Ivanhoe Mines issues third quarter 2024 financial results, and review of construction and exploration activities
October 30, 2024
Ivanhoe Mines issues third quarter 2024 financial results, and
review of construction and exploration activities
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Ivanhoe Mines announces a quarterly profit of $108 million for
Q3 2024, compared with $67 million for Q2 2024
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Ivanhoe Mines reports Adjusted EBITDA of $160 million for
Q3 2024, compared with $203 million for Q2 2024
■
Kamoa-Kakula produced a record 116,313 tonnes of copper in
Q3 2024 and 303,328 tonnes of copper year-to-date
■
Kamoa-Kakula Copper Complex sold a record 103,106 tonnes
of payable copper in Q3 2024 and recognized record quarterly
revenue of $828 million and EBITDA of $470 million
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Kamoa-Kakula’s quarterly cost of sales total $1.80 per lb. of
payable copper; C1 cash cost of $1.69 per lb., with costs
increased by Phase 3 expansion ramp-up
■
Kamoa-Kakula’s year-to-date C1 cash cost of $1.60 per lb. in
line with the midpoint of annual guidance
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Africa’s largest and greenest smelter project on schedule for
construction completion this year, to materially drive
improvement in margins
■
Phase 3 concentrator achieves steady state production rate
after quarter end, with milling rates regularly exceeding
nameplate capacity
■
Kipushi produced 17,817 tonnes of zinc in concentrate during
ramp-up in Q3 2024 and export of concentrates commenced
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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, 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
project in South Africa; as well as exploring and advancing the expansive
exploration licenses of Ivanhoe’s Western Forelands project, which hosts the
Makoko, Kitoko, and Kiala copper discoveries near Kamoa-Kakula. All figures are
in U.S. dollars unless otherwise stated.
Watch an October 2024 video highlighting Ivanhoe Mines’ financial
results, as well as construction and exploration activities:
https://vimeo.com/1024391679/4a60c76ad7?ts=0&share=copy
Founder and Co-Chairman Robert Friedland commented:
"Kamoa-Kakula has reached a major milestone with the ramp-up of the
Phase 3 expansion. Phase 3 provides steady-state milling capacity of
600,000 tonnes of copper per annum. We have reached the top tier of the
world's most significant copper complexes, which at every phase were
delivered ahead of schedule ... a true rarity in our industry.
“Africa's largest and greenest copper smelter is nearing construction
completion this year. The smelter will reduce cash costs and improve
profitability. With capital expenditures largely behind us at Kamoa-Kakula,
we look forward to a period of strong profit and free cash flow, even as we
continue to advance further copper growth initiatives on the joint venture.
“We expect 2025 to be a banner year as we deliver these significant
production milestones, as well as advance our industry-leading exploration
efforts in the Western Forelands, which continue to deliver some of the
world's most significant, tier-one copper discoveries."
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FINANCIAL HIGHLIGHTS
• Ivanhoe Mines recorded a profit of $108 million for Q3 2024 compared with a
profit of $108 million for Q3 2023. Ivanhoe Mines’ normalized profit for Q3 2024
was $112 million, compared with a normalized profit of $95 million for Q3 2023.
• Kamoa-Kakula sold 103,106 tonnes of payable copper during Q3 2024,
recognizing revenue of $828 million, an operating profit of $392 million, and
quarterly EBITDA of $470 million. Concentrate produced from Phase 3 is being
toll-treated into blister copper at the Lualaba Copper Smelter (LCS) to
maximize profitability until the on-site smelter is completed. As such, total
inventory, including in the on-site warehouse and at LCS, increased to
approximately 16,000 tonnes of copper in concentrate at the end of the
quarter.
• Kamoa-Kakula’s cost of sales per pound (lb.) of payable copper sold was
$1.80/lb. for Q3 2024 compared with $1.53/lb. and $1.34/lb. in Q2 2024 and Q3
2023, respectively. Over the first nine months of 2024, cost of sales per pound
(lb.) of payable copper sold was $1.62/lb.
• Cash cost (C1) per pound of payable copper produced in Q3 2024 totaled
$1.69/lb., compared with $1.52/lb. and $1.46/lb. achieved in Q2 2024 and Q3
2023, respectively. Cash cost (C1) per pound of payable copper produced for
the nine months ended September 30, 2024, was $1.60/lb., in line with the mid-
point of guidance.
