Ivanhoe Mines issues 2024 first quarter financial results, and overview of construction and exploration activities
April 30, 2024
Ivanhoe Mines issues 2024 first quarter financial results, and
overview of construction and exploration activities
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Kamoa-Kakula sold 85,155 tonnes of payable copper during
the quarter and recognized revenue of $618 million, as well as
EBITDA of $365 million
■
Ivanhoe Mines recorded Q1 2024 loss of $69 million, primarily
as a result of non-cash loss on convertible bonds due to 26%
quarterly share price increase; normalized profit of $70 million
and adjusted EBITDA of $126 million
■
Kamoa-Kakula produced 86,203 tonnes of copper in Q1 2024;
annual production guidance for Kamoa-Kakula maintained at
between 440,000 to 490,000 tonnes of copper
■
Kamoa-Kakula’s quarterly cost of sales total $1.50/lb. of
payable copper; C1 cash cost of $1.57/lb. towards the lower
end of guidance
■
Pre-commissioning of Kamoa-Kakula’s new 5 million-tonne-
per-annum Phase 3 concentrator underway, well ahead of
schedule, with first ore imminent
■
Kamoa-Kakula secures 15 MW of imported grid power to offset
DRC grid instability, significantly improving production in
April; with a further 40 MW expected from tomorrow, May 1
■
Pre-commissioning of Kipushi zinc concentrator underway
ahead of schedule, with first ore in June; expected to produce
over 270,000 tonnes as one of the world’s largest zinc mines
■
Ivanhoe Mines completed approx. 17,000 metres of diamond
drilling in the Western Forelands during the quarter, focused
on expanding the high-grade Kitoko copper discovery
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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, 2024. Ivanhoe Mines is a leading Canadian mining company that is
advancing its four principal mining and exploration projects in Southern Africa:
the expansion of the Kamoa-Kakula Copper Complex in the Democratic Republic
of Congo (DRC), which is expected to be the third largest copper mine globally;
the phased development of the Platreef palladium, nickel, platinum, rhodium,
copper and gold project in South Africa, which is the world’s largest undeveloped
precious metals project and one of the largest nickel sulphide deposits; the
restart of the historic Kipushi zinc-copper-lead-germanium mine in the DRC,
which is expected to be one of the largest zinc mines globally; and exploration on
Ivanhoe’s 2,650-square-kilometre Western Foreland exploration project for new
sedimentary copper discoveries, as well as expanding and further defining the
high-grade Makoko, Kiala, and Kitoko copper discoveries that are adjacent to
Kamoa-Kakula. All figures are in U.S. dollars unless otherwise stated.
Ivanhoe Mines Founder and Executive Co-Chairman Robert Friedland
commented:
"Kamoa-Kakula continues to excel, generating significant EBITDA at consistent
margins and maintaining cash costs at the low end of our 2024 forecast. This was
achieved despite grid instability during the quarter that impacted copper
production. Our management team has acted swiftly and decisively to resolve
this issue, by securing 55 megawatts of imported power from neighboring
countries via the Zambian grid, as well as by expanding our on-site backup
generation capacity. As a result of this intervention, we have seen a significantly
improved start to the second quarter at Kamoa-Kakula.
"Kamoa-Kakula's development milestones are consistently met on budget and
ahead of schedule, with the Phase 3 mill and mine expansion completed two
quarters earlier than planned. Anticipating first ore in the circuit next month,
Phase 3 will boost annual production to over 600,000 tonnes of copper ...
solidifying Kamoa-Kakula as one of the world's leading copper producers. With
improved power supply and accelerated Phase 3 output, we stand by our annual
copper production forecast of between 440,000 to 490,000 tonnes.
"Copper prices have recently reached $10,000 per tonne, signaling an impending
supply shortage, which is emphasized by smelter treatment charges for copper
concentrate approaching zero in the spot market. Copper producers cannot keep
up with the pace of demand for this essential metal, including from advanced
technologies such as data centres, which were recently estimated to consume
over 2 million tonnes of copper as soon as 2030 … added to which is an unseen
explosion in demand from the global military complex.
"Given this backdrop, we are looking to accelerate our growth plans at Kamoa-
Kakula to produce even more ‘green’ copper. We are excited by the upcoming
results of our engineering for ‘Project 95’ – increasing our metallurgical
recoveries to significantly increase production. We are also already looking at the
possibility of optimizing our Phase 3 plant to increase throughput beyond 5 Mtpa,
and potentially bringing forward the Phase 4 concentrator expansion.
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“We have the most incredible resource endowment at Kamoa-Kakula, including
our high-grade, mechanized underground operations, which are currently
producing at around 5% copper head grade, and great potential to expand our
underground mining footprint. We are also evaluating in detail the opportunity for
world-class open pit mining on the north of our Kamoa-Kakula mining license.
