Ivanhoe Mines Issues 2024 First Quarter Financial Results, and Overview of Construction and Exploration Activities

Rhea-AI Summary

Ivanhoe Mines reported a Q1 2024 loss of $69 million but recorded a normalized profit of $70 million with adjusted EBITDA of $126 million. Kamoa-Kakula sold 85,155 tonnes of payable copper, recognized revenue of $618 million, and produced 86,203 tonnes of copper in Q1 2024. The company's annual production guidance for Kamoa-Kakula is maintained at between 440,000 to 490,000 tonnes of copper. Pre-commissioning of Phase 3 concentrator is ahead of schedule. Kamoa-Kakula secured 15 MW of imported grid power and expects an additional 40 MW from Mozambique. Kipushi zinc concentrator pre-commissioning underway, aiming to produce over 270,000 tonnes. Ivanhoe Mines completed 17,000 meters of diamond drilling in the Western Forelands. Company's balance sheet shows $411 million in cash and cash equivalents. Ivanhoe Mines announced the redemption of all its outstanding 2.50% Convertible Senior Notes due 2026.

Positive

• Normalized profit of $70 million in Q1 2024.

• Adjusted EBITDA of $126 million for Q1 2024.

• Kamoa-Kakula sold 85,155 tonnes of payable copper in Q1 2024, recognizing revenue of $618 million.

• Annual production guidance for Kamoa-Kakula maintained at between 440,000 to 490,000 tonnes of copper.

• Pre-commissioning of Phase 3 concentrator underway ahead of schedule.

Negative

• Q1 2024 loss of $69 million reported by Ivanhoe Mines.

• Non-cash loss on convertible bonds due to 26% quarterly share price increase.

• Redemption of all outstanding 2.50% Convertible Senior Notes due 2026, resulting in up to 79.8 million shares to be issued.

• Production at Kamoa-Kakula impacted by instability in the DRC power grid.

• Heavy rainfall during the wet season negatively affected production.

Kamoa-Kakula sold 85,155 tonnes of payable copper during the quarter and recognized revenue of $618 million, as well as EBITDA of $365 million

Ivanhoe Mines recorded Q1 2024 loss of $69 million, primarily as a result of non-cash loss on convertible bonds due to 26% quarterly share price increase; normalized profit of $70 million and adjusted EBITDA of $126 million

Kamoa-Kakula produced 86,203 tonnes of copper in Q1 2024; annual production guidance for Kamoa-Kakula maintained at between 440,000 to 490,000 tonnes of copper

Kamoa-Kakula's quarterly cost of sales total $1.50/lb. of payable copper; C1 cash cost of $1.57/lb. towards the lower end of guidance

Pre-commissioning of Kamoa-Kakula's new 5 million-tonne-per-annum Phase 3 concentrator underway, well ahead of schedule, with first ore imminent

Kamoa-Kakula secures 15 MW of imported grid power to offset DRC grid instability, significantly improving production in April; with a further 40 MW expected from tomorrow, May 1

Pre-commissioning of Kipushi zinc concentrator underway ahead of schedule, with first ore in June; expected to produce over 270,000 tonnes as one of the world's largest zinc mines

Ivanhoe Mines completed approx. 17,000 metres of diamond drilling in the Western Forelands during the quarter, focused on expanding the high-grade Kitoko copper discovery

Johannesburg, South Africa--(Newsfile Corp. - April 30, 2024) - Ivanhoe Mines' (TSX: IVN) (OTCQX: IVPAF) President Marna Cloete and Chief Financial Officer David van Heerden are pleased to present the company's financial results for the three months ended March 31, 2024. Ivanhoe Mines is a leading Canadian mining company that is advancing its four principal mining and exploration projects in Southern Africa: the expansion of the Kamoa-Kakula Copper Complex in the Democratic Republic of Congo (DRC), which is expected to be the third largest copper mine globally; the phased development of the Platreef palladium, nickel, platinum, rhodium, copper and gold project in South Africa, which is the world's largest undeveloped precious metals project and one of the largest nickel sulphide deposits; the restart of the historic Kipushi zinc-copper-lead-germanium mine in the DRC, which is expected to be one of the largest zinc mines globally; and exploration on Ivanhoe's 2,650-square-kilometre Western Foreland exploration project for new sedimentary copper discoveries, as well as expanding and further defining the high-grade Makoko, Kiala, and Kitoko copper discoveries that are adjacent to Kamoa-Kakula. All figures are in U.S. dollars unless otherwise stated.

