Ivanhoe Mines Issues Third Quarter 2023 Financial Results, and Review of Construction and Exploration Activities
- Kamoa-Kakula sold 96,509 tonnes of payable copper in Q3 2023, recognizing revenue of $695 million and EBITDA of $423 million.
- Ivanhoe Mines recorded a profit of $108 million in Q3 2023, driven by income from the Kamoa-Kakula joint venture of $121 million.
- The Phase 3 concentrator project is 62% complete and ahead of schedule for production in Q3 2024.
- Kamoa-Kakula achieved a quarterly production record of 103,947 tonnes of copper in concentrate in Q3 2023.
- Kipushi concentrator is ahead of schedule for first production in Q2 2024, with the overall project approximately 62% complete.
- Maiden resource estimates for Makoko and Kiala discoveries, and Western Foreland exploration updates, expected shortly.
- None.
Kamoa-Kakula Copper Complex sold 96,509 tonnes of payable copper in Q3 2023, recognized quarterly revenue of
Ivanhoe Mines adjusted EBITDA of
Ivanhoe Mines recorded a quarterly profit of
Kamoa-Kakula's quarterly cost of sales total
Kamoa-Kakula year-to-date production of 301,336 tonnes and C1 cash cost of
Phase 3 concentrator project is
Quarterly production record achieved despite intermittent grid instability; phased roll-out of backup power and grid improvements advanced
Kipushi concentrator ahead of schedule for first production in Q2 2024, with the overall project approximately
Maiden resource on Makoko and Kiala discoveries, and Western Foreland exploration updates, expected shortly
Johannesburg, South Africa--(Newsfile Corp. - November 6, 2023) - 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 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.
Watch an November 2023 video highlighting Ivanhoe Mines' construction and exploration activities: https://vimeo.com/881367280/2c1e2c4872
https://vimeo.com/881367280/2c1e2c4872
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
$108 million for Q3 2023, which includes a$12 million non-cash gain on the$575 million convertible bond fair valuation, compared with a profit of$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$121 million for Q3 2023.Kamoa-Kakula sold 96,509 tonnes of payable copper during Q3 2023, recognizing revenue of
$695 million , an operating profit of$373 million and quarterly EBITDA of$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
$1.34 /lb. for Q3 2023 compared with$1.24 and$1.05 in Q2 2023 and Q3 2022, respectively. Cash costs (C1) per pound of payable copper produced during the quarter totaled$1.46 /lb., compared to$1.41 /lb. and$1.43 /lb. in Q2 2023 and Q3 2022, respectively.
- Ivanhoe Mines Adjusted EBITDA was
$152 million for Q3 2023, compared with$85 million for the same period in 2022, and$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
$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
$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
$1.40 -$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, approximately65% of the contained copper can be recovered from the tailings stream, which could increase overall metallurgical recoveries to well over90% . 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
$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 by50% 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.
The first group of 96 employees at Kamoa-Kakula's smelter complex were received at the Kansoko Training Centre for induction. Construction of the 500,000-tonne-per-annum smelter is on track for completion in Q4 2024.
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Conference call for investors on Monday, November 6, 2023
Ivanhoe Mines will hold an investor conference call to discuss its 2023 third-quarter financial results at 3:30 p.m. London time / 10:30 a.m. Eastern time / 7:30 a.m. Pacific time on Monday, November 6. 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/u8g4fpa4
Analysts are invited to join by phone for the Q&A using the following link: https://register.vevent.com/register/BI2f4b12f6a4054637be40addfc4467dad
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 Financial Statements and Management's Discussion and Analysis will be available at www.ivanhoemines.com and www.sedarplus.ca.
Read Ivanhoe's Q3 2023 Sustainability Update: https://www.ivanhoemines.com/wp-content/uploads/Sustainability_review_Q3_2023_Final.pdf
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DRC President, His Excellency Félix Tshisekedi, alongside Ivanhoe Mines' President Marna Cloete, cuts the ribbon to mark the formal opening of the newly constructed Kamoa Centre of Excellence in October 2023. Following the opening ceremony, the President met with the inaugural class, which was enrolled in September.
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Principal projects and review of activities
1. Kamoa-Kakula Copper Complex
Democratic Republic of Congo
| Q3 2023 | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | |
| Ore tonnes milled (000's tonnes) | 2,236 | 2,244 | 1,930 | 2,006 | 2,082 |
| Copper ore grade processed (%) | |||||
| Copper recovery (%) | |||||
| Copper in concentrate produced (tonnes) | 103,947 | 103,786 | 93,603 | 92,761 | 97,820 |
| Payable copper sold (tonnes) | 96,509 | 101,526 | 86,777 | 92,208 | 93,812 |
| Cost of sales per pound ($ per lb.) | 1.34 | 1.24 | 1.25 | 1.08 | 1.05 |
| Cash cost (C1) ($ per lb.) | 1.46 | 1.41 | 1.42 | 1.42 | 1.43 |
| Realized copper price ($ per lb.) | 3.84 | 3.79 | 4.04 | 3.54 | 3.50 |
| Sales revenue before remeasurement ($'000) | 681,821 | 729,924 | 659,529 | 619,997 | 570,504 |
| Remeasurement of contract receivables ($'000) | 13,014 | (27,542) | 29,594 | 53,473 | (110,031) |
| Sales revenue after remeasurement ($'000) | 694,835 | 702,382 | 689,123 | 673,470 | 460,473 |
| EBITDA ($'000)(1) | 423,211 | 456,628 | 457,311 | 452,089 | 251,086 |
| EBITDA margin (% of sales revenue) |
All figures in the above tables are on a
(1) Unrealized foreign exchange losses have been excluded from EBITDA in the current and prior periods presented, as the company believes that including the unrealized foreign exchange gains and losses does not give a valuable indication of the mine's ability to generate liquidity by producing operating cash flow to fund its working capital needs, service debt obligations, fund capital expenditures and distribute cash to its shareholders.
(2) Previously disclosed as
The Kamoa-Kakula Copper Complex is approximately 25 kilometres southwest of the town of Kolwezi and about 270 kilometres west of Lubumbashi in the DRC Copperbelt. Kamoa-Kakula'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. Kamoa-Kakula is independently ranked by international mining consultant Wood Mackenzie to become the world's third-largest copper mining operation in 2027, following the completion of the ongoing Phase 3 expansion. Kamoa-Kakula's employee workforce is currently
The Kamoa-Kakula Copper Complex is operated as the Kamoa Holding joint venture between Ivanhoe Mines and Zijin Mining. Ivanhoe sold a
Kamoa-Kakula summary of operating and financial data
C1 cash cost per pound of payable copper produced can be further broken down as follows:
| Q3 2023 | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | ||
| Mining | ($ per lb.) | 0.41 | 0.39 | 0.41 | 0.40 | 0.41 |
| Processing | ($ per lb.) | 0.20 | 0.19 | 0.19 | 0.16 | 0.12 |
| Logistics charges (delivered to China) | ($ per lb.) | 0.46 | 0.45 | 0.46 | 0.50 | 0.56 |
| Treatment, refining and smelter charges | ($ per lb.) | 0.25 | 0.25 | 0.23 | 0.23 | 0.21 |
| General and administrative expenditure | ($ per lb.) | 0.14 | 0.13 | 0.13 | 0.13 | 0.13 |
| C1 cash cost per pound of payable copper produced | ($ per lb.) | 1.46 | 1.41 | 1.42 | 1.42 | 1.43 |
C1 cash costs are 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 costs are 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 costs exclude royalties, production taxes and non-routine charges as they are not direct production costs.
All figures are on a
Construction of Kamoa-Kakula's Phase 3 concentrator project is
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Kamoa-Kakula produced a record 103,947 tonnes of copper in Q3 2023
Kamoa-Kakula's Phase 1 and 2 concentrators have consistently operated at a steady-state throughput rate of 9.2 million tonnes per annum (Mtpa) following the ahead-of-schedule completion of the debottlenecking program during the first quarter of 2023 and have regularly surpassed this throughput rate during the second and third quarter. The
The Kamoa-Kakula Phase 1 and Phase 2 concentrators continued to perform strongly in the third quarter, breaking several records including the quarterly production of 103,947 tonnes of copper in concentrate. 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
While the ongoing expansion of underground infrastructure at the Kakula mine continues, ore is drawn down as required from surface stockpiles to maximize copper production.
Kamoa-Kakula's year-to-date production is 301,336 tonnes of copper in concentrate, which includes the ramp-up following the completion of the debottlenecking program in February 2023. The 2023 annual production guidance for Kamoa-Kakula is maintained at between 390,000 to 430,000 tonnes of copper in concentrate.
For July, Kamoa-Kakula's Phase 1 and 2 concentrators milled 0.6 million tonnes of ore at an average feed grade of
The quarterly production record at Kamoa-Kakula was achieved despite continued intermittent grid instability.
Since late Q4 2022, Kamoa Copper has been working alongside DRC's state-owned power company, La Société Nationale d'Electricité (SNEL), to identify the causes of instability across the southern DRC's grid infrastructure to assist with delivering long-lasting solutions. Kamoa Copper has identified a series of upgrades and has outlined a project plan to deliver the improvements. Mobilization of resources is underway, with vendor selection and equipment procurement having commenced.
Concurrently, Kamoa Copper's engineering team are working towards insulating Kamoa-Kakula from future instability by expanding on-site backup generation capacity, as well as sourcing additional power imported from the Zambian grid, with negotiations nearing completion for initial provision of 30 MW.
