pre- or syn-mineral faulting, if present, is largely
obscured by intrusive and hydrothermal overprinting.
The Central deposit contains high-sulphidation
(covellite-chalcocite-enargite) and Cu-Au (chalcopyrite-gold) porphyry
styles, as well as a chalcocite enrichment blanket. High-sulphidation
(HS) alteration and mineralization are telescoped onto an underlying
gold-rich porphyry system. The HS system is centred on multiple
intruded quartz monzodiorite dykes characterized by a high intensity of
porphyry-related quartz veining.
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Current interpretations of the Central deposit (principally as
defined by covellite-chalcocite and advanced argillic alteration)
indicate it may be somewhat "funnel-shaped," suggesting that
high-sulphidation alteration extended upward to a paleosurface.
Laterally at the margins and at depth, the advanced argillic zone
shows a transition to intermediate argillic and chlorite alteration
assemblages that overprint early biotite alteration. Chalcopyrite
mineralization at these margins is commonly gold-rich, either relict
from early Au-rich porphyry mineralization or possibly HS-related.
Post mineral dykes are present in Central Oyu and comprise rhyolite,
biotite granodiorite and uncommon hornblende andesite dykes. The
rhyolite dykes are most common, usually occurring along the periphery
of the deposit displaying EW and WNW strikes. Biotite granodiorite
dykes occur along the deposit's eastern margin and tend to strike NNS
to NS. Hornblende andesite dykes, when present, strike ENE.
7.5 HUGO DUMMETT DEPOSIT
The Hugo Dummett deposit is the northernmost of at least three
mineralized centres comprising the Oyu Tolgoi Cu-Au
porphyry/high-sulphidation mineralized system. Though not the focus
of this Technical Report, it is briefly described here for the sake
of completeness of the property's geological description. The Hugo
Dummett deposit extends over a strike length of 2.6 km and appears to
be bound on the northern end by a ENE trending, late high angle
reverse fault that juxtaposes quartz monzodiorite intrusive rock,
outcropping to the north of the deposit with the barren sediments
that overlie the deposit. Underlying these sediments are dacitic ash
flow tuffs and phyric basalt that constitute the principal host rocks
of the deposit. These volcanic and volcaniclastic rocks appear to be
folded into a monocline having its flat lying limb as the central
core of the deposit and a steeply east dipping limb that bounds the
eastern flank of the deposit. The western boundary of the monocline
is cut by a steeply dipping to vertical fault referred to as the West
BAT Fault.
Quartz-monzodiorite (Qmd) intrusions, with varying degrees of
chalcopyrite and pyrite mineralization, irregularly intrude into the
underlying basalts as fingers and dykes. At the northern end of Hugo
North, an intense quartz stockwork has been intersected in several
deep holes proximal to a significant increase in gold content of the
bornite-rich mineralization hosted by both the quartz-rich basalt and
the Qmd.
Bornite + chalcopyrite mineralization is centred on a zone of intense
quartz veining that extends along the axis of the entire deposit.
Highest-grade mineralization corresponds to zones of (greater than)
90% quartz, which may be over 80 m thick in drill core. In long
section the quartz vein zone and corresponding high-grade
mineralization ((less than) 2% Cu) is flat lying or dips at moderate
angles to the north. The northerly plunge of the deposit is also in
part due to a series of N70E and East-West cross faults that step the
deposit down to the north. In cross section, it can be modeled as
elliptical grade shells perpendicular to the vein zone
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extent, with dimensions up to 300 m x 500 m, and oriented with the
long axis of the ellipse approximately parallel to bedding.
Host rocks are differentially altered. The dacitic ash flow tuff or
ignimbrite is intensely advanced argillic altered, including, quartz,
pyrophyllite, andalusite, topaz, crandallite, alunite, diaspore,
zunyite, kaolinite and late dickite. The augite basalt is altered to
sericite, kaolinite, minor chlorite and locally pyrophyllite
(typically at the ash flow tuff contact). At least locally strong
hematite alteration encloses zones of intense advanced argillic
alteration, and hematite typically forms a transitional zone to
sericite-chlorite altered basaltic rocks below the ash flow tuff.
Early K-silicate alteration is suspected to have been present in at
least some Qmd intrusions and related wall rocks and spatially linked
to the zone of intense quartz veining. K-silicate alteration is
recognized in the basalt as biotite, although it is partly obscured
by the above assemblages. Strongly mineralized intrusions are
encountered mainly in the Hugo Dummett North deposit. These
intrusions are characteristically red, and contain abundant quartz
veins. Late, weakly to moderately mineralized Qmd intrusions contain
sparse quartz veins and are typically sericite-altered.
The Hugo Dummett area contains multiple unmineralized pre and post
mineral dykes, that appear to trend northerly (still open to
interpretation) and include pre-mineral(?) biotite granodiorite; late
to post mineral biotite-hornblende andesite; and post mineral basalt
and rhyolite dykes. The biotite granodiorite dykes are prominent
along the entire western flank of the deposit. In Hugo North they
change from steeply dipping, 10 m to 20 m thick dykes flanking the
western edge of the (greater than) 2% copper grade shell into a large
intrusive mass, (greater than) 100 m to 200 m in thickness in the
overlying barren sediments.
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8.0 DEPOSIT TYPES
The Oyu Tolgoi deposits are Cu-Au porphyry and related
high-sulphidation Cu-Au mineralization types. Cu-Au porphyry deposits
are low-grade bulk tonnage, where copper sulphides are finely
disseminated or deposited in anastomosing veins and fractures in a
large volume of rock. High-sulphidation Cu deposits for Oyu Tolgoi
are gold-poor but have similar characteristics, and both types are
amenable to large-scale open pit or underground bulk mining methods.
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9.0 MINERALIZATION
9.1 SOUTHWEST DEPOSIT
Cu-Fe sulphide mineralization in the Southwest deposit consists
mainly of finely disseminated chalcopyrite and minor bornite. Pyrite
contents are low, generally less than 2%. Molybdenite is ubiquitous
occurring mainly on late structures. Bornite is subordinate to
chalcopyrite and is estimated to comprise less than 20% of the copper
mineralization. The bulk of the orebody is within basaltic wall
rocks, with less than 20% hosted by quartz monzodiorite. Au:Cu ratios
(Au in g/t, Cu in %) vary from 2 to 4:1, with highest ratios in the
deeper part of the deposit and possibly in the core of the porphyry
system. Outside the gold-rich zone, the augite basalts contain
anomalous gold contents, which become subtly Au-richer southward
(defined as the Far South sub-zone). Au:Cu ratios in this areas are
closer to 1:1
Mineralization at Southwest is correlated to vein density and
distribution. Veins are quarz-dominant with variable amounts of
sulphide (pyrite, chalcopyrite and bornite), K-feldspar, chlorite and
carbonate. Most veins have widths of several millimetres to several
centimetres, although within the core of the deposit veins up to a
metre or more thick occur. Vein contacts can be either planar or
variably deformed, and folded and/or faulted veins are common. The
combination of folded veins, minor faults and ductile shears, and
localized foliated zones attests to semi-brittle deformation within
the deposit area during mineralization.
Drill-holes that pass through the centre of the Southwest deposit
show a transition from irregularly oriented stockwork veins in
peripheral mineralized zones, to sub-parallel or sheeted veins within
the highest-grade core zone. Core zone veins have a moderately to
strongly preferred orientation corresponding to moderately SW-dipping
surfaces. In the peripheral mineralized zones, vein data show a
strong clustering corresponding to sub-vertical, N to NNW striking
orientations.
The intersection between the controlling faults and the dominant vein
set parallels the direction of maximum structural permeability, and
thus represent the most effective direction of hydrothermal fluid
flow during mineralization. Notably, the long axis of the deposit as
defined by the gold-rich envelope is within a few degrees of this
intersection line.
9.2 SOUTH DEPOSIT
Cu-Fe sulphide mineralization at the South deposit consists of finely
disseminated bornite and chalcopyrite. Pyrite contents are low.
Bornite may be dominant in the most strongly mineralized zones (Cu
(greater than) 1%). As at Southwest, molybdenite occurs locally on
late-stage structures. Although overall Au:Cu ratio's are low at the
South deposit, gold grade is
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supplemented by narrow high-grade gold veins (up to 50 ppm over 2 m
assay intervals), sporadically found throughout the South deposit.
Vein orientation data for South Oyu are limited and show variable
results. In surface exploration pits, quartz-dominant veins occur in
northwest-striking, steeply northeast-dipping, strongly sheeted sets.
Outcrops adjacent to the pits and oriented drill core data contain
stockwork vein styles that lack a clear preferred orientation.
9.3 WEDGE ZONE DEPOSIT
Sulphide mineralization in the Wedge Zone consists of two main types:
that which is hosted primarily within strongly altered ignimbrite in
the north half (generally north of the high-grade Au zone in SW Oyu,
beside the SW - Central transition area called the Bridge Zone) and
mineralization hosted in altered Qmd in the south (generally beside
the SW Gold Zone). The mineralization comprises bornite and
chalcopyrite with subordinate pyrite and enargite. Bornite is the
dominant phase in the highest-grade areas. Most of the mineralization
appears to be stratabound, occurring in the ignimbrite, generally
sub-paralleling the contact with the Lower Sedimentary Sequence. Qmd
mineralization roughly parallels the intrusive contact with the
remnant ignimbrite and lesser augite basalt. A distinctly higher
copper grade zone is observed closest to the sediment contact (within
5 to 50 m of the base of the sedimentary units). Except for two or
three local areas, gold mineralization is sparse. The Wedge Zone
represents a gold depleted area.
9.4 CENTRAL DEPOSIT
The Central Oyu deposit contains several styles of mineralization;
volumetrically the most important is finely disseminated
pyrite-covellite-chalcocite. The covellite-chalcocite zone is pyritic
(~10%) and is hosted by buff coloured advanced argillic-altered
quartz monzodiorite. It is mineralogically complex and contains minor
amounts of chalcopyrite, bornite, enargite, tetrahedrite and
tennantite. The best covellite-chalcocite mineralization correlates
to the highest intensity of quartz veining, suggesting that this
mineralization is inherited from earlier porphyry copper
mineralization. Quartz+sulphide veins measured from the core of the
deposit show a weak to moderate preferred orientation corresponding
to WSW-dipping vein surfaces. In contrast, those from peripheral
areas of the deposit show little or no preferred orientation.
A chalcocite enrichment blanket (up to 40 m thick) is developed over
parts of the Central Oyu deposit and usually corresponds directly to
the most strongly quartz-veined zones in quartz monzodiorite. The
quartz-veined zones are also typically strongly covellite
mineralized, thereby suggesting an inheritance from earlier porphyry
mineralization. There are exceptions where strong covellite
correlates to the intensity of advanced argillic alteration rather
than quartz vein intensity. However, polished section mineralogy
indicates that the chalcocite is derived from chalcopyrite-bornite
(shown by relict grains enclosed in
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chalcocite) and is therefore formed directly from the porphyry
progenitor rather than indirectly from covellite. The base of the
supergene chalcocite zone is mixed with covellite over metres to tens
of metres.
9.5 HUGO DUMMETT DEPOSIT
High-grade copper mineralization at Hugo Dummett occurs predominantly
as bornite, chalcocite and chalcopyrite. Pyrite, enargite,
tetrahedrite-tennantite occur in subordinate amounts mainly in the
Hugo Dummett South deposit where sulphide associations correlate to
the nature of alteration, which in turn is partly dependent on the
host rock, but also exhibit a lateral zonation from the core of the
high-grade shell ellipse. A typical sulphide zonation from the
high-grade copper core to low-grade copper mineralization is, bornite
+ chalcocite, followed outward to chalcopyrite (+/-
tetrahedrite-tennantite) and then finally pyrite, chalcopyrite (+/-
enargite). Enargite, bornite + pyrite, and locally covellite are
common sulphide minerals in the ignimbrite. A large part of the Hugo
Dummett South deposit is hosted by ignimbrite, while in contrast, the
high-grade mineralization at Hugo Dummett North is almost entirely
within augite basalt and is dominated by bornite. Bornite +
chalcopyrite-(chalcocite) occur in the augite basalt and Qmd
intrusions while chalcopyrite, pyrite and enargite occur in the
overlying dacitic ash flow tuffs. Molybdenite occurs locally in all
rock types. Gold: copper ratio's over much of the deposit are 1:10,
but in strongly quartz-veined Qmd intrusions and adjacent wall rocks
encountered in Hugo Dummett North, these ratio's increase to 1:1. The
high gold ratio's correlate primarily with bornite-rich
mineralization.