Ivanhoe Mines Founder and Executive Co-Chairman Robert Friedland commented:

"Kamoa-Kakula continues to excel, generating significant EBITDA at consistent margins and maintaining cash costs at the low end of our 2024 forecast. This was achieved despite grid instability during the quarter that impacted copper production. Our management team has acted swiftly and decisively to resolve this issue, by securing 55 megawatts of imported power from neighboring countries via the Zambian grid, as well as by expanding our on-site backup generation capacity. As a result of this intervention, we have seen a significantly improved start to the second quarter at Kamoa-Kakula.

"Kamoa-Kakula's development milestones are consistently met on budget and ahead of schedule, with the Phase 3 mill and mine expansion completed two quarters earlier than planned. Anticipating first ore in the circuit next month, Phase 3 will boost annual production to over 600,000 tonnes of copper ... solidifying Kamoa-Kakula as one of the world's leading copper producers. With improved power supply and accelerated Phase 3 output, we stand by our annual copper production forecast of between 440,000 to 490,000 tonnes.

"Copper prices have recently reached $10,000 per tonne, signaling an impending supply shortage, which is emphasized by smelter treatment charges for copper concentrate approaching zero in the spot market. Copper producers cannot keep up with the pace of demand for this essential metal, including from advanced technologies such as data centres, which were recently estimated to consume over 2 million tonnes of copper as soon as 2030 … added to which is an unseen explosion in demand from the global military complex.

"Given this backdrop, we are looking to accelerate our growth plans at Kamoa-Kakula to produce even more 'green' copper. We are excited by the upcoming results of our engineering for 'Project 95' - increasing our metallurgical recoveries to significantly increase production. We are also already looking at the possibility of optimizing our Phase 3 plant to increase throughput beyond 5 Mtpa, and potentially bringing forward the Phase 4 concentrator expansion.

"We have the most incredible resource endowment at Kamoa-Kakula, including our high-grade, mechanized underground operations, which are currently producing at around 5% copper head grade, and great potential to expand our underground mining footprint. We are also evaluating in detail the opportunity for world-class open pit mining on the north of our Kamoa-Kakula mining license. This remarkable mining complex has the capability to produce at over 20 Mtpa capacity for decades, chasing down the number one copper producer globally. There is much more to come this year at Kamoa-Kakula, without even mentioning the new deposits we are unearthing in the Western Forelands."

FINANCIAL HIGHLIGHTS

• Ivanhoe Mines' normalized profit for Q1 2024 was $70 million, compared to a normalized profit of $113 million for Q1 2023. Including a $139 million non-cash loss on the $575 million convertible bond fair valuation, Ivanhoe Mines recorded a loss of $69 million for Q1 2024, compared with a profit of $82 million for Q1 2023. The non-cash loss on the convertible bond resulted from a 26% appreciation in the Ivanhoe Mines share price to C$16.16 during the quarter.

• Ivanhoe Mines' Adjusted EBITDA was $126 million for Q1 2024, compared with $172 million for the same period in 2023, which includes an attributable share of EBITDA from Kamoa-Kakula.

• During Q1 2024, Kamoa-Kakula sold 85,155 tonnes of payable copper, recognizing revenue of $618 million, an operating profit of $286 million and quarterly EBITDA of $365 million. The realized copper price for the quarter was $3.82/lb. The current copper price (LME) as of April 29, 2024, is over $10,000/t ($4.54/lb.).

• Kamoa-Kakula's cost of sales per pound (lb.) of payable copper sold was $1.50/lb. for Q1 2024 compared with $1.50/lb. and $1.25/lb. in Q4 2023 and Q1 2023, respectively. Cash cost (C1) per pound of payable copper produced in Q1 2024 totaled $1.57/lb., towards the lower end of the guidance range of $1.50 to 1.70/lb., and compared with $1.53/lb. and $1.42/lb. in Q4 2023 and Q1 2023, respectively.
  
  
• Ivanhoe Mines has a strong balance sheet with cash and cash equivalents of $411 million on hand as at March 31, 2024, and expects Kamoa-Kakula's Phase 1 and Phase 2 cash flow and project-level facilities to be sufficient to fund the Phase 3 expansion capital cost requirements at current copper prices.