Over the next 12-18 months, on-site backup-power generation capacity will increase via a phased rollout. The current installed on-site backup-power generation capacity is approximately 48 megawatts (MW). Delivery of a further 30 MW in backup generation capacity, sufficient to power Kamoa-Kakula's entire Phase 1 and 2 operations in the event of grid disruptions, will commence later this year and be fully commissioned in the first quarter of 2024. Over 130 MW of further backup generation capacity has been ordered and is expected to be installed in 2024, in time for the completion of the Phase 3 concentrator and smelter that are currently under construction.
Discussions are advancing to secure up to 100 MW of additional power via the Zambian grid interconnector.
Draw-down of surface ore stockpiles at Kakula continues as required. While the ongoing expansion of underground infrastructure at the Kakula mine takes place, ore will be drawn as required from the stockpile to maximize copper production.
Kamoa-Kakula's high- and medium-grade ore surface stockpiles totaled approximately 4.1 million tonnes at an estimated grade of
The 2023 Kipaji group kicked off their "High Flyer Management Development Program" in late October. Kamoa's Kipaji program offers courses that focus on leadership.
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Construction of the Phase 3 concentrator plant and associated infrastructure advancing ahead of schedule
Kamoa-Kakula's ongoing Phase 3 concentrator expansion now is expected to be commissioned in Q3 2024 and includes a new 5-Mtpa plant at Kamoa, which is approximately 10 kilometres north of the Phase 1 and 2 concentrators.
The process design of the Phase 3 concentrator is very similar to that of the Phase 1 and 2 concentrators, but
Following the commissioning of Phase 3, Kamoa-Kakula will have a total design processing capacity of 14.2 Mtpa. The completion of Phase 3 is expected to increase annualized copper production to an average of approximately 620,000 tonnes per year over the next ten years, which will position Kamoa Copper as the world's third-largest copper mining complex in 2027, and the largest copper mine on the African continent. See Figure 1.
Figure 1: World's projected top 10 copper mines in 2027, by key metrics.
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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, consisting of two new underground mines known as Kamoa 1 and Kamoa 2 and a new 5-Mtpa concentrator plant, is well on track for first production in the fourth quarter of 2024. 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. The Kamoa 1 and Kamoa 2 mines share a single box cut with a twin service-and-conveyor decline.
The main access tunnels (drives) between the Kamoa 1 and Kansoko declines for the Phase 3 development now are connected (holed) in the centre of the deposit, a major achievement and milestone for the project team and the underground mining crews as it opens the mine's footprint for ventilation and marks entry into higher-grade ore from both sides of the deposit.
Construction crews lift the first shell section of the secondary ball mill into place at Kamoa-Kakula's Phase 3 concentrator site.
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Construction of the concentrate thickener is progressing well at Kamoa-Kakula's Phase 3 concentrator site. The process design of the Phase 3 concentrator is very similar to that of the Phase 1 and 2 concentrators, but
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Phase 3 concentrator project
As at October 30, overall project progress of the Phase 3 concentrator is now approximately
Detailed engineering design and procurement activities are essentially complete, with fabrication activities well advanced. The rate of equipment deliveries to site is steadily increasing. A total of 1,980 truck deliveries have already arrived and been offloaded, with a further 274 en-route to site.
Civil works are now effectively complete, with nearly 30,000 cubic metres of concrete poured to date. The steel, mechanical, piping and plate work (SMPP) contract was awarded during the second quarter, and delivery of structural steel commenced. Over 6,300 tonnes of the required 7,400 tonnes of structural steel and plate work have been shipped to site.
The last lot of the 1,830-tonne primary and secondary ball mill equipment package from CITIC Heavy Industries of Henan province, China, has arrived at site except for the secondary mill feed chute, which is expected in the fourth quarter.
Installation of the first of the two ball mills has commenced at the Phase 3 concentrator site, with flotation cell installation also underway. The first lots of cone crushers, flotation cells, vibrating screens, concentrate filters, cyclone cluster, compressor and pump mechanical equipment packages are now on site or expected to be delivered to site imminently.
Smelter project is
The Phase 3 expansion also includes the integration of Africa's largest direct-to-blister flash smelter, which will have a capacity of 500,000 tonnes of 99+%-pure blister copper anodes per annum. The onsite 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 Outotec of Espoo, Finland and will meet the world-leading International Finance Corporation's (IFC) emissions standards.
Detailed engineering and procurement activities for the smelter are nearing completion. More than 11,000 tonnes of the total 25,000 tonnes of structural steel have been delivered to site and structural steel erection is well underway. Overall mechanical and electrical equipment fabrication is
Civil construction is nearing completion with structural steel erection and mechanical equipment installation well underway. Approximately 2,000 construction workers are now working at the smelter site, and the workforce is expected to peak at 3,000 in February 2024.
Kamoa-Kakula's Phase 3 expansion includes the refurbishment of Turbine #5 at the Inga II hydroelectric power station. The turbine will supply an additional 178 MW of clean hydroelectric power to the national grid, which is sufficient to meet the power requirements of the Phase 3 concentrator, and the flash smelter. Study work is also progressing well to upgrade the transmission capacity of the existing grid infrastructure between the Inga II hydropower facility and the Kamoa site. The
Construction of Kamoa-Kakula's Phase 3 direct-to-blister smelter furnace is progressing on schedule for completion in Q4 2024. It will be Africa's largest copper smelter.
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The foundations and civil construction for the Phase 3 smelter's high-strength sulphuric acid storage tanks are now complete. As a by-product, the smelter will produce between 650,000 to 800,000 tonnes per year of high-strength sulphuric acid, which is planned to be sold domestically.
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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 planned Phase 4) concentrators. Under the Kamoa-Kakula 2023 Integrated Development Plan, the smelter is projected to accommodate approximately
As a by-product, the smelter will also produce in the region of 650,000 to 800,000 tonnes per year of high-strength sulphuric acid. There is a strong demand for sulphuric acid in the DRC, as it is used to leach copper from oxide ores through the SX-EW (solvent extraction and electrowinning) process. The DRC market consumed approximately 6 million tonnes of acid in 2022. The vast majority of the consumed high-strength sulphuric acid is imported by regional consumers in the form of sulphur and burned in domestic acid plants.
The on-site smelter will offer transformative financial benefits for the Kamoa-Kakula Copper Complex, most notable being a material reduction in logistics costs, and to a lesser extent reduced concentrate treatment charges and local taxes, as well as revenue from acid sales. Logistics costs accounted for
Phase 3 direct-to-blister flash copper smelter will be one of the world's largest copper smelters and also one of the greenest
According to the assessment completed by Skarn Associates and WSP Group, the smelter will have one of the world's lowest Scope 1 and 2 GHG emission intensities. As shown in Figure 2, the smelter is estimated to produce 0.36 CO2-e / t Cu. Out of the approximately 100 copper smelters analyzed globally, the smelter is estimated to rank fourth lowest in terms of GHG emissions.
Figure 2. 2021 Scope 1 & 2 global copper smelter GHG emissions intensity curve, highlighting Kamoa-Kakula smelter and the world's top 10 largest copper smelters.
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Notes: Kamoa-Kakula and industry peer Scope 1 and 2 GHG emissions data are estimates by Skarn Associates. Estimates include all direct and indirect emissions to produce copper blister-anode at the smelter gate. The horizontal width of each bar represents each smelter's 2021 copper production. In 2026, the Kamoa-Kakula Smelter is estimated to produce 500,000 tonnes of copper blister-anode, emitting an estimated 179,389 equivalent tonnes of CO2, thereby producing 0.36 equivalent tonnes of CO2 per tonne of copper produced. Chart sources: Skarn Associates, WSP Group and Ivanhoe Mines.
Smelter investment will reduce Kamoa-Kakula carbon emissions per unit of refined copper (Scope 1, 2 and 3) by an additional
Based on Scope 1, 2 and 3 (partial) emissions, including downstream emissions beyond the mine gate to produce LME-grade refined metal, Skarn Associates and WSP Group estimate that Kamoa-Kakula's GHG emissions-intensity in 2022 was 2.42 CO2-e / t Cu. Following the completion of the Phase 3 expansion and the smelter, the emissions intensity of Kamoa-Kakula on a Scope 1, 2 and 3 basis is estimated to almost halve to 1.31 CO2-e / t Cu. Industry peer data compiled by Skarn Associates ranks Kamoa-Kakula Copper Complex comfortably within the bottom decile of the GHG emissions intensities on a Scope 1, 2 and 3 basis as shown in Figure 3.
Figure 3. 2022 Scope 1, 2 & 3 copper GHG emissions intensity curve, highlighting Kamoa-Kakula and top 10 largest copper mining operations. Following the completion of the on-site smelter, as part of the Phase 3 expansion, the GHG emissions intensity is expected to almost halve.
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Notes: Kamoa-Kakula and industry peer Scope 1, 2 and 3 GHG emissions data are estimates by Skarn Associates. Estimates include emissions to produce refined LME-grade copper, from ore to the refinery gate. The emissions estimates for Scope 3 include Category 9, downstream transportation and distribution, and Category 10, processing of sold products. The horizontal width of each bar represents each operation's 2022 copper production. In 2022, Kamoa-Kakula produced 333,497 tonnes of copper, emitting an estimated 791,939 equivalent tonnes of CO2, thereby producing 2.42 equivalent tonnes of CO2 per tonne of copper produced. In 2026, Kamoa-Kakula is estimated to produce 632,000 tonnes of copper, emitting an estimated 830,894 equivalent tonnes of CO2, thereby producing 1.31 equivalent tonnes of CO2 per tonne of copper produced. Chart sources: Skarn Associates, WSP Group, Ivanhoe Mines.
The significant reduction in GHG emissions is due to the improvement in Scope 3 emissions from the on-site smelter. This is partially due to the smelter being inherently lower in GHG emissions-intensity compared with typical smelters currently used. The most significant impact is in terms of the transportation of a higher-grade copper anode, instead of shipping copper concentrate.
