IVN.TO · 2024-07-31 12:00:00

Ivanhoe Mines issues second quarter 2024 financial results, and review of construction and exploration activities

Mine Development & Operations Financials Exploration Programs

July 31, 2024

Ivanhoe Mines issues second quarter 2024 financial results,

and review of construction and exploration activities

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Ivanhoe Mines announces quarterly profit of $67 million and

record quarterly normalized profit of $115 million, driven by

income from the Kamoa-Kakula joint venture of $90 million

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Ivanhoe Mines reports record Adjusted EBITDA of $203 million

for Q2 2024, compared with $126 million for Q1 2024

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Kamoa-Kakula Copper Complex sold 95,900 tonnes of payable

copper in Q2 2024 and recognized record quarterly revenue of

$817 million and record EBITDA of $547 million

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Kamoa-Kakula’s quarterly cost of sales total $1.53 per lb. of

payable copper; C1 cash costs of $1.52 per lb. at the lower end

of guidance

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Kamoa-Kakula’s Phase 3 concentrator expansion completed

ahead of schedule, boosting annualized production to approx.

600,000 tonnes copper

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Smelter project over 85% advanced and on schedule for

construction completion by the end of 2024

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On July 28, Kamoa-Kakula produced a daily record of 1,614

tonnes of copper, following 16,703 tonnes of ore milled at the

Phase 3 concentrator, exceeding nameplate by 19%

■

Kipushi concentrator completed ahead of schedule, with ramp-

up to steady-state operations underway during Q3

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, 2024. Ivanhoe Mines is a leading Canadian mining company

developing and operating its four principal mining and exploration projects in

Southern Africa: expanding production at the world-class Kamoa-Kakula Copper

Complex in the Democratic Republic of Congo (DRC); ramping-up the ultra-high-

grade Kipushi zinc-copper-lead-germanium mine in the DRC; building the tier-one

Platreef palladium, rhodium, nickel, platinum, copper and gold development in

South Africa; as well as exploring and advancing the expansive exploration

licenses of Ivanhoe’s Western Forelands project, which currently hosts the

Makoko, Kitoko, and Kiala copper discoveries near Kamoa-Kakula. All figures are

in U.S. dollars unless otherwise stated.

Watch a July 2024 video highlighting Ivanhoe Mines’ financial results,

as well as construction and exploration activities:

https://vimeo.com/991739402/081b7ace0b?share=copy

FINANCIAL HIGHLIGHTS

• Ivanhoe Mines recorded a profit of $67 million for Q2 2024 compared with a

profit of $87 million for Q2 2023. Ivanhoe Mines’ normalized profit for Q2 2024

was $115 million, compared with a normalized profit of $114 million for Q2

2023. Normalized profit for the quarter excludes the non-cash loss on the fair

valuation of the embedded derivative component of the $575 million

convertible bond and the non-cash finance costs due to the early redemption

of the convertible notes. All convertible notes still outstanding at end of June

were redeemed after quarter end.

• Kamoa-Kakula sold 95,900 tonnes of payable copper during Q2 2024,

recognizing record revenue of $817 million, record operating profit of $463

million, and record quarterly EBITDA of $547 million.

• Kamoa-Kakula’s cost of sales per pound (lb.) of payable copper sold was

$1.53/lb. for Q2 2024 compared with $1.50/lb. and $1.24/lb. in Q1 2024 and Q2

2023, respectively. Cash cost (C1) per pound of payable copper produced in

Q2 2024 totaled $1.52/lb., which is at the lower end of the guidance range of

$1.50 to $1.70/lb., compared with $1.57/lb. and $1.41/lb. achieved in Q1 2024

and Q2 2023, respectively.

• Ivanhoe Mines’ Adjusted EBITDA was $203 million for Q2 2024, compared with

$172 million for the same period in 2023, including an attributable EBITDA share

from Kamoa-Kakula.

• Ivanhoe Mines has a strong balance sheet with cash and cash equivalents of

$246 million on hand as at June 30, 2024, with little debt at the corporate level

following the redemption of the convertible notes. Ivanhoe expects cash flow

from Kamoa-Kakula’s Phase 1, 2, and 3 operations, as well as project level

financing facilities to be sufficient to fund outstanding capital cost

requirements at current copper prices, which are largely related to the

completion of the smelter complex and associated ramp-up activities.

• At Kamoa-Kakula, joint venture company Kamoa Copper drew a further $200

million during the quarter under a term finance facility with ABSA of

Johannesburg, South Africa, Africa Finance Corporation (AFC) of Lagos,

Nigeria, Rawbank of Kinshasa, DRC, and FirstBank of Lagos, Nigeria. The new

funding facilities will be used to fund both the Phase 3 expansion of Kamoa-

Kakula and expanded working capital, as well as future growth, such as

Project 95. This brings total Kamoa-Kakula joint-venture in-country term loans

and working capital facilities to $800 million, at attractive interest rates of less

than 9%.