• Concurrent with the quarterly results, Ivanhoe Mines announced the redemption of all its outstanding 2.50% Convertible Senior Notes due 2026. The notes will be redeemed on July 11, 2024, at a price equal to 100% of the principal amount of the Notes redeemed plus accrued and unpaid interest. The company will settle any conversions in shares, resulting in up to 79.8 million shares to be issued. Ivanhoe will reduce total debt to below $150 million following redemption of the $575 million convertible notes.

OPERATIONAL HIGHLIGHTS

• Kamoa-Kakula produced 86,203 tonnes of copper in Q1 2024, with annual production guidance maintained at between 440,000 to 490,000 tonnes of copper in concentrate. Production during the quarter was impacted by instability within the DRC power grid.

• Since mid-March, 15 megawatts (MW) of imported power has been supplied to Kamoa-Kakula from the neighboring Zambian grid. The imported power has significantly improved the stability of Kamoa-Kakula's operations, with production in April, a 30-day month, expected to be approximately 32,000 tonnes of copper in concentrate. Kamoa-Kakula also recently signed an agreement to secure an additional 40 MW of imported power sourced from Mozambique from tomorrow, May 1. Mozambique's electrical generation capacity is 77% supplied by hydroelectricity.

• Pre-commissioning of the Kamoa-Kakula Phase 3 concentrator, with a nameplate capacity of 5 million tonnes per annum (Mtpa), is underway. First ore is due to be fed imminently, over six months ahead of the initial schedule. Construction of the direct-to-blister smelter is over 80% complete and on track for the end of 2024.

• Basic engineering on "Project 95" is underway and is expected to be completed in Q2 2024. Ivanhoe's previously announced "Project 95" is an initiative to increase the overall metallurgical copper recovery rate of Kamoa-Kakula's operations from the current nameplate rate of 87% up to approximately 95%.

• Kamoa-Kakula signed a term sheet outlining the key terms for a Reserved Capacity Agreement for the transportation of up to 240,000 tonnes of copper products along the Lobito Corridor from 2025.

• Kamoa-Kakula completed the first 10,000-tonne trial shipment of copper concentrate along the Lobito Corridor, as per the memorandum of understanding (MOU) announced on August 18, 2023. Shipments continue under the second 10,000-tonne trial, as per the term sheet as announced on February 7, 2024.

• At Kipushi, construction of the new concentrator is ahead of schedule with pre-commissioning activities now underway. To date, approximately 260,000 tonnes of ore are stockpiled on surface near the Kipushi concentrator. First feed of ore into the concentrator is expected in June.

• At Platreef, an updated independent feasibility study (FS) on an optimized development plan for Phase 2 is planned to be completed and published in the fourth quarter of 2024. The optimized development plan accelerates the development of Phase 2 at a total processing capacity of 4 Mtpa by equipping Shaft #3 for hoisting.

• In addition, a preliminary economic assessment (PEA) on a Phase 3 expansion is expected to be completed at the same time, increasing Platreef's processing capacity up to approximately 10 Mtpa. Phase 3 is anticipated to rank Platreef as one of the world's largest and lowest-cost platinum-group metal, nickel, copper and gold producers.

• Diamond drilling on the 2,650-square-kilometre Western Foreland exploration project has been focused on Kitoko, Makoko West and Makoko East, with between five and eight drill rigs operating during the quarter. A total of 16,861 metres of diamond core has been drilled in 18 completed holes to date.

• Ivanhoe Mines published its seventh annual Sustainability Report, underscoring the company's ongoing commitment to "mining with a greater purpose" and its pursuit to be a global leader in responsible mining. Please visit www.ivanhoemines.com to view the report.

Watch a Q1 2024 video of operations and construction activities

To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/3396/207374_dbe6c94534ff8abb_002full.jpg

Read Ivanhoe's Seventh Annual Sustainability Report: https://www.ivanhoemines.com/sustainability/

To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/3396/207374_dbe6c94534ff8abb_003full.jpg

Q1 2024 conference call for investors

Ivanhoe Mines will hold an investor conference call to discuss its Q1 2024 financial results at 10:30 a.m. Eastern time / 7:30 a.m. Pacific time on Tuesday, April 30. The conference call will conclude with a question-and-answer (Q&A) session. Media are invited to attend on a listen-only basis.

To view the webcast use the link: https://edge.media-server.com/mmc/p/97jmntfg

Analysts are invited to join by phone for the Q&A using the following link: https://register.vevent.com/register/BIe7bc3992938549e4a3e3a37cbabc4760

An audio webcast recording of the conference call, together with supporting presentation slides, will be available on Ivanhoe Mines' website at www.ivanhoemines.com.

