Ivanhoe Mines and Gécamines sign new joint venture to restart the ultra-high-grade Kipushi mine, a century since first opening
January 16, 2024
Ivanhoe Mines and Gécamines sign new joint venture to restart
the ultra-high-grade Kipushi mine, a century since first opening
■
Construction of new concentrator and underground development
well ahead of schedule for first production in Q2 2024
■
Kipushi expected to produce more than 250,000 tonnes of zinc
annually over first five years
■
New Kipushi commercial border crossing and bypass road to
unlock value for Kipushi and Kamoa-Kakula
KIPUSHI, DEMOCRATIC REPUBLIC OF CONGO (DRC) – Ivanhoe Mines (TSX: IVN;
OTCQX: IVPAF) Executive Co-Chair Robert Friedland and President Marna Cloete,
together with Chairman Guy-Robert Lukama Nkunzi and General Manager Placide Nkala
Basadilua of Gécamines, the Democratic Republic of Congo’s state-owned mining
company, are pleased to announce today the signing of the new joint venture
agreement to restart the ultra-high-grade Kipushi zinc-copper-germanium-silver mine.
In addition, Ivanhoe is pleased to provide an update on the restart of Kipushi, with both
surface construction activities and underground development tracking ahead of
schedule for first production, expected in the second quarter of 2024.
The signing of the new joint venture agreement heralds the beginning of a new era of
production for the Kipushi Mine, which will resume operations one hundred years after
first opening in 1924 as the world’s richest copper mine.
Gécamines’ Chairman, Guy-Robert Lukama Nkunzi commented:
“The relaunch of the Kipushi mine is a source of pride for all of Gécamines’ employees,
the local communities of Kipushi town, the Haut-Katanga Province as well as our
country as a whole. The restart of operations of a mine as emblematic as Kipushi, after
30 years of inactivity, is a strong signal of the desire and commitment of Gécamines,
and its partner Ivanhoe Mines, to contribute to the DRC’s economic development, in
accordance with the vision outlined by His Excellency, the President of the Republic
Félix-Antoine Tshisekedi Tshilombo.
2
“Thanks to this agreement, Gécamines will immediately increase its stake in KICO to
38%, then to 43% in 2027, strengthening its position in the joint venture. More
importantly, Gécamines working alongside its world-class partner, will unlock the
substantial potential of this unique, ultra-high-grade zinc deposit, with notable
quantities of germanium, copper and other metals critical for global growth.
“The successful development of Kipushi will create prosperity on many levels. We will
be creating local employment and developing the local economy, and we will also
structurally strengthen Gécamines and the Democratic Republic of Congo, placing them
on the world stage for the production of strategic minerals.”
Ivanhoe Mines’ Founder and Executive Co-Chairman, Robert Friedland commented:
“We are delighted to execute the joint-venture agreement with our long-term partners at
Gécamines. Together we will make Kipushi great again! Kipushi is an extraordinary
mineral endowment, holding not only the world's richest zinc orebody, but also
significant quantities of copper, lead, silver, germanium and gallium. Kipushi is another
great example of the unparalleled opportunities in the DRC for mineral development.
There is no better place on our planet to build a mine. This makes the Central African
Copperbelt and high-grade mines, like Kipushi and Kamoa-Kakula, strategically
important worldwide … especially in light of the increasing fragmentation of supply
chains and the growing demand for low-carbon-intensive strategic minerals.
“We would like to commend the dedicated Kipushi team, our joint-venture partner
Gécamines, and the hardworking Congolese people for their exceptional contributions
towards restarting this historic mine. The project is advancing ahead of schedule, in line
with our track record of operational excellence. Kipushi’s restart follows the timely and
cost-effective delivery of Phases 1 and 2 at the Kamoa-Kakula Copper Complex, with
Phase 3 now also ahead of schedule for first production in the third quarter of 2024.”
Highlights of the joint-venture agreement between Kipushi Holding,
Gécamines and KICO
As announced on February 14, 2022, Gécamines, Kipushi Holding and Kipushi
Corporation (KICO) signed a term sheet to return the Kipushi Mine to commercial
production. The agreement has now been fully executed. The terms are unchanged from
the original transaction and are summarized below:
• Upon completion of conditions precedent of the full agreement, Kipushi Holding, a
100%-owned subsidiary of Ivanhoe Mines, transfers to Gécamines an additional 6%
of the share capital and voting rights in KICO. As a result, Gécamines’ ownership in
Kipushi Holding increases from 32% to 38%.
