Ivanhoe Mines‘ President Marna Cloete and Chief Financial Officer David van Heerden are pleased to present the company’s financial results for the three and nine months ended September 30, 2023. Ivanhoe Mines is a leading Canadian mining company developing and operating its four principal mining and exploration projects in Southern Africa: expanding operations at the world-class Kamoa-Kakula Copper Complex (Kamoa-Kakula) in the Democratic Republic of Congo (DRC); building the tier-one Platreef palladium, nickel, platinum, rhodium, copper and gold development in South Africa; restarting the historic, ultra-high-grade Kipushi zinc-copper-lead-germanium mine in the DRC; as well as exploring the expansive exploration licences of Ivanhoe’s Western Foreland for copper discoveries adjacent to Kamoa-Kakula. All figures are in U.S. dollars unless otherwise stated.
Ivanhoe Founder and Executive Co-Chairman Robert Friedland commented:
“Kamoa-Kakula continues its industry-leading development and operating performance with copper production and costs remaining solidly within our annual guidance ranges… an increasing rarity in our business, where many of our peers are being plagued by cost over-runs and production shortfalls. With the Phase 3 concentrator expansion now well ahead of schedule, our teams are striving to further expedite copper production ramp-up into the second half of 2024, en route to becoming the world’s third-largest, lowest-carbon emitting copper complex by 2027.
“And this is only the beginning for a copper district with a multi-generational lifespan that will benefit the Congolese people, our partners, and our shareholders for many decades to come. We are particularly excited to provide, very soon, updates on our extensive exploration activities across Ivanhoe’s district-scale Western Foreland Exploration Project surrounding our 400-square-kilometre Kamoa-Kakula mining licenses. The Western Forelands, soon to be serviced by the new Lobito railway corridor, is without a doubt the best copper hunting ground on our planet. As we will soon demonstrate, there are vast opportunities to further expand high-grade, ultra-low-emissions copper production across this tier-one copper-mineralized basin, endowed with the world’s best copper deposits.
“Finally, our track record of operational excellence is continuing with the successful development of the Kipushi zinc-copper-silver mine, which is well ahead of schedule. Kipushi will also be powered by the Congo’s green hydropower grid. With the Platreef PGM-nickel-copper mine in South Africa also on track for production next year, Ivanhoe Mines has two additional world-class ore bodies spanning many critical strategic minerals, including zinc, platinum, palladium, nickel, rhodium, copper, and potentially gallium and germanium.”
Financial Highlights
- Ivanhoe Mines recorded a profit of US$108 million for Q3 2023, which includes a US$12 million non-cash gain on the US$575 million convertible bond fair valuation, compared with a profit of US$87 million for Q2 2023. The profit in the quarter includes Ivanhoe Mines’ share of profit and finance income from the Kamoa-Kakula joint venture of US$121 million for Q3 2023.
- Kamoa-Kakula sold 96,509 tonnes of payable copper during Q3 2023, recognizing revenue of US$695 million, an operating profit of US$373 million and quarterly EBITDA of US$423 million.
- Copper in concentrate held in inventory at Kamoa-Kakula at quarter end increased to more than 3,000 tonnes. In addition, approximately 48,000 dry metric tonnes of concentrate were sent for tolling at the local smelter in Q3, with copper in work in progress at the end of the quarter exceeding 7,000 tonnes. Excess inventory is expected to be sold in the fourth quarter.
- Kamoa-Kakula’s cost of sales per pound (lb.) of payable copper sold was US$1.34/lb. for Q3 2023 compared with US$1.24 and US$1.05 in Q2 2023 and Q3 2022, respectively. Cash costs (C1) per pound of payable copper produced during the quarter totaled US$1.46/lb., compared to US$1.41/lb. and US$1.43/lb. in Q2 2023 and Q3 2022, respectively.
- Ivanhoe Mines Adjusted EBITDA was US$152 million for Q3 2023, compared with US$85 million for the same period in 2022, and US$172 million for Q2 2023, which includes an attributable share of EBITDA from Kamoa-Kakula.
- Since entering Phase 1 commercial production on July 1, 2021, the Kamoa-Kakula joint venture has generated US$2.14 billion of net cash from operating activities, which has funded both the Phase 2 and Phase 3 expansions to date.
- Ivanhoe Mines has a strong balance sheet with cash and cash equivalents of US$303 million on hand as at September 30, 2023. The company expects Kamoa-Kakula’s Phase 1 and Phase 2 cash flow, together with additional local financing facilities that are advancing well, to be sufficient to fund the Phase 3 expansion capital cost requirements at current copper prices.