This remarkable mining complex has the capability to produce at over 20 Mtpa
capacity for decades, chasing down the number one copper producer globally.
There is much more to come this year at Kamoa-Kakula, without even mentioning
the new deposits we are unearthing in the Western Forelands.”
FINANCIAL HIGHLIGHTS
• Ivanhoe Mines’ normalized profit for Q1 2024 was $70 million, compared to a
normalized profit of $113 million for Q1 2023. Including a $139 million non-cash
loss on the $575 million convertible bond fair valuation, Ivanhoe Mines recorded
a loss of $69 million for Q1 2024, compared with a profit of $82 million for Q1
2023. The non -cash loss on the convertible bond resulted from a 26%
appreciation in the Ivanhoe Mines share price to C$16.16 during the quarter.
• Ivanhoe Mines’ Adjusted EBITDA was $126 million for Q1 2024, compared with
$172 million for the same period in 2023, which includes an attributable share
of EBITDA from Kamoa-Kakula.
• During Q1 2024, Kamoa-Kakula sold 85,155 tonnes of payable copper,
recognizing revenue of $618 million, an operating profit of $286 million and
quarterly EBITDA of $365 million. The realized copper price for the quarter was
$3.82/lb. The current copper price (LME) as of April 29, 2024, is over $10,000/t
($4.54/lb.).
• Kamoa-Kakula’s cost of sales per pound (lb.) of payable copper sold was
$1.50/lb. for Q1 2024 compared with $1.50/lb. and $1.25/lb. in Q4 2023 and Q1
2023, respectively. Cash cost (C1) per pound of payable copper produced in
Q1 2024 totaled $1.57/lb., towards the lower end of the guidance range of $1.50
to 1.70/lb., and compared with $1.53/lb. and $1.42/lb. in Q4 2023 and Q1 2023,
respectively.
• Ivanhoe Mines has a strong balance sheet with cash and cash equivalents of
$411 million on hand as at March 31, 2024, and expects Kamoa-Kakula’s Phase
1 and Phase 2 cash flow and project-level facilities to be sufficient to fund the
Phase 3 expansion capital cost requirements at current copper prices.
• Concurrent with the quarterly results, Ivanhoe Mines announced the
redemption of all its outstanding 2.50% Convertible Senior Notes due 2026.
The notes will be redeemed on July 11, 2024, at a price equal to 100% of the
principal amount of the Notes redeemed plus accrued and unpaid interest. The
company will settle any conversions in shares, resulting in up to 79.8 million
shares to be issued. Ivanhoe will reduce total debt to below $150 million
following redemption of the $575 million convertible notes.
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OPERATIONAL HIGHLIGHTS
• Kamoa-Kakula produced 86,203 tonnes of copper in Q1 2024, with annual
production guidance maintained at between 440,000 to 490,000 tonnes of
copper in concentrate. Production during the quarter was impacted by
instability within the DRC power grid.
• Since mid-March, 15 megawatts (MW) of imported power has been supplied to
Kamoa-Kakula from the neighboring Zambian grid. The imported power has
significantly improved the stability of Kamoa-Kakula’s operations, with
production in April, a 30-day month, expected to be approximately 32,000
tonnes of copper in concentrate. Kamoa-Kakula also recently signed an
agreement to secure an additional 40 MW of imported power sourced from
Mozambique from tomorrow, May 1. Mozambique’s electrical generation
capacity is 77% supplied by hydroelectricity.
• Pre-commissioning of the Kamoa-Kakula Phase 3 concentrator, with a
nameplate capacity of 5 million tonnes per annum (Mtpa), is underway. First
ore is due to be fed imminently, over six months ahead of the initial schedule.
Construction of the direct-to-blister smelter is over 80% complete and on track
for the end of 2024.
• Basic engineering on “Project 95” is underway and is expected to be
completed in Q2 2024. Ivanhoe’s previously announced “Project 95” is an
initiative to increase the overall metallurgical copper recovery rate of Kamoa-
Kakula’s operations from the current nameplate rate of 87% up to
approximately 95%.
• Kamoa-Kakula signed a term sheet outlining the key terms for a Reserved
Capacity Agreement for the transportation of up to 240,000 tonnes of copper
products along the Lobito Corridor from 2025.
• Kamoa-Kakula completed the first 10,000-tonne trial shipment of copper
concentrate along the Lobito Corridor, as per the memorandum of
understanding (MOU) announced on August 18, 2023. Shipments continue
under the second 10,000-tonne trial, as per the term sheet as announced on
February 7, 2024.
• At Kipushi, construction of the new concentrator is ahead of schedule with
pre-commissioning activities now underway. To date, approximately 260,000
tonnes of ore are stockpiled on surface near the Kipushi concentrator. First
feed of ore into the concentrator is expected in June.
