Ivanhoe Electric Announces Exploration Alliance with BHP to Accelerate the Search for Copper and Other Critical Minerals in the
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May 8, 2024
Ivanhoe Electric Announces Exploration Alliance with BHP to
Accelerate the Search for Copper and Other Critical Minerals in the
United States
The Alliance Will Focus Initially on Six Areas of Interest in the
Southwest United States
BHP to Contribute $15 Million of Exploration Capital
over Initial Three-year Term
Ivanhoe Electric will Provide Access to its New Generation
Typhoon™ Geophysical Survey System and Computational
Geosciences’ Inversion Software
Ivanhoe Electric will Operate the Alliance During the Exploration
Phase, with any Joint Ventures Formed Owned 50/50
PHOENIX, ARIZONA – Ivanhoe Electric Inc. (“Ivanhoe Electric”) (NYSE American: IE;
TSX: IE) Executive Chairman Robert Friedland, and President and Chief Executive
Officer Taylor Melvin, are pleased to announce the signing of a definitive Exploration
Alliance Agreement or “the Alliance” with a subsidiary of BHP (ASX: BHP, NYSE: BHP,
LSE: BHP).
The Exploration Alliance Agreement sets out the framework for BHP and Ivanhoe
Electric to explore mutually agreed “Areas of Interest” or AOIs in the United States to
identify projects within those AOIs that may become 50/50 owned joint ventures. The
initial AOIs are in Arizona, New Mexico, and Utah.
The Alliance is for a term of three years, which may be extended. BHP (through a wholly
owned subsidiary) will provide the initial funding of $15 million and any subsequent
funding would be on a 50/50 basis. Ivanhoe Electric will provide the Alliance with
access to one of its new generation Typhoon™ geophysical survey systems as well as
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the machine learning algorithmic software and data inversion services of its subsidiary,
Computational Geosciences (CGI).
Mr. Friedland commented: “Today we announce an important Alliance with BHP, one of
the world’s leading mining companies, to explore the untapped mineral wealth of the
United States using our Typhoon™ and CGI technologies. BHP and Ivanhoe Electric
have a common goal to find new sources of the critical minerals necessary to meet
growing demand associated with the energy transition and the electrification revolution.
We are excited to work together.”
Mr. Melvin commented: “Partnering with BHP to explore for new discoveries of critical
metals in the United States is a tremendous opportunity for Ivanhoe Electric. Our
Alliance with BHP is an important confirmation of Ivanhoe Electric’s disruptive
exploration technologies and our experienced team of exploration professionals. Our
teams have been working together to identify the first exploration areas for the Alliance,
and we see today’s announcement as the first step in what we expect to be a long and
successful partnership between Ivanhoe Electric and BHP.”
Sonia Scarselli, BHP’s Vice President Exploration said: “BHP’s exploration alliance with
Ivanhoe Electric supports our strategy to pursue growth in future-facing commodities
such as copper. Technology is set to play an increasingly important role in discovering
the resources the world will need in the decades to come. This alliance offers a great
opportunity to work with Ivanhoe Electric and the innovative technologies they have
built.”
Key Terms of the Exploration Alliance
• BHP (through a wholly owned subsidiary) will provide $15 million to fund the
Alliance for its initial three-year term, which term may be extended by mutual
agreement.
• Any funding beyond the initial $15 million provided by BHP would be on a 50/50
basis.
• Ivanhoe Electric will provide access to one of its new generation Typhoon™
geophysical surveying systems and CGI inversions for use by the Alliance.
• The Alliance will operate in two stages – a Project Generation Phase and a Joint
Venture Phase.
• Ivanhoe Electric will be the operator of the Alliance during the Project Generation
Phase. Operatorship of any project in the Joint Venture Phase will be mutually
agreed upon in the future.
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• The parties have agreed to six initial AOIs which cover an area of approximately
3,655 km2. Both parties have agreed that their activities within the AOIs during the
Project Generation Phase will be conducted exclusively for the benefit of the
Alliance.
• The Alliance will be governed by an Alliance Management Committee, composed
of an equal number of members from Ivanhoe Electric and BHP.
• Any Joint Venture that is agreed to be established will have 50/50 ownership.
Exploration Alliance in the United States
During the Project Generation Phase, the Alliance will conduct early-stage generative
exploration activities in the six initial AOIs. The goal of these initial activities is to
identify and stake mineral rights within the AOIs to form a project and/or acquire such
mineral rights from third parties. Except for one AOI where an affiliate of Ivanhoe
Electric currently holds staked mineral rights that will be transferred to the Alliance, no
mineral rights are presently held in the initial AOIs.
