Ivanhoe Australia has completed the acquisition of the Osborne Mine from Barrick Australia; a major milestone for the company in the scheduled production of molybdenum and rhenium from the Merlin Mine, now under construction in the Cloncurry district in north-west Queensland.

The acquisition was finalised in accordance with the terms and conditions announced on May 25, 2010.

“The acquisition of the Osborne Copper Gold Operation has fundamentally altered Ivanhoe Australia’s development path and will allow us to become a significant base metal producer much earlier than we originally expected,” said Peter Reeve, Ivanhoe Australia managing director.

“It is particularly pleasing that a substantial number of previous Osborne employees have chosen to stay with Ivanhoe Australia and assist the company in taking the strategic step of processing our Merlin resources through Osborne’s established, high-quality facilities.

"Opportunities to employ even more former Osborne staff will increase during the move to production during the next year,” he said.

Since the Osborne acquisition was announced by Ivanhoe Australia a significant level of activity relating to the Osborne integration and Merlin production has been underway.

The main elements of this work to date are as follows:

Construction is currently underway at the Merlin decline, with excavation of the box cut and the concreting of the box-cut face. The portal is expected to be completed in about six weeks, followed by the beginning of the actual decline.

Mining of Little Wizard ore is expected in the fourth quarter of 2011.

The Merlin-to-Osborne haul road - the road linking the Merlin Deposit with the Osborne Mine - has now been cleared and permitted. A number of tender parties have been pre-qualified to enable construction of the road to start by the end of November 2011. The 53km road will track on the west side of the Starra Line. It will have a 10m-wide, compacted gravel base topped with an eight-metre-wide asphalt roadway built to handle haul loads of up 200 tonnes.

Drilling is expected to begin on the Houdini Prospect at the project within a week. Houdini returned significant mineralisation from previous exploration over a 500m-long conductivity anomaly. Mineralisation appears to be chalcocite hosted within a sheared amphibolite which is consistent along the full 500m of identified mineralisation.

Work on competitive tendering for the sale of the take-or-pay natural gas volume for the Osborne power station began immediately following the Osborne acquisition and has, to date, resulted in a sale of about $4 million worth of gas through to the first quarter of 2012.

This important transaction is an unbudgeted saving, since the Osborne acquisition costing assumed no sale of unused gas.

A comprehensive study into the viability of various sources of copper and gold ore on the Starra Line and at Osborne began four weeks ago. The study will focus on the potential production rate for near-term mining opportunities and the capital and operating costs that would be required to process ore through the Osborne facilities.

A comprehensive drilling program based on new geophysical studies of the mineral systems has commenced on the Starra Line, with drilling on 222 underway and drilling on 276 ready to commence.  The drilling is targeting copper-gold mineralisation for processing through the Osborne mill. Initial drilling results are expected over the coming two to three weeks.

Drilling has commenced, or is planned, on a number of prospects on the combined Cloncurry-Osborne operations, currently utilising a total of five drill rigs. It is planned for a total of eight rigs to be operating in peak drilling periods.

Good progress is continuing to be made on the Merlin pre-feasibility study, with release of a completed study expected in November 2011.

Ivanhoe Australia recently hosted the bi-annual Ivanhoe Group Global Exploration Conference at the Osborne minesite. The conference which focused on the broad exploration activities of the group was attended by Ivanhoe Australia staff, Ivanhoe geologists from around the world, and Robert Friedland, John Macken and Professor Ian Plimer representing the Ivanhoe Australia Board.

A key initiative of the conference was the creation of an Ivanhoe Centre of Excellence in Geophysics lead by Barry de Wet who was previously the head geophysicist for BHP Billiton.

This significant initiative will ensure the development and
application of cutting-edge geophysics consistently across the Ivanhoe Group.

Significant inroads using these new geophysical techniques have already been applied at Ivanhoe Australia’s Starra Line projects where drilling is currently underway.