• From January 25, 2027, an additional 5% of the share capital and voting rights in
KICO shall be transferred from Kipushi Holding to Gécamines, further increasing
Gécamines’ ownership to 43%.
3
• Kipushi Holding would retain its 57% ownership in KICO in the event that part of
KICO’s share capital is required to be transferred to the DRC State or any third
party, pursuant to an applicable legal or regulatory provision. Therefore, Gécamines
would transfer any KICO shares required.
• Throughout the exploitation of the Big Zinc, estimated at 12 years, Gécamines will
have the option to purchase and locally process the concentrate produced by KICO.
• Once a minimum of the current proven and probable reserves and up to 12 million
tonnes have been mined and processed, an additional 37% of the share capital and
voting rights in KICO shall be transferred from Kipushi Holding to Gécamines. After
which, Kipushi Holding and Gécamines will hold 20% and 80%, respectively.
• A new supervisory board and executive committee, with appropriate shareholder
representation, is in the process of being established.
• New initiatives will be implemented focusing on the development of Congolese
employees, including individual development, the identification of future leaders,
succession planning and the promotion of gender equality across the workforce.
(L-R) Olivier Binyingo, SVP Public Affairs DRC, Ivanhoe Mines; Placide Nkala
Basadilua, GM, Gécamines; Marna Cloete, President, Ivanhoe Mines, and; Guy-
Robert Lukama Nkunzi, Chairman, Gécamines.
Dedicated Kipushi commercial border crossing to unlock direct export and
import access to Zambia
4
The Kipushi Mine is adjacent to the border town of Kipushi, approximately 30 kilometres
southwest of Lubumbashi on the DRC Copperbelt. Kipushi is approximately 250
kilometres southeast of the Kamoa-Kakula Copper Complex and less than one kilometre
from the Zambian border.
The commercial border crossings at Kasumbalesa and Sakania, also in Haut-Katanga
province, handle most of the DRC Copperbelt’s imports and exports (see Figure 1).
Ivanhoe Mines has been engaging with the provincial government of Haut-Katanga on a
new commercial DRC-Zambia road border crossing at the town of Kipushi. In 2023, a
series of study options were presented and reviewed by the provincial government of
Haut-Katanga and the national authorities in the DRC. Support was received to create a
new one-stop border post on the southern edge of Kipushi town within the DRC. The
new border infrastructure is expected to consist of a staging area and administration
building on both the DRC and Zambian sides of the border.
Figure 1. Map of the current and planned commercial DRC-Zambia road border
infrastructure used by the DRC Copperbelt for exporting mineral products
The appointment of the road-building contractor, by the Haut-Katanga province, has
also been made. The contractor will construct the 13-kilometre sealed, bypass road
around the town of Kipushi that will connect the existing N37 main road to the Kipushi
5
site. Mobilization of the construction contractor is expected to commence imminently.
Ivanhoe Mines has entered into an agreement with the Province of Haut-Katanga to both
fund and joint-manage the construction of the bypass road.
Concurrently, work is underway by the Zambian government to upgrade roads for
commercial traffic on the Zambian side of the border, connecting the T5 highway to the
new commercial Kipushi border (see Figure 1). Upgrades have commenced on some
sections of road, with further infrastructure upgrades and all-weather proofing planned
over the coming year.
A new commercial DRC-Zambia border crossing at Kipushi will not only benefit the
Kipushi Mine, but also Kamoa-Kakula as an additional route for exports. In addition, the
border crossing will provide socio-economic benefits to the community of Kipushi and
the city of Lubumbashi, the capital of Haut-Katanga province, which is approximately 30
kilometres north-east.
Off-take and financing discussions to be concluded this quarter
Following the April 27, 2023 announcement regarding an off -take and financing facility
term sheet with Glencore, Ivanhoe has received significant additional interest in relation
to the financing of Kipushi and off-take of zinc concentrate.