Early-stage activities currently contemplated by the Alliance’s initial work plan for 2024
include airborne geophysical surveys, supporting geological fieldwork, as well as
ground-based geophysical surveys, including with Ivanhoe Electric’s proprietary
Typhoon™ system.
Once mineral rights are acquired a “project” will be formed which the Alliance will
continue to fund and explore. There may be multiple projects identified within a single
AOI.
The Alliance will operate through an Alliance Management Committee in the Project
Generation Phase, as well as through a Technical Committee. The Alliance Management
Committee will be composed of an equal number of members from Ivanhoe Electric and
BHP. Ivanhoe Electric will, however, have a deciding vote in this phase where the matter
does not require unanimous approval. Unanimous matters include certain health,
safety, and environmental matters, approval of the annual work plan and budget, and
proposals to form new AOIs or acquire rights within an AOI.
The Joint Venture Phase will commence when a project within an AOI is approved by
the Alliance Management Committee to become a “Joint Venture Project”. With that
approval, a Joint Venture will be formed between Ivanhoe Electric and BHP over that
specific Joint Venture Project within an AOI. Until a joint venture is formed, Ivanhoe
Electric through affiliates will be the legal owner of the various project rights. If formed,
each Joint Venture will be conducted through a special purpose limited liability
company.
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If a proposal to form a Joint Venture is not approved by the Alliance Management
Committee and more than $3 million has been spent in the relevant AOI, then the
nominating party may independently pursue the project, and the mineral rights will be
transferred to the nominating party for no consideration, ending the Alliance
concerning that project. However, if more than $5 million has been spent in the relevant
AOI, then the other party will retain a 1% net smelter royalty over the project should it
not wish to proceed to form a joint venture.
The purpose of the Joint Venture Phase is to further explore and evaluate the
exploration results to assess its technical and economic merit, and if agreed upon, to
develop and operate a mine and associated infrastructure.
The Alliance will deploy Typhoon™ on a wide scale across the United
States in the search for deep, undercover mineral deposits
Typhoon™ is the brand name for Ivanhoe Electric’s proprietary electrical geophysical
surveying transmitter. Typhoon™ achieves its results through its unique specifications,
which include a current output of up to 200 amps and a voltage output of up to 10,000
volts. The transmitter uses switches and capacitance systems, which generate a very
pure and stable transmitted signal, resulting in an extremely high signal-to-noise ratio.
Typhoon™ was developed specifically to identify deep geophysical anomalies in
environments that have highly resistive surface conditions and to detect the presence
of sulfide minerals containing copper, nickel, gold and silver in areas where potential
deposits are hidden by cover and where target depths exceed the range of conventional
geophysical surveying systems. Ivanhoe Electric has deployed Typhoon™ at its Santa
Cruz, Tintic, Hog Heaven and White Hill projects in Arizona, Utah, Montana and Nevada
respectively, as well as its 50/50-owned joint venture with Saudi Arabian Mining
Company Ma’aden in Saudi Arabia.
The new generation of Typhoon™ that the Alliance will deploy has more modern
switches, diodes, capacitors and transformers in the unit, as well as improved cooling
systems, which will increase reliability and running time in hotter environments, such
as the Southwest United States and Saudi Arabia.
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Figure 1. Typhoon™ in resource exploration.
Ivanhoe Electric believes the next generation of major mineral discoveries in the United
States will likely be made deep beneath the surface, in areas where younger,
unmineralized cover overlays the older underlying prospective geology. Typhoon™ is
well-suited to identify sulfide mineral deposits at great depths using its proprietary
design. TyphoonTM has the ability to deliver a stronger, cleaner electrical current than
competing systems, allowing it to achieve industry-leading effective depth penetration
to over 1.5 km. CGI’s advanced, machine learning-based inversion software utilizes
complex algorithms to quickly and efficiently convert the data provided by TyphoonTM
into detailed images of chargeability anomalies.
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Other Terms of the Alliance
Other terms of the Exploration Alliance Agreement during the Project Generation Phase
include:
• Either party may terminate the Alliance once the initial $15 million BHP
funding commitment has been spent or the three-year initial term has ended.
In these circumstances, neither party may pursue any activities in the AOIs for
one year. If a party breaches this requirement, the non-breaching party may
call for the re-establishment of the Alliance in respect of any interest acquired.
• If the agreement terminates once the initial funding commitment from BHP is
spent, BHP retains a 12-month back-in right over projects that are not joint
ventures. BHP can back into a project by paying Ivanhoe Electric 50% of its
expenditures following the date of termination. In limited circumstances the
back-in right may extend for two years. For more detailed information related
to the terms of the Exploration Alliance Agreement, please see the Form 8-K
filed with the SEC.
