Ivanhoe Mines issues second quarter 2023 financial results, and review of construction and exploration activities
August 3, 2023
Ivanhoe Mines issues second quarter 2023 financial results,
and review of construction and exploration activities
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Kamoa-Kakula Copper Complex sold 101,526 tonnes of
payable copper in Q2 2023 and recognized record quarterly
revenue of $702 million and EBITDA of $457 million
■
Ivanhoe Mines recorded Adjusted EBITDA of $172 million for
Q2 2023, compared with $101 million for the same
period in 2022
■
Ivanhoe Mines recorded a quarterly profit of $87 million, driven
by income from the Kamoa-Kakula joint venture of
$123 million
■
Kamoa-Kakula’s quarterly cost of sales total $1.24 per lb. of
payable copper; C1 cash costs of $1.41 per lb. at the lower end
of guidance
■
Ivanhoe Mines announces significant preliminary testwork for
improving copper recoveries at Kamoa-Kakula
■
Platreef progressing well towards Q3 2024 start-up; over 2,000
metres underground development completed
■
Ivanhoe Mines welcomes the inclusion of copper on the 2023
U.S. Department of Energy Critical Minerals List
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 and six months
ended June 30, 2023. Ivanhoe Mines is a leading Canadian mining company
developing and operating its four principal mining and exploration projects in
Southern Africa: expanding the operations of the world-class Kamoa-Kakula
Copper Complex in the Democratic Republic of Congo (DRC); building the tier-
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one Platreef palladium, rhodium, nickel, platinum, copper and gold development
in South Africa; restarting the historic, ultra-high-grade Kipushi zinc-copper-lead-
germanium mine in the DRC; as well as exploring the expansive exploration
licences of Ivanhoe’s Western Foreland for copper discoveries adjacent to
Kamoa-Kakula. All figures are in U.S. dollars unless otherwise stated.
Watch an August 2023 video highlighting Ivanhoe Mines’ construction
and exploration activities: https://vimeo.com/850838953/163436ff95
FINANCIAL HIGHLIGHTS
• Ivanhoe Mines recorded a profit of $87 million for Q2 2023, net of a $27 million
non-cash loss on the $575 million convertible bond fair valuation, compared
with a profit of $82 million for Q1 2023. The profit in the quarter includes
Ivanhoe Mines’ share of profit and finance income from the Kamoa-Kakula
joint venture of $123 million.
• Kamoa-Kakula sold 101,526 tonnes of payable copper during Q2 2023,
recognizing a record revenue of $702 million, an operating profit of $394
million and a quarterly EBITDA of $457 million.
• Kamoa-Kakula’s cost of sales per pound (lb.) of payable copper sold was
$1.24/lb. for Q2 2023 compared with $1.25/lb. and $1.15/lb. in Q1 2023 and Q2
2022, respectively. Cash costs (C1) per pound of payable copper produced in
Q2 2023 totaled $1.41/lb., compared to $1.42/lb. and $1.42/lb. in Q1 2023 and
Q2 2022, respectively.
• Ivanhoe Mines Adjusted EBITDA was $172 million for Q2 2023, compared with
$101 million for the same period in 2022, and $172 million for Q1 2023.
• Since entering Phase 1 commercial production on July 1, 2021, the Kamoa-
Kakula joint venture has generated $1.82 billion of net cash from operating
activities, which has funded both the Phase 2 and Phase 3 expansions to date.
• Ivanhoe Mines has a strong balance sheet with cash and equivalents of $393
million on hand as at June 30, 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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• On May 22, 2023, Kipushi Corporation entered into a financing facility with
Rawbank SA, one of the largest financial institutions in the Democratic
Republic of the Congo. Under the terms of the facility, Rawbank provided an
$80 million loan, to be drawn down in two tranches of $40 million each. The
first tranche has been drawn and will be used to fund Kipushi’s working
capital requirements. The facility bears interest of 8% per annum.
• On April 27, 2023, Ivanhoe and joint-venture partner Gécamines, the DRC’s
state-owned mining company, announced an offtake term sheet for 100% of
Kipushi’s zinc concentrate, together with a $250-million facility supported by
Glencore International AG. The offtake and financing term sheet is subject to
the execution of final, binding agreements, which are expected to be
concluded in conjunction with the new Kipushi Corporation joint-venture
agreement in the coming months.