After issuance, the condensed consolidated interim financial statements and Management's Discussion and Analysis will be available at www.ivanhoemines.com and https://www.sedarplus.ca/.

Principal projects and review of activities

1. Kamoa-Kakula Copper Complex
39.6%-owned by Ivanhoe Mines
Democratic Republic of Congo

The Kamoa-Kakula Copper Complex operated as the Kamoa Holding joint venture between Ivanhoe Mines and Zijin Mining, has been independently ranked as the world's third-largest copper deposit by international mining consultant Wood Mackenzie in 2027. The project is approximately 25 kilometres southwest of the town of Kolwezi and about 270 kilometres west of Lubumbashi. Kamoa-Kakula Copper Complex's Phase 1 concentrator began producing copper in May 2021 and achieved commercial production on July 1, 2021. The Phase 2 concentrator, which doubled nameplate production capacity, was commissioned in April 2022.

Ivanhoe sold a 49.5% share interest in Kamoa Holding Limited (Kamoa Holding) to Zijin Mining and a 1% share interest in Kamoa Holding to privately owned Crystal River in December 2015. Kamoa Holding holds an 80% interest in the project. Ivanhoe and Zijin Mining each hold an indirect 39.6% interest in Kamoa-Kakula, Crystal River holds an indirect 0.8% interest, and the DRC government holds a direct 20% interest. Kamoa-Kakula's employee workforce of approximately 5,000 is currently 90% Congolese.

Aerial view of the Kamoa-Kakula Copper Complex, which is now operating at a processing capacity of 9.2 Mtpa, and production capacity of 450,000 tonnes of copper per annum.

To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/3396/207374_dbe6c94534ff8abb_004full.jpg

Kamoa-Kakula summary of operating and financial data

		Q1 2024			Q4 2023			Q3 2023			Q2 2023			Q1 2023
Ore tonnes milled (000's tonnes)		2,061			2,133			2,236			2,244			1,930
Copper ore grade processed (%)		4.80%			4.95%			5.37%			5.21%			5.42%
Copper recovery (%)		87.4%			87.9%			87.2%			87.2%			87.1%
Copper in concentrate produced (tonnes)		86,203			92,215			103,947			103,786			93,603
Payable copper sold (tonnes)		85,155			90,967			96,509			101,526			86,777
Cost of sales per pound ($ per lb.)		1.50			1.50			1.34			1.24			1.25
Cash cost (C1) ($ per lb.)		1.57			1.53			1.46			1.41			1.42
Realized copper price ($ per lb.)		3.82			3.71			3.84			3.79			4.04
Sales revenue before remeasurement ($'000)		612,496			625,983			681,821			729,924			659,529
Remeasurement of contract receivables ($'000)		5,824			(8,365)			13,014			(27,542)			29,594
Sales revenue after remeasurement ($'000)		618,320			617,618			694,835			702,382			689,123
EBITDA ($'000)		364,893			343,899			423,211			456,628			457,311
EBITDA margin (% of sales revenue)		59%			56%			61%			65%			66%

 

All figures in the above tables are on a 100%-project basis. Metal reported in concentrate is before refining losses or deductions associated with smelter terms. This release and the company's MD&A include "EBITDA", "Adjusted EBITDA", "EBITDA margin" and "Cash cost (C1)" which are non-GAAP financial performance measures. For a detailed description of each of the non-GAAP financial performance measures used herein and a detailed reconciliation to the most directly comparable measure under IFRS, please refer to the non-GAAP Financial Performance Measures section in the company's MD&A.

C1 cash cost per pound of payable copper produced can be further broken down as follows ($ per lb.):

		Q1 2024 2024			Q4 2023 2023			Q3 2023 2023			Q2 2023 2023			Q1 2023 2023
Mining		0.44			0.38			0.41			0.39			0.41
Processing		0.23			0.24			0.20			0.19			0.19
Logistics charges (delivered to China)		0.50			0.50			0.46			0.45			0.46
TC, RC, smelter charges		0.25			0.26			0.25			0.25			0.23
General & Administrative		0.15			0.15			0.14			0.13			0.13
Cash cost (C1) per pound of payable copper produced		1.57			1.53			1.46			1.41			1.42

 

Cash cost (C1) is prepared on a basis consistent with the industry standard definitions by Wood Mackenzie cost guidelines but are not measures recognized under IFRS. In calculating the C1 cash cost, the costs are measured on the same basis as the Company's share of profit from the Kamoa Holding joint venture that is contained in the financial statements. C1 cash cost is used by management to evaluate operating performance and include all direct mining, processing, and general and administrative costs. Smelter charges and freight deductions on sales to the final port of destination, which are recognized as a component of sales revenues, are added to C1 cash cost to arrive at an approximate cost of delivered, finished metal. C1 cash cost excludes royalties, production taxes and non-routine charges as they are not direct production costs.

