IVN.TO · 2022-02-14 12:00:00

Ivanhoe Mines and Gécamines sign new agreement to return the ultra-high-grade Kipushi Mine in the DRC to production

Corporate Updates

February 14, 2022

Ivanhoe Mines and Gécamines sign new agreement to return

the ultra-high-grade Kipushi Mine in the DRC to production

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Kipushi 2022 feasibility study highlights outstanding economic

results from planned rebirth of the historic Kipushi Mine, with

two-year development timeline

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Kipushi will be the world's highest-grade major zinc mine, with

average grade of 36.4% zinc over the first five years

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Life-of-mine average annual zinc production of 240,000 tonnes

with C1 cash costs of US$0.65/lb of payable zinc

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After-tax NPV8% of US$941 million and IRR of 41%,

based on long-term zinc price of US$1.20/lb, with pre-

production capital cost of US$382 million

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After-tax NPV8% of US$2.3 billion and IRR of 73%

at current spot zinc price of approximately US$1.67/lb

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Kipushi to be fully powered by clean hydroelectricity, aligning

with Ivanhoe’s vision to produce “green metals”

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Feasibility study based only on zinc-rich resources, including

the renowned Big Zinc Zone; significant potential upside from

copper-and silver-rich orebodies with future exploration

KIPUSHI, DEMOCRATIC REPUBLIC OF CONGO – Ivanhoe Mines (TSX: IVN;

OTCQX: IVPAF) Executive Co-Chair Robert Friedland and President Marna Cloete,

together with Alphonse Kaputo Kalubi (Chairman) and Bester-Hilaire Ntambwe

Ngoy Kabongo (CEO) of Gécamines, DRC’s state-owned mining company, are

pleased to announce that Kipushi Holding, an Ivanhoe Mines wholly-owned

subsidiary, and Gécamines have signed a new agreement to return the ultra-high-

grade Kipushi Mine back to commercial production. Kipushi will be the world's

highest-grade major zinc mine, with average grade of 36.4% zinc over the first five

years of production.

Watch a new video showcasing Kipushi’s planned transformation into

the world's highest-grade major zinc mine:

https://vimeo.com/676846621/282541f745

The new agreement 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 the Kipushi Mine for years to come, and is

subject to execution of definitive documentation.

Alphonse Kaputo Kalubi commented: “We recently have witnessed Ivanhoe's

outstanding achievements in transforming the Kamoa-Kakula joint venture into a

state-of-the-art copper producer applying the highest standards, now a

benchmark on the Congolese Copperbelt. Ivanhoe and Gécamines also have now

redefined the Kipushi Project in an equitable manner, aligned with the

expectations of the Mining Code and those of Gécamines’ sole shareholder, the

Congolese State.

“We are convinced that Kipushi's new partnership around the Big Zinc will be a

benchmark for a successful combination of expertise, resources, a unique asset

and a shared desire to create value for stakeholders, the State, shareholders and

neighbouring communities. Kipushi, like Kamoa-Kakula, brings new standards,

employment opportunities, better health and education infrastructure, and the

conditions for the emergence of a dynamic socio-economic fabric around

Kipushi. Gécamines, which has operated this mine for a long time, aims, by

consolidating its partnership with Ivanhoe, to optimize its contribution to the

DRC’s mining sector.”

Bester-Hilaire Ntambwe Ngoy Kabongo added: “We are excited to move our

longstanding partnership with Ivanhoe Mines into a new phase that will deliver

significant long-term benefits to all parties. Ivanhoe Mines has been a key partner

in the Kipushi Project for over a decade and we appreciate their continued

commitment to the project. We are confident in Ivanhoe Mines’ technical and

financial capabilities to operate the Big Zinc and trust that we can jointly develop

the project in a sustainable, responsible and value adding manner for its

stakeholders, such as neighbouring communities. Gécamines sees in it the

opportunity for an improved exploitation of the Big Zinc, the development of an

integrated economic fabric and the imbedding of skills in the Haut-Katanga

province.”

