Ivanhoe Mines provides 2022 production and cost guidance for Kamoa-Kakula Copper Complex
January 10, 2022
Ivanhoe Mines provides 2022 production and cost guidance for
Kamoa-Kakula Copper Complex
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2022 production guidance of between 290,000 to 340,000
tonnes of copper in concentrate
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Kamoa Copper produced 105,884 tonnes of copper in
concentrate in 2021, exceeding the upper end of the guidance
range, reflecting outstanding ramp-up of the Phase 1 operation
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Record monthly production of 18,853 tonnes achieved in
December, with plant recovery averaging 88.5%
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Phase 2 expansion now 80% complete, expected to start
operations in Q2 2022; pre-commissioning activities underway
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Phase 3 concentrator expansion targeted for 2024, with
earthworks to access new mining areas well underway
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Kamoa Copper’s outstanding growth profile is aligned with
first-class sustainability and social initiatives in keeping with
the project’s goal of producing the world’s “greenest copper”
RIYADH, SAUDI ARABIA – Ivanhoe Mines (TSX: IVN; OTCQX: IVPAF) Executive
Co-Chair Robert Friedland announced today, ahead of the inaugural Future
Minerals Forum, that the 2022 annual production guidance for the Kamoa-Kakula
Copper Complex in the Democratic Republic of Congo (DRC) is between 290,000
and 340,000 tonnes of copper in concentrate.
The figures are on a 100%-project basis and metal reported in concentrate is prior
to refining losses or deductions associated with smelter terms.
The guidance range for cash costs (C1) per pound of payable copper in 2022 is
between $1.20 and $1.40 per pound of payable copper. Cash costs (C1) per pound
of payable copper for Q3 2021 totaled $1.37/lb, while cost of sales per pound of
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payable copper sold for Q3 2021 was $1.08/lb. "Cash costs (C1) per pound" is a
non-GAAP financial performance measure. Additional information is provided in
the Non-GAAP Financial Performance Measures section of this news release.
Kamoa Copper’s copper-in-concentrate production for the year ended December
31, 2021, totalled 105,884 tonnes, exceeding the upper end of the increased
guidance range of 92,500 to 100,000 tonnes. The year-end total was boosted by
record monthly production of 18,853 tonnes achieved in December.
2021 guidance had been raised from an initial range of 80,000 to 95,000 tonnes,
during the course of the successful ramp-up of Kamoa Copper’s Phase 1
concentrator plant, which began operations in late May 2021 and reached
commercial operations on July 1, 2021.
During the month of December, a record 372,000 tonnes of ore were milled at an
average feed grade of 5.98% copper, exceeding the monthly design run rate of
316,667 tonnes by more than 17%.
Copper flotation recoveries also achieved a record 88.5% in December. The
Phase 1, steady-state design copper recovery is approximately 86%, depending
on ore feed grade.
Kamoa Copper expects to begin operations at the Phase 2 concentrator plant in
Q2 2022. The Phase 2 concentrator plant is identical to the Phase 1 concentrator,
with a nameplate milling capacity of 3.8 million tonnes per annum (Mtpa), and a
similar ramp-up profile for the new concentrator is targeted, with the benefit of
additional knowledge gained during the commissioning of Phase 1.
The Phase 3 expansion also is advancing, with work ongoing on new box cut to
open up the Kamoa Mine. An updated pre-feasibility study (PFS), including the
Phase 3 expansion, is expected in Q3 2022.
Watch a new video showcasing Phase 1 operations and the
Phase 2 and Phase 3 expansion work underway at the
Kamoa-Kakula Copper Complex:
https://vimeo.com/663982551/a4a47fa41f
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Chart 1: Cumulative tonnes of copper produced from May 2021 to
December 31, 2021.
2022 Guidance for Kamoa-Kakula
Guidance is based on a number of assumptions and estimates as of December
31, 2021, including among other things, assumptions about the timing of the
Phase 2 expansion and anticipated costs and expenditures. Production and cost
guidance assumes the Phase 2 concentrator plant will commence copper
production in Q2 2022 and that ramp-up will be in line with what was achieved
with Phase 1. Guidance involves estimates of known and unknown risks,
uncertainties and other factors which may cause the actual results to be
materially different.
Kamoa-Kakula 2022 Guidance
Contained copper in concentrate (tonnes) 290,000 - 340,000
Cash cost (C1) ($ per pound) 1.20 - 1.40
Cash costs (C1) per pound of payable copper for Q3 2021 of $1.37/lb reflected the
measured ramp-up of production at Kamoa-Kakula to steady-state, and are
expected to trend downward as the Phase 2 concentrator plant is commissioned
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and the mine’s fixed operating costs are spread over increased copper
production.