9.6 OXIDIZED ZONE
A deep oxidized zone occurs at Oyu Tolgoi. Although present water
tables are in the order of 6 m to 8 m below the surface (average
elevation 1,160 m), paleowater tables (which may be related to deep
weathering during the Cretaceous) are 40 m to 60 m deep over most of
the deposits. Owing to high pyrite contents inherent to
high-sulphidation alteration, Central Oyu is characterized by 40 m to
60 m of highly leached, soft white clay with limonite and minor
jarosite on fractures. A 5 m thick siliceous regolith above the clay
covers a small hill at Central Oyu. At South Oyu, hypogene Cu
(sulphides) are almost completely removed in the oxide zone, but at
Southwest Oyu, the oxide zone returns low-grade Cu and Au assay
results. This is possibly due to partial depletion of sulphide, but
it is also likely that high-grade mineralization does not reach the
present surface, as Au:Cu ratios are unchanged. Because of the low
sulphide contents of South and Southwest Oyu, no significant
supergene chalcocite has developed. The host rocks are dominated by
basalt, and so the oxidized zone is characterized by green-yellow
clays (possibly chlorite-smectite) and limonite on fractures. Calcite
filling fractures is also common within the oxide zone over basaltic
rocks.
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The best developed Cu-oxide at Oyu Tolgoi is the South oxide deposit
located at Turquoise Hill, where secondary copper as malachite and
minor turquoise has been exploited, possibly during the Bronze Age
period. The main oxide cap corresponds to Turquoise Hill, and
malachite covers an area of 300 m x 80 m along a northwest-oriented
ridge. Three ancient pits are located along this ridge. The oxide
zone is 40 m thick with assays up to 4% Cu from drill core and trench
samples. Two smaller areas of malachite, each about 100 m x 30 m,
occur nearby on lower topographic ridges. The RC collar in hole
OTRCD149, drilled to test the northern flank of Turquoise Hill near
the ancient pits intersected 29 m grading 1.83% copper starting at
surface in the malachite-rich zone.
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10.0 EXPLORATION
Exploration at Oyu Tolgoi has been mainly by remote sensing and
geophysical methods, including satellite image interpretation,
detailed ground magnetics, Bouguer gravity and gradient array induced
polarization (IP), as well as extensive drilling. Gradient array IP
has been conducted on north-south and subsequently east-west lines at
200 m line spacing, with electrode spacing up to 11 km. Drill holes
have been targeted to test IP chargeability targets or structural
zones. Outcropping prospects (Southwest, South and Central) have been
mapped at 1:1000 scale. The central part of the exploration block was
mapped at 1:5000 scale in 2001, and the entire block was mapped at
1:10,000 scale in 2002. As described below, geophysical methods have
been the most important exploration tool.
The initial geophysical surveys conducted by BHP in 1996 consisted of
airborne magnetics, ground magnetics and gradient array IP. The
airborne magnetic survey was flown on 300 m spaced east-west lines
approximately 100 m above surface level. The ground magnetic survey
and IP survey were on 250 m line spacing; the latter showed
chargeability anomalies over Central, South and Southwest deposits.
In 2001, subsequent to the Southwest Oyu high-grade discovery hole
OTD150, Ivanhoe contracted Delta Geoscience of B.C., Canada, to
conduct gradient array IP on 100 m spaced north-south lines over the
3 km x 4 km core block of Oyu Tolgoi. Using multiple current
electrode (AB) spacing, ranging from 1,000 m to 3,600 m, the sulphide
assemblages in Southwest, South and Central deposits were clearly
defined on all of the AB plans, indicating significant vertical depth
extents for the mineralization in all zones. The IP also defined a
large, semi-circular feature with Central Oyu on the southern side
and the Hugo Dummett IP anomaly on the north side. Considerable
speculation regarding the origin of this feature ensued, including
the possibility of a pyritic halo surrounding a porphyry copper core,
or a ring structure around a volcanic caldera. Drill testing on 200 m
spaced holes along the east-west extension of the Hugo Dummett IP
anomaly ultimately resulted in the drilling of hole OTD270 at the
eastern end of the anomaly. This proved to be the discovery hole for
Hugo Dummett South.
With the recognition that the Hugo Dummett high-grade copper zone
might be trending north-northeast, Delta Geoscience re-oriented the
IP survey lines to east-west and re-surveyed the core block of Oyu
Tolgoi on 100 m spaced lines using multiple AB current electrode
spacing. This survey resulted in an entirely different chargeability
signature that now appears to reflect a continuous zone of sulphide
mineralization extending north-northeasterly from the southwest end
of Southwest Oyu through to the northernmost extent of the property,
for a total strike length of approximately 5 km (Figure 10-1). The
Southwest Oyu high-grade, near-vertical pipe clearly responds on this
survey, becoming tightly constrained with depth. The Central Oyu
mineralization now trends north to northeasterly and continues to be
the dominant chargeability feature on the IP map, reflecting
concentrations of pyrite up to 10% and the central covellite core of
the high-
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sulphidation system. Extending north-northwesterly from Central Oyu,
the strong IP anomaly reflecting 4% to 6% pyrite mineralization
extends through Hugo Dummett, with the high-grade copper
mineralization intersected in hole OTD270 and subsequent drill holes
flanking it on the east side. The contrast between the copper-rich
sulphide mineralization and the pyrite-rich mineralization reflects
the overall sulphide concentration and the depth of burial of the
copper-rich zone.
Detailed total field, ground magnetic surveys, reading 25 m x 5 m and
50 m x 10 m centres, have been completed over the full Oyu Tolgoi
tenement (Figure 10-2). Although done in two surveys, the data were
merged to produce a high-quality magnetic image of the block. The
structural fabric of the property is clearly reflected by the
magnetic survey, as are the hydrothermal magnetite-altered basalts
underlying South and Southwest deposits. The magnetite-rich,
unmineralized basalts underlying the southern boundary of the
property and buried under sedimentary cover on the east side are also
clearly distinguished. The subtle, elongated magnetic features
flanking the Hugo Dummett copper-rich zone may be related to deeply
buried, hydrothermal magnetite-rich basalt similar to Southwest.
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FIGURE 10-1: GRADIENT ARRAY IP (E-W LINES)
[GRAPHIC - MAP "GRADIENT ARRAY IP (E-W LINES)"]
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FIGURE 10-2: GROUND MAGNETICS
[GRAPHIC - MAP "GROUND MAGNETICS"]
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11.0 DRILLING
Diamond drill holes are the principal source of geological and grade
data for the Oyu Tolgoi project. Ivanhoe conducted diamond drilling
over the Southern deposits throughout 2003 (Central and Southwest)
and the first half of 2004 (Southwest, South and Wedge). As of the
mineral resource cutoff date of 30 June 2004, drilling totals just
under 255,000 m in 539 drill holes for the Southern deposits of Oyu
Tolgoi. The holes generally range in length from 60 m to 1,200 m,
averaging 610 m. A list of the project drill holes, together with
their coordinates and lengths, is provided in Appendix A, along with
a location plan.
Drilling was done by wireline method with H-size (HQ, 63.5 mm nominal
core diameter) and N-size (NQ, 47.6 mm nominal core diameter)
equipment using up to 20 drill rigs. Upon completion, the collar and
anchor rods were removed and a PVC pipe was inserted into the hole.
The hole collar was marked by a cement block inscribed with the hole
number. Recent drilling at Southwest included multiple daughter holes
drilled from the parent drill hole. A bend was placed in the parent
hole at the location where the planned daughter holes were to branch
off. The bend was achieved by means of a Navi-Drill(R) (navi) bit,
which was lowered down the hole to the desired depth and aligned in
the azimuth of the desired bend. As the navi bit advanced, a bend was
achieved at the rate of 1 degree every 3 m. No core was recovered
from the navi-drilled interval.
Drill hole collars were located respective to a property grid.
Proposed hole collars and completed collars were surveyed by a Nikon
Theodolite instrument relative to 18 survey control stations
established during a legal survey of the property in August 2002. The
drill holes were drilled at an inclination of between 45 degrees and
90 degrees, with the majority between 60 degrees and 70 degrees.
Holes were drilled along 035 degrees and 125 degrees azimuths in
Southwest and South, 0 degrees and 180 degrees azimuths in Central.
Down-hole surveys were taken approximately every 50 m by the drill
contractor using a multi-shot measurement system (RANGER survey
instrument).
Standard logging and sampling conventions were used to capture
information from the drill core. The core is logged in detail onto
paper logging sheets, and the data were then entered into the project
database. The core was photographed before being sampled.
AMEC reviewed the core logging procedures at site and the drill core
was found to be well handled and maintained. Material was stored as
stacked pallets in an organized "core farm." Data collection was
competently done. Ivanhoe maintained consistency of observations from
hole to hole and between different loggers by conducting regular
internal checks. Core recovery in the mineralized units was
excellent, usually between 95% and 100%. Very good to excellent
recovery was observed in the mineralized intrusive sections checked
by AMEC. Overall, the Ivanhoe drill program and data capture were
performed in a competent manner.
September 2004 SECTION 11-1 [AMEC LOGO]
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TECHNICAL REPORT
OYU TOLGOI, MONGOLIA
12.0 SAMPLING METHOD AND APPROACH
Rock sampling for resource estimation has been conducted on diamond
drill core obtained from holes drilled between May 2001 and June
2004. About 540 drill holes, drilled in an area approximately 2 km x
2 km, were used for geological modelling and estimation. Collar
spacing is approximately 50 m to 100 m. The holes are up to 1,200 m
long and inclined between 45 degrees and 90 degrees.
Samples are taken at 2 m intervals down the drill holes, excluding
dykes that extend more than 10 m along the core length. NQ and HQ
core sizes are drilled routinely with one-half of the core collected
for analysis.
The core is split with a rock saw, flushed regularly with fresh
water. Core recovery is good, with relatively few broken zones. To
prevent sampling bias, the core is marked with a continuous linear
cutting line before being split. Samples are placed in cloth bags and
sent to the on-site preparation facility for processing.
Reject samples are stored in plastic bags inside the original cloth
sample bags and are placed in bins on pallets and stored at site.
Duplicate pulp samples are stored at site in the same manner as
reject samples. Pulp samples used for assaying are kept at the
assaying facility for several months and then transferred to a
warehouse in Ulaanbaatar.
Significant composited assays for the Southern deposits of the Oyu
Tolgoi project are shown in Appendix B. Only values greater than 0.30
wt% Cu were tabulated.
September 2004 SECTION 12-1 [AMEC LOGO]
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TECHNICAL REPORT
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13.0 SAMPLE PREPARATION, ANALYSES, AND SECURITY
13.1 SAMPLE PREPARATION AND SHIPMENT
Split core samples are prepared for analysis at an on-site facility
operated by SGS Mongolia LLC (SGS Mongolia). The samples are then
shipped under the custody of Ivanhoe to Ulaanbaatar, where they are
assayed at a lab facility operated by SGS Mongolia. The lab was
certified under ISO 9002:1994, which lapsed 15 December 2003; it will
seek certification under ISO 9002:2000 in July 2004. All sampling and
QA/QC work is overseen on behalf of Ivanhoe by Dale A. Sketchley,
M.Sc., P.Geo..
The samples are initially assembled into groups of 15 or 16, and then
4 or 5 quality control samples are interspersed to make up a batch of
20 samples. The quality control samples comprise one duplicate split
core sample, one uncrushed field blank, a reject or pulp preparation
duplicate, and one or two standard reference material (SRM) samples
(one (less than) 2% Cu and one (greater than) 2% Cu if higher grade
mineralization is present based on visual estimates). The two copper
SRMs are necessary because SGS Mongolia uses a different analytical
protocol to assay all samples (greater than) 2% Cu. The split core,
reject, and pulp duplicates are used to monitor precision at the
various stages of sample preparation. The field blank can indicate
sample contamination or sample mix-ups, and the SRM is used to
monitor accuracy of the assay results.