Currently, copper concentrate of approximately
Significant preliminary testwork for improving copper recoveries at Kamoa-Kakula
On July 27, 2023, Ivanhoe announced highly promising preliminary testwork to further improve copper recoveries at Kamoa-Kakula by liberating copper from the tailings stream by a conventional process of fine-grinding the material followed by flotation, thickening and filtration. Initial preliminary results indicate that with a feed grade of less than
Capital and operating cost estimates from an internal study indicate a positive return on investment. Basic engineering for the tailings-stream treatment plant has recently started and is expected to be complete in Q1 2024.
For context, in 2022 the Kamoa-Kakula Copper Complex milled approximately 7.1 million tonnes of ore at an average feed grade of
Figure 4. Global average copper head grade since 2000, compared with the average copper grade of Kamoa-Kakula's tailings during 2022.
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Source: BMO Research, Wood Mackenzie
Refurbishment of hydropower at Inga II approximately
The refurbishment of Turbine #5 at the Inga II hydroelectric facility is approximately
Year-to-date, the old turbine, transformers, alternators, and all associated control equipment have been successfully dismantled and removed, as well as all replacement equipment has been ordered.
All long-lead order equipment packages, consisting of the transformers, the turbine, and the alternator have been fabricated and shipped, and are expected to be delivered to site by year-end. In addition, other major equipment packages, including the turbine runner, turbine shaft, and stator frame have also been fabricated and shipped, with their arrival expected on-site by the end of November 2023. All that remains to be delivered are the alternator rotor poles and the water intake main gate, which are both expected to arrive early in the new year.
In addition, the refurbishment of the powerhouse gantry crane is expected to be completed imminently, which will be used to lower the new equipment into place. All contractors are mobilized on-site and are ready to commence assembly works in January 2024. Following wet commissioning and synchronization to the grid in Q4 2024, the fully refurbished Turbine #5 is expected to generate 178 MW of hydroelectric power for the DRC grid.
COPPER PRODUCTION AND CASH COST GUIDANCE FOR 2023
| Kamoa-Kakula 2023 Guidance | |||
| Contained copper in concentrate (tonnes) | 390,000 to 430,000 | ||
| Cash cost (C1) ($ per pound) | 1.40 to 1.50 | ||
Full-year 2023 cash cost (C1) and production guidance remain unchanged. The figures are on a
Production guidance is based on assumptions about the disruption of power supply, among other variables. The Kamoa-Kakula joint venture produced a total of 333,497 tonnes of copper in concentrate for the year ending December 31, 2022, and 301,336 tonnes for the nine months ended September 30, 2023, including 103,947 tonnes of copper in concentrate in Q3 2023.
Cash costs (C1) per pound of payable copper amounted to
C1 cash cost is a non-GAAP measure used by management to evaluate operating performance and includes all direct mining, processing, stockpile rehandling charges, and general and administrative costs. Smelter charges and freight deductions on sales to the final port of destination (typically China), 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.
For historical comparatives, see the non-GAAP Financial Performance Measures section of this news release and in the company's MD&A for the three and nine months ended September 30, 2023.
Members of the Kamoa-Kakula workforce are all smiles as DRC President, His Excellency Félix Tshisekedi delivers a speech at Kamoa-Kakula's concentrate storage facility during his site visit in October 2023.
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Members of Ivanhoe Mines' Board of Directors visited the underground mine at Kamoa-Kakula in October. The group toured operations and the company's industry-leading social and community investment initiatives.
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Crews celebrate the commissioning of Kamoa-Kakula's third backfill plant module.
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2. Platreef Project
South Africa
The Platreef Project is owned by Ivanplats (Pty) Ltd (Ivanplats), which is
The Platreef Project hosts an underground deposit of thick, platinum-group metals, nickel, copper, and gold mineralization on the Northern Limb of the Bushveld Igneous Complex in Limpopo Province - approximately 280 kilometres northeast of Johannesburg and eight kilometres from the town of Mokopane in South Africa.
On the Northern Limb, platinum-group metals mineralization is primarily hosted within the Platreef, a mineralized sequence traced for more than 30 kilometres along the strike. Ivanhoe's Platreef Project, within the Platreef's southern sector, is comprised of two contiguous properties: Turfspruit and Macalacaskop. Turfspruit, the northernmost property, is contiguous with, and along strike from, Anglo Platinum's Mogalakwena group of mining operations and properties.
Since 2007, Ivanhoe has focused its exploration and development activities on defining and advancing the down-dip extension of its original discovery at Platreef, now known as the Flatreef Deposit, which is amenable to highly mechanized, underground mining methods. With Shaft 1, the initial access to the deposit, now in operation and hoisting development rock from underground, Ivanhoe is focusing on construction activities to bring Phase 1 of Platreef into production by Q3 2024, phase 1 of the project is currently
Platreef development is currently funded by
Construction activities are advancing at Platreef's concentrator, with installation of the flotation cells progressing well.
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Surface construction activities and lateral underground mine development advancing well
Underground development work has been focused on lateral development towards the high-grade Flatreef orebody on the 750-metre, 850-metre and 950-metre levels. More than 2,000 metres of lateral development have been completed to date across all three levels (750-metre, 850-metre and 950-metre levels). An underground crushing and loading feeder has been constructed on the 950-metre level, which will more efficiently load for hoisting waste and ore from the 750-metre, 850-metre and 950-metre levels. Once the commissioning of the crusher and loading feeder is complete, the rate of lateral underground development is expected to increase to approximately 400 metres per month through the end of the year. The advancement rate is expected to further increase to over 500 metres per month across all three underground levels early next year.
Platreef's Phase 1 concentrator is on schedule for first production in Q3 2024. All major civil structures are nearing completion providing access to follow-on contractors. The fabrication of the long-lead order mechanical equipment items is progressing as planned with deliveries on schedule. Over
Construction activities advancing well as installation of Platreef's mill building and rougher-cleaner flotation cell structures continue.
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The 10-metre diameter Shaft 2, currently under construction, will have a hoisting capacity of approximately 8 Mtpa. Shaft 2 will be utilized in subsequent development phases and will be among the largest hoisting shafts in the world. The Shaft 2 headgear concrete structure was completed in the first quarter to a height of approximately 79 metres. Shaft 2's overall height will be approximately 100 metres above ground, including the steel structure housing the main winders. The Shaft 2 headgear internal structural steel construction is progressing well. The kibble and stage winder civil construction has successfully been completed. Sinking winders and related infrastructure will be delivered in December 2023 with installation set to commence during Q1 2024.
Drilling of the pilot drill hole for the reaming of Shaft 2, which commenced in February 2023, has reached shaft bottom at the 950-metre level. Raiseboring of an initial 3.1-metre diameter shaft has now commenced, with 38 metres of the total 950 metres completed to date. This first phase of reaming Shaft 2 is expected to be complete in Q2 2024.
Construction of Platreef's first 5-MW solar-power is expected to be completed in Q1 2024. The solar power plant inverter and solar panels were recently delivered to site. The power generated by this plant will support development activities and operations, together with other renewable energy sources that are expected to be introduced over time.
Civil assistants Petros Qhinebe (left), and Morapedi Twani (right), inspecting work at Platreef's Ablon Eskom electrical substation.
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Optimization work is underway to potentially accelerate Platreef's Phase 2 expansion
Ivanhoe has initiated optimization work to identify value-accretive options for installing hoisting capacity in Shaft 3 (previously named Vent Shaft 1). Shaft 3, originally planned as a ventilation and secondary escape shaft, is currently under construction and is now planned to be equipped for hoisting, which will provide additional hoisting capacity to remove ore and waste from the underground mine. This 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, which is expected in 2027.
Shaft 3 is currently being reamed to a diameter of 5.1 metres. Approximately 410 metres of 950 metres have been reamed to date, with planned completion in Q4 2023. The manufacturing of the auxiliary winder for the Shaft 3 headgear is well-advanced and on schedule. The civil contractor responsible for the foundations of the stage winder and equipping winder has been appointed and is mobilizing.
Long-term supply of bulk water for the Platreef Mine
The water requirement for the Phase 1 operation is projected to peak at approximately 3 million litres per day, which will then increase to 9 million litres per day once the Phase 2 expansion is commissioned.
In January 2022, Ivanplats signed new offtake agreements for the rights to receive locally supplied bulk water needed for the phased development plan at Platreef. The updated offtake agreement with the Mogalakwena Local Municipality is for at least 3 million litres per day and up to a maximum of 10 million litres per day for 32 years, of treated municipal effluent from the Masodi Wastewater Treatment Works. Ivanplats funded the completion of the Masodi Wastewater Treatment Works, which was completed during the quarter.
In addition, Ivanplats has also signed a Memorandum of Agreement to upgrade and refurbish the sewerage treatment infrastructure to increase the water offtake for future expansions.
3. Kipushi Project
Democratic Republic of Congo
The Kipushi zinc-copper-germanium-silver-lead mine in the DRC is adjacent to the town of Kipushi, approximately 30 kilometres southwest of Lubumbashi on the Central African Copperbelt. Kipushi is approximately 250 kilometres southeast of the Kamoa-Kakula Copper Complex and less than one kilometre from the Zambian border. Ivanhoe acquired its
The Kipushi 2022 Feasibility Study focuses on the mining of Kipushi's zinc-rich Big Zinc and Southern Zinc zones, with an estimated 11.8 million tonnes of Measured and Indicated Mineral Resources grading
In Q1 2022, a new agreement was finalized between Kipushi Holding and Gécamines to return the ultra-high-grade Kipushi Mine to commercial production, which sets out the commercial terms that will form the basis of a new Kipushi joint-venture agreement establishing a robust framework for the mutually beneficial operation of Kipushi for years to come and are subject to execution of definitive documentation. Once the agreement is concluded, it is anticipated that Ivanhoe Mines' ownership in the Kipushi Project will reduce to
In Q2 2023, Kipushi Corporation finalized an unsecured,
In Q2 2023, Ivanhoe Mines announced the signing of a tri-partite offtake and financing term sheet between Kipushi Corporation SA, Gécamines and Glencore International AG (Glencore). Concurrent with the advancing agreements, Ivanhoe is evaluating alternative local financing options, if commercially viable, to conclude the project's financing and offtake agreements during the fourth quarter.