- Kamoa-Kakula’s full-year cash cost (C1) guidance is unchanged at US$1.40 – US$1.50 per pound and full-year production guidance is also maintained at 390,000 to 430,000 tonnes of copper in concentrate.
Operational Highlights
- Record quarterly production of 103,947 tonnes of copper in concentrate was achieved at Kamoa-Kakula for Q3 2023, compared to 103,786 tonnes in Q2 2023 and 97,820 tonnes in Q3 2022.
- Over the first nine months of 2023, Kamoa-Kakula has produced a total of 301,336 tonnes of copper in concentrate, placing it well on track to deliver annual production guidance of between 390,000 – 430,000 tonnes of copper.
- Kamoa-Kakula’s Phase 1 and 2 concentrators milled a record 2.24 million tonnes of ore during the third quarter at an average feed grade of 5.37% copper. This included high-grade, run-of-mine ore from the Kakula Mine, supplemented with ore from the surface stockpiles to achieve throughput higher than original design capacity.
- Kamoa-Kakula’s Phase 3 mine and concentrator expansion, 500,000-tonne-per-annum on-site, direct-to-blister copper smelter and the refurbishment of Turbine #5 at the Inga II hydroelectric facility are advancing on schedule for completion in late 2024.
- Kamoa-Kakula completed highly promising preliminary testwork to further improve copper recoveries at Kamoa-Kakula by liberating copper from the tailings stream. Initial results indicate that with a tailings feed grade of less than 1% copper, approximately 65% of the contained copper can be recovered from the tailings stream, which could increase overall metallurgical recoveries to well over 90%. Basic engineering for the tailings-stream recovery plant is underway and is expected to be complete in Q1 2024.
- Kamoa Copper S.A. signed a memorandum of understanding (MOU) with Lobito Atlantic International SARL, the consortium awarded the concession for the Lobito Atlantic Rail Corridor. A trial shipment of up to 10,000 tonnes of copper concentrate from Kamoa-Kakula to the port of Lobito, Angola is planned for Q4 2023. Making the Kamoa-Kakula joint venture the first customer for the Lobito Corridor in the modern era.
- Ivanhoe is expanding its copper exploration program on its Western Foreland licences, which covers approximately 2,407 square kilometres adjacent to Kamoa-Kakula. Significant drilling has taken place year-to-date, with over 37,500 metres completed, including several new targets identified. An additional US$2 million has been added to the remaining budget for 2023 to further advance new targets.
- Ivanhoe is planning to publish a maiden Mineral Resource estimate for its Makoko and Kiala high-grade copper discoveries in the Western Foreland shortly, as well as an update on more recent drill developments across the 2,407-square-kilometre land package.
- At Platreef, optimization work is underway to identify value-accretive options for installing hoisting capacity in Shaft 3 (previously named Vent Shaft 1), which has the benefit of de-risking the development and ramp-up of the Phase 1 mine and may be used to accelerate the ramp-up of underground mining activities for Phase 2 in advance of the completion of Shaft 2 – expected in 2027.
- Platreef underground development work is focused on lateral development towards the high-grade Flatreef orebody on the 750-metre, 850-metre and 950-metre levels. Once the commissioning of underground crusher and loader has been completed, underground development rate is expected to increase to approximately 400 metres per month by year-end.
- Drilling of the pilot drill hole for the reaming of Platreef’s Shaft 2, which commenced in February 2023, has reached the shaft bottom. Reaming from the 950-metre level is now underway with 38 metres completed. Shaft 2 raisebore reaming is expected to be complete in Q2 2024.
- Platreef’s Phase 1 is approximately 63% complete and on schedule for first production in Q3 2024, with all major civil structures nearing completion and the fabrication of the long-lead order mechanical equipment items progressing as planned.
- At Kipushi, construction of the 800,000 tonnes-per-annum concentrator is approximately 67% complete and ahead of schedule for commissioning in Q2 2024.
- Kipushi’s underground development continues to progress at approximately 20% ahead of schedule, with 2,744 metres of lateral development completed since September 2022. The underground development rate is expected to increase by 50%to approximately 450 metres per month by year-end.
- Stoping (mining) of Kipushi’s ultra-high-grade Big Zinc orebody is expected to commence this month. Stoping will start on a trail mining basis to complete the training of the underground mining crews in preparation for the commencement of commercial operations in the new year.