The SRMs are prepared from material of varying matrices and grades to
formulate bulk homogenous material. Ten samples of this material are
then sent to each of at least seven international testing
laboratories. The resulting assay data are analyzed statistically to
determine a representative mean value and standard deviation
necessary for setting acceptance/rejection tolerance limits. Blank
samples are also subjected to a round-robin program to ensure the
material is barren of any of the grade elements before they are used
for monitoring contamination.
A total of 33 different reference materials have been developed and
used to monitor the assaying of six different ore types made up of
varying combinations of chalcopyrite, bornite, primary and supergene
chalcocite, enargite, covellite, and molybdenite.
Split core samples are prepared according to the following protocol:
o the entire sample is crushed to 90% minus 2 to 3 mm
o a 1 kg sub-sample is riffle split from the crushed minus 2 to 3 mm
sample and pulverized to 90% minus 75 (micro)m (200 mesh)
o a 150 g sub-sample is split off by taking multiple scoops from the
pulverized 75 (micro)m sample
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TECHNICAL REPORT
OYU TOLGOI, MONGOLIA
o the 150 g sub-sample is placed in a kraft envelope, sealed with a
folded wire or glued top, and prepared for shipping.
All equipment is flushed with barren material and blasted with
compressed air between each sampling procedure. Screen tests are done
on crushed and pulverized material from one sample taken from each
batch of 15 or 16 samples to ensure that sample preparation
specifications are being met.
Prepared samples are placed in wooden shipping boxes, locked, sealed
with tamper-proof tags, and shipped to Ulaanbaatar for assaying.
Sample shipment details are provided to the assaying facility both
electronically and as paper hard copy accompanying each shipment. The
assaying facility then electronically confirms sample receipt, the
state of the tamper-proof tags, and assigned laboratory report
numbers back to site.
13.2 ASSAY METHOD
All samples are routinely assayed for gold, copper, and molybdenum.
Gold is determined using a 30 g fire assay fusion, cupelled to obtain
a bead, and digested with Aqua Regia, followed by an AAS finish.
Copper and molybdenum are determined by acid digestion of a 5 g
subsample, followed by an AAS finish. Samples are digested with
nitric, hydrochloric, hydrofluoric, and perchloric acids to dryness
before being leached with hydrochloric acid to dissolve soluble salts
and made to volume with distilled water.
13.3 QA/QC PROGRAM
Assay results are provided to Ivanhoe in electronic format and as
paper certificates. Upon receipt of assay results, values for SRMs
and field blanks are tabulated and compared to the established SRM
pass-fail criteria:
o automatic batch failure if the SRM result is greater than the
round robin limit of three standard deviations
o automatic batch failure if two consecutive SRM results are greater
than two standard deviations on the same side of the mean
o automatic batch failure if the field blank result is over 0.06 g/t
Au or 0.06% Cu.
If a batch fails, it is re-assayed until it passes. Override
allowances are made for barren batches. Batch pass/failure data are
tabulated on an ongoing basis, and charts of individual reference
material values with respect to round-robin tolerance limits are
maintained.
Laboratory check assays are conducted at the rate of one per batch of
20 samples, using the same QA/QC criteria as routine assays.
September 2004 SECTION 13-2 [AMEC LOGO]
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TECHNICAL REPORT
OYU TOLGOI, MONGOLIA
13.3.1 STANDARDS PERFORMANCE
Ivanhoe strictly monitors the performance of the SRM samples as the
assay results arrive at site. Since the last Southern deposits
mineral resource update (Juras, 2003) the ability of the laboratories
to return assay values in the prescribed SRM ranges has steadily
improved: to around 2% (Figure 13-1). Charts of the individual SRMs
are included in Appendix C. All samples are given a "fail" flag as a
default entry in the project database. Each sample is re-assigned a
date-based "pass" flag when assays have passed acceptance criteria.
At the data cutoff date of 30 June 2004, only a very small number of
assayed samples still had the "fail" flag. The relative uncertainty
introduced to the mineral resource estimate by using this very small
number of temporarily failed samples is considered negligible.
FIGURE 13-1: SRM FAILURE CHART
[GRAPH - "SRM FAILURE CHART"]
13.3.2 BLANK SAMPLE PERFORMANCE
Assay performance of field blanks is presented in Figures 13-2 to
13-3 for gold and copper. In these figures, the lower blue horizontal
line represents the analytical detection limit (ADL) of the
respective metal, and the upper yellow horizontal line represents the
analytical rejection threshold (ART). The gold ADL is 0.01 g/t with
an ART of 0.06 g/t; copper ADL was initially 0.01% and is now 0.001%
with an ART of 0.06%. The results show a low incidence of
contamination and a few cases of sample mix-ups, which were
investigated at site and corrected.
September 2004 SECTION 13-3 [AMEC LOGO]
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TECHNICAL REPORT
OYU TOLGOI, MONGOLIA
FIGURE 13-2: BLANK SAMPLE RESULTS FOR GOLD
[GRAPH - "BLANK SAMPLE RESULTS FOR GOLD"]
FIGURE 13-3: BLANK SAMPLE RESULTS FOR COPPER
[GRAPH - "BLANK SAMPLE RESULTS FOR COPPER"]
September 2004 SECTION 13-4 [AMEC LOGO]
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TECHNICAL REPORT
OYU TOLGOI, MONGOLIA
13.3.3 DUPLICATES PERFORMANCE
The QA/QC program currently uses four different types of duplicate
samples: core, coarse reject, pulp, and laboratory check pulps
(samples sent to an umpire lab).
CORE, COARSE REJECT AND PULP DUPLICATES
AMEC has reviewed the core, coarse reject, and pulp duplicate samples
for the southern Oyu Tolgoi deposits. The pulp and coarse reject
duplicates reproduce well for copper and are reasonable for gold
values greater than 0.2 g/t. The duplicate data are shown as relative
difference charts in Figures 13-4 to 13-7. Pulp and reject duplicate
types for each metal, though more so for gold, show similar high
variability to good reproducibility trends from near detection values
towards higher-grade value. Patterns for all metals are symmetric
about zero, suggesting no bias in the assay process.
FIGURE 13-4: RELATIVE DIFFERENCE SCATTER PLOT, SOUTHWEST AND SOUTH DUPLICATE
SAMPLES - COPPER (%)
[GRAPH - "RELATIVE DIFFERENCE SCATTER PLOT, SOUTHWEST AND SOUTH DUPLICATE
SAMPLES - COPPER (%)"]
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FIGURE 13-5: RELATIVE DIFFERENCE SCATTER PLOT, SOUTHWEST AND SOUTH DUPLICATE
SAMPLES - GOLD (G/T)
[GRAPH - "RELATIVE DIFFERENCE SCATTER PLOT, SOUTHWEST AND SOUTH DUPLICATE
SAMPLES - GOLD (G/T)"]
FIGURE 13-6: RELATIVE DIFFERENCE SCATTER PLOT, CENTRAL DUPLICATE SAMPLES -
COPPER (%)
[GRAPH - "RELATIVE DIFFERENCE SCATTER PLOT, CENTRAL DUPLICATE SAMPLES - COPPER
(%)"]
September 2004 SECTION 13-6 [AMEC LOGO]
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TECHNICAL REPORT
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FIGURE 13-7: RELATIVE DIFFERENCE SCATTER PLOT, CENTRAL DUPLICATE SAMPLES - GOLD
(G/T)
[GRAPH - "RELATIVE DIFFERENCE SCATTER PLOT, CENTRAL DUPLICATE SAMPLES - GOLD
(G/T)"]
The absolute relative percent difference for duplicate pairs against
the percentile ranking of the grade in the sample population were
also evaluated. For the 90th percentile of the population, a maximum
difference of 10% is recommended for the pulp duplicates and 20% for
the coarse reject duplicates because these duplicate types can be
controlled by the sub-sampling protocol. The same criteria do not
apply to core duplicates because these differences cannot be
controlled by the sub-sampling protocol; however, the heterogeneity
of the mineralization ideally would allow the difference to be less
than 30%.
Table 13-1 summarizes the results of these analyses for each type of
sample and the charts are shown in Figures 13-8 to 13-11. The core
duplicates are above the ideal value of 30% for gold samples, whereas
the coarse reject duplicates reproduce well for all elements.
TABLE 13-1: PERCENT DIFFERENCE AT THE 90TH POPULATION PERCENTILE (% DIFF)
SOUTHWEST AND SOUTH DEPOSITS CENTRAL DEPOSIT
----------------------------------- ---------------------------------
AREA CU AU CU AU
---------------- ----------------- ---------------- ---------------
DUPLICATE TYPE % DIFF. LIMIT NO. % DIFF. NO. % DIFF. NO. % DIFF. NO. % DIFF.
=========================================================================================================
Core 30 2898 38 2771 60 1599 32 975 50
Coarse Reject 20 1371 14 1095 25 743 7 465 24
Pulp 10 1368 5 1092 18 688 4 440 24
---------------------------------------------------------------------------------------------------------
September 2004 SECTION 13-7 [AMEC LOGO]
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FIGURE 13-8: PERCENTILE RANK PLOTS, SOUTHWEST AND SOUTH DUPLICATE DATA - COPPER
(%)
[GRAPH - "PERCENTILE RANK PLOTS, SOUTHWEST AND SOUTH DUPLICATE DATA - COPPER
(%)"]
FIGURE 13-9: PERCENTILE RANK PLOTS, CENTRAL DUPLICATE DATA - GOLD (G/T)
[GRAPH - "PERCENTILE RANK PLOTS, CENTRAL DUPLICATE DATA - GOLD (G/T)"]
September 2004 SECTION 13-8 [AMEC LOGO]
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TECHNICAL REPORT
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FIGURE 13-10: PERCENTILE RANK PLOTS, CENTRAL DUPLICATE DATA - COPPER (%)
[GRAPH - "PERCENTILE RANK PLOTS, CENTRAL DUPLICATE DATA - COPPER (%)"]
FIGURE 13-11: PERCENTILE RANK PLOTS, CENTRAL DUPLICATE DATA - GOLD (G/T)
[GRAPH - "PERCENTILE RANK PLOTS, CENTRAL DUPLICATE DATA - GOLD (G/T)"]
September 2004 SECTION 13-9 [AMEC LOGO]
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TECHNICAL REPORT
OYU TOLGOI, MONGOLIA
Gold pulp duplicates mimic the reject duplicate results, and likely
point to some liberation of gold during sample preparation. To obtain
results closer to the ideal 10% limit, Ivanhoe would probably need to
increase the pulp sample size (2x to 3x). However, since most of the
Au values lie near the detection limit, and the few which are above
1.0 g/t show much better reproducibility (Figures 13-5 and 13-7) than
the overall rank analysis, AMEC recommends no changes to the current
sampling protocol.
13.3.4 SPECIFIC GRAVITY PROGRAM
Samples for specific gravity determination are taken at approximately
10 m intervals per drill hole and tabulated by rock type. The
specific gravity for non-porous samples (the most common type) is
calculated using the weights of representative samples in water (W2)
and in air (W1). The bulk density is calculated by W1/(W1-W2). AMEC
believes this method to be appropriate for the non-porous mineralized
units and barren dykes.
Less-common porous samples are dried and then coated with paraffin
before weighing. Allowance is made for the weight and volume of the
paraffin when calculating the specific gravity.
September 2004 SECTION 13-10 [AMEC LOGO]
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TECHNICAL REPORT
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14.0 DATA VERIFICATION
As a test of assay data integrity, the data used to estimate the
August 2004 Hugo mineral resource were verified with a random
comparison of 5% of the database records against the original
electronic assay certificates. No discrepancies were found. Collar
coordinates were checked against the database entries. No
discrepancies were observed. AMEC also checked the down-hole survey
data. Camera shots and RANGER output were read for the checked drill
holes and compared to those stored in the resource database. Rare
minor discrepancies were observed that are probably due to arbitrary
corrections made to the data due to the suspected or measured
presence of magnetite. These would have neglible impact on any
resource estimate. AMEC concludes that the assay and survey database
transferred to AMEC is sufficiently free of error to be adequate for
resource estimation.