The remaining initial capital for the Kipushi Project is
Kipushi's primary mining fleet is supplied by Epiroc of Stockholm, Sweden. The majority of the primary fleet and secondary support underground equipment has been mobilized, with the final deliveries expected in the next month.
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Over 69 years, Kipushi produced a total of 6.6 million tonnes of zinc and 4.0 million tonnes of copper from 60 million tonnes of ore grading
Since acquiring its interest in the Kipushi Mine in 2011, Ivanhoe's drilling campaigns have upgraded and expanded the mine's zinc-rich Measured and Indicated Mineral Resources to an estimated 11.78 million tonnes grading
Based on testwork conducted for the Kipushi 2022 Feasibility Study, concentrate assays for the Kipushi Mine include significant quantities of germanium and gallium.
Germanium is a strategic metal used today in electronic devices, flat-panel display screens, light-emitting diodes, night vision devices, optical fibre, optical lens systems, and solar power arrays.
Gallium is a strategic metal used today to manufacture compound semiconductor wafers used in integrated circuits, and optoelectronic devices such as laser diodes, light-emitting diodes, photodetectors, and solar cells.
Kipushi concentrator ahead of schedule for first production in Q2 2024, with the overall project approximately
Construction of the new 800,000-tonne-per-annum concentrator facility is well underway. The concentrator includes dense media separation (DMS) and a milling and flotation circuit and is expected to produce more than 270,000 tonnes of zinc contained in concentrate over the first five years of operations. Design recoveries are targeted at
With overall project progress to-date at approximately
The ball mill, fabricated by CITIC Heavy Industries of Henan Province, China has been delivered to site. The DMS plant fabricated by Bond Equipment of Dallas, Texas and the flotation cells fabricated by FL Smidth of Copenhagen, Denmark, have been completed and have been delivered to site.
Construction of Kipushi's new concentrator facility, with a capacity of 800,000 tonnes per annum, is currently underway.
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Kipushi steel erection commenced in April 2023 with 1,852 tonnes of a total of 2,214 tonnes dispatched to site.
The structural, mechanical, piping and plate work (SMPP) contractor has assembled and erected numerous structures and mechanical equipment installation is progressing well.
The construction of the tailings storage facility is progressing well with
Underground development activity is ramping up, with 2,147 metres of lateral development completed since September 2022. Stoping of the ultra-high-grade Big Zinc orebody is expected to begin in January 2024.
In the first quarter of 2023, the underground mining contractor was appointed, and the phased on-site mobilization of mining crews and equipment is almost complete. The primary mining fleet is supplied by Epiroc of Stockholm, Sweden. The majority of the primary fleet and secondary support underground equipment has been mobilized, with the final deliveries expected in the next month.
Employees from the Kushona Sewing Centre attend an on-site training program at Kipushi, allowing them to enhance and develop their skills.
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The underground mining operation is fully mechanized, highly efficient and designed to enable a quick ramp-up to a steady state. At the end of the second quarter, three mining crews had been deployed underground. Each mining crew made up of five miners per shift, is equipped with a primary fleet consisting of an Epiroc 282 Twin Boomer, a ST 14 Scooptram (LHD) and two MT42 dump trucks.
The second Simba long-hole drill rig for stoping (production mining) has also arrived on site and is being inspected by the engineering team. Training of new underground miners is ongoing, with the fourth development team now in place.
Underground development is taking place to open multiple access levels to the Big Zinc orebody, from the top down. Perimeter, access and ventilation drives are under development at several locations between the 1,220-metre and 1,335-metre levels, while decline development continues to spiral down parallel to the plunging Big Zinc deposit. The access drive and reserve bay at the 1,365-metre level have been profiled and provide access to the 1,365-metre level development. Year to date, 2,744 metres of horizontal development have been completed year to date, approximately
The year-to-date underground development rate has averaged 305 metres per month. Following the mobilization of the remaining underground equipment fleet and the fourth mining crew, the underground development rate is expected to increase to approximately 450 metres per month by year-end.
Underground ore development throughout the remainder of the year will have a grade of between 20
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.
The mining method of the Big Zinc orebody will be transverse sublevel open stoping in a primary and secondary sequence. The void of the mined-out stopes will be filled with cemented aggregate to maximize the extraction of the ultra-high-grade ore.
The total mining height of long-hole stopes is 60 metres (comprising of an upper 30-metre-high stope and lower 30-metre-high stope), which will be separated by 15-metre-high sill pillars. The long-hole stopes will be mined with a bottom-up mining sequence, with the lower stope extracted first followed by the upper stope. The stopes will be extracted using a primary and secondary long-hole stoping sequence.
Kipushi's operations will be supplied with hydroelectric power from DRC's state-owned electricity company, SNEL. A study completed in 2020 by Wood Mackenzie ranked Kipushi at the 2nd percentile of the Scope 1 + 2 emissions curve. See Figure 5 below.
Figure 5. 2020 Global zinc mine site Scope 1 and 2 greenhouse gas (GHG) emissions intensity. Scope 1 and 2 annual GHG emissions from the Kipushi mine are forecast to be 0.06 equivalent tonnes of carbon dioxide per tonne of zinc produced (tCO2e/t Zn).
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Notes: Estimates include direct and indirect emissions to produce contained copper from ore to mine gate. The horizontal width of each bar represents each operation's 2020 zinc production. Source: Wood Mackenzie's Emissions Benchmarking Tool, Ivanhoe Mines.
4. Western Foreland Exploration Project
Democratic Republic of Congo
Ivanhoe's DRC exploration group is targeting Kamoa-Kakula-style copper mineralization on its Western Foreland exploration licences. The 17 licences in the Western Foreland cover a combined area of approximately 2,407 square kilometres to the north, south and west of the Kamoa-Kakula Copper Complex. The licences are now referred to as
The exploration group is using models that successfully led to the discoveries of Kakula, Kakula West, and the Kamoa North Bonanza Zone on the Kamoa Copper SA mining licence. The group is composed of a mixture of the same exploration geologists responsible for the previous discoveries and others with experience in the greater Copper Belt. The focus of exploration in the quarter has been on diamond and air core drilling in different areas of the licence package.
Nabil Kyungu Katshinda, exploration geologist, examines core from Ivanhoe's ongoing drill campaign on the 80
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During the quarter, the number of contractor diamond drill rigs increased to seven, in addition to the Ivanhoe Landcruiser diamond drill rig. A total of 28,550 metres of diamond core has been drilled so far this year with 12,813 metres completed in Q3 2023 over 27 holes, and diamond drilling is on track to exceed 40,000 metres for the year. Based on results to date, Ivanhoe increased the budget for the remainder of 2023 by
The drill rigs worked for most of the quarter on more remote targets due to improved access during the dry season. At the commencement of the wet season starting in mid-to-late November, drill rigs will move back to more accessible parts of the Foreland Shelf, including the Makoko area, with the plan to continue drilling to the extent possible.
Air core drilling has been focused on identifying geochemistry to map lithology and identify anomalism under the Kalahari sand cover in the remote south-western portion of the Western Foreland licence package. A total of 8,983 metres of air core has been drilled so far this year, with 7,195 metres completed in Q3 2023 over 194 holes. Drilling is behind relative to plan due to a late rainy season and mechanical breakdowns, but there is a plan to make up the deficit in 2024.
Resource modelling and QA/QC for the maiden Mineral Resource estimate at the Makoko and Kiala copper discoveries in the Western Foreland is complete. Ivanhoe plans to release the maiden Mineral Resource, as well as an update on more recent drilling during the dry-season, shortly.
Figure 6. Map highlighting Ivanhoe Mines' current exploration target areas across the Western Foreland licences.
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5. The Mokopane Feeder Exploration Project
South Africa
Three new
Figure 7. Recently completed results from the high-resolution Falcon Gravity survey across the Platreef and Mokopane Feeder licences. Drilling of the Mokopane Feeder gravity anomaly is expected to commence in the fourth quarter.
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The gravity-high anomaly (shown in red in Figure 7) is interpreted to represent a primary feeder zone to the Rustenburg Layered Suite of the Northern Limb of the Bushveld Complex. Significant thickening of the Rustenburg Layered Suite, particularly of the denser Lower Zone units, is necessary to explain this large gravity anomaly. The proximity of the inferred feeder to the regional-scale crustal faults (the Ysterberg-Planknek and the Zebediela faults), as well as the anomalously thick zones of platinum-group metals mineralization at the Platreef Deposit, lead Ivanhoe to believe there is significant potential for nickel, copper and platinum-group metals mineralization associated with this gravity feature.
Detailed high-resolution fixed-wing airborne magnetic and Falcon airborne gravity gradiometer geophysical surveys have been completed to map and model the subsurface petrophysical characteristics of the anomaly. The magnetic survey was completed during Q2 2023, and the gravity survey in Q3 2023. A detailed interpretation of the two datasets is nearing completion. The high-resolution nature of the new data sets will form a crucial part of the planning for the deep diamond drilling, planned to commence in Q4 2023 and carry over into 2024.