• Cash cost was impacted by the ramp-up of the Phase 3 expansion, including
the drawing of lower-grade surface stockpiles to supplement the ramp-up
process, and the optimization of the concentrator circuit towards nameplate
recoveries of approximately 86%. The ramp-up of the Phase 3 concentrator to
steady state was achieved early in the fourth quarter.
• Ivanhoe Mines’ Adjusted EBITDA was $160 million for Q3 2024, compared with
$203 million for Q2 2024 and $152 million for the same period in 2023, which
includes an attributable share of EBITDA from Kamoa-Kakula.
• Ivanhoe Mines has a strong balance sheet with cash and cash equivalents of
$180 million on hand as at September 30, 2024, and expects that at current
copper prices, cash flow generated from Kamoa-Kakula’s operations, as well
as project-level financing facilities, will be sufficient to fund the remaining
capital cost requirements for the Phase 3 expansion. Major capital cost
requirements are expected to be reduced from the fourth quarter following
completion of Kamoa-Kakula’s direct-to-blister smelter, with construction on
track to be complete by year-end, and smelter ramp-up expected from Q1
2025.
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OPERATIONAL HIGHLIGHTS
• Record quarterly production of 116,313 tonnes of copper in concentrate was
achieved at Kamoa-Kakula for Q3 2024, compared with 86,203 tonnes in Q1
2024 and 100,812 tonnes in Q2 2024. Over the first nine months of 2024,
Kamoa-Kakula produced a total of 303,328 tonnes of copper in concentrate.
• Kamoa-Kakula’s 2024 production guidance has been revised to between
425,000 – 450,000 tonnes of copper due to the impact of power intermittency
experienced, particularly in the first half of the year.
• Kamoa-Kakula’s Phase 1 and 2 concentrators milled approximately 2.2 million
tonnes of ore during the third quarter at an average feed grade of 4.9% copper.
Copper flotation recoveries for the quarter averaged 86.6%.
• Following the commissioning of the Phase 3 concentrator’s fine-grinding mills
in September, sustained improvements in processing throughput and
recovery rates were achieved. During the third week of October, the
concentrator milled a record 19,198 tonnes over 24 hours, equivalent to an
annualized processing rate of over 6.5 million tonnes per annum, which is 30%
higher than the nameplate capacity. In addition, in late September, over 24
hours, the copper recovery rate of the concentrator averaged 87%, exceeding
the nameplate recovery rate of 86%.
• Kamoa-Kakula's 500,000-tonne-per-annum on-site, direct-to-blister copper
smelter is advancing on schedule with construction completion expected by
the end of 2024, and heat-up to commence in Q1 2025.
• During the quarter, DRA Global of Johannesburg, South Africa, and Zijin
Engineering of Fujian Province, China were appointed as engineering,
procurement, and construction management (EPCM) contractors to execute
“Project 95” at Kamoa-Kakula. A capital cost of approximately $200 million is
estimated for concentrator modifications. 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 from Q1 2026.
• The Kipushi concentrator ramp-up continued during the third quarter,
producing 17,817 tonnes of zinc in concentrate. Nameplate concentrator
milling rate is expected to be achieved in Q1 2025. Export of concentrates
commenced at the end of Q3 2024.
• Kipushi concentrator recovery rates regularly reached over 90% during the
quarter. In addition, after quarter end, over 24 hours the Kipushi concentrator
milled 2,108 tonnes, producing 1,357 tonnes of zinc concentrate at a
concentrate grade of 52% contained zinc. This is equivalent to an annualized
zinc production of approximately 220,000 tonnes of zinc, after accounting for
availability.
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• Kipushi’s 2024 production guidance was revised to between 50,000 – 70,000
tonnes of zinc in concentrate based on the ramp-up schedule, from 100,000 –
140,000 tonnes previously.
• 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 be complete in Q3 2025, 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.
• Construction of Platreef’s Phase 1 concentrator was completed on schedule
early in the third quarter. Cold commissioning commenced, 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.
• Reaming of the 5.1-meter diameter Shaft #3 from the 950-meter level was
recently completed and equipping has commenced. Shaft #3 is expected to
commence hoisting from Q1 2026 with a capacity of approximately 4 million
tonnes per annum.
• 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 published in Q1 2025.