September 2004 SECTION 14-1 [AMEC LOGO]
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TECHNICAL REPORT
OYU TOLGOI, MONGOLIA
15.0 ADJACENT PROPERTIES
Adjacent properties are not relevant for the review of the Oyu Tolgoi
project.
September 2004 SECTION 15-1 [AMEC LOGO]
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TECHNICAL REPORT
OYU TOLGOI, MONGOLIA
16.0 MINERAL PROCESSING AND METALLURGICAL TESTING
Material relevant to this section is contained in a previous
Technical Report on the Oyu Tolgoi project (Hodgson, 2004).
September 2004 SECTION 16-1 [AMEC LOGO]
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TECHNICAL REPORT
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17.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES
The mineral resource estimates for the Oyu Tolgoi project were
calculated under the direction of Dr. Harry Parker, Ch.P.Geol., and
Dr. Stephen Juras, P.Geo. The estimates were made from 3-dimensional
block models utilizing commercial mine planning software
(MineSight(R)). The project was divided into four deposits, or Oyu's:
Southwest (SW), South (SO), Wedge Zone (WZ) and Central (CO).
Projects limits are in truncated UTM coordinates. Project limits are
649500 to 652000 East, 4762000 to 4765000 North and -225 m to +1,170
m elevation. Cell size was 20 m east x 20 m north x 15 m high.
17.1 GEOLOGIC MODELS AND DATA ANALYSIS
Infill diamond drilling over the Southern deposits of Oyu Tolgoi
enabled better resolution of the various mineral-hosting and
non-hosting lithologic units, the structural geology (namely the
fault distribution) and the Cu-Au mineralization itself. The higher
density of data and ongoing geologic investigations into the
structural history, intrusive history and alteration zonation enabled
Ivanhoe to create 3-dimensional shapes of key faults and intrusive
units. Of particular use was the modelling of the Southern deposits
Qmd intrusive units, and the East and West Bounding Faults, South
Fault and Solongo Fault. Comprehensive geologic models were also
created of the post-mineral units: the post-mineral dykes (rhyolite,
hornblende-biotite andesite and biotite granodiorite) and the contact
between the mineralized volcanic sequence and the non-mineralized
Lower Sedimentary sequence. AMEC checked the shapes for
interpretational consistency on section and plan, and found them to
have been properly constructed. The shapes honoured the drill data
and appear well constructed.
Based on these structural, lithologic and mineralogic features, the
Southern deposits were sub-divided into seven zones for the purposes
of data analysis and grade interpolation (Figure 17-1). They are:
1. Far South: the area of mineralized augite basalt south of the SW
Gold Zone, bounded by the East Bounding Fault to the SE
2. Southwest Gold Zone: area of the SW Gold Zone and immediate
marginal areas between the East and West Bounding faults
3. Bridge: northern portion of the SW deposit (i.e. north of the SW
Gold Zone) which is transitional into the Central deposit
4. Central: Central deposit
5. South: South deposit, as defined by the South and Solongo faults
6. South Sliver: a small sub-zone that occupies the area between the
2 splays of the South Fault
7. Wedge: Ignimbrite and/or Qmd hosted Cu mineralization between the
East Bounding and South Faults
September 2004 SECTION 17-1 [AMEC LOGO]
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FIGURE 17-1: OYU TOLGOI SOUTHERN DEPOSITS ESTIMATION ZONES
[GRAPHIC - MAP "OYU TOLGOI SOUTHERN DEPOSITS ESTIMATION ZONES"]
To constrain grade interpolation in each of the zones, AMEC created
3-dimensional mineralized envelopes based on gold grades in Southwest
and copper grades in Central, South, Bridge Zone and Wedge Zone.
Except for the Wedge Zone, these were derived by a method of
Probability Assisted Constrained Kriging (PACK) to initially outline
a general shape. Threshold grades were 0.7 g/t for Au and 0.3 to 0.5
% for Cu. Grade outline selection was done by inspecting contoured
probability values (in increments of 0.05) in MineSight(R). These
shapes were then edited on plan and section views to be consistent
with the structural and lithologic models and the drill assay data so
that the boundaries did not violate data and current geologic
understanding of mineralization controls. Grade shells in the Wedge
Zone were manually drawn at grade thresholds of 0.3% and 0.6% Cu.
The solids and surfaces were used to code the drill hole data and
block model cells. A set of cross sections and plans with drill holes
colour-coded by domain and blocks similarly coloured were plotted and
inspected to determine the proper assignment of domain.
These mineralized domains were reviewed to determine appropriate
estimation or grade interpolation parameters. Several different
procedures were applied to the data to discover whether statistically
distinct domains could be constructed using the available geological
September 2004 SECTION 17-2 [AMEC LOGO]
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TECHNICAL REPORT
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variables. For each zone, key lithologic categories were investigated
within and outside grade shells. The lithologic units were grouped
into the mineralized volcanics (mostly augite basalt except for
ignimbrite in the Wedge Zone) and intrusive rocks - namely the Qmd.
Brecciated and variable mineralized phases of the Qmd (OT-Qmd and the
xenolithic Qmd) were also looked at separately in the Southwest
deposit.
Descriptive statistics, contact plots, and histograms have been
completed for copper and gold. Results obtained were used to guide
the construction of the block model and the development of estimation
plans. Post-mineral dykes were purposely omitted from this analysis
to more clearly determine the characteristics of the Cu and Au
mineralization. Subsequent data for grade interpolation did include
narrow unmineralized post mineral dyke intervals as non-segregated
internal dilution.
The data analyses were conducted on composited assay data. Assays
were composited into 5 m down-hole composites. The compositing for
the data analysis honoured the main lithology categories according to
logged data and then were segregated by zone and grade shell or
background codes. AMEC reviewed the compositing process and found it
to have been performed correctly.
17.1.1 HISTOGRAMS AND CUMULATIVE FREQUENCY PLOTS
Histograms and cumulative probability plots display the frequency
distribution of a given variable and demonstrate graphically how that
frequency changes with increasing grade. With histograms, the grades
are grouped into bins, and a vertical bar on the graph shows the
relative frequency of each bin. Cumulative frequency or cumulative
distribution function (CDF) diagrams demonstrate the relationship
between the cumulative frequency (expressed as a percentile or
probability) and grade on a logarithmic scale. They are useful for
characterizing grade distributions, and identifying multiple
populations within a data set.
Appendix D contains a complete set of histograms and CDFs for copper
and gold by grade shell and main rock type, for each zone. The
statistical properties of the composited copper and gold data by
grade shell and lithology are summarized in Tables 17-1 and 17-2.
Copper grades in the augite basalt units (Va) show distinct mean
values for inside a grade shell versus background domains. The
coefficients of variation (CV) values, however, are similarly low in
all augite basalts, irrespective of domains (0.5 to 0.65). CDF plots
are likewise similar displaying essentially single lognormal
distribution for Cu, with about 2% to 10% included lower grade
material. No distinct break occurs at or around the grade shell
threshold value of 0.3% Cu in CDF patterns of augite basalt data when
looked at without grade shell selection.
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TABLE 17-1: STATISTICS - COPPER COMPOSITES (EXCLUDING POST MINERAL DYKE
INTERVALS)
ZONE SHELL MEAN CV Q25 Q50 Q75 MAX NO. OF COMPS
=====================================================================================================================
FAR SOUTH
Augite Basalt - 0.31 0.65 0.17 0.27 0.40 1.75 2,519
---------------------------------------------------------------------------------------------------------------------
SOUTHWEST
Augite Basalt Au 0.72 0.55 0.46 0.65 0.90 4.01 2,996
Qmd Au 0.29 1.11 0.08 0.20 0.36 1.71 139
OT-Qmd Au 0.82 0.63 0.39 0.76 1.13 3.37 412
Augite Basalt Bkgd 0.40 0.52 0.26 0.37 0.51 2.61 5,068
Qmd Bkgd 0.10 1.39 0.02 0.04 0.11 1.03 1,132
OT-Qmd Bkgd 0.29 0.84 0.18 0.26 0.35 1.95 117
---------------------------------------------------------------------------------------------------------------------
BRIDGE
Va + Qmd Cu 0.71 0.53 0.43 0.65 0.95 2.33 351
Augite Basalt Bkgd 0.38 0.51 0.27 0.35 0.46 2.78 713
Qmd Bkgd 0.21 0.96 0.05 0.15 0.31 1.19 500
---------------------------------------------------------------------------------------------------------------------
CENTRAL
Augite Basalt Cu 0.69 0.50 0.47 0.63 0.85 3.45 1,647
Qmd Cu 0.68 0.61 0.41 0.61 0.85 4.19 4,019
Ignimbrite Cu 0.75 0.60 0.43 0.62 0.93 2.78 483
Augite Basalt Bkgd 0.32 0.55 0.21 0.30 0.40 1.17 567
Qmd Bkgd 0.14 1.24 0.04 0.08 0.18 2.88 3,810
Ignimbrite Bkgd 0.31 1.19 0.15 0.18 0.40 2.72 243
---------------------------------------------------------------------------------------------------------------------
SOUTH
Augite Basalt Cu 0.60 0.60 0.37 0.49 0.70 3.44 1,255
Qmd Cu 0.58 0.55 0.37 0.52 0.69 2.41 699
Augite Basalt Bkgd 0.29 0.59 0.19 0.25 0.32 1.17 637
Qmd Bkgd 0.23 0.73 0.12 0.19 0.29 1.54 605
---------------------------------------------------------------------------------------------------------------------
WEDGE
Ignimbrite Cu - hi 0.89 0.48 0.59 0.81 1.08 2.32 310
Ignimbrite + Va Cu 0.47 0.42 0.35 0.44 0.56 1.62 668
Qmd Cu 0.47 0.42 0.34 0.45 0.58 1.32 505
Ignimbrite + Va Bkgd 0.25 0.79 0.08 0.24 0.35 1.30 361
Qmd Bkgd 0.15 1.02 0.05 0.10 0.21 1.31 1,066
---------------------------------------------------------------------------------------------------------------------
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TABLE 17-2: STATISTICS - GOLD COMPOSITES (EXCLUDING POST MINERAL DYKE INTERVALS)
ZONE SHELL MEAN CV Q25 Q50 Q75 MAX NO. OF COMPS
=====================================================================================================================
FAR SOUTH
Augite Basalt - 0.34 .83 0.18 0.27 0.42 5.74 2,519
---------------------------------------------------------------------------------------------------------------------
SOUTHWEST
Augite Basalt Au 1.59 .70 0.83 1.28 2.01 10.1 2,996
Qmd Au 0.65 1.28 0.12 0.37 0.74 4.12 139
OT-Qmd Au 1.33 .97 0.57 0.99 1.67 12.0 412
Augite Basalt Bkgd 0.35 .71 0.20 0.30 0.44 3.90 5,068
Qmd Bkgd 0.11 2.12 0.01 0.03 0.10 4.21 1,132
OT-Qmd Bkgd 0.45 .91 0.17 0.42 0.54 2.51 117
---------------------------------------------------------------------------------------------------------------------
BRIDGE
Va + Qmd Cu 0.14 1.57 0.05 0.08 0.13 1.83 351
Augite Basalt Bkgd 0.15 1.73 0.06 0.09 0.14 3.38 713
Qmd Bkgd 0.04 1.64 0.02 0.03 0.08 1.01 500
---------------------------------------------------------------------------------------------------------------------
CENTRAL
Augite Basalt Cu 0.39 1.23 0.09 0.21 0.53 7.70 1,647
Qmd Cu 0.17 1.63 0.05 0.09 0.16 5.25 4,019
Ignimbrite Cu 0.11 1.40 0.05 0.07 0.10 1.46 483
Augite Basalt Bkgd 0.18 1.40 0.05 0.10 0.19 2.69 567
Qmd Bkgd 0.06 1.96 0.02 0.03 0.06 2.39 3,810
Ignimbrite Bkgd 0.06 .95 0.03 0.04 0.08 0.42 243
---------------------------------------------------------------------------------------------------------------------
SOUTH
Augite Basalt Cu 0.19 2.26 0.04 0.08 0.18 5.58 1,255
Qmd Cu 0.36 2.41 0.10 0.18 0.35 16.1 699
Augite Basalt Bkgd 0.11 2.31 0.02 0.04 0.09 2.52 637
Qmd Bkgd 0.12 1.44 0.03 0.07 0.13 1.61 605
---------------------------------------------------------------------------------------------------------------------
WEDGE
Ignimbrite Cu - hi 0.14 2.67 0.02 0.04 0.07 2.95 310
Ignimbrite + Va Cu 0.04 1.13 0.02 0.03 0.05 0.67 668
Qmd Cu 0.08 2.02 0.02 0.04 0.08 2.20 505
Ignimbrite + Va Bkgd 0.08 1.99 0.02 0.03 0.06 1.37 361
Qmd Bkgd 0.08 2.32 0.02 0.04 0.07 3.25 1,066
---------------------------------------------------------------------------------------------------------------------
Copper values in quartz monzodiorite units (Qmd) show marked mean
numbers between grade shell and background values. These differences
were also controlled by which intrusive phase was predominant in a
particular zone (e.g, early altered and mineralized Central Qmd units
versus late, poorly altered and mineralized Southwest Qmds).