SELECTED QUARTERLY FINANCIAL INFORMATION
The following table summarizes selected financial information for the prior eight quarters. Ivanhoe had no operating revenue in any financial reporting period. All revenue from commercial production at Kamoa-Kakula is recognized within the Kamoa Holding joint venture. Ivanhoe did not declare or pay any dividend or distribution in any financial reporting period.
| Three months ended | |||||
| September 30, | June 30, | March 31, | December 31, | ||
| 2023 | 2023 | 2023 | 2022 | ||
| $'000 | $'000 | $'000 | $'000 | ||
| Share of profit from joint venture | 69,829 | 73,066 | 82,659 | 83,324 | |
| Finance income | 56,671 | 61,956 | 57,826 | 58,477 | |
| Gain (loss) on fair valuation of embedded derivative liability | 12,218 | (26,618) | (30,900) | (66,600) | |
| Deferred tax recovery (expense) | 1,212 | 1,965 | 926 | (3,839) | |
| General administrative expenditure | (9,841) | (10,474) | (8,571) | (11,870) | |
| Finance costs | (8,752) | (5,539) | (10,465) | (10,457) | |
| Share-based payments | (6,732) | (7,120) | (7,702) | (7,809) | |
| Exploration and project evaluation expenditure | (6,264) | (4,375) | (3,381) | (3,887) | |
| Profit (loss) attributable to: | |||||
| Owners of the company | 112,510 | 92,042 | 86,637 | 41,884 | |
| Non-controlling interests | (4,988) | (4,859) | (4,157) | (4,705) | |
| Total comprehensive income (loss) attributable to: | |||||
| Owners of the company | 109,681 | 86,588 | 74,154 | 53,078 | |
| Non-controlling interest | (5,250) | (5,443) | (5,420) | (3,621) | |
| Basic profit per share | 0.09 | 0.08 | 0.07 | 0.03 | |
| Diluted profit per share | 0.08 | 0.07 | 0.07 | 0.03 | |
| Three months ended | |||||
| September 30, | June 30, | March 31, | December 31, | ||
| 2022 | 2022 | 2022 | 2021 | ||
| $'000 | $'000 | $'000 | $'000 | ||
| Finance income | 46,720 | 38,596 | 31,505 | 27,978 | |
| Share of profit from joint venture | 34,057 | 49,690 | 87,109 | 78,391 | |
| Deferred tax recovery (expense) | 4,252 | 114,184 | (1,347) | 74,069 | |
| (Loss) gain on fair valuation of embedded derivative liability | (27,700) | 183,600 | (66,400) | (88,500) | |
| Finance costs | (10,223) | (10,013) | (7,391) | (10,539) | |
| General administrative expenditure | (9,199) | (8,957) | (6,238) | (10,658) | |
| Share-based payments | (7,381) | (4,637) | (7,389) | (7,490) | |
| Exploration and project evaluation expenditure | (4,312) | (13,470) | (12,243) | (15,800) | |
| Profit (loss) attributable to: | |||||
| Owners of the company | 26,344 | 316,242 | 26,394 | 45,833 | |
| Non-controlling interests | (2,477) | 35,278 | (4,854) | 2,333 | |
| Total comprehensive income (loss) attributable to: | |||||
| Owners of the company | 4,588 | 306,381 | 45,495 | 29,774 | |
| Non-controlling interest | (4,678) | 34,495 | (2,858) | 632 | |
| Basic profit per share | 0.02 | 0.26 | 0.02 | 0.04 | |
| Diluted profit per share | 0.02 | 0.11 | 0.02 | 0.04 | |
DISCUSSION OF RESULTS OF OPERATIONS
Review of the three months ended September 30, 2023 vs. September 30, 2022
The company recorded a profit for Q3 2023 of
The Kamoa-Kakula Copper Complex sold 96,509 tonnes of payable copper in Q3 2023 realizing revenue of
| Three months ended | ||
| September 30, | ||
| 2023 | 2022 | |
| $'000 | $'000 | |
| Company's share of profit from joint venture | 69,829 | 34,057 |
| Interest on loan to joint venture | 51,561 | 40,832 |
| Company's income recognized from joint venture | 121,390 | 74,889 |
The company's share of profit from the Kamoa Holding joint venture was
| Three months ended | ||
| September 30, | ||
| 2023 | 2022 | |
| $'000 | $'000 | |
| Revenue from contract receivables | 681,821 | 570,504 |
| Remeasurement of contract receivables | 13,014 | (110,031) |
| Revenue | 694,835 | 460,473 |
| Cost of sales | (286,030) | (216,233) |
| Gross profit | 408,805 | 244,240 |
| General and administrative costs | (32,632) | (21,477) |
| Amortization of mineral property | (3,002) | - |
| Profit from operations | 373,171 | 222,763 |
| Finance costs | (85,097) | (81,105) |
| Foreign exchange (loss) gain | (15,249) | 737 |
| Finance income and other | 5,323 | 3,493 |
| Profit before taxes | 278,148 | 145,888 |
| Current tax expense | (44,276) | (16,971) |
| Deferred tax expense | (55,212) | (40,368) |
| Profit after taxes | 178,660 | 88,549 |
| Non-controlling interest of Kamoa Holding | (37,592) | (19,747) |
| Total comprehensive income for the period | 141,068 | 68,802 |
| Company's share of profit from joint venture ( | 69,829 | 34,057 |
The realized and provisional copper prices used for the remeasurement (mark-to-market) of contract receivables for the three months ended September 30, 2023, and for the same period in 2022, can be summarized as follows:
| Three months ended | ||
| September 30, | ||
| 2023 | 2022 | |
| $'000 | $'000 | |
| Realized during the period - open at the start of the period | ||
| Opening forward price ($/lb.)(1) | 3.78 | 3.74 |
| Realized price ($/lb.)(1) | 3.86 | 3.50 |
| Payable copper tonnes sold | 92,501 | 74,672 |
| Remeasurement of contract receivables ($'000) | 16,881 | (40,688) |
| Realized during the period - new copper sold in the current period | ||
| Provisional price ($/lb.)(1) | 3.83 | 3.42 |
| Realized price ($/lb.)(1) | 3.78 | 3.51 |
| Payable copper tonnes sold | 26,271 | 28,758 |
| Remeasurement of contract receivables ($'000) | (3,040) | 5,669 |
| Open at the end of the period - open at the start of the period | ||
| Opening forward price ($/lb.)(1) | - | 3.79 |
| Closing forward price ($/lb.)(1) | - | 3.37 |
| Payable copper tonnes sold | - | 50,399 |
| Remeasurement of contract receivables ($'000) | - | (47,387) |
| Open at the end of the period - new copper sold in current period | ||
| Provisional price ($/lb.)(1) | 3.76 | 3.55 |
| Closing forward price ($/lb.)(1) | 3.76 | 3.36 |
| Payable copper tonnes sold | 70,534 | 65,054 |
| Remeasurement of contract receivables ($'000) | (827) | (27,625) |
| Total remeasurement of contract receivables ($'000) | 13,014 | (110,031) |
| (1) Calculated on a weighted average basis | ||
Of the
Ivanhoe's exploration and project evaluation expenditure amounted to
Finance income for Q3 2023 amounted to
The company recognized a gain on the fair valuation of the embedded derivative financial liability of
Review of the nine months ended September 30, 2023 vs. September 30, 2022
The company recorded a profit of
The company recognized income in aggregate of
| Nine months ended | ||
| September 30, | ||
| 2023 | 2022 | |
| $'000 | $'000 | |
| Company's share of profit from joint venture | 225,554 | 170,856 |
| Interest on loan to joint venture | 148,990 | 103,995 |
| Company's income recognized from joint venture | 374,544 | 274,851 |
The company's share of profit from the Kamoa Holding joint venture was
| Nine months ended | ||
| September 30, | ||
| 2023 | 2022 | |
| $'000 | $'000 | |
| Revenue from contract receivables | 2,071,274 | 1,737,338 |
| Remeasurement of contract receivables | 15,066 | (263,137) |
| Revenue | 2,086,340 | 1,474,201 |
| Cost of sales | (803,253) | (556,715) |
| Gross profit | 1,283,087 | 917,486 |
| General and administrative costs | (91,072) | (61,209) |
| Amortization of mineral property | (8,603) | - |
| Profit from operations | 1,183,412 | 856,277 |
| Finance costs | (264,471) | (202,576) |
| Foreign exchange (loss) gain | (49,467) | 5,273 |
| Finance income and other | 15,511 | 7,773 |
| Profit before taxes | 884,985 | 666,747 |
| Current tax expense | (239,869) | (26,912) |
| Deferred tax expense | (64,551) | (202,586) |
| Profit after taxes | 580,565 | 437,249 |
| Non-controlling interest of Kamoa Holding | (124,900) | (92,086) |
| Total comprehensive income for the period | 455,665 | 345,163 |
| Company's share of profit from joint venture ( | 225,554 | 170,856 |
The realized and provisional copper prices used for the remeasurement (mark-to-market) of contract receivables for the nine months ended September 30, 2023, and for the same period in 2022, can be summarized as follows.