About Ivanhoe Electric
We are a U.S. company that combines advanced mineral exploration technologies with
electric metals exploration projects predominantly located in the United States. We use
our accurate and powerful Typhoon™ geophysical surveying system, together with
advanced data analytics provided by our subsidiary, Computational Geosciences Inc.,
to accelerate and de-risk the mineral exploration process as we seek to discover new
deposits of critical metals that may otherwise be undetectable by traditional exploration
technologies. We believe the United States is significantly underexplored and has the
potential to yield major new discoveries of critical metals. Our mineral exploration
efforts focus on copper as well as other metals including nickel, vanadium, cobalt,
platinum group elements, gold and silver. Through the advancement of our portfolio of
electric metals exploration projects, headlined by the Santa Cruz Copper Project in
Arizona and the Tintic Copper-Gold Project in Utah, as well as other exploration
projects in the United States, we intend to support United States supply chain
independence by finding and delivering the critical metals necessary for the
electrification of the economy. We also operate a 50/50 joint venture with Saudi Arabian
Mining Company Ma’aden to explore for minerals on ~48,500 km2 of underexplored
Arabian Shield in the Kingdom of Saudi Arabia. Website: www.ivanhoeelectric.com.
About BHP
BHP is a world-leading resources company. We work in more than 90 locations
worldwide and our products are sold globally. We've positioned our business to
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support the megatrends shaping our world. Iron ore and metallurgical coal for the steel
needed for global infrastructure and the energy transition. Copper for renewable energy
and potash to support more sustainable farming. A resource mix for today – and critical
to the future. Website: www.BHP.com.
Contact Information
Ivanhoe Electric:
Email: [email protected]
BHP
Email: [email protected]
Follow us on
Ivanhoe Electric’s Executive Chairman Robert Friedland: @robert_ivanhoe
Ivanhoe Electric: @ivanhoeelectric
Ivanhoe Electric’s investor relations website located at www.ivanhoeelectric.com should be
considered Ivanhoe Electric’s recognized distribution channel for purposes of the Securities
and Exchange Commission’s Regulation FD.
Forward-Looking Statements
Certain statements in this news release constitute “forward-looking statements” or “forward-
looking information” within the meaning of applicable US and Canadian 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 Ivanhoe Electric, 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 by the use of 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 Ivanhoe
Electric’s current expectations regarding future events, performance and results and speak
only as of the date of this news release.
Such statements in this news release include, without limitation statements regarding
subsequent funding of the Alliance, exploration activities in the six initial AOIs, including
geophysical surveys and supporting geological fieldwork, the addition of new AOIs, the results
of exploration activities within the AOIs, the establishment of a joint venture for any of the
AOIs, the operatorship of any Joint Venture if established, and the use of and effectiveness of
Typhoon™ for exploration activities within the AOIs.
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Forward-looking statements are based on management’s beliefs and assumptions and on
information currently available to management. Such statements are subject to significant risks
and uncertainties, and actual results may differ materially from those expressed or implied in
the forward-looking statements due to various factors, including changes in the prices of
copper or other metals Ivanhoe Electric is exploring for; the results of exploration and drilling
activities and/or the failure of exploration programs or studies to deliver anticipated results or
results that would justify and support continued exploration, studies, development or
operations; the final assessment of exploration results and information that is preliminary; the
significant risk and hazards associated with any future mining operations, extensive regulation
by the US government as well as local governments; changes in laws, rules or regulations, or
their enforcement by applicable authorities; the failure of parties to contracts with Ivanhoe
Electric to perform as agreed; and the impact of political, economic and other uncertainties
associated with operating in foreign countries, and the impact of the COVID-19 pandemic and
the global economy. These factors should not be construed as exhaustive and should be read
in conjunction with the other cautionary statements and risk factors described in Ivanhoe
Electric’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange
Commission.
No assurance can be given that such future results will be achieved. Forward-looking
statements speak only as of the date of this news release. Ivanhoe Electric cautions you not to
place undue reliance on these forward-looking statements. Subject to applicable securities
laws, Ivanhoe Electric 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, and Ivanhoe Electric expressly disclaims any requirement to do so. No
assurance can be given that such future results will be achieved. Forward-looking statements
speak only as of the date of this news release. Ivanhoe Electric cautions you not to place
undue reliance on these forward-looking statements. Subject to applicable securities laws,
Ivanhoe Electric 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, and Ivanhoe Electric expressly disclaims any requirement to do so.