Ivanhoe Mines issues 2022 fourth quarter and annual financial results, plus overview of construction and exploration activities
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March 13, 2023
Ivanhoe Mines issues 2022 fourth quarter and annual financial
results, plus overview of construction and
exploration activities
■
Kamoa-Kakula Copper Complex sold 323,733 tonnes of
payable copper in 2022 and recognized record annual revenue
of $2.15 billion and record EBITDA of $1.39 billion
■
Ivanhoe Mines recognized a record profit of $434 million in
2022, driven by record income from the Kamoa-Kakula joint
venture of $405 million
■
Kamoa-Kakula’s 2022 cost of sales total $1.09 per lb. of
payable copper; C1 cash costs of $1.39 per lb. within guidance
■
Kamoa-Kakula sold 92,208 tonnes of payable copper in Q4
2022 for record quarterly revenue of $673 million and record
EBITDA of $451 million at a margin of 67%
■
Kamoa-Kakula’s Phase 3 expansion on target for Q4 2024
completion; increasing copper production to a ten-year
average of 620,000 tonnes per annum,
at C1 cash cost of $1.22/lb.
■
Ivanhoe Mines commences optimization work to accelerate
Phase 2 expansion of the Tier-One Platreef palladium, nickel,
platinum, rhodium, copper and gold mine in South Africa;
Phase 1 on target for first production in Q3 2024
■
Construction ongoing at ultra-high-grade Kipushi zinc-copper-
germanium-silver mine; on track for Q3 2024 production
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JOHANNESBURG, SOUTH AFRICA ‒ Ivanhoe Mines (TSX: IVN; OTCQX: IVPAF)
today announced its financial results for the year ended December 31, 2022.
Ivanhoe Mines is a leading Canadian mining company that is advancing its four
principal mining and exploration projects in Southern Africa: the Phase 3
expansion of the Kamoa-Kakula Copper Complex in the Democratic Republic of
Congo (DRC) that commenced commercial operations in July 2021; the
construction of the Platreef palladium, nickel, platinum, rhodium, copper and gold
project in South Africa, scheduled for first production in the third quarter of 2024;
the restart of the historic Kipushi zinc-copper-lead-germanium mine in the DRC,
also scheduled for first production in the third quarter of 2024; and the
exploration for new copper discoveries on Ivanhoe’s 2,407-square-kilometre
Western Foreland exploration project, which is adjacent to Kamoa-Kakula.
All figures are in U.S. dollars unless otherwise stated.
FINANCIAL HIGHLIGHTS
• Ivanhoe Mines reported a record profit of $434 million for 2022, compared
with a profit of $45 million for 2021. Ivanhoe’s profit in Q4 2022 was $37
million compared to a profit of $24 million in Q3 2022.
• Kamoa-Kakula sold 323,733 tonnes of copper in 2022, and recognized record
revenue of $2.15 billion, record operating profit of $1.27 billion and record
EBITDA of $1.39 billion.
• During Q4 2022, Kamoa-Kakula sold 92,208 tonnes of payable copper and
recognized record revenue of $673 million, record operating profit of $418
million and record EBITDA of $451 million.
• Kamoa-Kakula’s cost of sales per pound (lb.) of payable copper sold was
$1.08/lb. for Q4 2022 compared with $1.05/lb. in Q3 2022. Cash costs (C1) per
pound of payable copper produced in Q4 2022 totalled $1.42/lb., compared to
$1.43/lb. in Q3 2022.
• Ivanhoe Mines presents adjusted EBITDA for the group of $489 million for
2022, and $162 million for Q4 2022, 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 $1.22 billion of net cash from operating
activities, which has funded both the Phase 2 and Phase 3 expansion
activities to date.
• Ivanhoe Mines has a strong balance sheet with cash and cash equivalents of
$597 million on hand as at December 31, 2022, and total debt of $739 million,
the majority of which relates to the $575 million of unsecured 2.5%
convertible notes that mature in April 2026, unless redeemed earlier.
OPERATIONAL HIGHLIGHTS
• Production at the Kamoa-Kakula Copper Complex for the fourth quarter of
2022 was 92,761 tonnes of copper in concentrate.
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• The debottlenecking program of Kamoa-Kakula's Phase 1 and Phase 2
concentrators was completed ahead of schedule, increasing nameplate
processing capacity by 22% to a combined total of 9.2 million tonnes of ore
per annum. The final installation and commissioning of a fourth Larox filter
press are now also complete, increasing copper production capacity to
450,000 tonnes per annum.
• Kamoa-Kakula's Phase 3 expansion, 500,000-tonne-per-annum on-site, direct-
to-blister copper smelter and refurbishment of Turbine #5 at the Inga II
hydroelectric facility are all advancing on schedule and are expected to be
complete in late 2024. At current copper prices, it is expected that cashflow
from Kamoa-Kakula’s Phase 1 and Phase 2 operations will be sufficient to
fund the 2023 and 2024 expansion capital cost requirements of $2.53 billion.