| Nine months ended | ||
| September 30, | ||
| 2023 | 2022 | |
| $'000 | $'000 | |
| Realized during the period - open at the start of the period | ||
| Opening forward price ($/lb.)(1) | 3.84 | 4.21 |
| Realized price ($/lb.)(1) | 3.91 | 4.04 |
| Payable copper tonnes sold | 180,772 | 178,345 |
| Remeasurement of contract receivables ($'000) | 28,150 | (68,859) |
| Realized during the period - new copper sold in the current period | ||
| Provisional price ($/lb.)(1) | 4.00 | 3.42 |
| Realized price ($/lb.)(1) | 3.90 | 3.51 |
| Payable copper tonnes sold | 113,184 | 28,758 |
| Remeasurement of contract receivables ($'000) | (24,596) | 5,669 |
| Open at the end of the period - open at the start of the period | ||
| Opening forward price ($/lb.)(1) | 3.79 | 4.25 |
| Closing forward price ($/lb.)(1) | 4.05 | 3.89 |
| Payable copper tonnes sold | 6,625 | 127,115 |
| Remeasurement of contract receivables ($'000) | 3,748 | (102,665) |
| Open at the end of the period - new copper sold in current period | ||
| Provisional price ($/lb.)(1) | 3.81 | 4.10 |
| Closing forward price ($/lb.)(1) | 3.83 | 3.88 |
| Payable copper tonnes sold | 170,775 | 202,767 |
| Remeasurement of contract receivables ($'000) | 7,764 | (97,282) |
| Total remeasurement of contract receivables ($'000) | 15,066 | (263,137) |
| (1) Calculated on a weighted average basis | ||
Of the
Exploration and project evaluation expenditure amounted to
Finance income amounted to
As explained in the accounting for the convertible notes section in the company's MD&A for the three and nine months ended September 30, 2023, the company recognized a loss on fair valuation of the embedded derivative financial liability of
The total comprehensive income for the nine months ended September 30, 2023, included an exchange loss on translation of foreign operations of
Financial position as at September 30, 2023 vs. December 31, 2022
The company's total assets increased by
The company's investment in the Kamoa Holding joint venture increased by
| September 30, | December 31, | |
| 2023 | 2022 | |
| $'000 | $'000 | |
| Company's share of net assets in joint venture | 735,994 | 510,439 |
| Loan advanced to joint venture | 1,685,591 | 1,536,601 |
| Total investment in joint venture | 2,421,585 | 2,047,040 |
The company's share of net assets in the Kamoa Holding joint venture can be broken down as follows:
| September 30, 2023 | December 31, 2022 | ||||
| $'000 | $'000 | $'000 | $'000 | ||
| Assets | |||||
| Property, plant and equipment | 3,726,522 | 1,844,628 | 2,733,176 | 1,352,922 | |
| Mineral property | 781,285 | 386,736 | 789,888 | 390,995 | |
| Indirect taxes receivable | 386,353 | 191,245 | 279,385 | 138,296 | |
| Other receivables | 337,076 | 166,853 | 212,221 | 105,049 | |
| Consumable stores | 335,315 | 165,981 | 257,434 | 127,430 | |
| Trade receivables | 323,915 | 160,338 | 63,196 | 31,282 | |
| Long-term loan receivable | 295,596 | 146,320 | 252,523 | 124,999 | |
| Non-current inventory | 240,000 | 118,800 | 246,424 | 121,980 | |
| Current inventory | 84,779 | 41,966 | 27,011 | 13,370 | |
| Right-of-use asset | 43,955 | 21,758 | 11,549 | 5,717 | |
| Cash and cash equivalents | 24,019 | 11,889 | 365,633 | 180,988 | |
| Prepaid expenses | 14,395 | 7,126 | 9,216 | 4,562 | |
| Non-current deposits | 1,872 | 927 | 2,272 | 1,125 | |
| Deferred tax asset | 618 | 306 | 710 | 351 | |
| Liabilities | |||||
| Shareholder loans | (3,404,287) | (1,685,122) | (3,103,381) | (1,536,174) | |
| Trade and other payables | (398,042) | (197,031) | (309,710) | (153,306) | |
| Deferred tax liability | (321,229) | (159,008) | (273,841) | (135,551) | |
| Income taxes payable | (197,083) | (97,556) | (14,600) | (7,227) | |
| Equipment finance facility | (127,247) | (62,987) | (102,890) | (50,931) | |
| Rehabilitation provision | (75,329) | (37,288) | (45,231) | (22,389) | |
| Other provisions | (67,248) | (33,288) | (26,675) | (13,204) | |
| Provisional payment facility | (56,191) | (27,815) | (38,866) | (19,239) | |
| Lease liability | (45,648) | (22,596) | (13,243) | (6,555) | |
| Non-controlling interest | (416,542) | (206,188) | (291,012) | (144,051) | |
| Net assets of the joint venture | 1,486,854 | 735,994 | 1,031,189 | 510,439 | |
Before commencing commercial production in July 2021, the Kamoa Holding joint venture principally used loans from its shareholders to develop the Kamoa-Kakula Copper Complex through investing in development costs and other property, plant and equipment. No additional shareholder loans were advanced in 2022 or 2023 with joint venture cashflow funding its operations and expansions.
Kamoa-Kakula's Phase 1 and 2 operations are anticipated to generate significant operating cash flow to fund, together with local financing facilities, the Phase 3 capital cost requirements at current copper prices. Kamoa-Kakula has
The cash flows of the Kamoa Holding joint venture can be summarized as follows:
| Three months ended | Nine months ended | |||
| September 30, | September 30, | |||
| 2023 | 2022 | 2023 | 2022 | |
| $'000 | $'000 | $'000 | $'000 | |
| Net cash generated from operating activities before change in working capital items | 321,035 | 331,736 | 1,172,992 | 941,258 |
| Change in working capital items | (233,835) | (12,420) | (490,748) | (31,226) |
| Net cash used in investing activities | (377,240) | (282,228) | (1,000,628) | (532,995) |
| Net cash used in financing activities | (26,885) | (10,832) | (30,629) | (9,699) |
| Effect of foreign exchange rates on cash | 7,740 | (8,530) | 7,399 | (15,194) |
| Net cash (outflow) inflow | (309,185) | 17,726 | (341,614) | 352,144 |
| Cash and cash equivalents - beginning of the period | 333,204 | 356,449 | 365,633 | 22,031 |
| Cash and cash equivalents - end of the period | 24,019 | 374,175 | 24,019 | 374,175 |
The Kamoa Holding joint venture's net increase in property, plant and equipment from December 31, 2022, to September 30, 2023, amounted to
| Nine months ended | ||
| September 30, | ||
| 2023 | 2022 | |
| $'000 | $'000 | |
| Kamoa Holding joint venture | ||
| Expansion capital | 860,375 | 489,088 |
| Sustaining capital | 140,253 | 25,709 |
| Initial capital | - | 9,009 |
| 1,000,628 | 523,806 | |
| Depreciation capitalized | 29,413 | 9,318 |
| Total capital expenditure | 1,030,041 | 533,124 |
| Borrowing costs capitalized | 91,643 | 34,927 |
| Total additions to property, plant and equipment for Kamoa Holding | 1,121,684 | 568,051 |
| Less depreciation, disposals and foreign exchange translation | (128,338) | (91,831) |
| Net increase in property, plant and equipment of Kamoa Holding | 993,346 | 476,220 |
Ivanhoe's cash and cash equivalents decreased by
The net increase in property, plant and equipment amounted to
The main components of the additions to property, plant and equipment - including capitalized development costs - at the Platreef and Kipushi projects for the nine months ended September 30, 2023, and for the same period in 2022, are set out in the following tables:
| Nine months ended | ||
| September 30, | ||
| 2023 | 2022 | |
| $'000 | $'000 | |
| Platreef Project | ||
| Phase 1 construction | 96,282 | 40,130 |
| Phase 2 construction | 41,405 | 10,108 |
| Salaries and benefits | 9,543 | 9,500 |
| Administrative and other expenditure | 5,514 | 4,436 |
| Depreciation | 4,411 | 687 |
| Studies and contracting work | 3,391 | 3,459 |
| Site costs | 3,098 | 2,483 |
| Social and environmental | 1,431 | 987 |
| Total development costs | 165,075 | 71,790 |
| Other additions to property, plant and equipment | 6,577 | 2,264 |
| Total additions to property, plant and equipment for Platreef | 171,652 | 74,054 |
| Nine months ended | ||
| September 30, | ||
| 2023 | 2022 | |
| $'000 | $'000 | |
| Kipushi Project | ||
| Mine construction costs | 96,029 | 2,173 |
| Salaries and benefits | 12,262 | 8,994 |
| Administration and overheads | 12,070 | 6,627 |
| Other expenditure | 8,427 | 3,930 |
| Depreciation - development | 6,240 | 1,833 |
| Studies and contracting work | 5,797 | 3,496 |
| Electricity | 5,293 | 2,395 |
| Other additions to property, plant and equipment | 451 | 501 |
| Depreciation - exploration and project evaluation | - | 3,758 |
| Reversal of VAT write-off previously capitalized | - | (7,377) |
| Total project expenditure | 146,569 | 26,330 |
| Accounted for as follows: | ||
| Additions to property, plant and equipment | 96,480 | 2,674 |
| Development costs capitalized to property, plant and equipment | 50,089 | 5,304 |
| Exploration and project evaluation expenditure in the loss from operating activities | - | 18,352 |
| Total project expenditure | 146,569 | 26,330 |
Costs incurred during 2023 at the Platreef and Kipushi projects are deemed necessary to bring the project to commercial production and are therefore capitalized as property, plant and equipment.
On June 30, 2023, the company entered into an exchange agreement with I-Pulse Inc. (I-Pulse), under which the company replaced the outstanding convertible loan balance owed to it by High Power Exploration Inc. (HPX) with an equity investment in I-Pulse. The company extended a
The company's total liabilities increased by
On May 22, 2023, Kipushi Corporation SA (Kipushi), a subsidiary of the company and the operator of the Kipushi Project, entered into a loan agreement with Rawbank SA (Rawbank), a financial institution in the Democratic Republic of the Congo. Under the terms of the loan agreement, Rawbank provided an
On August 4, 2023, the company entered into an
LIQUIDITY AND CAPITAL RESOURCES
The company had
The company's capital expenditure for 2023 and 2024 can be summarized as follows:
| Capital Expenditure | YTD 2023 Actuals | 2023 Guidance | 2024 Guidance |
| ($' million) | ($' million) | ($' million) | |
| Kamoa-Kakula | |||
| Phase 3 expansion | 728 | 1,400 - 1,800 | 1,100 - 700 |
| Phase 2 and other expansion capital | 132 | 120 | - |
| Sustaining capital | 141 | 180 | 80 |
| 1,001 | 1,700 - 2,100 | 1,180 - 780 | |
| Platreef | |||
| Phase 1 initial capital | 126 | 190 - 240 | 200 - 150 |
| Phase 2 capital | 41 | 60 | 120 |
| 167 | 250 - 300 | 320 - 270 | |
| Kipushi | |||
| Initial capital | 140 | 200 - 250 | 180 - 130 |
All capital expenditure figures are presented on a
The ranges provided reflect uncertainty in the timing of Kamoa-Kakula Phase 3 expansion, Platreef Phase 2 capital and Kipushi cash flows between calendar years 2023 and 2024. The 2024 capital expenditure guidance for Platreef and Kipushi excludes sustaining capital required in 2024 post-initial production.