Coefficients of variation (CV) values range from low inside copper
grade shells (0.4 to 0.6)
September 2004 SECTION 17-5 [AMEC LOGO]
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TECHNICAL REPORT
OYU TOLGOI, MONGOLIA
to around 1.0 in background areas. CDF plots commonly show double to
triple lognormal distributions (in analyses ignoring grade shell
boundaries). Usually one of the grade distributions is at very low
values, accounting for 5 to 15% of the data, and another still
low-grade group representing about 30% to 70% of the remaining data.
Threshold grades range from 0.15 % to 0.3 % Cu. These populations
likely correspond to the three recognized intrusive Qmd phases in the
Southern deposits. Occurrence of grade breaks in the grade trends
support the use of grade shells, particularly in areas where
mineralized Qmd units are common (e.g, Central and South).
Copper grades in the dacite ash flow tuff or Ignimbrite units mirror
the mineralized Qmd statistics. Common only in Wedge and less so in
Central, CDF plots show similar double to occasional triple lognormal
distributions. Likely copper mineralization in the ignimbrites are
related to one or all metal-bearing pulses associated with the Qmd
phases.
Gold grades are highest in the Southwest Gold Zone, where every
lithology has been enriched. Augite basalts units contain the highest
gold values in this zone (1.6 g/t Au). Elsewhere, the augite basalts
in Southwest (immediate background to the gold zone and the Far South
sub-zone) and in Central contain anomalous mean values (0.3 to 0.4
g/t Au). Augite basalt units east of the East Bounding Fault contain
distinctly lower gold concentrations (0.1 to 0.2 g/t). Qmd units are
generally gold depleted as are the Ignimbrites. An exception is the
South deposit Qmd where the higher means correspond to the presence
of narrow high-grade gold veins. The Southwest augite basalts are the
only units where the gold CV values are below 1.0 (0.7 to 0.8). Of
all deposits, the Wedge Zone is the most depleted and Southwest most
enriched relative to gold.
CDF diagrams for gold show typical positively skewed trends. For
Southwest, the plots display single lognormal distribution
populations in the high gold shell and background / Far South areas.
In the rest of the zones, double lognormal populations are shown
with a variable but high included low-grade component. In the area
of the Southwest Gold Zone, CDF patterns of all data (in augite
basalts) show a double lognormal population, with the threshold
between the two populations at around 0.7 g/t Au. This lends support
towards the use of this threshold grade to construct the Southwest
gold shell.
17.1.2 GRADE SCATTER PLOTS
Copper versus gold scatter plots were used to determine what degree
of correlation exists between the two grades and if trends are
evident. Various Au versus Cu composite data scatter plots are shown
in Figure 17-2. Mineralization in augite basalt units in and around
the Southwest high gold zone appear to define a Au to Cu ratio of
3:1. Further south, in the Far South sub-zone, the augite basalts
apparently define a main 1:1 Au to Cu ratio and a subordinate 3:1
ratio. Elsewhere, the augite basalts of the South deposit show the
marked depletion in gold relative to the Southwest area by defining
an Au to Cu ratio of
September 2004 SECTION 13-5 [AMEC LOGO]
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OYU TOLGOI, MONGOLIA
FIGURE 17-2: AU VS. CU COMPOSITE DATA SCATTER PLOTS, OYU TOLGOI SOUTHERN
DEPOSITS
[GRAPH(S) 4 - "AU VS. CU COMPOSITE DATA SCATTER PLOTS"]
1:10. A second set of gold mineralization is indicated on this
scatter plot that appears to be related to a range of Cu grades (0.3
to 0.5% Cu) but not in any definable ratio. These data may represent
the narrow high-grade vein population found in the South deposit. At
Central, the mineralization associated with Qmd phases generally
outlines two Au to Cu ratio trends: a 1:10 ratio and general 1.5 to
2:1 trend.
17.1.3 CONTACT PROFILE ANALYSIS
Contact plots were generated to explore the relationship between: (1)
grade and lithology, and (2) grade and grade shell codes. The plots
are constructed with software that searches for data with a given
code, and then searches for data with another specified code and bins
the grades according to the distance between the two points. This
allows for a graphical representation of the grade trends away from a
"contact". If average grades are reasonably similar near a boundary
and then diverge as the distance from the contact
September 2004 SECTION 17-7 [AMEC LOGO]
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TECHNICAL REPORT
OYU TOLGOI, MONGOLIA
increases, the particular boundary should probably not be used as a
grade constraint. In fact, if a hard boundary is imposed where grades
tend to change gradually, grades may be overestimated on one side of
the boundary and underestimated on the opposite side. If there is a
distinct difference in the averages across a boundary, there is
evidence that the boundary may be important in constraining the grade
estimation.
Contact profiles, or plots, were made for Cu and Au across the
various key lithologic units and mineralized domains in each deposit.
Two sets are shown as examples in Figures 17-3 and 17-4; the
remainder are shown in Appendix D. Contact profiles for both metals
in Southwest show distinct differences in grade in the vicinity of
the boundary between the augite basalt and Qmd intrusions (Figure
17-3). Distinct differences also occur across the gold shell (Figure
17-4). For Central, no distinction is observed for copper between the
augite basalt and Qmd, but a marked one is present for gold. Distinct
differences occur in both metals across the copper shell. The South
deposit shows distinct differences across its copper shell for copper
and gold values. No differences in either gold or copper were seen
between the augite basalt and Qmd within each domain. Finally, the
Wedge Zone copper shells show distinct copper grade differences
between the 0.3% and 0.6% shells, and between the 0.3% shell and
background. No differences were observed between Qmd and Ignimbrites
within each domain. Gold showed no distinct breaks between any shell
or lithology in this zone.
17.1.4 ESTIMATION DOMAINS
The data analyses demonstrated that all of the grade shell domains in
the Southern deposits should be treated as separate domains with
respect to Cu and Au. Additionally, the augite basalt and Qmd units
will be treated as separate sub-domains in Southwest for both Cu and
Au, and Au-only in Central. Grades for blocks within the respective
domains in each deposit or zone will be estimated with a hard
boundary between them; only composites within the domain will be used
to estimate blocks within the domain. The exception to this hard
boundary approach will be for the gold distribution in the Wedge
Zone; no boundaries will be necessary. Also no boundaries will be
used between Qmd units and augite basalts in South or Wedge deposits.
September 2004 SECTION 17-8 [AMEC LOGO]
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TECHNICAL REPORT
OYU TOLGOI, MONGOLIA
FIGURE 17-3: AU AND CU CONTACT PLOTS, AUGITE BASALT (VA) VS. QMD, SOUTHWEST
DEPOSIT
[GRAPH - "OT S CONACT PLOT: AU 5M COMP DATA SOUTH WEST - MAIN VA VS QMD"]
[GRAPH - "OT S CONTACT PLOT: CU 5M COP DATA SOUTH WEST - MAIN VA VS QMD"]
FIGURE 17-4: AU AND CU CONTACT PLOTS, GOLD SHELL VS. BACKGROUND, SOUTHWEST
DEPOSIT
[GRAPH - "OT 2 CONTACT PLOT: AU 5M COMP DATA SOUTH WEST - MAIN IN VS OUT AU
SHELL"]
[GRAPH - "OT S CONTACT PLOT: CU 5M COMP DATA SOUTH WEST - MAIN INSIDE VS OUTSIDE
AU SHE"]
17.2 EVALUATION OF EXTREME GRADES
Extreme grades were examined for copper and gold, mainly by
histograms and CDF plots. Generally, the distributions do not
indicate a problem with extreme grades for copper. A restricted
outlier approach was instead used to constrain any outlier-type
grades. For Au, capped grades were selected in domains with high CVs
and/or where trends defined in the
September 2004 SECTION 17-9 [AMEC LOGO]
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TECHNICAL REPORT
OYU TOLGOI, MONGOLIA
cumulative probability plots began to become discontinuous. In the
latter case, this generally occurred between the 98% to 99.5% level.
Capped gold grades for the Oyu Tolgoi Southern deposits are shown in
Table 17-3. The capped grades were applied to the assay data prior to
compositing.
TABLE 17-3: CAP GRADES FOR AU ASSAYS, OYU TOLGOI SOUTHERN DEPOSITS
ZONE AND DOMAIN AU (G/T)
==================================================================
Far South
Augite basalt 2.0
------------------------------------------------------------------
Southwest
Augite basalt 8.0
Quartz monzodiorite 1.0
------------------------------------------------------------------
South deposit
All units - Cu shell 2.0
All units - background 1.0
------------------------------------------------------------------
Central deposit
Augite basalt - background 1.0
Quartz monzodiorite - background 0.5
Augite basalt - Cu shell 3.0
Quartz monzodiorite - Cu Shell 1.5
------------------------------------------------------------------
Wedge Zone
Entire zone 0.7
------------------------------------------------------------------
17.3 VARIOGRAPHY
Variography, a continuation of data analysis, is the study of the
spatial variability of an attribute. AMEC prefers to use a
correlogram, rather than the traditional variogram, because it is
less sensitive to outliers and is normalized to the variance of data
used for a given lag. The correlogram ranges from -1 to +1, although
models are usually made over the interval [0,1], where 0 represents
no correlation (statistical independence) and 1 represents perfect
correlation.
Correlograms were calculated for copper and gold in the main
mineralized domains in each zone. The approach to correlogram model
development is to calculate a relatively large number of sample
correlograms in several directions using composite values.
Directional sample correlograms are calculated along horizontal
azimuths of 0 degrees, 30 degrees, 60 degrees, 90 degrees, 120
degrees, 150 degrees, 180 degrees, 210 degrees, 240 degrees, 270
degrees, 300 degrees, and 330 degrees. For each azimuth, sample
correlograms are also calculated at a dip of -30 degrees and -60
degrees in addition to horizontally. Finally, a correlogram is
calculated in the vertical direction. Using the 37 sample
correlograms, an algorithm determines the best-fit model. This model
consists of a nugget effect; single or two-nested structure variance
contributions; ranges for the variance contributions; and the model
type (spherical or exponential type). After fitting the variance
parameters, the algorithm then fits an ellipsoid to the ranges from
the directional models
September 2004 SECTION 17-10 [AMEC LOGO]
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TECHNICAL REPORT
OYU TOLGOI, MONGOLIA
for each structure. The anisotropy in grade variation is given by the
two ellipsoids. Variogram model parameters and orientation data of
rotated variogram axes are shown in Tables 17-4 and 17-5,
respectively. The correlograms for the main mineralized domains at
Southwest, South, Central and Wedge are included in Appendix E.