• At Platreef, an updated independent feasibility study (FS) on an optimized
development plan for Phase 2 is planned to be completed and published in the
fourth quarter of 2024. The optimized development plan accelerates the
development of Phase 2 at a total processing capacity of 4 Mtpa by equipping
Shaft #3 for hoisting.
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• In addition, a preliminary economic assessment (PEA) on a Phase 3 expansion
is expected to be completed at the same time, increasing Platreef’s processing
capacity up to approximately 10 Mtpa. Phase 3 is anticipated to rank Platreef
as one of the world’s largest and lowest-cost platinum-group metal, nickel,
copper and gold producers.
• Diamond drilling on the 2,650-square-kilometre Western Foreland exploration
project has been focused on Kitoko, Makoko West and Makoko East, with
between five and eight drill rigs operating during the quarter. A total of 16,861
metres of diamond core has been drilled in 18 completed holes to date.
• Ivanhoe Mines published its seventh 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.
Watch a Q1 2024 video of operations and construction activities:
https://vimeo.com/940933807/fcf1a26650?share=copy
Read Ivanhoe’s Seventh Annual Sustainability Report:
https://www.ivanhoemines.com/sustainability/
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Q1 2024 conference call for investors
Ivanhoe Mines will hold an investor conference call to discuss its Q1 2024
financial results at 10:30 a.m. Eastern time / 7:30 a.m. Pacific time on Tuesday,
April 30. 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 use the link: https://edge.media-server.com/mmc/p/97jmntfg
Analysts are invited to join by phone for the Q&A using the following link:
https://register.vevent.com/register/BIe7bc3992938549e4a3e3a37cbabc4760
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 condensed consolidated interim financial statements and
Management’s Discussion and Analysis will be available at
www.ivanhoemines.com and https://www.sedarplus.ca/.
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 of approximately 5,000 is currently 90% Congolese.
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Aerial view of the Kamoa-Kakula Copper Complex, which is now operating
at a processing capacity of 9.2 Mtpa, and production capacity of 450,000
tonnes of copper per annum.
Kamoa-Kakula summary of operating and financial data
Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023
Ore tonnes milled (000’s tonnes) 2,061 2,133 2,236 2,244 1,930
Copper ore grade processed (%) 4.80% 4.95% 5.37% 5.21% 5.42%
Copper recovery (%) 87.4% 87.9% 87.2% 87.2% 87.1%
Copper in concentrate produced
(tonnes) 86,203 92,215 103,947 103,786 93,603
Payable copper sold (tonnes) 85,155 90,967 96,509 101,526 86,777
Cost of sales per pound ($ per lb.) 1.50 1.50 1.34 1.24 1.25
Cash cost (C1) ($ per lb.) 1.57 1.53 1.46 1.41 1.42
Realized copper price ($ per lb.) 3.82 3.71 3.84 3.79 4.04
Sales revenue before
remeasurement ($'000) 612,496 625,983 681,821 729,924 659,529
Remeasurement of contract
receivables ($'000) 5,824 (8,365) 13,014 (27,542) 29,594
Sales revenue after remeasurement
($'000) 618,320 617,618 694,835 702,382 689,123
EBITDA ($'000) 364,893 343,899 423,211 456,628 457,311
EBITDA margin (% of sales revenue) 59% 56% 61% 65% 66%
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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 and the company’s MD&A
include “EBITDA”, “Adjusted EBITDA”, “EBITDA margin” and “Cash cost (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
company’s MD&A.
C1 cash cost per pound of payable copper produced can be further broken
down as follows ($ per lb.):
Cash cost (C1) is 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 cost is 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 cost excludes royalties, production taxes and non-routine charges as they are not
direct production costs.
All figures are on a 100% project basis and metal reported in concentrate is before refining losses or
deductions associated with smelter terms.
The increase in Kamoa-Kakula’s C1 cash cost per pound of payable copper produced in
Q1 2024 is principally due to the decrease in copper in concentrate produced during the
quarter, but also as a result of the lower grade of copper ore processed in Q1 2024. The
grid instability during the quarter not only impacted the ore tonnes milled but also
impacted the copper ore grade processed due to reduced underground access to high-
grade areas due to water ingress during power interruptions.
Q1 2024
2024
Q4 2023
2023
Q3 2023
2023
Q2 2023
2023
Q1 2023
2023
Mining 0.44 0.38 0.41 0.39 0.41
Processing 0.23 0.24 0.20 0.19 0.19
Logistics charges (delivered to China) 0.50 0.50 0.46 0.45 0.46
TC, RC, smelter charges 0.25 0.26 0.25 0.25 0.23
General & Administrative 0.15 0.15 0.14 0.13 0.13
Cash cost (C1) per pound of payable
copper produced 1.57 1.53 1.46 1.41 1.42