HIGHLIGHTS
Development of the Kakula Mine, the first of multiple, planned mining areas at Ivanhoe Mines' Kamoa-Kakula joint-venture copper project, has advanced ahead of schedule and first copper concentrate production is expected within a few weeks. Lower-grade ore will be fed into the plant during the final commissioning phase, to ensure plant performance and copper recovery are satisfactory before increasing the head grade.
Kamoa-Kakula's Phase 2 construction is progressing slightly ahead of plan and is scheduled to start up in Q3 2022, which will see a doubling of mill throughput to 7.6 million tonnes per annum (Mtpa). Phases 1 and 2 combined are forecast to produce approximately 400,000 tonnes of copper per year. Based on independent benchmarking, the project's phased expansion scenario to 19 Mtpa would position Kamoa-Kakula as the world's second-largest copper mining complex, with peak annual copper production of more than 800,000 tonnes.
Kamoa-Kakula's initial production guidance, on a 100%-project basis, is between 80,000 and 95,000 tonnes of copper in concentrate for the remainder of 2021.
At the end of April 2021, Kamoa-Kakula's pre-production ore stockpiles held three million tonnes grading 4.74% copper, containing more than 140,000 tonnes of copper.
Given the current copper price environment, Ivanhoe, together with its partner Zijin, is exploring the acceleration of the Kamoa-Kakula Phase 3 concentrator expansion from 7.6 Mtpa to 11.4 Mtpa, which may be fed from expanded mining operations at Kansoko or a new mining area at Kamoa North (including the Bonanza Zone). Kamoa Copper also is refining its longer-term downstream processing strategy, including the potential construction of a smelter or hydrometallurgical processing facility.
In March 2021, Ivanhoe Mines completed a US$575 million, 2.50% convertible senior notes offering. The funding positions Ivanhoe and joint-venture partners to fast-track additional hydropower upgrades to provide sufficient clean and renewable electricity for Kamoa-Kakula expansions to 19 million tonnes of ore per annum and beyond, including a smelter. Funding also allows for expansion and acceleration of the Western Foreland exploration program, in pursuit of the next world-scale copper discovery.
In April 2021, Ivanhoe announced that Ivanhoe Mines Energy DRC signed an agreement with the DRC's state-owned power company SNEL to upgrade a major turbine at the Inga II hydropower facility. The upgraded turbine is expected to produce 162 megawatts of clean, renewable hydropower, providing the Kamoa-Kakula Copper Mine with sufficient, sustainable electricity for future expansions, including a copper smelter.
In May 2021, Ivanhoe pledged to achieve net-zero operational greenhouse gas emissions (Scope 1 and 2) at the industry-leading Kamoa-Kakula Copper Mine. Since the mine already is powered by clean, renewable hydro-generated electricity, the focus of the company's net-zero commitment will be on electrifying the project's mining fleet with new, state-of-the-art equipment powered by electric batteries or hydrogen fuel cells, when commercially available.
In February, Ivanhoe began its 2021 exploration program on its Western Foreland licences that cover a combined area of approximately 2,550 square kilometres in close proximity to Kamoa-Kakula. The 2021 exploration budget has been increased to $21 million to include additional drilling and surveys. The budget may be further expanded based on program results.
To support Ivanhoe's growth plans, future capital needs and widen shareholder support, the company is considering the viability of seeking one or more listings on international stock exchanges. Any such listing(s) would be subject to market conditions and meeting listing requirements.
In February 2021, Ivanhoe announced that its South African subsidiary, Ivanplats, is arranging project-level financing of up to $420 million to advance development of the world-scale Platreef palladium, rhodium, platinum, nickel, copper and gold project in South Africa.
Ivanplats has signed a non-binding term sheet with Orion Mine Finance, a leading international provider of production-linked stream financing to base and precious metals mining companies, for a $300-million gold, palladium and platinum streaming facility. Ivanplats also has appointed two prominent, international commercial banks - Societe Generale and Nedbank - as mandated lead arrangers for a senior project debt facility of up to $120 million.
Ivanplats' proposed financings follow the November 30, 2020 issuance of the outstanding findings of an independent Platreef Integrated Development Plan 2020 (Platreef IDP20), which consists of an updated feasibility study (Platreef 2020 FS) and a preliminary economic assessment (Platreef 2020 PEA). The initial capital cost for the phased development plan under the Platreef 2020 PEA, starting at a mining rate of 700,000 tonnes per annum (700 ktpa), is estimated at $390 million.
Detailed engineering is underway on Platreef's 700-ktpa initial mine design, 770-ktpa concentrator and associated infrastructure for the phased development plan, which is scheduled to be incorporated into an updated feasibility study before the end of 2021. The Shaft 1 changeover is progressing well in preparation for permanent hoisting by early 2022.
At the Kipushi Mine redevelopment project in the DRC, the Kipushi Project's draft feasibility study, and development and financing plan are being reviewed by Ivanhoe Mines together with its joint-venture partner and state-owned mining company, Gécamines. The project is maintaining a reduced workforce to conduct maintenance activities and pumping operations.
Ivanhoe has made excellent progress in upgrading Kipushi's underground infrastructure to allow for mining to quickly begin at the ultra-high-grade Big Zinc orebody. Resumption of production at the mine now requires the construction of a surface processing plant and other related surface production facilities. Discussions are continuing with Gécamines to advance a new era of production at Kipushi and it is anticipated that these discussions will be concluded with the finalization of the feasibility study and the agreement on the development and financing plan by mid-2021.
At the end of Q1 2021, Kamoa-Kakula had reached 628,000 work hours free of a lost-time injury, Kipushi had reached 3.14 million work hours free of a lost-time injury, and Platreef had reached 202,000 work hours free of a lost-time injury.