• On June 15, 2023, Ivanhoe announced the replacement of an outstanding
$77.4-million loan receivable from High Power Exploration (HPX) with an
equity investment in I-Pulse, its parent company, joining leading mining
company BHP Group Limited as an investor. The company intends to enter
into a collaboration agreement with I-ROX, an I-Pulse subsidiary, to investigate
and develop applications for pulsed-power technology in the mining sector.
OPERATIONAL HIGHLIGHTS
• Record quarterly production of 103,786 tonnes of copper in concentrate was
achieved at Kamoa-Kakula for Q2 2023, compared with 93,603 tonnes in Q1
2023 and 87,314 tonnes in Q2 2022.
• Over the first six months of 2023, Kamoa-Kakula has produced a total of
197,389 tonnes of copper in concentrate, placing it well on track to deliver
annual production guidance of between 390,000 – 430,000 tonnes of copper.
• Kamoa-Kakula's Phase 1 and 2 concentrators milled a record 2.2 million
tonnes of ore during the second quarter at an average feed grade of 5.2%
copper. This included high-grade, run-of-mine ore from the Kakula Mine,
supplemented with ore from the surface stockpiles to achieve throughput
higher than original design capacity.
• On July 2, 2023, Kamoa-Kakula achieved a record daily milling rate of 29,968
dry metric tonnes, which is equivalent to an annual milling rate of 10 million
tonnes per annum (after accounting for availability). For July, Kamoa-Kakula
produced 35,636 tonnes of copper in concentrate, just short of a record, and
achieved recoveries of 88%.
• Kamoa-Kakula's Phase 3 mine and concentrator expansion, 500,000-tonne-
per-annum on-site, direct-to-blister copper smelter and the refurbishment of
Turbine #5 at the Inga II hydroelectric facility are advancing on schedule and
are expected to be complete in late 2024. At current copper prices, it is
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expected that cashflow from Kamoa-Kakula’s Phase 1 and 2 operations will be
sufficient to fund the remaining 2023 and 2024 expansion capital cost
requirements of approximately $2.1 billion.
• On July 27, 2023, Ivanhoe announced significant preliminary test work for
improving copper recoveries at Kamoa-Kakula. In 2022, Kamoa Copper’s
process engineering team, together with a number of internationally
recognized external metallurgy specialists, initiated work to investigate ways
to economically recover additional copper units from the tailings stream of the
Phase 1 and 2 concentrators. Results to-date indicate a significant
improvement in total recoveries can be achieved by liberating copper from the
tailings stream, which would further increase production, revenues and cash
flow.
• 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. A total of 37 holes and 10,853 metres were completed during Q2
2023, following the conclusion of the wet-season in May. A total of 15,736
metres of diamond core have been drilled in the first half of 2023.
• Ivanhoe is on schedule to publish a maiden Mineral Resource estimate for its
Makoko and Kiala high-grade copper discoveries in the Western Foreland in
Q3 2023.
• Ivanhoe is undertaking optimization work to identify value-accretive options
for installing hoisting capacity to Platreef's Shaft 3, which was originally
planned as a ventilation and secondary escape shaft. Shaft 3 is currently
under construction and now is planned to be equipped for hoisting. Shaft 3 is
currently being reamed to a diameter of 5.1 metres. Approximately, 340 metres
of the total 950 metres have been reamed to date, with completion planned in
Q4 2023. The additional hoisting capacity from Shaft 3 may be used to
accelerate underground mining activities for Phase 2, in advance of the
completion of Shaft 2, which is expected in 2027.
• Platreef underground development work is focused on lateral development
towards the high-grade Flatreef orebody on the 750-metre, 850-metre and 950-
metre levels. More than 2,000 metres of lateral development has been
completed to date across all three levels, advancing at a rate of approximately
200 metres per month. Once the crusher and loading feeder installation on the
950-metre level is completed at the end of August, the rate of lateral
underground development is expected to increase to approximately 300
metres per month throughout the remainder of the year.
• Drilling of the pilot drill hole for the reaming of the 10-metre-diameter Shaft 2,
which commenced in February 2023, was completed during the quarter.
Preparations are now underway to commence reaming of Shaft 2 to an initial
diameter of 3.1 metres.
