Ivanhoe Mines issues third quarter 2023 financial results, and review of construction and exploration activities
November 6, 2023
Ivanhoe Mines issues third quarter 2023 financial results, and
review of construction and exploration activities
■
Kamoa-Kakula Copper Complex sold 96,509 tonnes of payable
copper in Q3 2023, recognized quarterly revenue of $695
million and EBITDA of $423 million
■
Ivanhoe Mines adjusted EBITDA of $152 million for Q3 2023,
compared with $85 million for Q3 2022
■
Ivanhoe Mines recorded a quarterly profit of $108 million,
driven by income from the Kamoa-Kakula joint venture of
$121 million
■
Kamoa-Kakula’s quarterly cost of sales total $1.34 per lb. of
payable copper; C1 cash costs of $1.46 per lb.
■
Kamoa-Kakula year-to-date production of 301,336 tonnes and
C1 cash cost of $1.43 per lb., in line with guidance
■
Phase 3 concentrator project is 62% complete and ahead of
schedule for production in Q3 2024
■
Quarterly production record achieved despite intermittent grid
instability; phased roll-out of backup power and grid
improvements advanced
■
Kipushi concentrator ahead of schedule for first production in
Q2 2024, with the overall project approximately 62% complete
■
Maiden resource on Makoko and Kiala discoveries, and
Western Foreland exploration updates, expected shortly
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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 and nine months
ended September 30, 2023. Ivanhoe Mines is a leading Canadian mining company
developing and operating its four principal mining and exploration projects in
Southern Africa: expanding operations at the world-class Kamoa-Kakula Copper
Complex (Kamoa-Kakula) in the Democratic Republic of Congo (DRC); building
the tier-one Platreef palladium, nickel, platinum, rhodium, 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 November 2023 video highlighting Ivanhoe Mines’
construction and exploration activities:
https://vimeo.com/881367280/2c1e2c4872?share=copy
Ivanhoe Founder and Executive Co-Chairman Robert Friedland commented:
“Kamoa-Kakula continues its industry-leading development and operating
performance with copper production and costs remaining solidly within our
annual guidance ranges … an increasing rarity in our business, where many
of our peers are being plagued by cost over-runs and production shortfalls.
With the Phase 3 concentrator expansion now well ahead of schedule, our
teams are striving to further expedite copper production ramp-up into the
second half of 2024, en route to becoming the world’s third-largest, lowest-
carbon emitting copper complex by 2027.
“And this is only the beginning for a copper district with a multi-generational
lifespan that will benefit the Congolese people, our partners, and our
shareholders for many decades to come. We are particularly excited to
provide, very soon, updates on our extensive exploration activities across
Ivanhoe’s district-scale Western Foreland Exploration Project surrounding
our 400-square-kilometre Kamoa-Kakula mining licenses. The Western
Forelands, soon to be serviced by the new Lobito railway corridor, is
without a doubt the best copper hunting ground on our planet. As we will
soon demonstrate, there are vast opportunities to further expand high-
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grade, ultra-low-emissions copper production across this tier-one copper-
mineralized basin, endowed with the world's best copper deposits.
“Finally, our track record of operational excellence is continuing with the
successful development of the Kipushi zinc-copper-silver mine, which is
well ahead of schedule. Kipushi will also be powered by the Congo’s green
hydropower grid. With the Platreef PGM-nickel-copper mine in South Africa
also on track for production next year, Ivanhoe Mines has two additional
world-class ore bodies spanning many critical strategic minerals, including
zinc, platinum, palladium, nickel, rhodium, copper, and potentially gallium
and germanium.”
FINANCIAL HIGHLIGHTS
• Ivanhoe Mines recorded a profit of $108 million for Q3 2023, which includes a
$12 million non-cash gain on the $575 million convertible bond fair valuation,
compared with a profit of $87 million for Q2 2023. The profit in the quarter
includes Ivanhoe Mines’ share of profit and finance income from the Kamoa-
Kakula joint venture of $121 million for Q3 2023.