• In January 2023, Ivanhoe Mines announced outstanding economic results of
an updated, independent Integrated Development Plan (2023 IDP) for the
world-leading Kamoa-Kakula Copper Complex. The Pre-Feasibility Study
(PFS) for a phased expansion from 9.2 to 19.2 million tonnes per annum
yields an after-tax NPV8% of approximately $19 billion, over a 33-year mine
life. Kamoa-Kakula to rank as the fourth largest copper producer globally
from 2025, with lowest-quartile C1 cash costs.
• Ivanhoe continues its expansive copper exploration program on its Western
Foreland licences that cover approximately 2,407 square kilometres adjacent
to Kamoa-Kakula. The 2023 exploration program is budgeted at approximately
$19 million and includes up to 70,000 metres of total drilling.
• In mid-2023, Ivanhoe plans to release a maiden Mineral Resource estimate for
its Makoko and Kiala high-grade copper discoveries in the Western Foreland,
to be followed by a Preliminary Economic Assessment.
• Ivanhoe has commenced an optimization study at its Tier-One Platreef
palladium, nickel, platinum, rhodium, copper and gold mine in South Africa to
potentially accelerate production from the Phase 2 expansion. The study will
consider the implications of converting the 5.1-metre-diameter ventilation
shaft (Shaft 3), which is under construction, to a production shaft with the
capability to hoist.
• Underground development work at Platreef continues to focus on
establishing underground infrastructure on the 750-metre, 850-metre and 950-
metre levels around Shaft 1, as well as developing towards the first reef and
stoping areas on all three levels. Mine development across all three levels has
progressed well, with more than 750 metres of lateral development completed
to date. The first concentrate is scheduled for Q3 2024.
• The pilot drilling required for the raise-boring of Platreef's Shaft 2 commenced
in February 2023. Headgear construction began in November 2022 with more
than 70 metres of the 104-metres completed to date. In addition, raise boring
of Shaft 3 also commenced in February 2023.
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• Surface earthworks and civil works for the Kipushi concentrator continue on
schedule, with over 1,700 cubic metres of foundation concrete poured to date.
First concentrate is on track for Q3 2024.
• Underground mine development around Kipushi’s Big Zinc orebody is
advancing ahead of schedule. Development waste, as well as low-grade
mineralized rock from the advancement of the perimeter and access drives
surrounding the Big Zinc orebody, is being hoisted to the surface and
stockpiled.
• At the end of December 2022, Kamoa-Kakula achieved 1.53 million work hours
free of a lost-time injury. Zero lost time injuries have been recorded on the
construction projects of the Phase 3 expansion, smelter construction and
Inga II Turbine #5 refurbishment. In addition, the Platreef Project reached
408,360 hours worked free of a lost-time injury, and the Kipushi Project
reached 658,142 hours worked free of a lost-time injury.
• According to estimates by the United States Geological Survey, the
Democratic Republic of the Congo is now the World’s second-largest copper-
producing country, tied with Peru, having produced 2.2 million tonnes in
2022. This achievement would not be possible without Kamoa-Kakula, the
fastest-growing major copper mine on the planet.
Watch an updated, detailed timeline on the history of the Kamoa-
Kakula Copper Complex: https://vimeo.com/806783775/fa83ffbb7c
Read Ivanhoe's Fourth Quarter 2022 Sustainability Update:
https://bit.ly/3l95VGI
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Conference call for investors on Monday, March 13
Ivanhoe Mines will hold an investor conference call to discuss its 2022 fourth
quarter and annual financial results at 10:30 a.m. Eastern time / 7:30 a.m. Pacific
time on Monday, March 13. 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 please use the following link: https://edge.media-
server.com/mmc/p/vcbrd72a
Analysts are invited to join by phone for the Q&A using the following link:
https://register.vevent.com/register/BI2a229263d9634c82ab5ad144f57d6398
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.sedar.com.
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Principal projects and review of activities
1. Kamoa-Kakula Copper Complex
39.6%-owned by Ivanhoe Mines
Democratic Republic of Congo
The Kamoa-Kakula Copper Complex operated as the Kamoa Holding joint venture
between Ivanhoe Mines and Zijin Mining, has been independently ranked as the world’s
fourth-largest copper deposit by international mining consultant Wood Mackenzie from
2025. The project is approximately 25 kilometres southwest of the town of Kolwezi and
about 270 kilometres west of Lubumbashi. Kamoa-Kakula Copper Complex’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.
Ivanhoe sold a 49.5% share interest in Kamoa Holding Limited (Kamoa Holding) to Zijin
Mining and a 1% share interest in Kamoa Holding to privately-owned Crystal River in
December 2015. Kamoa Holding holds an 80% interest in the project. Since the
conclusion of the Zijin transaction, each shareholder has been required to fund
expenditures at Kamoa-Kakula in an amount equivalent to its proportionate
shareholding interest. Ivanhoe and Zijin Mining each hold an indirect 39.6% interest in
Kamoa-Kakula, Crystal River holds an indirect 0.8% interest, and the DRC government
holds a direct 20% interest.