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• At the Kipushi Mine, overall construction progress is approximately 50%
complete and construction of the concentrator is on schedule for
commissioning in Q3 2024. The concentrator includes dense media separation
and a milling and flotation circuit. Kipushi is expected to produce more than
270,000 tonnes of zinc contained in concentrate over the first five years of
production.
• Kipushi's underground development activity is ahead of schedule, with 2,147
metres of lateral development completed since September 2022. Stoping of
ultra-high-grade Big Zinc orebody is expected to begin in January 2024. The
year-to-date underground development rate averages approximately 250
metres per month. The underground development rate is expected to increase
to approximately 450 metres per month by year-end.
Christelle Nday (centre left) and Micheline Kyenge (centre right), President
and Vice President of Kamoa's Women In Mining, conducted a tour of
Kamoa-Kakula for a group of Grade 10 students from the nearby Mutoshi
Technical Institute. The students are pictured in front of a 21-tonne
underground loader at the Kansoko Mine portals.
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Conference call for investors on Thursday, August 3, 2023
Ivanhoe Mines will hold an investor conference call to discuss its 2023 second-
quarter financial results at 3:30 p.m. London time / 10:30 a.m. Eastern time / 7:30
a.m. Pacific time on Thursday, August 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/3envh996
Analysts are invited to join by phone for the Q&A using the following link:
https://register.vevent.com/register/BI41a67c7e4bc743e7975234c0ae560d1a
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.sedarplus.ca.
Read Ivanhoe's Second Quarter 2023 Sustainability Update:
https://ivanhoemines.com/site/assets/files/3775/sustainability-review-
q2-2023.pdf
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Construction of the off-gas handling structure and the adjoining furnace
building at Kamoa-Kakula’s direct-to-blister copper smelter.
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 is approximately 25 kilometres southwest of the
town of Kolwezi and about 270 kilometres west of Lubumbashi in the DRC Copperbelt.
Kamoa-Kakula’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. Kamoa-
Kakula is independently ranked by international mining consultant Wood Mackenzie to
become the world’s third-largest copper mining operation in 2027, following the
completion of the ongoing Phase 3 expansion. Kamoa-Kakula’s employee workforce is
currently 97% Congolese.
The Kamoa-Kakula Copper Complex is operated as the Kamoa Holding joint venture
between Ivanhoe Mines and Zijin Mining. 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.
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Kamoa-Kakula summary of operating and financial data
Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022
Ore tonnes milled (000’s tonnes) 2,244 1,930 2,006 2,082 1,950
Copper ore grade processed (%) 5.21% 5.42% 5.40% 5.60% 5.44%
Copper recovery (%) 87.2% 87.1% 86.1% 85.9% 84.0%
Copper in concentrate produced
(tonnes)
103,786 93,603 92,761 97,820 87,314
Payable copper sold (tonnes) 101,526 86,777 92,208 93,812 85,794
Cost of sales per pound ($ per lb.) 1.24 1.25 1.08 1.05 1.15
Cash cost (C1) ($ per lb.) 1.41 1.42 1.42 1.43 1.42
Realized copper price ($ per lb.) 3.79 4.04 3.54 3.50 4.34
Sales revenue before
remeasurement ($'000)
729,924 659,529 619,997 570,504 699,381
Remeasurement of contract
receivables ($'000)
(27,542) 29,594 53,473 (110,031) (205,248)
Sales revenue after remeasurement
($'000)
702,382 689,123 673,470 460,473 494,133
EBITDA ($'000)(1) 456,628 457,311 452,089 251,086 285,477
EBITDA margin (% of sales revenue) 65% 66% 67% 55% 58%
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 news release includes “EBITDA”,
“Adjusted EBITDA”, “EBITDA margin”, normalized profit 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 this news release starting on page 52.
(1) Unrealized foreign exchange losses have been excluded from EBITDA in the current and prior
periods presented, as the Company believes that including the unrealized foreign exchange gains
and losses does not give a valuable indication of the mine’s ability to generate liquidity by
producing operating cash flow to fund its working capital needs, service debt obligations, fund
capital expenditures and distribute cash to its shareholders.
C1 cash cost per pound of payable copper produced can be further
broken down as follows:
Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022
Mining ($ per lb.) 0.39 0.41 0.40 0.41 0.39
Processing ($ per lb.) 0.19 0.19 0.16 0.12 0.14
Logistics charges (delivered to
China)
($ per lb.) 0.45 0.46 0.50 0.56 0.51