As documented in the Kamoa-Kakula 2023 Integrated Development Plan (IDP 2023) announced on January 30, 2023, the remaining capital cost for the total Phase 3 expansion is estimated at
Construction for Platreef's Phase 1 Mine is well underway, with the first production on track for Q3 2024. The planned Phase 2 capital expenditure at Platreef for 2024 is indicative only and subject to the completion of the ongoing optimization work and includes the continuation of sinking Shaft 2 and the construction of the Shaft 2 headframe, as well as Shaft 3 construction and equipping, allowing optionality to accelerate the ramp-up of underground mining activities for Phase 2, in advance of the completion of Shaft 2, which is expected in 2027. The 2024 Phase 2 capital expenditure guidance excludes capital expenditure planned post-initial production.
Construction of the Kipushi Mine is also underway, with the processing plant scheduled for completion in Q2 2024. Of the
On May 22, 2023, Kipushi entered into a loan agreement with Rawbank SA, a financial institution in the Democratic Republic of the Congo. Under the terms of the loan agreement, Rawbank provided an
On August 4, 2023, the company entered into an
Exploration activities at the Western Foreland exploration project in the DRC and other targets had an initial budget of
On March 17, 2021, the Company closed a private placement offering of
The company has a mortgage bond outstanding on its offices in London, United Kingdom, of £3.2 million (
In 2013, the company became a party to a loan payable to ITC Platinum Development Limited, which had a carrying value and contractual value of
The company has an implied commitment in terms of spending on work programs submitted to regulatory bodies to maintain the good standing of exploration and exploitation permits at its mineral properties. The following table sets forth the company's long-term obligations:
| Contractual obligations as at September 30, 2023 | Payments Due By Period | ||||
| Total | Less than 1 year | 1-3 years | 4-5 years | After 5 years | |
| $'000 | $'000 | $'000 | $'000 | $'000 | |
| Convertible notes | 581,616 | 6,616 | 575,000 | - | - |
| Debt | 139,760 | 83,316 | 11,007 | 45,437 | - |
| Lease commitments | 1,383 | 349 | 572 | 462 | - |
| Total contractual obligations | 722,759 | 90,281 | 586,579 | 45,899 | - |
Debt in the above table represents the mortgage bond owing to Citibank, the loan payable to ITC Platinum Development Limited, the loan from Rawbank and the aircraft loan as described above.
The company is required to fund its Kamoa Holding joint venture in an amount equivalent to its proportionate shareholding interest.
NON-GAAP FINANCIAL PERFORMANCE MEASURES
Kamoa-Kakula's C1 cash costs and C1 cash costs per pound
C1 cash costs and C1 cash costs per pound are non-GAAP financial measures. These are disclosed to enable investors to better understand the performance of Kamoa-Kakula in comparison to other copper producers who present results on a similar basis.
C1 cash costs are 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 costs are 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 finished metal. C1 cash costs and C1 cash costs per pound exclude royalties and production taxes and non-routine charges as they are not direct production costs.
Reconciliation of Kamoa-Kakula's cost of sales to C1 cash costs, including on a per pound basis:
| Three months ended | Nine months ended | |||
| September 30, | September 30, | |||
| 2023 | 2022 | 2023 | 2022 | |
| $'000 | $'000 | $'000 | $'000 | |
| Cost of sales | 286,030 | 216,233 | 803,253 | 556,715 |
| Logistics, treatment and refining charges | 122,460 | 141,126 | 357,790 | 303,638 |
| General and administrative expenditure | 32,631 | 21,476 | 91,071 | 61,209 |
| Royalties and production taxes | (60,450) | (58,160) | (174,256) | (142,387) |
| Depreciation | (49,692) | (31,023) | (135,902) | (78,716) |
| Power rebate | (4,654) | - | (13,926) | - |
| Movement in finished goods inventory | 1,133 | 7,451 | (329) | 7,999 |
| General and administrative expenditures of other group entities | (4,465) | 1,224 | (9,110) | (1,078) |
| C1 cash costs | 322,993 | 298,327 | 918,591 | 707,380 |
| Cost of sales per pound of payable copper sold ($ per lb.) | 1.34 | 1.05 | 1.28 | 1.09 |
| C1 cash costs per pound of payable copper produced ($ per lb.) | 1.46 | 1.43 | 1.43 | 1.38 |
| Payable copper produced in concentrate (tonnes) | 100,569 | 94,641 | 291,543 | 232,912 |
Figures in the above table are for the Kamoa-Kakula joint venture on a
EBITDA, Adjusted EBITDA and EBITDA margin
EBITDA and Adjusted EBITDA are non-GAAP financial measures. Ivanhoe believes that Kamoa-Kakula's EBITDA is a valuable indicator of the mine's ability to generate liquidity by producing operating cash flow to fund its working capital needs, service debt obligations, fund capital expenditures and distribute cash to its shareholders. EBITDA and Adjusted EBITDA are also frequently used by investors and analysts for valuation purposes. Kamoa-Kakula's EBITDA and the EBITDA and Adjusted EBITDA for the company are intended to provide additional information to investors and analysts and do not have any standardized definition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared per IFRS. EBITDA and Adjusted EBITDA exclude the impact of cash costs of financing activities and taxes, and the effects of changes in operating working capital balances, and therefore are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate EBITDA and Adjusted EBITDA differently.
The EBITDA margin is an indicator of Kamoa-Kakula's overall health and denotes its profitability, which is calculated by dividing EBITDA by revenue. The EBITDA margin is intended to provide additional information to investors and analysts, does not have any standardized definition under IFRS, and should not be considered in isolation, or as a substitute, for measures of performance prepared per IFRS.
Reconciliation of profit after tax to Kamoa-Kakula's EBITDA:
| Three months ended | Nine months ended | |||
| September 30, | September 30, | |||
| 2023 | 2022 | 2023 | 2022 | |
| $'000 | $'000 | $'000 | $'000 | |
| Profit after taxes | 178,660 | 88,549 | 580,565 | 437,249 |
| Finance costs | 85,097 | 81,105 | 264,471 | 202,576 |
| Current and deferred tax expense | 99,488 | 57,339 | 304,420 | 229,498 |
| Depreciation | 52,694 | 31,023 | 144,505 | 78,716 |
| Unrealized foreign exchange loss (gain)(1) | 12,613 | (3,338) | 58,857 | (9,349) |
| Finance income | (5,341) | (3,593) | (15,668) | (7,912) |
| EBITDA | 423,211 | 251,085 | 1,337,150 | 930,778 |
Figures in the above table are for the Kamoa-Kakula joint venture on a
(1) Unrealized foreign exchange losses (gains) have been excluded from EBITDA as the company believes that including the unrealized foreign exchange gains and losses does not give a useful indication of Kamoa-Kakula's overall health and profitability.
Reconciliation of profit after tax to Ivanhoe's EBITDA and adjusted EBITDA:
| Three months ended | Nine months ended | |||
| September 30, | September 30, | |||
| 2023 | 2022 | 2023 | 2022 | |
| $'000 | $'000 | |||
| Profit after taxes | 107,522 | 23,867 | 277,185 | 396,927 |
| Finance income | (56,671) | (46,720) | (176,453) | (116,821) |
| Current and deferred tax recovery | (1,107) | (4,232) | (3,757) | (117,208) |
| Finance costs | 8,752 | 10,223 | 24,756 | 27,627 |
| Unrealized foreign exchange loss (1) | 986 | 1,806 | 4,211 | 2,558 |
| Depreciation | 703 | 855 | 1,788 | 5,393 |
| EBITDA | 60,185 | (14,201) | 127,730 | 198,476 |
| Share of profit from joint venture net of tax | (69,829) | (34,057) | (225,554) | (170,856) |
| Company's share of EBITDA from Kamoa-Kakula joint venture(2) | 167,200 | 99,499 | 528,485 | 368,433 |
| (Gain) loss on fair valuation of embedded derivative liability | (12,218) | 27,700 | 45,300 | (89,500) |
| Non-cash share-based payments | 6,561 | 6,558 | 19,688 | 19,268 |
| Adjusted EBITDA | 151,899 | 85,499 | 495,649 | 325,821 |
| Q3 2023 | Q2 2023 | Q1 2023 | Q4 2022 | |
| $'000 | $'000 | $'000 | $'000 | |
| Profit after taxes | 107,522 | 87,183 | 82,480 | 37,179 |
| Finance income | (56,671) | (61,956) | (57,826) | (58,477) |
| Current and deferred tax recovery (expense) | (1,107) | (1,769) | (881) | 3,839 |
| Finance costs | 8,752 | 5,539 | 10,465 | 10,457 |
| Unrealized foreign exchange loss (gain)(1) | 986 | 1,934 | 1,291 | (231) |
| Depreciation | 703 | 609 | 476 | 476 |
| EBITDA | 60,185 | 31,540 | 36,005 | (6,757) |
| Share of profit from joint venture net of tax | (69,829) | (73,066) | (82,659) | (83,324) |
| Company's share of EBITDA from Kamoa-Kakula joint venture(2) | 167,200 | 180,489 | 180,796 | 179,082 |
| (Gain) loss on fair valuation of embedded derivative liability | (12,218) | 26,618 | 30,900 | 66,600 |
| Non-cash share-based payments | 6,561 | 6,589 | 6,538 | 6,461 |
| Adjusted EBITDA | 151,899 | 172,170 | 171,580 | 162,062 |
(1) Unrealized foreign exchange losses have been excluded from EBITDA as the company believes that including the unrealized foreign exchange gains and losses does not give a useful indication of the company's overall health and profitability.
