Ivanhoe Mines issues 2023 first quarter financial results, and overview of construction and exploration activities
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May 3, 2023
Ivanhoe Mines issues 2023 first quarter financial results, and
overview of construction and exploration activities
■
Kamoa-Kakula sold 86,777 tonnes of payable copper during the
quarter and recognized record revenue of $689 million, as well
as record EBITDA of $452 million
■
Ivanhoe Mines recorded Q1 2023 profit of $82 million, net of
$31 million non-cash loss on the convertible bond fair
valuation
■
Kamoa-Kakula produced 93,603 tonnes of copper in Q1 2023,
including a record 34,915 tonnes of copper in March, following
debottlenecking program completed ahead of schedule
■
Kamoa-Kakula’s quarterly cost of sales total $1.25 per lb. of
payable copper; C1 cash costs of $1.42 per lb. towards the
lower end of guidance
■
Kamoa-Kakula’s Phase 3 expansion on track for Q4 2024;
boosting 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 on installing
hoisting capacity in Shaft 3 at the Tier-One Platreef palladium,
nickel, platinum, rhodium, copper and gold mine in
South Africa
■
Ivanhoe Mines agrees off-take terms with Gécamines and
Glencore for 100% of Kipushi's zinc concentrate, together with
US$250 million facility
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JOHANNESBURG, SOUTH AFRICA – Ivanhoe Mines’ (TSX: IVN; OTCQX: IVPAF)
President Marna Cloete and Chief Financial Officer David van Heerden are
pleased to present the company’s financial results for the three months ended
March 31, 2023. 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 recorded a profit of $82 million for Q1 2023, compared to a
profit of $22 million for the same period in 2022. The profit in the quarter is net
of a $31 million non-cash loss on the fair value adjustment of the embedded
derivative financial liability of the convertible bond, resulting predominantly
from a 14% increase in the share price from C$10.70 per share to C$12.21 per
share at quarter end. The profit includes Ivanhoe Mines’ share of profit and
finance income from the Kamoa-Kakula joint venture of $130 million for Q1
2023.
• Adjusted Q1 2023 EBITDA for the Ivanhoe Mines group of $168 million,
compared to $145 million for the same period in 2022, and $162 million for Q4
2022, which includes an attributable share of EBITDA from Kamoa-Kakula.
• During Q1 2023, Kamoa-Kakula sold 86,777 tonnes of payable copper and
recognized record revenue of $689 million, with an operating profit of $416
million and record quarterly EBITDA of $452 million.
• Kamoa-Kakula’s cost of sales per pound (lb.) of payable copper sold was
$1.25/lb. for Q1 2023 compared with $1.08/lb. and $1.08/lb. in Q4 2022 and Q1
2022, respectively. Cash costs (C1) per pound of payable copper produced in
Q1 2023 totalled $1.42/lb., compared to $1.42/lb. and $1.21/lb. in Q4 2022 and
Q1 2022, respectively.
• Ivanhoe Mines has a strong balance sheet with cash and cash equivalents of
$497 million on hand as at March 31, 2023, and expects Kamoa-Kakula’s Phase
1 and Phase 2 cash flow to be sufficient to fund the Phase 3 expansion capital
cost requirements at current copper prices.
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• Off-take and financing terms agreed with Gécamines and Glencore to return
Ivanhoe’s ultra-high-grade Kipushi Mine to production in Q3 2024; off-take
term sheet for 100% of Kipushi’s zinc concentrate, together with a $250-million
facility to finance construction.
OPERATIONAL HIGHLIGHTS
• Kamoa-Kakula produced 93,603 tonnes of copper in Q1 2023, including a
record 34,915 tonnes of copper in March 2023, following the completion of the
debottlenecking program in late February 2023, ahead of schedule and on-
budget.
• Kamoa-Kakula’s Phase 1 and 2 concentrators have continued to perform
strongly, achieving a daily mill throughput record of over 29,000 tonnes, and
also achieving recoveries in excess of 88% during March and April,
significantly higher than the design rate of 86%.
• Construction for Platreef’s Phase 1 concentrator is advancing well and is on
track for first production in Q3 2024. The Shaft 2 headgear concrete structure
is complete to a height of approximately 79 metres. Shaft 2’s overall height will
be approximately 100 metres above ground, including the steel structure
housing the main winders.
• Ivanhoe initiated an optimization study at Platreef 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.
• Surface construction activities and underground development of the Big Zinc
orebody at Kipushi are advancing ahead of schedule, with first concentrate
production expected in Q3 2024.
• Ivanhoe continues its expansive copper exploration program on its Western
Foreland licences that cover approximately 2,407 square kilometres adjacent
to Kamoa-Kakula. Diamond drilling commenced in early January with a single
contractor rig, which was increased to three rigs by the end of March, together
with an Ivanhoe Land Cruiser mounted diamond drill rig. A total of 4,883
meters of diamond core was drilled during the quarter, which was wet season.
• Ivanhoe Mines published its sixth annual Sustainability Report, underscoring
the company’s ongoing commitment to “mining with a greater purpose” and
its pursuit to be a global leader in responsible mining. Please visit
www.ivanhoemines.com to view the report.