C1 cash cost is a non-GAAP measure 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 final
port of destination (typically China), 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.
Cost of sales per pound of payable copper sold for Q3 2021 was $1.08/lb. For
historical comparatives see the Non-GAAP Financial Performance Measures
section of this news release. Please also see the Management’s Discussion and
Analysis for the three and nine months ended September 30, 2021, for discussion
of non-GAAP measures. All figures in the above table are on a 100%-project
basis.
“Kamoa Copper’s outstanding operational success in 2021 is a product of the
culture and values promoted throughout the organization,” said Mr. Friedland.
“We are focused on training and empowering our young, talented Congolese
workforce to operate this globally significant copper mining and smelting
complex for generations to come. We invest deeply in our people and we
celebrate their diversity, as diversity is a core value and a key to our strength.
Collectively we are determined to create long-term stakeholder and shareholder
value through continued investment in discovering and developing world-class
orebodies, technological innovation, strong corporate governance, environmental
stewardship, empowering our host communities and intense focus on health and
safety.
“The Phase 2 expansion remains significantly ahead of schedule, and we are well
on the way to doubling our annualized copper production to more than 400,000
tonnes starting early in Q2 2022, vaulting Kamoa Copper into the ranks of the
world’s ten largest copper mines.
“Our outstanding team of geologists are confident that the Kamoa and Kakula
mines are just the initial discoveries of a major new mining district, which
extends the storied African Copperbelt in a southwesterly direction all the way to
the Zambian border. We will be conducting an extensive drilling campaign on our
majority-owned Western Foreland exploration licences this year to unlock the
potential of this highly-prospective ground.”
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The Kamoa Copper Complex with the Phase 1 and Phase 2 concentrator
plants at the Kakula Mine. A small portion of Ivanhoe’s Western Foreland
exploration licences are in the background.
Muhemba Richard (left), operating an ore-truck simulator under the
guidance of trainer Kasongo Kabila at Kamoa Copper’s state-of-the-art
training centre.
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A 3D illustration of Kamoa-Kakula’s Phase 2 concentrator flotation cells.
The picture below shows the current progress, which is approximately 80%
complete.
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A convoy of trucks transporting Kamoa Copper’s copper concentrate for
export to international markets.
Kamoa-Kakula’s Phase 1 (at top) and Phase 2 ball mills.
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Phase 2 expansion now 80% complete, expected to start operations in
Q2 2022
Construction of the second 3.8-Mtpa concentrator plant (Phase 2) continues to
progress ahead of schedule with hot commissioning expected to start in Q2 2022.
Engineering, procurement and fabrication activities all are effectively complete,
with construction activities well advanced. As of the end of December, the overall
project was approximately 80% complete. Some pre-commissioning activities
have started.
The main construction focus now has shifted from structural steel erection and
installation of platework, equipment and piping (SMPP) to electrical, control and
instrumentation (EC&I) installation. Most areas have been handed over from the
SMPP contractor to the EC&I contractor. All of the Phase 2 surface piping has
been installed. Installation of cable racking is nearing completion and cable
pulling and instrument installation is well advanced.
More than 675 truckloads of Phase 2 plant construction equipment and materials
already have been delivered to site.
Updated PFS study, including Phase 3 expansion, expected in Q3
2022; work on new box cut to open up the Kamoa Mine advancing
Kamoa Copper also is advancing the Phase 3 expansion, with operations at the
first stream of the Phase 3 concentrator expected by the end of 2024. The Phase 3
concentrator will be located adjacent to the Kansoko Mine (at the Kansoko Sud
orebody) and is being designed as two identical streams with a common dry front
end, the same as the Phase 1 and 2 concentrators, but at a larger nameplate
milling capacity per stream than the 3.8-Mtpa capacity of the Phase 1 and 2
concentrators.
The Phase 3 concentrator is expected to be supplied with ore from the
established mine at Kansoko, as well as from two new planned mines, named
Kamoa 1 and Kamoa 2. The Kamoa 1 and Kamoa 2 mining areas will be accessed
via a twin-decline system (the Kamoa Mine decline), and the box cut for the
declines is under construction.
Phase 3 also includes the construction of a direct-to-blister smelter, with a
production capacity of 500,000 tonnes per annum of blister copper. Basic
engineering, led by China Nerin Engineering Co., Ltd. of Jiangxi, China, is
ongoing and expected to be completed in Q2 2022.
The planned smelter is to be built adjacent to the Phase 1 and 2 concentrator
plants, and is designed to meet the International Finance Corporation’s
emissions standards. The smelter has been sized to process the majority of the
copper concentrate forecast to be produced by Kamoa-Kakula’s Phase 1, Phase 2
and Phase 3 concentrators. With a nameplate capacity of 500,000 tonnes per