The deposits of the Oyu Tolgoi project exhibit mineralization
controls related to the intrusive history and structural geology
(faults). The patterns of anisotropy demonstrated by the various
correlograms tend to be consistent with geological interpretations -
particularly to any bounding structural features (faults and
lithologic contacts) and quartz + sulphide vein orientation data. Key
observations:
o Southwest deposit (including Far South) - Copper displays NE-SW
trending, moderately SE dipping and more north-south trending,
steep S dipping structures within mineralized augite basalt. Gold
in the same lithology displays structures that trend NNE-SSW,
dipping steeply to the SE and NE-SW, with moderate to steep SE
dips. Also observed are NE-SW trending structures having gentle NW
dips. These observations match the structural data and current 0.7
g/t Au shell shape. The latter has a near vertical upper portion
and a moderately south plunging lower half. Mineralizing fluids
are thought to have used the west dipping East Bounding Fault as a
conduit. Fluid flow would likely have been upwards and "away" from
the fault plane, that is in a north-westerly direction. This would
account for the southeast dip directions. The north to northeast
trends match attitudes of the bounding faults and observed vein
data.
o South deposit - Both copper and gold are influenced by the
geometry of the deposit defined in part by the flanking faults
(South and Solongo). Both metals display E-W to ENE-WSW trends
having steep N or S dips. The second structure in both metals
trend northerly (NNE to NNW) with the model for copper having
moderate E dips and the model for gold showing steep E dips. This
second structure is compatible to some of the vein data at South.
o Central deposit - Copper structures show moderately S dipping E-W
trends and NNE-SSW trends that are shallow dipping. The latter
structure outlines a tabular shape, mimicking the Cu grade shell
shape. The former structure orientation is similar to those of
peripheral rhyolite dykes and to some vein data. Gold outlines N-S
trending, near vertical structures that are characterized by small
ranges.
September 2004 SECTION 17-11 [AMEC LOGO]
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TECHNICAL REPORT
OYU TOLGOI, MONGOLIA
TABLE 17-4: CU AND AU VARIOGRAM PARAMETERS FOR OYU TOLGOI SOUTHERN DEPOSITS
SILLS ROTATION ANGLES RANGES
NUGGET ---------------------------------------------------------------------------------------
MODEL CO C1 C2 Z1 X1' Y1" Z2 X2' Y2" Z1 X1' Y1" Z2 X2' Y2"
====================================================================================================================================
CU - SOUTHWEST
Augite basalt - all SW SPH .324 .246 .430 -22 47 -38 77 1 -72 87 96 55 400 500 275
Qmd - background SPH .130 .511 .358 32 -4 28 -31 10 14 100 17 22 250 97 143
Augite basalt - Far South SPH .339 .203 .458 -74 34 20 39 22 -69 19 67 31 100 300 150
------------------------------------------------------------------------------------------------------------------------------------
CU - CENTRAL
Cu Shell SPH .313 .480 .207 24 -104 12 37 6 12 32 59 65 166 280 300
Augite basalt - background SPH .382 .337 .280 25 82 62 74 -18 2 11 16 101 150 110 80
Qmd - background EXP .200 .350 .450 -18 6 -6 52 3 90 90 12 25 100 200 80
------------------------------------------------------------------------------------------------------------------------------------
CU - SOUTH
Cu Shell SPH .325 .450 .225 50 56 -69 24 -12 -27 21 147 51 150 250 400
Background EXP .336 .305 .360 -91 19 46 8 -31 -25 19 52 4 175 40 125
------------------------------------------------------------------------------------------------------------------------------------
CU - WEDGE
Cu Shell SPH .390 .397 .214 -12 54 -46 -45 64 106 8 30 54 67 29 229
Background EXP .272 .207 .521 80 -27 -21 -30 -35 8 60 24 6 200 149 83
------------------------------------------------------------------------------------------------------------------------------------
AU - SOUTHWEST
Augite basalt - Au Shell SPH .300 .388 .313 14 1 17 -27 -26 -71 139 67 105 419 122 497
Augite basalt - background EXP .321 .239 .441 -34 62 4 17 -5 -41 18 142 56 400 270 300
Qmd - background SPH .265 .555 .180 -54 -58 -3 64 3 -22 54 13 100 200 173 142
Augite basalt - Far South SPH .442 .188 .370 -16 -20 -68 39 1 -54 30 189 14 175 300 400
------------------------------------------------------------------------------------------------------------------------------------
AU - CENTRAL
Cu Shell SPH .264 .201 .535 25 80 66 9 106 -97 70 110 35 150 200 250
Augite basalt - background SPH .345 .340 .315 13 60 6 -12 -3 -30 10 40 70 150 75 100
Qmd - background SPH .272 .396 .332 -26 29 -17 18 -15 -69 12 30 25 100 150 70
------------------------------------------------------------------------------------------------------------------------------------
AU - SOUTH
Cu Shell SPH .445 .231 .324 2 -65 4 55 17 -55 20 110 100 200 250 125
Background EXP .317 .238 .445 92 7 51 -10 -15 -27 5 11 16 150 41 100
------------------------------------------------------------------------------------------------------------------------------------
AU - WEDGE
all units and shells EXP .122 .347 .531 -39 -66 -73 36 10 60 30 10 60 150 100 63
------------------------------------------------------------------------------------------------------------------------------------
September 2004 SECTION 17-12 [AMEC LOGO]
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TECHNICAL REPORT
OYU TOLGOI, MONGOLIA
TABLE 17-5: AZIMUTH AND DIP ANGLES OF ROTATED VARIOGRAM AXES, OYU TOLGOI
SOUTHERN DEPOSITS
AXIS AZIMUTH AXIS DIP
------------------------------------------------- ----------------------------------------------
Z1 X1 Y1 Z2 X2 Y2 Z1 X1 Y1 Z2 X2 Y2
====================================================================================================================================
CU - SOUTHWEST
Augite basalt - all SW 111 39 338 167 165 77 32 -25 47 18 -72 1
Qmd - background 309 120 32 203 61 329 61 28 -4 73 14 10
Augite basalt - Far South 138 27 286 138 86 39 52 16 34 20 -60 21
------------------------------------------------------------------------------------------------------------------------------------
CU - CENTRAL
Cu Shell 12 103 204 280 128 37 -14 -3 -76 77 11 6
Augite basalt - background 267 177 25 69 163 74 4 7 82 72 2 -18
Qmd - background 117 72 342 322 235 52 82 -6 6 0 87 3
------------------------------------------------------------------------------------------------------------------------------------
CU - SOUTH
Cu Shell 158 75 50 91 120 24 12 -32 56 60 -27 -12
Background 162 18 269 50 112 8 41 43 19 50 -21 -31
------------------------------------------------------------------------------------------------------------------------------------
CU - WEDGE
Cu Shell 115 37 348 240 153 315 24 -25 54 -7 25 64
Background 120 180 80 316 55 330 57 -19 -27 54 7 -35
------------------------------------------------------------------------------------------------------------------------------------
AU - SOUTHWEST
Augite basalt - Au Shell 279 104 14 54 115 333 73 17 1 17 -58 -26
Augite basalt - background 151 60 326 102 112 17 28 2 62 49 -41 -5
Qmd - background 310 39 306 162 153 64 32 -2 -58 68 -22 3
Augite basalt - Far South 66 114 344 129 128 39 20 -61 -20 36 -54 1
------------------------------------------------------------------------------------------------------------------------------------
AU - CENTRAL
Cu Shell 271 180 25 92 1 189 4 9 80 2 16 74
Augite basalt - background 200 108 13 72 80 348 30 3 60 60 -30 -3
Qmd - background 123 56 334 102 142 18 57 -14 29 21 -64 -15
------------------------------------------------------------------------------------------------------------------------------------
AU - SOUTH
Cu Shell 357 88 2 156 122 55 25 2 -65 33 -52 17
Background 356 191 92 53 88 350 39 50 7 59 -26 -15
------------------------------------------------------------------------------------------------------------------------------------
AU - WEDGE
all units and shells 35 122 321 285 127 36 7 -22 -66 77 12 5
------------------------------------------------------------------------------------------------------------------------------------
September 2004 SECTION 17-13 [AMEC LOGO]
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TECHNICAL REPORT
OYU TOLGOI, MONGOLIA
o Wedge Zone - Copper structures show pronounced northeast-southwest
trends (NE-SE and NNE-SSW). Dips vary from moderately S to
moderate to steeply SE. Overall attitude is consistent with the
contact orientation between the ignimbrite and overlying Lower
Sedimentary sequence. This contact may have acted as an
impermeable cap to the mineralizing fluids resulting in a
ponding-effect within the ignimbrite.
The nugget effects, or random variation components of spatial
variation, tend to be moderate. Copper variograms generally have
nugget effects of 30% to 40% of the total variation whereas gold
variograms have somewhat more variable nugget effects of 25% to 50%
of the total variation.
17.4 MODEL SET-UP
The block size for the model was selected based on mining selectivity
considerations. It was assumed the smallest block size that could be
selectively mined as ore or waste, referred to the selective mining
unit (SMU), was approximately 20 m x 20 m x 15 m. In this case the
SMU grade-tonnage curves predicted by the restricted estimation
process adequately represented the likely actual grade-tonnage
distribution.
The assays were composited into 5 m down-hole composites. The
compositing honoured the domain zone by breaking the composites on
the domain code values. Unlike the composite data used for data
analyses (Section 17.1), these included any post-mineral dyke
material intervals that were deemed too small to be part of a post
mineral dyke model. The capping limits were applied to the assay data
prior to compositing. AMEC reviewed the compositing process and found
it to have been performed correctly. Also, assay data in older drill
holes (pre-OTD231) were adjusted for bias (Juras 2003, Hodgson 2004).
Bulk density data were assigned to a unique MineSight(R) assay
database file. These data were composited into 15 m fixed-length
down-hole values to reflect the block model bench height.
Various coding was done on the block model in preparation for grade
interpolation. The block model was coded according to zone,
lithologic domain and grade shell. Percent below topography was also
calculated into the model blocks. Post-mineral dykes were assumed to
represent zero grade waste cutting the mineralized rock. The shapes
were used to calculate an ore-remaining percent for each block by
subtracting the volume percent dyke that intersects a block from 100.
This percentage was used in the resource tabulation procedure to
properly account for mineralized material.
Only the hypogene mineralization was estimated (with the Central
chalcocite blanket being the only exception). The top of the hypogene
was defined by the base of sulphide oxidation surface (constructed by
Ivanhoe). A transition zone exists in areas where the top of observed
sulphide minerals is above the base of oxidation. Unfortunately, that
surface
September 2004 SECTION 17-14 [AMEC LOGO]
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TECHNICAL REPORT
OYU TOLGOI, MONGOLIA
was poorly constructed and non-usable for controlling grade
interpolation at this time. Ivanhoe should make the effort to remedy
this so that the potential of this transitional material can be
properly assessed.
17.5 ESTIMATION
The Oyu Tolgoi estimation plans, or sets of parameters used for
estimating blocks, were designed using a philosophy of restricting
the number of samples for local estimation. AMEC has found this to be
an effective method of reducing smoothing and producing estimates
that match the Discrete Gaussian change-of-support model and
ultimately the actual recovered grade-tonnage distributions. While
local predictions based on the small number of samples are
uncertain(1), this method can produce reliable estimates of the
recovered tonnage and grade over the entire deposit, i.e., the global
grade-tonnage curves from the estimations are accurate predictors of
the actual grade-tonnage curves.
Modelling consisted of grade interpolation by ordinary kriging (KG).
The chalcocite blanket in Central was interpolated by grade averaging
because of the small data population in this domain. Only capped
grades were interpolated. Nearest-neighbour (NN) grades were also
interpolated for validation purposes. Blocks and composites were
matched on estimation domain. To reduce the impact of locally
inaccurate block grades due to conditional bias at the grade shell
boundaries, all blocks straddling those contacts were estimated twice
with each of the composite sets on either side of the contact. The
final block grade was calculated with a volume-weighted average of
the two domain grades in that block. The effect is to slightly smooth
the grades at the hard grade shell boundary so that the distribution
of block grades more closely approximates the shape of the composite
distribution.
The search ellipsoids were oriented preferentially to the orientation
of the respective zone as defined by bounding structures or to the
attitude of the relevant Cu or Au grade shell. Search ranges
comprised 175 to 200 m along the respective long axis, 100 to 150 m
down the dip direction and 125 to 175 m vertically. Block
discretization is 4 x 4 x 3.
