Kincora has consolidated the dominant land position in the emerging Southern Gobi copper-gold belt of Mongolia. The Company’s wholly owned district-scale portfolio has been refined from over 1400km2 at the time of the IBEX merger to less than 800km2 and is the dominant position along strike and in between two large-scale, world-class porphyry projects - the Oyu Tolgoi mine (pictured above) and the Tsagaan Suvarga Serven Sukhait development project.
Rio Tinto, via its controlling interest in Turquoise Hill Resources, operates Oyu Tolgoi. Oyu Tolgoi consists of a series of Devonian age deposits that sit within a 26-kilometer trend. First phase production from open pit operations commenced in 2012, with an excellent safety record to date, and is one of a few new large-scale copper mines built in recent decades. Development of stage two underground operations is ongoing, currently the largest expansion project in the mining industry (any commodity, any location) and follows the largest project financing in the mining industry. Oyu Tolgoi is forecast to be the world’s third largest copper mine with a multiple generation resource supporting longer-term development optionality.
A local conglomerate, Mongolyn Alt LLC (MAK), privately owns the Tsagaan Suvarga project. Its Serven Sukhait open pit development project and southern exploration targets sit on the western margin of the Devonian age Tsagaan Suvarga Intrusive Complex. MAK has invested US$377 million of a reported US$1,089 million total capital cost into the development of the Serven Sukhait open pit, which is forecast to annually produce up to 316,000t of copper and 4,400t of molybdenum concentrate.
Figure 1. Notable Mongolian Copper & Gold Occurrences
Figure 2. Southern Gobi Oyu Tolgoi-Tsagaan Suvarga Copper Belt
Figure 3. Summary of Defined Resources
|Mineralized System||Current Stage||Mt||Cu (%)||Au (g/t)||Mo (%)||CuEq Grade||Date||Cut-off Grade|
|Measured & Indicated1|
|OT, Hugo Dummet||Construction||976||1.61||0.38||0.003||1.87||2015||0.373|
|OT, Oyut OP (ex mined)||Mining||1,092||0.43||0.27||0.006||0.61||2015||0.223|
|OT, Oyut UG||Studies||107||0.35||0.61||0.003||0.73||2015||0.373|
|Tsagaan Suvarga (Primary)||Construction||291||0.55||0.02||0.60||2009||0.20|
|Kharmagtai||Exploration||46||0.42||0.51||0.73||2015||0.3 & 0.54|
|OT, Hugo Dummet||Construction||1,835||0.79||0.18||0.005||0.93||2015||0.373|
|OT, Oyut OP (ex mined)||Mining||389||0.29||0.16||0.004||0.40||2015||0.223|
|OT, Oyut UG||Studies||159||0.39||0.32||0.003||0.59||2015||0.373|
|Tsagaan Suvarga (Primary)||Construction||15||0.33||0.01||0.36||2009||0.20|
|Kharmagtai||Exploration||157||0.32||0.28||0.49||2015||0.3 & 0.54|
1 Reported Measured & Indicated Mineral Resources as reported respective code (JORC or NI 43-101)
2 Reported Inferred Mineral Resources as reported to respective code (JORC or NI 43-101)
3 Cut-off grade - CuEq per respective technical report (otherwise stated as Cu %)
4 Reported at 0.3% CuEq cut off within pit shells & cut-off 0.5% CuEq applied to underground
Figure 4. Summary of Stated Exploration Targets
|Project||Mt||Cu (%)||Au (g/t)||Mo (%)||CuEq Grade||Contained Metal (CuEq, Mt2)||Date||Cut-off Grade|
|West Kasulu - Target Range||416 - 428||0.26 - 0.30||0.06 - 0.07||0.003 - 0.004||0.30 - 0.35||1.3 - 1.5||2018||0.20|
1 Exploration target range (per the Jan’18 Mining Associates review): the potential quantity and grade are conceptual in nature and is based on the nearest neighbor and ordinary krige estimates. There has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the target being delineated as a mineral resource
2 Contained Metal CuEq Mt: The Copper Equivalent (CuEq) calculation represents an estimate for the total value for each metal, multiplied by the conversion factor, summed and expressed in equivalent copper percentage based on spot prices (Cu $3.11/lb, Au $1279/oz and Mo $7.1/lb). Grades have not been adjusted for metallurgical or refining recoveries and the copper equivalent grades are of an exploration nature only and intended for summarizing grade. The copper equivalent calculation is intended as an indicative value only. Refer to Kincora's January 25th, 2018 press release for further details.
Copper porphyries occur in clusters focused on key geological structures within established belts- they do not occur in isolation. There is increasing recognition of the Southern Gobi’s copper potential, being one of the last under-explored known copper frontiers with various analogy’s in terms of legislative roadmap, existing producing mines/development projects, limited exploration activities and understanding of geological potential to the development of Chile’s copper industry in the early 1970’s.
In terms of landmass size and important geological structural features/controls, the Devonian belt in the Southern Gobi is particularly comparable to Northern Chile, where there are over 15 current large mines producing ~2Mtpa Cu (>10% of global production).
The South Gobi area lies near the boundary of the South Mongolian and the South Gobi tectonic units. Primarily Paleozoic volcanic, sedimentary and intrusive rocks and Mesozoic sedimentary cover underlie the region. During the Paleozoic, southern Mongolia grew through the accretion of Island Arc- and Andean-type subduction, related magmatic arcs and continental blocks. Late in the Paleozoic, Basin and Range style rifting accompanied bimodal volcanism. By early Mesozoic, continental uplift was in progress, unroofing the tectonic belts with deposition of terrigenous sediments into thrust-controlled, foreland basins. At the end of the Late Cretaceous, the region was increasingly arid, similar to the present day Central Asian basins.
The Devonian age, gold rich Oyu Tolgoi copper porphyry system is a Tier 1 asset, being the largest high-grade group of Paleozoic porphyry deposits known in the world, which coupled with the underexplored Tsagaan Suvarga Devonian porphyry system encourages exploration in this underexplored Southern Gobi district.
The region is sparsely populated, generally flat open desert, enjoys existing and rapidly improving infrastructure, is not at altitude and is within trucking distance to China – a favorable location for exploration and mine development.
This is evident by Oyu Tolgoi Stage 1 open pit operations commencing exports within 4 years of final approvals’, grid power being connected between Oyu Tolgoi to Tsagaan Suvarga in 2017 (and within 500 metres of Kincora’s White Pearl camp) and Stage 2 underground operations at Oyu Tolgoi scheduled to commence within 8 years of the restart of development activities.
Other significant mines, including the world-class Erdenes Tavan Tolgoi mine and other coal mines with associated infrastructure (including rail, power and water) are proposed or under construction. This coal basin to the west of Oyu Tolgoi in 2017 became the largest exporter of coal to China (overtaking Australia) despite currently not having rail.
Xanadu Mines’ flagship Kharmagtai copper-gold exploration project sits in close proximity outside of the interpreted Devonian belt where they continue to explore for a fourth mineralized system to support it advancing from exploration to development.