Negotiations are advancing with numerous parties, including facilities of $200 million or
higher, and are expected to be concluded during this quarter, prior to the commencement
of production in the second quarter . The remaining initial capital for the Kipushi Project
was approximately $240 million as at September 30, 2023, which will be funded by such
facilities, with any shortfall covered by additional shareholder loans from Ivanhoe Mines.
New Kipushi concentrator is 79% complete and ahead of schedule for first
production in Q2 2024
The new 800,000-tonne-per-annum concentrator includes dense media separation,
milling and a flotation circuit, and is expected to produce more than 250,000 tonnes of
zinc per annum over the first five years of production. Design recoveries are targeted at
96%, with a concentrate grade averaging 55% contained zinc. The project is 79%
complete and is tracking ahead of schedule, with commissioning expected to take place
in the second quarter.
Detailed engineering, procurement and fabrication activities are now all complete, and
ahead of schedule. All major equipment has also been delivered to site, including the
ball mill fabricated by CITIC Heavy Industries of Henan Province, China, the dense
media separation (DMS) plant fabricated by Bond Equipment in Gauteng, South Africa,
and the flotation cells by FL Smidth of Copenhagen, Denmark. All mechanical and
electrical equipment packages are in the process of completing onsite installation and
testing, with the final few truck deliveries of equipment expected later this month.
6
The construction team celebrate the lowering of Kipushi’s ball mill shell into
place. The ball mill was fabricated by CITIC Heavy Industries.
Bird’s eye view of the installed flotation cells, fabricated by FL Smidth. All long-
lead order equipment items have been delivered to site and are in the process of
being installed.
7
Aerial view of the Kipushi concentrator construction site, with the run-of-mine
(ROM) overland feed conveyor (top of picture in green) from the nearby P5 shaft
to the ROM stockpile area. The 800,000 tonnes-per-annum concentrator is
tracking ahead of schedule at 79% complete, with first production expected in Q2
2024.
(L-R) Gloire Kumwimba and Mojej Mbuya, Electrical Quality Controllers of Panaco
SARL, conducting electrical testing of a motor prior to installation
8
Underground development ahead of schedule, with over 4,500 metres of
lateral and decline development completed since September 2022
In line with the 2022 Kipushi Feasibility Study, mining will focus on the 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.
In the first quarter of 2023, the underground mining contractor was appointed, and the
subsequent phased on-site mobilization of mining crews and equipment was completed
during the fourth quarter. The primary mining fleet is supplied by Epiroc of Stockholm,
Sweden. Following the complete mobilization in the fourth quarter of the underground
equipment fleet, as well as the development crews, the current underground
development rate is approximately 400 metres per month.
The underground mining operation is fully mechanized, highly efficient and designed to
enable a quick ramp-up to steady state. The underground mining team consists of four
mining crews. Each mining crew is made up of five miners per shift and equipped with a
primary fleet consisting of an Epiroc 282 Twin Boomer, a ST 14 Scooptram (LHD) and
two MT42 dump trucks. In addition, Simba long-hole drill rigs have been deployed for
stope production and have commenced long-hole drilling for stoping.
Stoping of ultra-high-grade Big Zinc orebody started ahead of schedule
The mining method of the Big Zinc orebody is transverse sublevel open stoping, with
high-grade ore extracted from the stopes 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 height of each long-hole stope is approximately 60 metres, comprising an upper 30-
metre-high stope and a lower 30-metre-high stope. Stopes will be separated by a 15-
metre-high sill pillar. The long-hole stopes will be mined with a bottom-up mining
sequence, with the lower stope extracted first followed by the upper stope.
Underground development is taking place concurrently on multiple access levels
around the Big Zinc orebody. Perimeter and access drives are under development on
the 1,335-metre and 1,365-metre levels, concurrently with the profiling of the stope drill
and extraction drives into the Big Zinc orebody. In addition, stope extraction drives
(used for accessing and extracting blasted ore from the stopes) and stope drill drives
are being developed on the 1,260-metre, 1,290-metre and 1320-metre levels inside the
Big Zinc orebody.
Stoping (mining) of Kipushi’s ultra-high-grade Big Zinc orebody commenced in
December. Stoping started on a trial-mining basis to complete the training of the
underground mining crews in preparation for the commencement of commercial
operations this quarter. Ore will be stockpiled on surface adjacent to the concentrator
ahead of commissioning in the second quarter.