Ivanhoe Electric in U.S. exploration alliance with BHP

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Ivanhoe Electric Inc. [IE-TSX, NYSE] has announced a definitive exploration alliance agreement with a subsidiary of BHP Billiton Ltd. [BHP-NYSE]. The aim is to explore areas of interest in the U.S. to identify projects that may become 50/50%-owned joint ventures.

The original six areas of interest are located in Arizona, New Mexico and Utah, covering 3,655 square kilometres.  The alliance is for three years. During that time, BHP will provide initial funding of $15 million, with additional funding being provided on a 50/50 basis.

Ivanhoe Electric will, in turn, provide access to its Typhoon geophysical survey systems and CGI data inversions. Ivanhoe Electric will be the operator during the project generation phase, while operatorship of any project will be mutually agreed upon in the future.

Ivanhoe Electric is headed by billionaire mining magnate Robert Friedland. His previous endeavours include nickel discoveries in the Voisey’s Bay area of Newfoundland and Labrador and more recently copper mining operations in Mongolia and the Democratic Republic of Congo (DRC). The DRC assets are held by Ivanhoe Mines Ltd. [IVN-TSX, IVPAF-OTC].

Friedland is Executive Chairman of Ivanhoe Electric, which is led by President and CEO Taylor Melvin.

The company has said it is aiming to develop mineral deposits in the U.S. in order to support American supply chain independence and to deliver critical metals needed for electrification of the economy.

Ivanhoe was in the news recently when it announced the completion of an initial assessment (IA) for the Santa Cruz project in Arizona.

“Our goal is to develop a modern copper mine that produces copper with among the lowest levels of carbon dioxide output in the industry, a product we think has the potential to attract a premium price in the future,’’ the company has said.

The IA is a preliminary technical and economic study focusing on the potential for a high grade 15,000 tonne-per-day underground oxide copper mining operation (to be largely powered by renewable energy).

The IA envisions an underground operation producing 50,000 tonnes per year of cathode copper over a 20-year initial mine life based on a life-of-mine average grade of 1.58% copper and a cash cost of US$1.36 a pound.

The initial capital expenditure is estimated at US$1.15 billion followed by a life of mine sustaining capital expenditure of 988 million.

Ivanhoe sees potential for future growth with additional resources from the Texaco Deposit (not included in the IA) and the deeper sulfide resources at Santa Cruz.

Santa Cruz is one of the company’s two flagship properties. The other is the Tintic Copper-Gold project in Utah. Ivanhoe recently began drilling at the historic Tintic copper-gold district after more than five years of property acquisition, digitization of old mine records and meticulous geologic mapping.

Ivanhoe Electric shares advanced on the news, rising 1.7% or 26 cents to $15.41. and currently trade in a 52-week range of $22.30 and $9.89.

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