• Ivanhoe continues its expansive copper exploration program on its Western
Foreland licenses adjacent to Kamoa-Kakula. Diamond drilling during the third
quarter of 2024 focused on Makoko West, Kitoko, Sakanama, and Lubudi. Nine
drill rigs were in operation across the Western Foreland at quarter end,
completing over 23,409 metres of diamond-core drilling, bringing the total to
over 63,000 metres completed year-to-date, out of a total 70,000 metres
planned.
• Positive results from drilling around Makoko and Makoko West led to the
addition of three new, adjacent exploration licences, totaling 336 km2, to the
Western Foreland package in Q3 2024. Two new rigs were also deployed to the
newly acquired licence area after quarter-end.
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David Kapembwa, Smelter Foreman, Kamoa Copper, inspecting pressure of
cooling water lines during pressure testing at the on-site direct-to-blister
copper smelter.
Conference call for investors on Wednesday, October 30, 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 October 30, 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/cza3bouw
Analysts are invited to join by phone for the Q&A using the following link:
https://register.vevent.com/register/BI13b58175fedd463caf90c57c7402aa05
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.
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Read Ivanhoe's Third Quarter 2024 Sustainability Review:
For the third quarter, the group achieved an industry-
leading combined Lost Time Injury Frequency Rate
(LTIFR) of 0.50 and a Total Recordable Injury
Frequency Rate (TRIFR) of 1.11 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 Q3 2024 Sustainability
Review:
https://www.ivanhoemines.com/investors/document-
library/#sustainability
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 expands annual
production capacity up to approximately 600,000 tonnes of copper, 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 and the DRC
government holds the remaining 20% interest. Ivanhoe and Zijin Mining therefore each
hold an indirect 39.6% interest in Kamoa-Kakula, with Crystal River holding an indirect
0.8% interest. Kamoa-Kakula’s full-time employee workforce is approximately 5,500 and
is over 90% Congolese.
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Kamoa-Kakula summary of operating and financial data
Q3 2024 Q2 2024 Q1 2024 Q4 2023 Q3 2023
Ore tonnes milled (000’s tonnes) 3,266(1) 2,381(1) 2,061 2,133 2,236
Copper ore grade processed (%) 4.14%(1) 4.91%(1) 4.80% 4.95% 5.37%
Copper recovery (%) 85.3%(1) 86.7%(1) 87.4% 87.9% 87.2%
Copper in concentrate produced
(tonnes) 116,313 100,812 86,203 92,215 103,947
Payable copper sold (tonnes)(2) 103,106 95,900 85,155 90,967 96,509
Cost of sales per pound ($ per lb.) 1.80 1.53 1.50 1.50 1.34
Cash cost (C1) ($ per lb.) 1.69 1.52 1.57 1.53 1.46
Realized copper price ($ per lb.) 4.16 4.34 3.82 3.71 3.84
Sales revenue before
remeasurement ($'000) 836,871 813,817 612,496 625,983 681,821
Remeasurement of contract
receivables ($'000) (8,983) 3,256 5,824 (8,365) 13,014
Sales revenue after remeasurement
($'000) 827,888 817,073 618,320 617,618 694,835
EBITDA ($'000) 469,735 547,257 364,893 343,899 423,211
EBITDA margin (% of sales
revenue) 57% 67% 59% 56% 61%
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 press 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 Accounting
Standards, please refer to the non-GAAP Financial Performance Measures section of this press release.
(1) Blended figures across the Phase 1, 2, and 3 concentrators, following the commencement of the Phase
3 concentrator in June 2024. Excluding Phase 3, the Phase 1 and 2 concentrators milled 2.21 million
tonnes of ore at an average feed grade of 4.9% with an average recovery of 86.6% in Q3 2024.
(2) Payable copper sold is net of the payability factor of circa 97%. Copper in concentrate produced net of
the payability factor is noted in the non-GAAP Financial Performance Measures section of this press
release.
C1 cash cost per pound of payable copper produced can be further broken
down as follows:
Q3 2024 Q2 2024 Q1 2024 Q4 2023 Q3 2023
Mining ($ per lb.) 0.62 0.45 0.44 0.38 0.41
Processing ($ per lb.) 0.26 0.21 0.23 0.24 0.20
Logistics charges ($ per lb.) 0.42 0.48 0.50 0.50 0.46
TC, RC, smelter charges ($ per lb.) 0.26 0.25 0.25 0.26 0.25
General & Administrative ($ per lb.) 0.13 0.13 0.15 0.15 0.14
Cash cost (C1) per pound of
payable copper produced ($ per lb.) 1.69 1.52 1.57 1.53 1.46