Kamoa-Kakula summary of operating and financial data
FY 2022 Q4 2022 Q3 2022 Q2 2022 Q1 2022
Ore tonnes milled (000’s tonnes) 7,121 2,006 2,082 1,950 1,083
Copper ore grade processed (%) 5.54% 5.40% 5.60% 5.44% 5.91%
Copper recovery (%) 85.6% 86.1% 85.9% 84.0% 87.1%
Copper in concentrate produced
(tonnes) 333,497 92,761 97,820 87,314 55,602
Payable Copper sold (tonnes) 323,733 92,208 93,812 85,794 51,919
Cost of sales per pound
($ per lb.) 1.09 1.08 1.05 1.15 1.08
Cash cost (C1)($ per lb.) 1.39 1.42 1.43 1.42 1.21
Realized copper price ($ per lb.) 3.79 3.54 3.50 4.34 4.51
Sales revenue before remeasurement
($’000) 2,357,335 619,997 570,504 699,381 467,453
Remeasurement of contract receivables
($’000) (209,664) 53,473 (110,031) (205,248) 52,142
Sales revenue after remeasurement
($’000) 2,147,671 673,470 460,473 494,133 519,595
EBITDA ($'000) 1,391,497 451,371 254,423 286,313 399,391
EBITDA margin (% of sales revenue) 65% 67% 55% 58% 77%
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All figures in the above tables are on a 100%-project basis. Metal reported in concentrate is before
refining losses or deductions associated with smelter terms. This release includes “EBITDA”, “Adjusted
EBITDA”, “EBITDA margin” and "Cash costs (C1)” which are non-GAAP financial performance measures.
For a detailed description of each of the non-GAAP financial performance measures used herein and a
detailed reconciliation to the most directly comparable measure under IFRS, please refer to the non -
GAAP Financial Performance Measures section of the company’s MD&A for the year ended December
31, 2022.
C1 cash cost per pound of payable copper produced can be further
broken down as follows:
FY 2022 Q4 2022 Q3 2022 Q2 2022 Q1 2022
Mining ($ per lb.) 0.39 0.40 0.41 0.39 0.30
Processing ($ per lb.) 0.14 0.16 0.12 0.14 0.15
Logistics charges (delivered to China) ($ per lb.) 0.50 0.50 0.56 0.51 0.36
Treatment, refining and smelter charges ($ per lb.) 0.21 0.23 0.21 0.21 0.20
General and administrative expenditure ($ per lb.) 0.15 0.13 0.13 0.17 0.20
C1 cash cost per pound of payable
copper produced ($ per lb.) 1.39 1.42 1.43 1.42 1.21
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 recogni zed 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 and production taxes and non-routine charges as they are
not direct production costs.
Kamoa-Kakula produced 333,497 tonnes of copper in 2022, an
increase of 215% compared with 2021
Kamoa-Kakula's Phase 1 and 2 concentrator plants milled approximately 2.0 million
tonnes of ore during the fourth quarter at an average feed grade of 5.4% copper, for a
total of 7.1 million tonnes at an average grade of 5.5% copper for the year ended
December 31, 2022. This included high-grade, run-of-mine ore from the Kakula Mine,
supplemented with ore from the surface stockpiles to meet the throughput over design
capacity. In line with design parameters, copper recoveries averaged approximately
86% for the year.
The Kamoa-Kakula Copper Complex produced 92,761 tonnes of copper in concentrate
in the fourth quarter of 2022, for a total of 333,497 tonnes of copper in concentrate for
the year. This represents an increase of 215% compared with 2021 due to the
successful commissioning of the Phase 2 concentrator in April 2022 and achieved the
upper end of 2022 guidance.
All figures are on a 100% project basis and metal reported in concentrate is before
refining losses or deductions associated with smelter terms.
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Phase 1 and Phase 2 debottlenecking program to boost throughput to
9.2 million tonnes of ore per year is complete
In late February 2023, the debottlenecking of Kamoa-Kakula’s Phase 1 and 2
concentrators was completed ahead of schedule. The program increases the combined
design processing capacity of the Phase 1 and 2 concentrator plants by 22%, from 7.6
to 9.2 million tonnes per annum (Mtpa).
Commissioning of the fourth filter press took place on March 4, 2023. The
debottlenecking program boosts Kamoa-Kakula's annual production capacity to
approximately 450,000 tonnes of copper in concentrate.
Since the completion of the debottlenecking, the concentrator has achieved record daily
throughput of 27,796 tonnes and a record daily copper production of 1,505 tonnes.
However, since December and persisting during the first quarter of 2023, Kamoa-
Kakula has experienced intermittent grid stability issues in the DRC, impacting the
ability to run the Phase 1 and 2 concentrators continuously. The issues have been
prevalent across the southern grid power system in the DRC Copper Belt.
Kamoa Copper is liaising with the DRC’s state-owned power company La Société
Nationale d’Electricité (SNEL), to identify the issues and assist with potential solutions,
as well as evaluate options to insulate Kamoa-Kakula from future disruptions.
Representatives from DRA Global and Outotec standing in front of the first
batch of concentrate produced from the newly installed fourth Larox filter
press. The commissioning of the filter press ahead of schedule marks the
completion of the debottlenecking program.