“The new agreement with Gécamines is a testament to the great perseverance,

ingenuity and patience of Ivanhoe’s team, working alongside our partners in the

Democratic Republic of Congo,” Mr. Friedland said. “On behalf of Ivanhoe Mines’

Board, I would like to thank our team, led by our President Marna Cloete, who

have helped us arrive at this historic day.

“The outstanding performance by the Kamoa Copper team in delivering the first

phases of the Kamoa-Kakula Mine, ahead of schedule and on budget,

undoubtedly helped expedite the new agreement, as it showcases our strong

development capabilities and industry-leading community initiatives to our

partner Gécamines and the Congolese government.

“The new agreement now allows us to responsibly, efficiently and expeditiously

develop Kipushi into an ultra-high-grade zinc producer, with outstanding

potential to find more zinc, copper, germanium and silver resources – paving the

way to fulfilling its promise of significant, long-lasting, economic and social

benefits for the Congolese people.

“The past few years have been a significant challenge for us all, including the

loyal men and women preparing Kipushi’s underground workings for a

resumption of production. Together, we have faced the global impact of the

COVID-19 pandemic and we have emerged stronger than ever. Now we have a

clear line of sight on having our three tier-one, cornerstone mining assets enter

commercial production.”

(L-R) Olivier Binyingo (Ivanhoe Mines Vice President Public Affairs DRC),

Marna Cloete (Ivanhoe Mines President), Alphonse Kaputo Kalubi

(Chairman of Gécamines), and Louis Watum (General Manager, Kipushi

Corporation) discussing the Kipushi partnership during a recent visit to the

Kamoa-Kakula mining complex.

Gécamines’ Chairman Alphonse Kaputo Kalubi (left) “operating” a piece of

heavy equipment at Kamoa-Kakula’s state-of-the-art training centre.

The re-birth of a mining legend; Kipushi is a significant past producer

of copper, zinc, germanium and precious metals

The Kipushi copper-zinc-germanium-silver mine in the DRC Copperbelt is

adjacent to the town of Kipushi and approximately 30 kilometres southwest of

Lubumbashi. It is located less than one kilometre from the Zambian border.

Kipushi has a long and storied history as a major producer of copper and zinc.

Built and then operated by Union Minière for 42 years, Kipushi began mining a

reported 18% copper deposit from a surface open pit in 1924. It was the world’s

richest copper mine at the time. The Kipushi Mine then transitioned to become

Africa’s richest underground copper, zinc and germanium mine. State-owned

Gécamines gained control of Kipushi in 1967 and operated the mine until 1993,

when it was placed on care and maintenance due to a combination of economic

and political factors.

Over a span of 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 11% zinc and

approximately 7% copper. It also produced 278 tonnes of germanium and 12,673

tonnes of lead between 1956 and 1978. There is no formal record of the

production of precious metals as the concentrate was shipped to Belgium and

the recovery of precious metals remained undisclosed during the colonial era;

however, drilling by Ivanhoe Mines has encountered significant silver values

within Kipushi’s current zinc- and copper-rich deposits.

Germanium is a strategic metal used today in electronic devices, flat-panel

display screens, light-emitting diodes, night vision devices, optical fiber, optical

lens systems, and solar power arrays.

Most of Kipushi’s historical production was from the Fault Zone, a steeply-

dipping ore body rich in copper and zinc that initially was mined as an open pit.

The Fault Zone extends to a depth of at least 1,800 metres below surface, along

the intersection of a fault in carbonaceous dolomites (see Figure 3).

Before Kipushi was idled, Gécamines discovered the Big Zinc deposit at a depth

of approximately 1,250 metres below surface and adjacent to the producing Fault

Zone (see Figure 3). The Big Zinc Deposit has not been mined and is the initial

target for production as outlined in the new feasibility study.

