It was discovered by Canada’s Ivanhoe Mines (TSE:IVN) and is being developed in partnership with Rio Tinto (LON:RIO). Production is expected to reach 450,000 tonnes of copper annually from the open pit and underground mine that will chase the high grade copper core. Ivanhoe Mines also held the licence for Bronze Fox and explored the deposit for eight years starting in 2001 but drilled only 24 holes. The company was eventually forced to surrender its rights to the licence. The history of the Bronze Fox project reveals Ivanhoe was not the first to explore the area. Work was carried out by geologists under the Soviet regime during the 1950s, 60s and 70s and the surface trenches and drill-holes collars there act as a reminder of this. A nine-year exploration licence was taken by Nadmin LLC, a Mongolian company, in 2010, and Kincora acquired the deposit in July this year. Covering an area of 220 square kilometres, the Bronze Fox property, or Buyant Licence as it is called now by Mineral Resources Authority of Mongolia, is divided into five areas. They are West Kasulu, Dunlop Fox, Buchanan Heights, Sophie North, and Leca Pass. Kincora’s efforts thus far have focused on just 35 square kilometres around those areas.
Since April this year the group has sunk more than 12,000 metres of drill holes on the Bronze Fox project in Mongolia. And it expects to add a further 1,000 metres by the time rigs stop turning ahead of the 2011 drilling program completion winter shutdown. Over the winter Kincora will stop drilling but will “expedite the core cutting process", analyse the 2011 season’s drilling and exploration results and complete further ground magnetic survey, said chief executive Igor Kovarsky. This will assist in understanding the structure and location of magnetic depletions zones, he added. There may also be a further DDIP and/or PDIP line survey. Current drilling and geochemical soil sampling from historic trenches around the ‘gap’ zone at the West Kasulu target (current focus zone strike ~1 km) has the potential to pull together and define a conceptual lower grade, near surface resource which could support a ‘starter’ open pit development project, Kovarsky said. There is copper mineralisation from the surface right across the 35 square kilometres of the lease so far explored at between 0.3 and 0.4 per cent on average. A slightly higher grade could support an open pit operation. There is also a potential gold deposit at the shear zone three kilometres to the south from the Leca Pass area. Rock chip sampling from the surface has shown a very high grade of gold – up to 93 grams per tonne of the precious metal.
However the discovery of lower lying, higher grade copper mineralisation above one per cent would change the whole complexion of the project. There is an initial NI 43-101 technical report, which was issued this spring, and a NI 43-101 resource statement will be compiled at some point in 2012, after a next wave of drilling gets into full swing. The drill holes containing mineralisation are up to six kilometres apart, lie predominately within a six kilometre strike high IP chargeability anomaly, are open along strike and cover a very large area of more than 35 square kilometres but only ~13% per cent of the total license area, Kovarsky said.
The group recently revealed encouraging results from three holes drilled last month. This included a one metre intersection of 8.11 per cent copper and 1.5 grams per tonne of gold within a 106m intersection with an average grade of 0.4 per cent copper. “Two good drill holes and we would be okay. It would completely alter our approach,” said Kovarsky. Of course what the chief executive is hoping to discover is a higher grade, deeper lying ore body of the style of Oyo Tolgoi. Grades intersected to date do indicate that there is widespread copper mineralisation, which is encouraging. A marginal improvement in the copper grade would allow the company to initiate plans for an open pit operation. Bronze Fox may even support a gold mine.
However the whole complexion of the project changes with the discovery of higher grades at depth where it can push underground. “If we hit some grades pretty deep and we find a second Oyu Tolgoi then it changes,” said Kovarsky. “With this type of deposit you might hit grades of 1 to 1.5 per cent copper, perhaps even 2 per cent. “If we hit this higher grade, then the efforts will be concentrated on how deep this goes. “By that time we might have the resource to mine open pit with the copper grade more than 0.4 per cent,” Kovarsky said. “We’ve already identified three new geophysical anomaly high priority target areas which will be tested in next year’s exploration programme. “There are plenty of positive indications that we could find the higher grade deposit. I can’t tell you when we will hit the zone, but I am absolute sure there is something there. “We are in the right geological area. Buyant License (Bronze Fox project) area occurs in the same early to mid-Palaeozoic island arc. “The island arc exhibits characteristics typical for calc-alkaline, 'island arc-type' Cu-Au porphyry deposits. All the data speaks to another Oyu Tolgoi deposit being possible.” The work carried out over the winter months will then pave the way for the 2012 campaign, which will see Kincora sink at least 25 holes.
The company has around US$6 million in the bank. This is enough to begin 2012 new exploration programme. However, group is likely to tap the markets for funds as it “aggressively attacks the designed exploration areas and advances the project”, Kovarsky said. He said the company has “strong support” from its main investor, Origo Partners, the Beijing headquartered and London listed private equity fund, which owns 28 per cent of the business. Kincora, backed by Origo, is looking for other promising projects and opportunities in Mongolia. “I don’t see a problem raising money at the right market conditions and timing for it. We have strong financial support from Origo and we have a few possible indications from names in Europe and USA who interested to invest in our project,” Said Kovarsky.
However, Kincora isn’t averse to bringing in a partner – a recognised mining group with deeper pockets – but only at the right price. In the meantime Kovarsky and his team will continue to piece the jigsaw together, hoping the picture will look a little like Oyu Tolgoi.
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