(2) The company's attributable share of EBITDA from the Kamoa-Kakula joint venture is calculated using the company's effective shareholding in Kamoa Copper SA (
Below is a table reconciling the company's profit after taxes to the company's normalized profit after taxes. Normalized profit after taxes excludes the (gain) loss on fair valuation of the embedded derivative liability.
| Q3 2023 | Q2 2023 | Q1 2023 | Q4 2022 | |
| $'000 | $'000 | $'000 | $'000 | |
| Profit after taxes | 107,522 | 87,183 | 82,480 | 37,179 |
| (Gain) loss on fair valuation of embedded derivative liability | (12,218) | 26,618 | 30,900 | 66,600 |
| Normalized profit after taxes | 95,304 | 113,801 | 113,380 | 103,779 |
Disclosure of technical information
Disclosures of a scientific or technical nature in this news release regarding the Kamoa-Kakula Copper Complex (other than stockpiles estimation), the Platreef Project and the Kipushi Project have been reviewed and approved by Steve Amos, who is considered, by virtue of his education, experience and professional association, a Qualified Person under the terms of National Instrument 43-101 (NI 43-101). Mr. Amos is not considered independent under NI 43-101 as he is the Executive Vice President, Projects, at Ivanhoe Mines. Mr. Amos has verified the technical data related to the foregoing disclosed in this news release.
Disclosures of a scientific or technical nature regarding the Kamoa-Kakula stockpiles in this news release have been reviewed and approved by George Gilchrist, who is considered, by virtue of his education, experience and professional association, a Qualified Person under the terms of NI 43-101. Mr. Gilchrist is not considered independent under NI 43- 101 as he is the Vice President, Resources, at Ivanhoe Mines. Mr. Gilchrist has verified the technical data regarding the Kamoa-Kakula stockpiles disclosed in this news release.
Disclosures of a scientific or technical nature regarding the Western Foreland Exploration Project in this news release have been reviewed and approved by George Gilchrist, who is considered, by virtue of his education, experience and professional association, a Qualified Person under the terms of NI 43-101. George Gilchrist is not considered independent under NI 43-101 as he is the Vice President, Mineral Resources, at Ivanhoe Mines. George Gilchrist has verified the technical data regarding the Western Foreland Exploration Project disclosed in this news release.
Ivanhoe has prepared an independent, NI 43-101-compliant technical report for the Kamoa-Kakula Copper Complex, the Platreef Project and the Kipushi Project, each of which is available on the company's website and under the company's SEDAR+ profile at www.sedarplus.ca:
- Kamoa-Kakula Integrated Development Plan 2023 Technical Report dated March 6, 2023, prepared by OreWin Pty Ltd.; China Nerin Engineering Co. Ltd.; DRA Global; Epoch Resources; Golder Associates Africa; Metso Outotec Oyj; Paterson and Cooke; SRK Consulting Ltd.; and The MSA Group.
- The Kipushi 2022 Feasibility Study dated February 14, 2022, prepared by OreWin Pty Ltd., MSA Group (Pty) Ltd., SRK Consulting (South Africa) (Pty) Ltd, and METC Engineering.
- The Platreef 2022 Feasibility Study dated February 28, 2022, prepared by OreWin Pty Ltd., Mine Technical Services, SRK Consulting Inc., DRA Projects (Pty) Ltd and Golder Associates Africa.
These technical reports include relevant information regarding the effective dates and the assumptions, parameters and methods of the mineral resource estimates on the Platreef Project, the Kipushi Project and the Kamoa-Kakula Copper Complex cited in this news release, as well as information regarding data verification, exploration procedures and other matters relevant to the scientific and technical disclosure contained in this news release in respect of the Platreef Project, Kipushi Project and Kamoa-Kakula Copper Complex.
Information contact
Follow Robert Friedland (@robert_ivanhoe) and Ivanhoe Mines (@IvanhoeMines_) on X.
Investors
Vancouver: Matthew Keevil +1.604.558.1034
London: Tommy Horton +44 7866 913 207
Media
Tanya Todd +1.604.331.9834
Website www.ivanhoemines.com
Forward-looking statements
Certain statements in this news release constitute "forward-looking statements" or "forward-looking information" within the meaning of applicable securities laws. Such statements and information involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company, its projects, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. Such statements can be identified using words such as "may", "would", "could", "will", "intend", "expect", "believe", "plan", "anticipate", "estimate", "scheduled", "forecast", "predict" and other similar terminology, or state that certain actions, events, or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. These statements reflect the company's current expectations regarding future events, performance and results and speak only as of the date of this news release.
Such statements include without limitation, the timing and results of: (i) statements that Kamoa-Kakula expects Phase 1 and Phase 2 cash flow and project facilities to be sufficient to fund the Phase 3 expansion capital cost requirements at current copper prices; (ii) statements regarding Kamoa-Kakula's full-year cash cost (C1) guidance remaining at
As well, all of the results of the feasibility study for the Kakula copper mine, the Kamoa-Kakula 2023 IDP, the Platreef 2022 feasibility study, and the Kipushi 2022 feasibility study constitute forward-looking statements or information and include future estimates of internal rates of return, net present value, future production, estimates of cash cost, proposed mining plans and methods, mine life estimates, cash flow forecasts, metal recoveries, estimates of capital and operating costs and the size and timing of phased development of the projects.
Furthermore, concerning this specific forward-looking information concerning the operation and development of the Kamoa-Kakula Copper Complex, Platreef and Kipushi projects, and the exploration of the Western Foreland Exploration Project and the Mokopane Feeder Exploration Project, the company has based its assumptions and analysis on certain factors that are inherently uncertain. Uncertainties include: (i) the adequacy of infrastructure; (ii) geological characteristics; (iii) metallurgical characteristics of the mineralization; (iv) the ability to develop adequate processing capacity; (v) the price of copper, nickel, zinc, platinum, palladium, rhodium and gold; (vi) the availability of equipment and facilities necessary to complete development and exploration; (vii) the cost of consumables and mining and processing equipment; (viii) unforeseen technological and engineering problems; (ix) accidents or acts of sabotage or terrorism; (x) currency fluctuations; (xi) changes in regulations; (xii) the compliance by joint venture partners with terms of agreements; (xiii) the availability and productivity of skilled labour; (xiv) the regulation of the mining industry by various governmental agencies; (xv) the ability to raise sufficient capital to develop such projects; (xvi) changes in project scope or design; (xvii) recoveries, mining rates and grade; (xviii) political factors; (xviii) water inflow into the mine and its potential effect on mining operations, and (xix) the consistency and availability of electric power.
This news release also contains references to estimates of Mineral Resources and Mineral Reserves. The estimation of Mineral Resources is inherently uncertain and involves subjective judgments about many relevant factors. Estimates of Mineral Reserves provide more certainty but still involve similar subjective judgments. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. The accuracy of any such estimates is a function of the quantity and quality of available data and of the assumptions made and judgments used in engineering and geological interpretation (including estimated future production from the company's projects, the anticipated tonnages and grades that will be mined and the estimated level of recovery that will be realized), which may prove to be unreliable and depend, to a certain extent, upon the analysis of drilling results and statistical inferences that ultimately may prove to be inaccurate. Mineral Resource or Mineral Reserve estimates may have to be re-estimated based on: (i) fluctuations in copper, nickel, zinc, platinum group elements (PGE), gold or other mineral prices; (ii) results of drilling; (iii) metallurgical testing and other studies; (iv) proposed mining operations, including dilution; (v) the evaluation of mine plans after the date of any estimates and/or changes in mine plans; (vi) the possible failure to receive required permits, approvals and licences; and (vii) changes in law or regulation.
Forward-looking statements and information involve significant risks and uncertainties, should not be read as guarantees of future performance or results and will not necessarily be accurate indicators of whether such results will be achieved. Many factors could cause actual results to differ materially from the results discussed in the forward-looking statements or information, including, but not limited to, the factors discussed above and under the "Risk Factors" section in the company's MD&A for the three and nine months ended September 30, 2023, and its Annual Information Form, and elsewhere in this news release, as well as unexpected changes in laws, rules or regulations, or their enforcement by applicable authorities; the failure of parties to contracts with the company to perform as agreed; social or labour unrest; changes in commodity prices; and the failure of exploration programs or studies to deliver anticipated results or results that would justify and support continued exploration, studies, development or operations.
Although the forward-looking statements contained in this news release are based upon what management of the company believes are reasonable assumptions, the company cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this news release and are expressly qualified in their entirety by this cautionary statement. Subject to applicable securities laws, the company does not assume any obligation to update or revise the forward-looking statements contained herein to reflect events or circumstances occurring after the date of this news release.
The company's actual results could differ materially from those anticipated in these forward-looking statements as a result of the factors outlined in the "Risk Factors" section in the company's MD&A for the three and nine months ended September 30, 2023, and its Annual Information Form.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/186379
FAQ
What were Ivanhoe Mines' Q3 2023 financial results?
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What updates can we expect for the Makoko and Kiala discoveries?