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 35.34%

zinc, 0.80% copper, 23 grams/tonne (g/t) silver and 64 g/t germanium, at a 7% zinc

cut-off, containing 9.2 billion pounds of zinc, 8.7 million ounces of silver and 24.4

million ounces of germanium (see Table 1).

In addition, Ivanhoe’s drilling expanded Kipushi’s copper-rich Measured and

Indicated Mineral Resources to an additional 2.29 million tonnes at grades of

4.03% copper, 2.85% zinc, 21 g/t silver and 19 g/t germanium, at a 1.5% copper

cut-off – containing 144 million pounds of copper (see Table 1).

In 1924, Kipushi began mining 18% copper from a surface open pit, before

transitioning to Africa’s richest underground copper and zinc mine. This

picture shows the Kipushi open pit in November 1928.

Picture of the headframes for Kipushi shafts 1, 2 and 3, and the Kipushi

concentrator in February 1966.

Kipushi’s geology team in 2016 showing a drill intersection in the Big Zinc

Deposit of 44.8% zinc over 340 metres, still one of the world’s highest-

grade drill holes.

Core from hole KPU008 drilled in 2014 in Kipushi’s Série Récurrente Zone –

11.2 metres of 17% copper and 89.6 g/t silver, highlighting the potential to

discover additional zones of copper- and silver-rich mineralization.

Kipushi feasibility study issued, heralding the planned re-start of the

historic mine, with a two-year development timeline and exceptional

economic results

Ivanhoe Mines today announced the positive findings of an independent,

feasibility study for the planned resumption of commercial production at Kipushi.

The Kipushi 2022 Feasibility Study (2022 FS) builds on the results of the pre-

feasibility study (PFS) published by Ivanhoe Mines in January 2018. The

redevelopment of Kipushi is based on a two-year construction timeline, which

utilizes the significant existing surface and underground infrastructure to allow

for substantially lower capital costs than comparable development projects. The

estimated pre-production capital cost, including contingency, is US$382 million.

The 2022 FS 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 35.3% zinc. Kipushi’s exceptional zinc grade is more

than twice that of the world’s next-highest-grade zinc project, according to Wood

Mackenzie, a leading, international industry research and consulting group (see

Figure 2).

The 2022 FS does not include any of the copper-rich mineral resources delineated

to date and assumes that revenue is attributable to zinc only, with no by-product

credits.

The 2022 FS envisages the recommencement of underground mining operations,

and the construction of a new concentrator facility on surface with annual

processing capacity of 800,000 tonnes of ore, producing on average 240,000

tonnes of zinc contained in concentrate.

Concurrent with the release of the 2022 FS, Ivanhoe is finalizing Kipushi’s

development and financing plan, together with its partner Gécamines. The

Kipushi Mine is operated by Kipushi Corporation (KICO), a joint venture between

Ivanhoe Mines wholly owned subsidiary, Kipushi Holding, and Gécamines, the

DRC’s state-owned mining company.

The 2022 FS was independently prepared on a 100%-project basis by OreWin Pty.

Ltd., MSA Group (Pty.) Ltd., SRK Consulting (Pty) Ltd. and METC Engineering. A

National Instrument 43-101 technical report will be filed on SEDAR at

www.sedar.com and on the Ivanhoe Mines website at www.ivanhoemines.com

within 45 days of the issuance of this news release.

Figure 1: World’s 10 major zinc mines, showing estimated annual zinc

production and zinc head grades (ranked by production, 2020).

Source: Wood Mackenzie; January 2022. Note: Wood Mackenzie compared the Kipushi Project’s life -of-

mine average annual zinc production and zinc head grade of 240,000 tonnes and 3 1.9%, respectively,

against production and zinc head grades estimated in 2020.

100

200

300

400

500

600

Milled Zinc Grade (%)

Contained Zinc Production (kt)

Contained zinc production (kt)

Ore milled head grade Zn (%)

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