All figures are on a 100% project basis and metal reported in concentrate is before refining losses or deductions associated with smelter terms.

The increase in Kamoa-Kakula's C1 cash cost per pound of payable copper produced in Q1 2024 is principally due to the decrease in copper in concentrate produced during the quarter, but also as a result of the lower grade of copper ore processed in Q1 2024. The grid instability during the quarter not only impacted the ore tonnes milled but also impacted the copper ore grade processed due to reduced underground access to high-grade areas due to water ingress during power interruptions.

Mireille Kahinda Kayakez, underground drilling operator, was born and raised in Kolwezi, DRC, and is one of the many local employees at Kamoa-Kakula.

To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/3396/207374_dbe6c94534ff8abb_005full.jpg

Aerial view of smelter construction site (foreground) and the Phase 1 and 2 concentrators (background). Construction of the smelter is over 80% complete and on target for completion at the end of 2024.

To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/3396/207374_dbe6c94534ff8abb_006full.jpg

Kamoa-Kakula produced 86,203 tonnes of copper in concentrate in Q1 2024

Kamoa-Kakula produced 86,203 tonnes of copper in concentrate in the first quarter of 2024. Annual production guidance for Kamoa-Kakula is maintained at between 440,000 and 490,000 tonnes of copper in concentrate for 2024.

Kamoa-Kakula's Phase 1 and 2 concentrators milled approximately 2.06 million tonnes of ore during the first quarter at an average feed grade of 4.8% copper. Copper flotation recoveries for the quarter averaged 87.4%, above the Phase 1 and 2 concentrator design recovery rate of 86.0%.

A daily milling record was achieved on January 2, 2024, when 31,375 tonnes of ore was processed by the Phase 1 and 2 concentrators over 24 hours. This performance is equivalent to an annual milling rate of 10.5 million tonnes (after accounting for availability).

A quarterly mining record of 2.5 million tonnes of ore was achieved from the Kakula and Kamoa 1 underground mines, as shown in Figure 1. Ore from the Kamoa 1 Mine is stockpiled on surface ahead of the commencement of the adjacent Phase 3 concentrator. The Phase 3 concentrator is tracking ahead of schedule with completion and first feed now expected next month, in May, two full quarters ahead of original schedule. At the end of the quarter, there were 2.05 million tonnes of stockpiled ore for the Phase 3 concentrator, at an average grade of 3.1% copper.

Figure 1. Mined ore per quarter from the Kakula and Kamoa 1 underground mines (million tonnes).

To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/3396/207374_ivanhoefigure007.jpg

First-quarter production, including throughput and head grade, continued to be impacted by the previously reported instability within the DRC's southern power grid. Kamoa Copper continues to work closely with the DRC's state-owned power company, La Société Nationale d'Electricité (SNEL), to deliver solutions for the identified causes of the instability experienced across the southern DRC's grid infrastructure since late 2022. During the first quarter, heavier-than-usual rainfall during the wet season further contributed to grid intermittency. The rainfall led to elevated water levels in the Congo River, causing debris to block the intakes feeding the Inga hydroelectric dam complex. The blockages negatively impacted hydro-generation capacity. The wet season typically occurs between November and April.

Production at the Kamoa-Kakula Copper Complex for the first quarter of 2024 was 86,203 tonnes of copper in concentrate, compared to 92,215 tonnes in Q4 2023 and 93,603 tonnes in Q1 2023. Ore was drawn down as required from surface stockpiles to maximize copper production.