A two pass approach was instituted for interpolation. The first pass
allowed a single hole to place a grade estimate in a block and the
second pass required a minimum of two holes from the same estimation
domain. This approach was used to enable most blocks to receive a
grade estimate within the domains, including the background domains.
Blocks mostly received a minimum of 3 to 4 composites and a maximum
of 4 to 5 composites from a single drill hole (for the two hole
minimum pass). Maximum composite limits varied by domain, ranging
from 12 to 20.
--------
1 Local grade estimates at the block-scale can be conditionally biased.
Blocks estimated to be low-grade will actually be higher grade and vice
versa. Division of the deposits into domains prior to estimation reduces
the impact of conditional bias.
September 2004 SECTION 17-15 [AMEC LOGO]
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TECHNICAL REPORT
OYU TOLGOI, MONGOLIA
These parameters were based on the geological interpretation, data
analyses and variogram analyses. The number of composites used in
estimating grade into a model block followed a strategy that matched
composite values and model blocks sharing the same ore code or
domain. The minimum and maximum number of composites were adjusted
for each grade item to incorporate an appropriate amount of grade
smoothing. This was done by change-of-support analysis (Discrete
Gaussian or Hermitian polynomial change-of-support method), as
described below.
For both metals, an outlier restriction was used to control the
effects of high-grade composites within each of the domains,
particularly in background domains and poorly mineralized units (e.g,
Southwest Qmd). The threshold grades were generally set as the grade
of the relevant grade shell or distinct break in the probability
curves in the case of poorly mineralized units. In Southwest, an
outlier of 0.7 g/t Au was used in background domains for augite
basalt. Zones that contained Cu grade shells had a 0.5% Cu outlier
value implemented in the background domains. Au values in those
background domains had outlier values of 0.3 g/t (Wedge), 0.4 g/t
(Central and Southwest Qmd) and 0.5 g/t (South). The restricted
distances were 40m in Southwest, 30m elsewhere.
Bulk density values were estimated into the resource model by an
averaging of composites. A maximum of six and minimum of two 15 m
composites were used for the averaging. A rectangular search was
used, measuring 200 m north x 200 m east x 50 m elevation. The
assignment was constrained by matching composite values and model
blocks that shared the same domain. In the event a block was not
estimated, default density values were assigned based on lithology
code. Augite basalt was assigned a value equal to 2.83, Qmd was given
a value of 2.71.
17.5.1 VALIDATION
VISUAL INSPECTION
AMEC completed a detailed visual validation of the Oyu Tolgoi
Southern deposits block model. The model was checked for proper
coding of drill hole intervals and block model cells, in both section
and plan. Coding was found to be properly done. Grade interpolation
was examined relative to drill hole composite values by inspecting
sections and plans. The checks showed good agreement between drill
hole composite values and model cell values. The hard boundaries
between grade shells appear to have constrained grades to their
respective estimation domains. The addition of an outlier restriction
reduced a significant amount of gold grade smearing in background
domains. Examples of representative sections and plans containing
block model grades, drill hole composite values, and domain outlines
are included in Appendix G.
September 2004 SECTION 17-16 [AMEC LOGO]
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TECHNICAL REPORT
OYU TOLGOI, MONGOLIA
MODEL CHECK FOR CHANGE-OF-SUPPORT
An independent check on the smoothing in the estimates was made using
the Discrete Gaussian or Hermitian polynominal change-of-support
method described by Journel and Huijbregts (Mining Geostatistics,
Academic Press, 1978). The distribution of hypothetical block grades
derived by this method is compared to the estimated model grade
distribution by means of grade-tonnage curves. The grade-tonnage
curves allow comparison of the histograms of the two grade
distributions in a format familiar to mining. If the estimation
procedure has adequately predicted grades for the selected block
size, then the grade-tonnage curves should match fairly closely. If
the curves diverge significantly, then there is a problem with the
estimated resource.
This method uses the "declustered" distribution of composite grades
from a nearest-neighbour or polygonal model to predict the
distribution of grades in blocks. In this case the blocks used in the
model are 20 m x 20 m x 15 m. The unadjusted polygonal model assumes
much more selectivity for ore and waste than is actually possible in
mining practice, since many sample-sized volumes are averaged
together within a block. This means that part of the sample-sized
volumes in the block may be ore (above the mining cutoff) and part
may be waste. Hence, the distribution of the grade of the blocks is
not likely to resemble the distribution of grades from composite
samples derived from the polygonal estimate. The method assumes that
the distribution of the blocks will become more symmetric as the
variance of the block distribution is reduced, i.e., as the mining
blocks become bigger.
The histogram for the blocks is derived from two calculations:
o the block-to-block variance (sometimes referred to in statistics
as the between-block variance), which is calculated by subtracting
the average value of the variogram within a block from the
variance for composite samples (the sill of the variogram)
o the frequency distribution for the composite grades transformed by
means of hermite polynomials (Herco: hermite correction) into a
less skewed distribution with the same mean as the declustered
grade distribution and with the block-to-block variance of the
grades.
The distribution of hypothetical block grades derived by the Herco
method is then compared to the estimated grade distribution to be
validated by means of grade-tonnage curves.
The distribution of calculated 20 m x 20 m x 15 m block grades for
copper in the main domains of Southwest (Au shell, Background, Far
South), Central (Cu Shell) and South (Cu Shell) are shown with dashed
lines on the grade-tonnage curves in Figures 17-5 and 17-6. This is
the distribution of grades based on 20 m blocks obtained from the
change-of-support models. The continuous lines in the figures show
the grade-tonnage distribution obtained from the block estimates. The
grade-tonnage predictions produced for the model
September 2004 SECTION 17-17 [AMEC LOGO]
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show that grade and tonnage estimates are validated by the
change-of-support calculations over the likely range of mining grade
cutoff values (0.4% to 0.6% Cu).
FIGURE 17-5: CHANGE-OF-SUPPORT GRADE-TONNAGE PLOTS FOR CU MODEL AND
HERCO VALUES, SOUTHWEST DEPOSIT DOMAINS
[GRAPH - "RECOVERED GRADE - TONNAGE CHART, SOUTH WEST DEPOST - IN AU SHELL"]
[GRAPH - "RECOVERED GRADE - TONNAGE CHART, SOUTH WEST DEPOST - OUTSIDE AU
SHELL"]
[GRAPH - "RECOVERED GRADE - TONNAGE CHART, FAR SOUTH DEPOSIT"]
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FIGURE 17-6: CHANGE-OF-SUPPORT GRADE-TONNAGE PLOTS FOR CU MODEL AND
HERCO VALUES, CU SHELL DOMAINS, CENTRAL AND SOUTH
DEPOSITS
[GRAPH - "RECOVERED GRADE - TONNAGE CHART, CENTRAL DEPOST - INSIDE CU SHELL"]
[GRAPH - "RECOVERED GRADE - TONNAGE CHART, SOUTH DEPOSIT - INSIDE CU SHELL"]
MODEL CHECKS FOR BIAS
AMEC checked the block model estimates for global bias by comparing
the average metal grades (with no cutoff) from the model (KG) with
means from nearest-neighbour estimates. (The nearest-neighbour
estimator declusters the data and produces a theoretically unbiased
estimate of the average value when no cutoff grade is imposed and is
a good basis for checking the performance of different estimation
methods.) Results are displayed in Table 17-6.
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TABLE 17-6: GLOBAL MODEL MEAN GRADE VALUES BY DOMAIN IN EACH ZONE
NEAREST-NEIGHBOUR ESTIMATE KRIGED ESTIMATE % DIFFERENCE
========================================================================================
CU (%) - SOUTHWEST
Far South 0.250 0.252 1
Au shell 0.598 0.588 2
Background 0.226 0.231 2
----------------------------------------------------------------------------------------
CU (%) - CENTRAL
Cu Shell 0.637 0.625 2
Background 0.162 0.170 5
----------------------------------------------------------------------------------------
CU (%) - SOUTH
Cu Shell 0.455 0.452 1
Background 0.192 0.196 2
----------------------------------------------------------------------------------------
CU (%) - WEDGE
Hi Cu Shell 0.733 0.670 9
Cu Shell 0.414 0.396 4
Background 0.099 0.102 3
----------------------------------------------------------------------------------------
AU (G/T) - SOUTHWEST
Far South 0.290 0.276 5
Au shell 1.312 1.278 3
Background 0.234 0.233 0
----------------------------------------------------------------------------------------
AU (G/T) - CENTRAL
Cu Shell 0.170 0.156 9
Background 0.054 0.058 7
----------------------------------------------------------------------------------------
AU (G/T) - SOUTH
Cu Shell 0.151 0.137 9
Background 0.077 0.079 3
----------------------------------------------------------------------------------------
AU (G/T) - WEDGE
Hi Cu Shell 0.076 0.071 7
Cu Shell 0.052 0.049 4
Background 0.038 0.037 0
----------------------------------------------------------------------------------------
AMEC also checked for local trends in the grade estimates (grade
slice or swath checks). This was done by plotting the mean values
from the nearest-neighbour estimate versus the kriged results for
benches (in 30 m swaths), northings and eastings (both in 40 m
swaths). The kriged estimate should be smoother than the
nearest-neighbour estimate, thus the nearest-neighbour estimate
should fluctuate around the kriged estimate on the plots.
September 2004 SECTION 17-20 [AMEC LOGO]
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Results for copper and gold are shown in Appendix F. The two trends
behave as predicted and show no significant trends of copper or gold
in the estimates.
HISTOGRAMS AND PROBABILITY PLOTS
Histograms were constructed to show the frequency of sample grades
within the mineralized domains. Both kriged and nearest-neighbour
plots were made for copper and gold. The nearest-neighbour plots
mimic the respective composite value distribution. The kriged results
show the formation of a more symmetric distribution because of the
smoothing effect caused by using multiple values from multiple drill
holes to interpolate a model block value.
17.6 MINERAL RESOURCE CLASSIFICATION
The mineral resources of the Oyu Tolgoi project were classified using
logic consistent with the CIM definitions referred to in National
Instrument 43-101. Inspection of the model and drill hole data on
plans and sections in the Southwest Gold Zone area, combined with
spatial statistical work and investigation of confidence limits in
predicting planned quarterly production showed good geologic and
grade continuity in areas where sample spacing was about 50 m. When
taken together with all observed factors, AMEC decided that blocks
covered by this data spacing in the Southwest Gold Zone area may be
classified as Measured Mineral Resource. A three-hole rule was used
where blocks containing an estimate resulting from three or more
samples from different holes (all within 55 m with at least one
within 30 m) were classified as Measured Mineral Resource.
The Indicated Mineral Resource category is supported by the present
drilling grid over most of the remaining part of the Oyu Tolgoi
Southern deposits. The drill spacing is at a nominal 70 m on and
between sections. Geologic and grade continuity is demonstrated by
inspection of the model and drill hole data in plans and sections
over the various zones, combined with spatial statistical work and
investigation of confidence limits in predicting planned annual
production. Considering these factors, AMEC decided that blocks
covered by this data spacing may be classified as Indicated Mineral
Resource. A two-hole rule was used where blocks containing an
estimate resulting from two or more samples from different holes. For
the Southwest deposit the two holes needed to be within 75 m with at
least one hole within 55 m. For the remaining deposits, both holes
needed to be within 65 m with at least one hole within 45 m to be
classified as Indicated Mineral Resources.
All interpolated blocks that did not meet the criteria for either
Measured or Indicated Mineral Resources were assigned as Inferred
Mineral Resources if within they fell within 150 m of a drill hole
composite.
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17.7 MINERAL RESOURCE SUMMARY
The mineralization of the Oyu Tolgoi Southern deposits as of 18
August 2004 is classified as Measured, Indicated and Inferred Mineral
Resources. The resources are shown in Tables 17-7, and 17-8, and are
reported at a copper equivalent cutoff grade. The mineral resource
estimate summary has been split into resources lying above and below
a depth of 560 m below surface (an elevation of 600 m above sea
level). Mine planning work has identified this depth to be a
conservative depth for a large-scale, open-pit mining operation. The
resources above the depth of 560 m from surface have been estimated
using a 0.30% copper equivalent cutoff grade. Resources lying below a
depth of 560 m from surface (likely mining would be by underground
bulk mining methods) were estimated using a 0.60% copper equivalent
cutoff grade.