• Kamoa-Kakula sold 96,509 tonnes of payable copper during Q3 2023,
recognizing revenue of $695 million, an operating profit of $373 million and
quarterly EBITDA of $423 million.
• Copper in concentrate held in inventory at Kamoa-Kakula at quarter end
increased to more than 3,000 tonnes. In addition, approximately 48,000 dry
metric tonnes of concentrate were sent for tolling at the local smelter in Q3,
with copper in work in progress at the end of the quarter exceeding 7,000
tonnes. Excess inventory is expected to be sold in the fourth quarter.
• Kamoa-Kakula’s cost of sales per pound (lb.) of payable copper sold was
$1.34/lb. for Q3 2023 compared with $1.24 and $1.05 in Q2 2023 and Q3 2022,
respectively. Cash costs (C1) per pound of payable copper produced during
the quarter totaled $1.46/lb., compared to $1.41/lb. and $1.43/lb. in Q2 2023 and
Q3 2022, respectively.
• Ivanhoe Mines Adjusted EBITDA was $152 million for Q3 2023, compared with
$85 million for the same period in 2022, and $172 million for Q2 2023, 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 $2.14 billion of net cash from operating
activities, which has funded both the Phase 2 and Phase 3 expansions to date.
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• Ivanhoe Mines has a strong balance sheet with cash and cash equivalents of
$303 million on hand as at September 30, 2023. The company expects Kamoa-
Kakula’s Phase 1 and Phase 2 cash flow, together with additional local
financing facilities that are advancing well, to be sufficient to fund the Phase 3
expansion capital cost requirements at current copper prices.
• Kamoa-Kakula’s full-year cash cost (C1) guidance is unchanged at $1.40 –
$1.50 per pound and full-year production guidance is also maintained at
390,000 to 430,000 tonnes of copper in concentrate.
OPERATIONAL HIGHLIGHTS
• Record quarterly production of 103,947 tonnes of copper in concentrate was
achieved at Kamoa-Kakula for Q3 2023, compared to 103,786 tonnes in Q2
2023 and 97,820 tonnes in Q3 2022.
• Over the first nine months of 2023, Kamoa-Kakula has produced a total of
301,336 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 2.24 million
tonnes of ore during the third quarter at an average feed grade of 5.37%
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.
• 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 for
completion in late 2024.
• Kamoa-Kakula completed highly promising preliminary testwork to further
improve copper recoveries at Kamoa-Kakula by liberating copper from the
tailings stream. Initial results indicate that with a tailings feed grade of less
than 1% copper, approximately 65% of the contained copper can be recovered
from the tailings stream, which could increase overall metallurgical recoveries
to well over 90%. Basic engineering for the tailings-stream recovery plant is
underway and is expected to be complete in Q1 2024.
• Kamoa Copper S.A. signed a memorandum of understanding (MOU) with
Lobito Atlantic International SARL, the consortium awarded the concession
for the Lobito Atlantic Rail Corridor. A trial shipment of up to 10,000 tonnes of
copper concentrate from Kamoa-Kakula to the port of Lobito, Angola is
planned for Q4 2023. Making the Kamoa-Kakula joint venture the first
customer for the Lobito Corridor in the modern era.
• Ivanhoe is expanding its copper exploration program on its Western Foreland
licences, which covers approximately 2,407 square kilometres adjacent to
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Kamoa-Kakula. Significant drilling has taken place year-to-date, with over
37,500 metres completed, including several new targets identified. An
additional $2 million has been added to the remaining budget for 2023 to
further advance new targets.
• Ivanhoe is planning to publish a maiden Mineral Resource estimate for its
Makoko and Kiala high-grade copper discoveries in the Western Foreland
shortly, as well as an update on more recent drill developments across the
2,407-square-kilometre land package.