In December 2023, SNEL and Ivanhoe Mines Energy DRC, a subsidiary of Kamoa Holding Limited, signed an amendment to the existing financing agreement to fund the identified infrastructure upgrades. The original 2014 financing agreement consisted of a loan of up to $250 million to fund the refurbishment of 78 MW of generation capacity at the Mwadingusha dam and 178 MW of generation capacity from Turbine #5 at the Inga II dam. Infrastructure investments are underway to enable the transmission of that power over the Inga-Kolwezi connection. The refurbishment of the Mwadingusha facility was completed in September 2021, and the refurbishment of Turbine #5 at Inga II dam is expected to be completed during the first quarter of 2025.

The amendment to the financing agreement increases the loan up to $450 million. As with the existing financing agreement, the $200 million in additional funding by Ivanhoe Mines Energy to SNEL bears interest at the Secured Overnight Financing Rate plus 3% and will be repaid via a 40% discount on the tariff of grid energy consumed by Kamoa-Kakula.

The additional funding is assigned specifically for grid infrastructure upgrades, such as an increase in grid capacity between the Inga II dam and Kolwezi, a new harmonic filter at the Inga Converter Station, as well as a new static compensator at the Kolwezi Converter Station. In addition, various smaller initiatives have been identified to strengthen the transmission capability and improve the long-term stability of the southern grid. This includes the restringing of powerlines in the southern grid, as well as repairs to the direct current (DC) infrastructure. Funding will also be used to install preventative measures to avoid future blockages of the Inga dam intakes. Mobilization of resources is well underway, with project delivery expected to be complete by mid-2025. In addition to this, Ivanhoe Mines Energy is working with SNEL to put in place maintenance contracts to maintain key generation capacity and transmission infrastructure.

55 MW of imported power secured to offset grid stability, with significantly improved production in April; installation of further on-site backup-power generation capacity ongoing

Since mid-March, 15 MW of imported power has been supplied to Kamoa-Kakula from the neighbouring Zambian grid. The imported power has had a significant, positive effect on the stability of Kamoa-Kakula's operations, with production of copper in concentrate for April, a 30-day month, expected to be approximately 32,000 tonnes.

Kamoa-Kakula has recently signed an agreement that secures an additional 40 MW of imported power sourced from Mozambique, from May 1, 2024, supplied via the Zambian interconnector. Mozambique has abundant hydroelectric-generated capacity, the majority of which is exported to South Africa. Subject to availability, it is expected that total imported power will increase up to 100 MW by year-end (see Figure 2).

Figure 2. Kamoa-Kakula's 2024 peak demand and phased rollout of on-site, back-up generation capacity and imported grid power, supplementing existing domestically supplied power by SNEL (MW).

To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/3396/207374_ivanhoefigure008.jpg

Other power-generating projects have been initiated to de-risk the current and future operations over the short to medium term, while the grid infrastructure upgrades are completed.

Kamoa Copper's engineering team is currently expanding its on-site backup generation capacity to ensure there is on-site redundancy for the current Phase 1 and 2 operations, as well as future Phase 3 operations.

On-site backup-power generator capacity is scheduled to increase, via a phased roll-out, to a total of over 200 MW in time for the completion of the direct-to-blister copper smelter in Q4 2024, as shown in Figure 2. The generator farm sites are being built adjacent to the Phase 1 and 2 concentrators, and smelter at Kakula, as well as adjacent to the Phase 3 concentrator at Kamoa.

63 MW of on-site backup generation capacity is currently installed at Kamoa-Kakula and that is expected to increase, ahead of schedule, to a total of 123 MW by the end of the second quarter. Peak on-site power demand from operations is currently approximately 105 MW. The Phase 3 concentrator will add an additional requirement of 45 MW once fully ramped in the third quarter. In addition, the smelter will require a further 75 MW of power once fully ramped up throughout 2025.

Construction of the Phase 3 concentrator plant and associated infrastructure is 94% complete and ahead of schedule for first-feed imminently

Kamoa-Kakula's Phase 3 concentrator is expected to be completed imminently, in May 2024, significantly ahead of the original schedule. The new 5-Mtpa Phase 3 concentrator is located adjacent to the Kamoa underground mines, approximately 10 kilometres north of the Phase 1 and 2 concentrators located above the Kakula underground mine.

Aerial view of Kamoa-Kakula's Phase 3 concentrator, which is tracking two full quarters ahead of schedule for first feed in May 2024.

To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/3396/207374_dbe6c94534ff8abb_017full.jpg

The Phase 3 concentrator is 30% larger in capacity compared with the Phase 1 and 2 concentrators. The process design is very similar, therefore the bulk of the equipment is the same or similar to that installed in the Phase 1 and 2 concentrators, resulting in a commonality of spare parts, while also leveraging prior operational and maintenance experience.