The equivalent grade was calculated using assumed metal prices for
copper and gold. The assumed prices were US$0.80 for Cu and US$350/oz
for gold. For convenience the formula is:
o CuEq = %Cu + (g/t Au*11.25)/17.64
The contained gold and copper estimates in the tables below have not
been adjusted for metallurgical recoveries.
TABLE 17-7: OYU TOLGOI SOUTHERN DEPOSIT MINERAL RESOURCE SUMMARY - 18 AUGUST
2004
GRADES CONTAINED METAL
----------------------------------------------------------------
COPPER GOLD COPPER EQ. COPPER GOLD
MINERAL RESOURCE CATEGORY TONNES (%) (G/T) (%) ('000S LB) (OZ)
====================================================================================================================
Above a depth of 560 m from surface (600 m elevation), 0.30% Copper Equivalent Cut-off
Measured 108,360,000 0.58 0.85 1.13 1,386,000 2,961,000
Indicated 882,070,000 0.47 0.25 0.62 9,140,000 7,090,000
--------------------------------------------------------------------------------------------------------------------
Measured+Indicated 990,430,000 0.48 0.31 0.68 10,481,000 9,871,000
--------------------------------------------------------------------------------------------------------------------
Inferred 259,060,000 0.35 0.20 0.47 1,999,000 1,666,000
====================================================================================================================
Below a depth of 560 m from surface (600 m elevation), 0.60% Copper Equivalent Cut-off
Measured 5,280,000 0.76 2.12 2.11 88,000 360,000
Indicated 65,620,000 0.44 0.99 1.08 637,000 2,089,000
--------------------------------------------------------------------------------------------------------------------
Measured+Indicated 70,900,000 0.47 1.08 1.15 735,000 2,462,000
--------------------------------------------------------------------------------------------------------------------
Inferred 26,200,000 0.41 0.55 0.76 237,000 463,000
--------------------------------------------------------------------------------------------------------------------
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TABLE 17-8: OYU TOLGOI SOUTHERN DEPOSIT MINERAL RESOURCE SUMMARY - 18 AUGUST
2004 (AT MULTIPLE COPPER EQUIVALENT CUTOFF GRADES)
GRADES CONTAINED METAL
COPPER EQ. -------------------------- -----------------------
CUTOFF GRADE COPPER GOLD COPPER EQ. COPPER GOLD
MINERAL RESOURCE CATEGORY (%) TONNES (%) (G/T) (%) ('000S LB) (OZ)
===================================================================================================================
Above a depth of 560 m from surface (600 m elevation)
MEASURED (GREATER THAN)= 1.00 48,200,000 0.79 1.48 1.73 839,000 2,293,000
(GREATER THAN)= 0.70 69,900,000 0.70 1.17 1.45 1,079,000 2,629,000
(GREATER THAN)= 0.60 83,560,000 0.66 1.03 1.32 1,216,000 2,767,000
(GREATER THAN)= 0.30 108,360,000 0.58 0.85 1.13 1,386,000 2,961,000
-------------------------------------------------------------------------------------------------------------------
INDICATED (GREATER THAN)= 1.00 81,730,000 0.92 0.75 1.40 1,658,000 1,971,000
(GREATER THAN)= 0.70 239,970,000 0.74 0.42 1.01 3,915,000 3,240,000
(GREATER THAN)= 0.60 357,120,000 0.66 0.36 0.89 5,196,000 4,133,000
(GREATER THAN)= 0.30 882,070,000 0.47 0.25 0.62 9,140,000 7,090,000
-------------------------------------------------------------------------------------------------------------------
MEASURED+INDICATED (GREATER THAN)= 1.00 129,930,000 0.87 1.02 1.52 2,492,000 4,261,000
(GREATER THAN)= 0.70 309,870,000 0.73 0.59 1.11 4,987,000 5,878,000
(GREATER THAN)= 0.60 440,680,000 0.66 0.48 0.97 6,412,000 6,801,000
(GREATER THAN)= 0.30 990,430,000 0.48 0.31 0.68 10,481,000 9,871,000
-------------------------------------------------------------------------------------------------------------------
INFERRED (GREATER THAN)= 1.00 5,390,000 1.14 0.57 1.50 135,000 99,000
(GREATER THAN)= 0.70 16,650,000 0.79 0.35 1.02 290,000 187,000
(GREATER THAN)= 0.60 35,990,000 0.61 0.32 0.81 484,000 370,000
(GREATER THAN)= 0.30 259,060,000 0.35 0.20 0.47 1,999,000 1,666,000
===================================================================================================================
Below a depth of 560 m from surface (600 m elevation)
MEASURED (GREATER THAN)= 1.00 5,000,000 0.78 2.19 2.18 86,000 352,000
(GREATER THAN)= 0.70 5,220,000 0.76 2.13 2.13 87,000 357,000
(GREATER THAN)= 0.60 5,280,000 0.76 2.12 2.11 88,000 360,000
-------------------------------------------------------------------------------------------------------------------
INDICATED (GREATER THAN)= 1.00 29,470,000 0.55 1.39 1.44 357,000 1,317,000
(GREATER THAN)= 0.70 54,440,000 0.46 1.09 1.17 552,000 1,908,000
(GREATER THAN)= 0.60 65,620,000 0.44 0.99 1.08 637,000 2,089,000
-------------------------------------------------------------------------------------------------------------------
MEASURED+INDICATED (GREATER THAN)= 1.00 34,470,000 0.58 1.50 1.55 441,000 1,662,000
(GREATER THAN)= 0.70 59,660,000 0.49 1.19 1.25 644,000 2,283,000
(GREATER THAN)= 0.60 70,900,000 0.47 1.08 1.15 735,000 2,462,000
-------------------------------------------------------------------------------------------------------------------
INFERRED (GREATER THAN)= 1.00 3,020,000 0.51 1.04 1.17 34,000 101,000
(GREATER THAN)= 0.70 12,960,000 0.45 0.69 0.89 129,000 287,000
(GREATER THAN)= 0.60 26,200,000 0.41 0.55 0.76 237,000 463,000
-------------------------------------------------------------------------------------------------------------------
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18.0 OTHER RELEVANT DATA AND INFORMATION
No other data or information are relevant for the review of the Oyu
Tolgoi project.
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19.0 REQUIREMENTS FOR TECHNICAL REPORTS ON PRODUCTION AND DEVELOPMENT
PROPERTIES
This section is not relevant for this review.
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20.0 CONCLUSIONS AND RECOMMENDATIONS
AMEC reviewed pertinent data from the Oyu Tolgoi project to obtain a
sufficient level of understanding to assess the Mineral Resource
estimate for the Oyu Tolgoi Southern deposits (Southwest, South,
Central, Wedge). AMEC's general conclusions from this review are as
follows:
o The geology of the Oyu Tolgoi project is well understood,
particularly with the integration of a comprehensive structural
model, a new development since the previous Technical Report
(Juras 2003). The Southern deposits are considered to be examples
of a Cu-Au porphyry system and related high-sulphidation types of
deposits. Four deposits are known:
1. The Southwest deposit consists primarily of pyrite-chalcopyrite
mineralization related to sericite and sericite-albite
alteration. Mineralization is characterized by high gold
contents with Au:Cu ratios about 1:1 in the main part of the
deposit, rising to 3:1 in the core of the system and at depth.
The deposit is essentially hosted in augite basalts.
2. South deposit contains pyrite-chalocopyrite-bornite
mineralization. It lies in augite basalt and lesser Qmd
intrusive units. It is gold-poor.
3. Central deposit contains several mineralization types: a
pyrite-covellite-chalcocite type, a subordinate auriferous
chalcopyrite-pyrite type and a supergene chalcocite blanket
type. Qmd units are the predominant host.
4. Wedge Zone consists of bornite+/-chalcopyrite mineralization
hosted in strongly altered ignimbrites. It is a gold-depleted
system.
o The exploration program relies strongly on geophysical survey data
(IP and magnetics), and other target anomalies still remain within
the project land holdings.
o The database used to estimate the mineral resources for the Oyu
Tolgoi project consists of samples and geological information from
539 core drill holes drilled by Ivanhoe between 2002 and June
2004. Data transfer to the resource database was validated from
original assay certificates through a 5% check of the database.
o Ivanhoe employs a comprehensive QA/QC program. Each sample batch
of 20 samples contains four or five quality control samples. The
quality control samples comprise one duplicate split core sample
and one uncrushed field blank, which are inserted prior to sample
preparation; a reject or pulp preparation duplicate, which is
inserted during sample preparation; and one or two reference
material samples (one (less than) 2% Cu and one (greater than) 2%
Cu if higher-grade mineralization is present based on visually
estimates), which are inserted after sample preparation. AMEC
reviewed Ivanhoe's
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QA/QC procedures at site and found them to be strictly adhered to.
Duplicate performance of core, coarse reject, and pulp duplicates
was evaluated by AMEC and found to be well within the respective
accepted ranges. The current Ivanhoe QA/QC program exceeds
industry standards and demonstrates that the assay process for the
Southern deposits samples is in control.
o The Oyu Tolgoi resource models were developed using
industry-accepted methods. AMEC validated the model estimates and
found them to reasonably estimate grade and tonnage for the
Southern deposits.
o The mineralization at Oyu Tolgoi Southern deposits was classified
using logic consistent with the CIM definitions referred to in
National Instrument 43-101 into Measured, Indicated and Inferred
Mineral Resources.
This independent mineral resource estimate and review by AMEC
supports the August 2004 Oyu Tolgoi Southern deposit Mineral
Resource statement.
September 2004 SECTION 20-2 [AMEC LOGO]
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21.0 REFERENCES
Badarch, G. et al., 2002. A new terrane subdivision for Mongolia:
implications for the Phanerozoic crustal growth of Central
Asia. Journal of Asian Earth Sciences, v.21, p.87-110.
Cargill, G., 2002. Report on the Oyu Tolgoi Exploration Project
South Gobi Region, Mongolia. National Instrument 43-101
Technical Report, 11 January 2002.
Hodgson, S., 2004. Technical Report, Preliminary Assessment, Oyu
Tolgoi Project, Mongolia. National Instrument 43-101
Technical Report, January 2004.
Journel, A.G. and Huijbregts, Ch.J. 1978. Mining Geostatistics,
Academic Press, London.
Juras, S., 2003. Technical Report, Oyu Tolgoi Project, Mongolia.
National Instrument 43-101 Technical Report, February 2003.
Perello, J. et al., 2001. Oyu Tolgoi, Mongolia: Siluro-Devonian
porphyry Cu-Au-Moand high-sulphidation Cu mineralization
with a Cretaceous chalcocite blanket. Econ.Geol. v.96,
p.1407-1428.
Tseveendorj, D. and Garamjav, D., 1999. About ancient copper mining
and processing in Mongolia; Ulaanbaatar, Mongolia, Academy
of Science Institute Proceedings Series 19, p.17-21 (in
Mongolian).
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APPENDIX A
--------------------------------------------------------------------------------
Drillhole List and Plan Views
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APPENDIX B
--------------------------------------------------------------------------------
Composite Data List
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APPENDIX C
--------------------------------------------------------------------------------
QA/QC Charts
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APPENDIX D
--------------------------------------------------------------------------------
EDA Charts
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APPENDIX E
--------------------------------------------------------------------------------
Variography
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APPENDIX F
--------------------------------------------------------------------------------
Grade Swath Plots
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APPENDIX G
--------------------------------------------------------------------------------
BLOCK MODEL SECTIONS AND PLANS
125 AZIMUTH SECTIONS
Central Deposit Au and Cu
Southwest and South Deposit Au and Cu
Wedge and Bridge Zones Au and Cu
PLANS
Plan 1065 Au and Cu
Plan 885 Au and Cu
Plan 705 Au and Cu
September 2004 APPENDICES [AMEC LOGO]