• At Platreef, optimization work is underway to identify value-accretive options
for installing hoisting capacity in Shaft 3 (previously named Vent Shaft 1),
which has the benefit of de-risking the development and ramp-up of the Phase
1 mine and may be used to accelerate the ramp-up of underground mining
activities for Phase 2 in advance of the completion of Shaft 2 – 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. Once the commissioning of underground crusher and loader has
been completed, underground development rate is expected to increase to
approximately 400 metres per month by year-end.
• Drilling of the pilot drill hole for the reaming of Platreef’s Shaft 2, which
commenced in February 2023, has reached the shaft bottom. Reaming from
the 950-metre level is now underway with 38 metres completed. Shaft 2
raisebore reaming is expected to be complete in Q2 2024.
• Platreef’s Phase 1 is approximately 63% complete and on schedule for first
production in Q3 2024, with all major civil structures nearing completion and
the fabrication of the long-lead order mechanical equipment items progressing
as planned.
• At Kipushi, construction of the 800,000 tonnes-per-annum concentrator is
approximately 67% complete and ahead of schedule for commissioning in Q2
2024.
• Kipushi's underground development continues to progress at approximately
20% ahead of schedule, with 2,744 metres of lateral development completed
since September 2022. The underground development rate is expected to
increase by 50%to approximately 450 metres per month by year-end.
• Stoping (mining) of Kipushi’s ultra-high-grade Big Zinc orebody is expected to
commence this month. Stoping will start on a trail mining basis to complete
the training of the underground mining crews in preparation for the
commencement of commercial operations in the new year.
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The first group of 96 employees at Kamoa-Kakula’s smelter complex were
received at the Kansoko Training Centre for induction. Construction of the
500,000-tonne-per-annum smelter is on track for completion in Q4 2024.
Conference call for investors on Monday, November 6, 2023
Ivanhoe Mines will hold an investor conference call to discuss its 2023 third-
quarter financial results at 3:30 p.m. London time / 10:30 a.m. Eastern time / 7:30
a.m. Pacific time on Monday, November 6. 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/u8g4fpa4
Analysts are invited to join by phone for the Q&A using the following link:
https://register.vevent.com/register/BI2f4b12f6a4054637be40addfc4467dad
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.
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Read Ivanhoe's Q3 2023 Sustainability Update:
https://www.ivanhoemines.com/wp-
content/uploads/Sustainability_review_Q3_2023_Final.pdf
DRC President, His Excellency Félix Tshisekedi, alongside Ivanhoe Mines’
President Marna Cloete, cuts the ribbon to mark the formal opening of the
newly constructed Kamoa Centre of Excellence in October 2023. Following
the opening ceremony, the President met with the inaugural class, which
was enrolled in September.
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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
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 the
company’s MD&A for the three and nine months ended September 30, 2023, starting on page 45.
(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.
(2) Previously disclosed as 5.55% on October 4, 2023, but amended following metallurgical reconciliation.
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-
Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022
Ore tonnes milled (000’s tonnes) 2,236 2,244 1,930 2,006 2,082
Copper ore grade processed (%) 5.37%(2) 5.21% 5.42% 5.40% 5.60%
Copper recovery (%) 87.2% 87.2% 87.1% 86.1% 85.9%
Copper in concentrate produced
(tonnes)
103,947 103,786 93,603 92,761 97,820
Payable copper sold (tonnes) 96,509 101,526 86,777 92,208 93,812
Cost of sales per pound ($ per lb.) 1.34 1.24 1.25 1.08 1.05
Cash cost (C1) ($ per lb.) 1.46 1.41 1.42 1.42 1.43
Realized copper price ($ per lb.) 3.84 3.79 4.04 3.54 3.50
Sales revenue before
remeasurement
($'000)
681,821 729,924 659,529 619,997 570,504
Remeasurement of contract
receivables ($'000)
13,014 (27,542) 29,594 53,473 (110,031)
Sales revenue after remeasurement
($'000)
694,835 702,382 689,123 673,470 460,473
EBITDA ($'000)(1) 423,211 456,628 457,311 452,089 251,086
EBITDA margin (% of sales revenue) 61% 65% 66% 67% 55%