• At Kipushi, Trafigura and CITIC Metal, off-takers for approximately two thirds

of the zinc concentrate production, have each provided a loan facility to

Kipushi Corporation (KICO) for $60 million over the five-year term of the off-

take contract, at a rate of interest SOFR, plus 6%. Both these loan facilities

were drawn in July 2024. A bank facility has also been signed and drawn with

domestic lender FirstBank DRC for $50 million at SOFR plus 4.5%.

OPERATIONAL HIGHLIGHTS

• Quarterly production of 100,812 tonnes of copper in concentrate was achieved

at Kamoa-Kakula for Q2 2024, compared with 86,203 tonnes in Q1 2024 and

103,786 tonnes in Q2 2023.

• Over the first six months of 2024, Kamoa-Kakula produced a total of 187,015

tonnes of copper in concentrate. With the ramp-up to steady state of the

Phase 3 concentrator expected to be complete in August 2024, boosting

annual copper production capacity to over 600,000 tonnes, Kamoa-Kakula’s

2024 production guidance is maintained at between 440,000 – 490,000 tonnes

of copper.

• Kamoa-Kakula's Phase 1 and 2 concentrators milled 2.29 million tonnes of ore

during the second quarter at an average feed grade of 5.04% copper,

benefitting from improved power availability including imported power via the

Zambian interconnector, which is now up to 65 megawatts (MW). On-site back-

up power generation capacity has been increased to 135 MW with

commissioning nearing completion.

• First ore into Kamoa-Kakula’s Phase 3 concentrator was achieved on May 26,

2024, up to two quarters ahead of the originally announced schedule, with first

concentrate reported on June 10, 2024. The Phase 3 concentrator produced

1,100 tonnes of copper in concentrate for the remainder of June.

• After quarter end, Kamoa-Kakula’s Phase 1, 2 and 3 concentrators achieved a

daily production record of 1,614 tonnes of copper. The record consisted of 306

tonnes of copper from the Phase 3 concentrator, in addition to 1,308 tonnes

from Phase 1 and 2. Phase 3 also achieved a daily milling record 16,703

tonnes of ore, exceeding nameplate capacity of 5 million tonnes per annum

(Mtpa) by 19%.

• Kamoa-Kakula's 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. Construction completion of the smelter is

expected by the end of 2024, and Turbine #5 by Q1 2025.

• Basic engineering of “Project 95” at Kamoa-Kakula is now complete, with

engineering contractor tendering and early procurement activities now

underway. A capital cost of $198 million is estimated for concentrator

modifications, plus $102 million in capital costs brought forward for a new

tailings storage cell. Increased recovery to 95% is expected to boost average

annualized copper production by up to 30,000 tonnes from the Phase 1 and 2

concentrators. Project execution is expected to take 18 months.

• First feed of ore into the Kipushi concentrator from the surface run-of-mine

(ROM) stockpiles was achieved on May 31, 2024, marking the completion of

construction ahead of schedule. The first batch of zinc concentrate production

was achieved two weeks later, on June 14, 2024. Ramp-up of the Kipushi

concentrator to steady-state production is expected in September.

• Kipushi’s 2024 production guidance is between 100,000 – 140,000 tonnes of

zinc in concentrate.

• Basic engineering has already commenced on de-bottlenecking initiatives of

the Kipushi concentrator, to target a 20% increase in processing capacity to

960,000 tonnes of ore per annum. The de-bottlenecking program is expected

to take approximately nine months, based on the availability of long-lead order

equipment.

• Kipushi will be the lowest greenhouse gas emitter per tonne of zinc produced.

On a Scope 1 and 2 basis (reported from ore to mine gate), Kipushi’s

greenhouse gas (GHG) emissions intensity for 2025 is expected to be 0.019

equivalent tonnes of carbon dioxide per tonne of contained zinc produced (t

CO2-e / t Zn). This comfortably ranks Kipushi at the bottom of the Scope 1 and

2 GHG emissions curve, according to independent industry experts Skarn

Associates.

• Ivanhoe continues its expansive copper exploration program on its Western

Foreland licenses adjacent to Kamoa-Kakula. The company’s 2024 exploration

program consists of 70,000 metres of diamond-core drilling, with 39,000

metres completed during H1 2024. Drilling during Q2 2024 was mostly focused

on Kitoko and Makoko West. Nine drill rigs were in operation at quarter end.

• Construction of Platreef’s Phase 1 concentrator was completed on schedule

after the quarter's end. Cold commissioning has started, with water being fed

through the concentrator. The concentrator will be placed on care and

maintenance until H2 2025, as Shaft 1 prioritizes the hoisting of waste from the

development required to bring forward the start of Phase 2.

• Work continues on the updated feasibility study to accelerate Platreef’s Phase

2, as well as the preliminary economic assessment of the new Phase 3

expansion. Both studies are expected to be completed in the fourth quarter.