Following the commissioning of the Phase 3 concentrator, Kamoa-Kakula will have a total design processing capacity of 14.2 Mtpa. Phase 3 is expected to increase annualized copper production to over 600,000 tonnes per year over the next ten years, positioning Kamoa-Kakula as the world's third-largest copper mining complex, and the largest copper mine on the African continent. See Figure 3.

Figure 3. World's projected top 10 copper mines in 2027, by key metrics.

To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/3396/207374_dbe6c94534ff8abb_018full.jpg

Note: Kamoa-Kakula production and grade are based on the Kamoa-Kakula 2023 PFS. The 'Cu Head Grade' for the projects benchmarked by Wood Mackenzie reflects the average reserve grade. Source: Wood Mackenzie, 2023 (based on public disclosure, the Kamoa-Kakula 2023 PFS has not been reviewed by Wood Mackenzie).

Kamoa-Kakula's Phase 3 expansion consists of two new underground mines called Kamoa 1 and Kamoa 2, as well as the existing Kansoko Mine. The Kamoa 1 and Kamoa 2 mines share a single box cut with a twin service-and-conveyor decline. Construction of the twin declines to the Kamoa 1 and Kamoa 2 underground mines and excavation to access the Phase 3 mining areas is advancing well for Q2 production.

Once commissioned, copper concentrate produced from the Phase 3 concentrator will be partially sold to generate cash flow, and partially stockpiled in anticipation of the smelter commissioning scheduled for the end of 2024.

Construction of the direct-to-blister copper smelter project is 81% complete and on target for completion by the end of 2024

The Phase 3 expansion also includes the construction of Africa's largest smelter, which will have a capacity of 500,000 tonnes of >99%-pure blister-anode copper per annum. The direct-to-blister flash smelter is being built adjacent to the existing Phase 1 and Phase 2 concentrator plants. The smelter will incorporate leading-edge technology supplied by Metso Finland and will comply with the world-leading International Finance Corporation's (IFC) emissions standards.

The smelter project is 81% complete and on schedule for completion at the end of Q4 2024. Detailed engineering and procurement activities for the smelter are complete. Approximately 23,000 tonnes of the total approximately 26,000 tonnes of structural steel have been delivered to site, with over 14,000 tonnes already installed. Of a total of approximately 73,000 tonnes of equipment and materials, 49,000 tonnes have been delivered to site with an additional 24,000 tonnes en route. The remaining equipment will be delivered in the next three months. Civil construction is nearing completion with structural steel erection and mechanical equipment installation well advanced. In April, a major milestone was achieved with the delivery and installation of the three anode furnaces and steam drier drums, each weighing approximately 200 tonnes. Electrical installation has commenced in all areas. Recruitment and training of the operational team is well advanced and ongoing.

Construction of Kamoa-Kakula's Phase 3 smelter concentrate blending building. The smelter project is on track for completion in Q4 2024.

To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/3396/207374_dbe6c94534ff8abb_019full.jpg

The smelter will have a processing capacity of approximately 1.2 Mtpa of dry concentrate feed and is designed to run on a blend of concentrate produced from the Kakula (Phase 1 and 2) and Kamoa (Phase 3 and future Phase 4) concentrators. As per the Kamoa-Kakula 2023 Integrated Development Plan, the smelter is projected to process approximately 80% of Kamoa-Kakula's total concentrate production. Kamoa-Kakula will also continue to toll-treat concentrates under a 10-year agreement with the Lualaba Copper Smelter (LCS),

FAQ

What was Ivanhoe Mines' normalized profit for Q1 2024?

Ivanhoe Mines reported a normalized profit of $70 million for Q1 2024.

What is Kamoa-Kakula's annual production guidance for copper?

Kamoa-Kakula's annual production guidance is maintained at between 440,000 to 490,000 tonnes of copper.

What is the status of the Phase 3 concentrator at Kamoa-Kakula?

The pre-commissioning of Kamoa-Kakula's Phase 3 concentrator is ahead of schedule.

How much imported grid power did Kamoa-Kakula secure?

Kamoa-Kakula secured 15 MW of imported grid power and expects an additional 40 MW from Mozambique.

What financial event did Ivanhoe Mines announce recently?

Ivanhoe Mines announced the redemption of all its outstanding 2.50% Convertible Senior Notes due 2026.