IOCG Deposits

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IOCG Deposits Provide a Large-scale, Low-cost Mining 
Opportunity 
Long mine life and simple metallurgy are highly attractive to major mining companies. 
 November 22, 2017 
Iron-oxide-copper-gold (IOCG) deposits rank alongside porphyry 
deposits as some of the world’s largest deposits and most consistent in 
grade, making for highly profitable mines and therefore attractive targets 
for major mining companies. 
However, the adage “once you’ve seen a few porphyries, you’ve seen them all” 
doesn’t apply to IOCG deposits, which can vary greatly in terms of their metal 
content. From mostly iron deposits in Brazil, to predominantly copper deposits 
in Chile, to the copper-uranium deposits found in South Australia, the geology of 
IOCG deposits is widely variable. 
IOCG deposits contain some of the world’s most critically important 
commodities and are a significant source of global copper production. 
Copper market strong 
Copper’s medium- to longer-term fundamentals are strongly supported by 
robust growth in global demand for the metal and looming shortfalls due to labor 
unrest and declining production. 
“We’ve had a multiyear decline in spending on exploration and development of 
the new copper mines, and that just doesn’t turn around overnight,” Vertical 
Research Partners’ Michael Dudas told CNBC. “We could see a multiyear 
period where there could be a tightness in the copper market, which should lead 
to better prices,” he added. 
Large polymetallic deposits found in crustal fault zones 
IOCG deposits represent a broad range of polymetallic orebodies occurring in a 
wide variety of host rocks, but they fall within the category of intrusion-related 
hydrothermal systems. As the name suggests, these deposits can contain 
significant resources of iron, copper and gold; however, some IOCG deposits 
are also known to contain considerable amounts of uranium, cobalt and rare 
earths. Other elements that may be present in these mineralized systems 
include molybdenum, silver and nickel. 
In terms of size, IOCG deposits can range from a few million tonnes of 
contained ore (e.g., Prominent Hill) to upwards of 18 billion tonnes (e.g., 
Carajas). And while grades are typically low — with some exceptions — they 
remain consistent throughout the system unlike skarn-type deposits. 
IOCG orebodies are usually found in Archean- to Proterozoic-aged terrains 
throughout the world, from Nova Scotia to Chile to Australia, often in crustal-
scale fault zones. Geophysics exploration techniques are well suited for 
discovering IOCG deposits. Because these deposits are associated with an 
abundance of magnetite and are typically denser than the host rock, some of 
the most valuable discovery tools are magnetic and gravity surveys. 
Additionally, the varying amounts of sulfides contained in these systems make 
electromagnetic surveys helpful in the detection of buried IOCG deposits. 
Important hot spots: South Australia, Chile 
The world’s largest IOCG deposit is BHP Billiton’s 
(ASX:BHP,NYSE:BHP,LSE:BLT) Olympic Dam, located along the eastern 
margin of the Gawler Craton in South Australia — a global hotspot for such 
deposits. Olympic Dam is best known for being the world’s largest uranium 
resource, but it is also fourth in the world for copper resources and fifth in the 
word for gold resources. In fact, it was the discovery of this deposit that led to 
the initial definition of this type of deposit, previously lumped in with porphyries. 
Also located in South Australia’s Gawler Craton is the Prominent Hill copper-
gold mine, which was bought by OZ Minerals (ASX:OZL) for $1.2 billion. The 
mine produces more than 100,000 tonnes of copper each year at one of the 
highest grades of copper concentrate on the market. 
The company holds another IOCG deposit in the region, the Carrapateena 
copper-gold project, which it purchased for $250 million in 2011. The 
Carrapateena project has an estimated capital cost of $916 million and is slated 
to commence operations by the end of 2019. Once in production, the mine will 
be the second-largest copper mine in South Australia, and is expected to churn 
out 4.25 million tonnes per year with an estimated mine life of 20 years. 
Chile is the top jurisdiction in the world for IOCG deposits. The country’s prolific 
Atacama IOCG Belt is home to the world’s second-largest such deposit, Lundin 
Mining’s (TSX:LUN) Candelaria. After 25 years of mining activity, the low-cost 
mine still has another 25 years of life remaining. Lundin paid Freeport-
McMoRan (NYSE:FCX) $1.8 billion for its 80-percent interest in Candelaria in 
2014. 
“IOCG deposits are attractive to major mining companies for a variety of 
reasons, but primarily it’s their immense size and scale,” says Patrick J. 
Cruickshank, MBA, president and CEO of Chilean 
Metals(TSXV:CMX,OTCQB:CMETF,SSE:CMX,MILA:CMX,FWB:IVV1,BER:IVV
1). “These aren’t narrow veins you’re chasing. They are massive deposits that 
can become super mines. For majors, it’s about the balance sheet and little to 
no risk. Buying up an established IOCG deposit that can range upwards of 1 
billion tonnes of copper when the metal is selling at $7,000 per tonne has huge 
upside.” 
Chilean Metals holds a large portfolio of prospective IOCG projects in the 
Atacama IOCG Belt, including the Zulema property, which is located 30 
kilometers from Lundin’s Candelaria mine. Drilling at Zulema has identified 
IOCG-style mineralization consistent with the known geology of the Candelaria 
system. The company has also partnered with technical advisor Minotaur 
Exploration (ASX:MEP) on further exploration work at Zulema. Minotaur is 
highly experienced with IOCG-type deposits, and discovered the famous 
Prominent Hill IOCG deposit in Australia. 
Santo Domingo, another major Chilean IOCG deposit in this region, was 
developed by Farwest Resources and picked up by Capstone Mining (TSX:CS) 
in 2011 for $700 million. Farwest discovered Santo Domingo under a joint 
venture agreement to explore for IOCG deposits in Northern Chile. A 2014 
feasibility study for the deposit indicates average annual production of 
approximately 110,000 tonnes of copper for the first five years. Over an 
estimated mine life of 18 years, Santo Domingo is expected to produce roughly 
1 million tonnes of copper. 
Emerging IOCG district in Nova Scotia 
Nova Scotia’s Cobequid-Chedabucto Fault Zone, a 250-kilometer-long crustal 
fault structure that cuts through the middle of the province, is showing promise 
as an emerging IOCG district. Minotaur Atlantic Exploration has identified a 
large number of IOCG targets along this fault zone, with multiple high-result 
assay returns of up to 30 percent copper and 20 grams per tonne gold. 
Chilean Metals has a portfolio of four properties along this trend. The 
company’s Bass River North project has the largest VTEM anomaly in Nova 
Scotia, and it has launched its winter pre-drill work program there. Nova Scotia 
is a favorable mining jurisdiction rich in natural resources, and the government 
has initiated a mineral incentive program to assist exploration companies in 
search of new discoveries. 
The takeaway 
The enormous size, polymetallic nature, decades-long mine life and simple 
metallurgy inherent in IOCG deposits facilitates large-scale, low-cost mining — 
highly attractive features to major mining companies. The scale of these 
projects also makes them attractive plays for large investment funds. 
IOCG deposits are the elephants that explorers prefer to hunt. However, the 
huge size of this deposit type, coupled with the multiple ore streams and 
throughput needed, can push the development CAPEX for these projects to 
upwards of $1 billion, a difficult challenge for a junior exploration company. 
Positioning this type of project asa possible acquisition target is the best exit 
strategy. Investors should look for those companies that understand this and 
are putting the majority of their cash into the ground to prove scale and 
economics to attract a major buyer. 
Fonte: investingnews.com