• Construction of Platreef's Shaft 2 headgear now is approximately 60%

complete. Construction activities are advancing well on the installation of

1,124 tonnes of internal structural steel inside Shaft 2’s headgear.

Lebo Ramonyalioa, Instrumentation Engineer, DRA; and, Pieter Schoeman,

Instrumentation Engineer, DRA, standing at the newly completed apron

feeder in the Kakula North mining area.

Conference call for investors on Wednesday, July 31, 2024

Ivanhoe Mines will hold an investor conference call to discuss the results at 10:30

a.m. Eastern time / 7:30 a.m. Pacific time on July 31, 2024. 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/67hi5owr

Analysts are invited to join by phone for the Q&A using the following link:

https://register.vevent.com/register/BIdca605fc67a44c9188026e3aad0c263d

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 www.sedarplus.ca.

Read Ivanhoe's Second Quarter 2024 Sustainability Review:

For the second quarter, the group achieved an industry-

leading combined Lost Time Injury Frequency Rate

(LTIFR) of 0.22 per 1,000,000 hours worked and a Total

Recordable Injury Frequency Rate (TRIFR) of 0.82 per

1,000,000 hours worked. Regrettably, there was one

fatality in the group during the quarter, which occurred at

Kamoa-Kakula.

For more information on each project’s health and safety

performance, as well as more information on the various

sustainability initiatives underway across the group, read

Ivanhoe’s Q2 2024 Sustainability Review:

https://www.ivanhoemines.com/wp-

content/uploads/Sustainability_review_Q2_2024V5.pdf

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 operated as the Kamoa Holding joint venture

between Ivanhoe Mines and Zijin Mining. The project is approximately 25 kilometres

southwest of the town of Kolwezi and about 270 kilometres west of Lubumbashi.

Kamoa-Kakula’s Phase 1 concentrator began producing copper in May 2021. The

Phase 2 concentrator, completed in April 2022, doubled nameplate production capacity

to 400,000 tonnes of copper per annum. A debottlenecking program, completed 10

months later in February 2023, further increased copper production capacity to 450,000

tonnes per annum. The Phase 3 concentrator, completed in June 2024, increased

copper production capacity to over 600,000 tonnes per annum, ranking the Kamoa-

Kakula Copper Complex as the world’s third-largest copper mining operation by

international mining consultant Wood Mackenzie.

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 full-time employee workforce is approximately 5,500 and is over 90%

Congolese.

Kamoa-Kakula summary of operating and financial data

Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023

Ore tonnes milled (000’s tonnes) 2,381(1) 2,061 2,133 2,236 2,244

Copper ore grade processed (%) 4.91%(1) 4.80% 4.95% 5.37% 5.21%

Copper recovery (%) 86.7%(1) 87.4% 87.9% 87.2% 87.2%

Copper in concentrate produced

(tonnes) 100,812 86,203 92,215 103,947 103,786

Payable copper sold (tonnes) 95,900 85,155 90,967 96,509 101,526

Cost of sales per pound ($ per lb.) 1.53 1.50 1.50 1.34 1.24

Cash cost (C1) ($ per lb.) 1.52 1.57 1.53 1.46 1.41

Realized copper price ($ per lb.) 4.34 3.82 3.71 3.84 3.79

Sales revenue before

remeasurement

($'000) 813,817 612,496 625,983 681,821 729,924

Remeasurement of contract

receivables ($'000) 3,256 5,824 (8,365) 13,014 (27,542)

Sales revenue after remeasurement

($'000) 817,073 618,320 617,618 694,835 702,382

EBITDA ($'000) 547,257 364,893 343,899 423,211 456,628

EBITDA margin (% of sales revenue) 67% 59% 56% 61% 65%

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 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 th e non-

GAAP Financial Performance Measures section of this release.

(1) Blended figures across the Phase 1, 2, and 3 concentrators, following the commencement of Phase 3

concentrator in June 2024. Excluding Phase 3, the Phase 1 and 2 concentrators milled 2,288,000 tonnes

of ore at an average feed grade of 5.04% with an average recovery of 86.9%. No concentrate produced

by the Phase 3 concentrator was sold during the quarter.

C1 cash cost per pound of payable copper produced can be further broken

down as follows:

2024

2023

2023 Mining ($ per lb.) 0.45 0.44 0.38 0.41 0.39

Processing ($ per lb.) 0.21 0.23 0.24 0.20 0.19

Logistics charges (delivered to

China)

($ per lb.) 0.48 0.50 0.50 0.46 0.45

TC, RC, smelter charges ($ per lb.) 0.25 0.25 0.26 0.25 0.25

General & Administrative ($ per lb.) 0.13 0.15 0.15 0.14 0.13

Cash cost (C1) per pound of

payable copper produced ($ per lb.) 1.52 1.57 1.53 1.46 1.41

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