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Watch a Q1 2023 video of operations and construction activities at
Kamoa-Kakula: https://vimeo.com/823071306/8b676323fb
Read Ivanhoe’s First Quarter 2023 Sustainability Update:
https://bit.ly/40XMxeC
Q1 2023 conference call for investors
Ivanhoe Mines will hold an investor conference call to discuss its Q1 2023
financial results at 10:30 a.m. Eastern time / 7:30 a.m. Pacific time on Wednesday,
May 3. 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/i6yyz97g
Analysts are invited to join by phone for the Q&A using the following link:
https://register.vevent.com/register/BI639b8647ae7c4cf6802991597dd26b68
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
third-largest copper deposit by international mining consultant Wood Mackenzie in
2027. 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. 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’s employee workforce is currently 97% Congolese.
Aerial view of Kamoa-Kakula’s Copper Complex, which is now operating at
a recently increased processing capacity of 9.2 million tonnes per annum,
and production capacity of up to 450,000 tonnes of copper per annum.
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Kamoa-Kakula summary of operating and financial data
Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022
Ore tonnes milled (000’s tonnes) 1,930 2,006 2,082 1,950 1,083
Copper ore grade processed (%) 5.42% 5.40% 5.60% 5.44% 5.91%
Copper recovery (%) 87.1% 86.1% 85.9% 84.0% 87.1%
Copper in concentrate produced (tonnes) 93,603 92,761 97,820 87,314 55,602
Payable copper sold (tonnes) 86,777 92,208 93,812 85,794 51,919
Cost of sales per pound ($ per lb.) 1.25 1.08 1.05 1.15 1.08
Cash cost (C1) ($ per lb.) 1.42 1.42 1.43 1.42 1.21
Realized copper price ($ per lb.) 4.04 3.54 3.50 4.34 4.51
Sales revenue before remeasurement
($’000)
659,529 619,997 570,504 699,381 467,453
Remeasurement of contract receivables
($’000)
29,594 53,473 (110,031) (205,248) 52,142
Sales revenue after remeasurement
($’000)
689,123 673,470 460,473 494,133 519,595
EBITDA ($’000) 452,422 451,371 254,423 286,313 399,391
EBITDA margin (% of sales revenue) 66% 67% 55% 58% 77%
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 MD&A 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 in the MD&A .
C1 cash cost per pound of payable copper produced can be further broken
down as follows:
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,
Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022
Mining ($ per lb.) 0.41 0.40 0.41 0.39 0.30
Processing ($ per lb.) 0.19 0.16 0.12 0.14 0.15
Logistics charges (delivered to China) ($ per lb.) 0.46 0.50 0.56 0.51 0.36
Treatment, refining and smelter charges ($ per lb.) 0.23 0.23 0.21 0.21 0.20
General and administrative expenditure ($ per lb.) 0.13 0.13 0.13 0.17 0.20
C1 cash cost per pound of payable
copper produced ($ per lb.) 1.42 1.42 1.43 1.42 1.21
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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 recognized 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.
John Katumbwe, Scooptram (LHD) driver, developing the twin decline to
the new Kamoa 1 and Kamoa 2 underground mines, which will be the
source of copper ore for Kamoa-Kakula’s Phase 3 concentrator. Total
copper production from Kamoa-Kakula is expected to increase to 600,000
tonnes per annum in Q4 2024.
Kamoa-Kakula produced 93,603 tonnes of copper in Q1 2023,
including a record 34,915 tonnes of copper in March 2023
Kamoa-Kakula’s Phase 1 and 2 concentrators are now regularly operating at the
increased processing rate of 9.2 million tonnes per annum (Mtpa), following the
completion of the debottlenecking program. The $50-million Phase 1 and 2 concentrator
debottlenecking program was completed on budget and ahead of schedule in late
February 2023, increasing production capacity up to 450,000 tonnes of copper in
concentrate per annum. 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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Following the completion of the debottlenecking program in February, Kamoa-Kakula’s
Phase 1 and 2 concentrators had a record-breaking month in March for copper
production, including a monthly production record of 34,915 tonnes of copper in
concentrate, in addition to a weekly production record of 9,016 tonnes in mid-March,
and a daily production record of 1,563 tonnes on March 25, 2023. These records were
achieved following two scheduled plant shutdowns during the first quarter to tie in the
new debottlenecking equipment. During the month of April, strong concentrator
performance continued with a record daily mill throughput achieved of 29,206 tonnes of
ore.
Kamoa-Kakula’s Phase 1 and 2 concentrators milled approximately 1.93 million tonnes
of ore during the first quarter at an average feed grade of 5.42% copper. This included
approximately 255,000 tonnes of ore from the surface stockpiles.
(L-R) Chris Tshibanda, Control Room Supervisor; Linda Malumda, Senior
Operator Larox; Rachelle Museka, Mill Operator; Serge Mukembe, Control
Room Supervisor at Kamoa-Kakula’s Phase 1 and Phase 2 concentrator
facility, which is now operating at a throughput capacity of 9.2 Mtpa
following the successful debottlenecking program.
The Phase 1 and Phase 2 concentrators also substantially outperformed design
specifications in terms of copper recovery during the months of March and April. Copper
recoveries averaged 88% and periodically exceeded 90% over a 24-hour periods.
These record recoveries are significantly above Kamoa-Kakula’s nameplate 86%
recovery rate.