Kamoa-Kakula’s off-take agreements signed for Phase 1 blister copper and copper concentrate
June 9, 2021
Kamoa-Kakula’s off-take agreements signed for Phase 1 blister
copper and copper concentrate
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Kamoa-Kakula fully authorized to commence exports of blister
copper and copper concentrate to international markets
KOLWEZI, DEMOCRATIC REPUBLIC OF CONGO – Ivanhoe Mines (TSX: IVN; OTCQX:
IVPAF) Co-Chairs Robert Friedland and Yufeng “Miles” Sun are pleased to announce
that Kamoa Copper SA – the operating company of the joint venture between Ivanhoe
Mines, Zijin Mining Group, Crystal River and the Government of the Democratic
Republic of Congo (DRC) – has signed copper concentrate and blister copper off-take
agreements on competitive arm's-length commercial terms, for 100% of Kamoa-
Kakula’s Phase 1 copper output, which is projected to be approximately 200,000 tonnes
of copper per year.
Kamoa Copper began producing copper concentrate on May 25, 2021, and made its first
delivery of concentrates to the nearby Lualaba Copper Smelter, outside of Kolwezi, on
June 1, 2021.
Watch a new video showcasing Kamoa-Kakula’s milling, flotation and
recovery processes involved in producing the ultra-high grade, clean
copper concentrate: https://vimeo.com/560814916/6db2333083
Kamoa Copper has signed off-take agreements with CITIC Metal (HK) Limited (CITIC
Metal) and Gold Mountains (H.K.) International Mining Company Limited, a subsidiary of
Zijin, for 50% each of the copper products from Kamoa-Kakula’s Phase 1 production.
The off-take agreements are evergreen for the production volumes from Phase 1,
including copper concentrate and blister copper resulting from processing of copper
concentrates at the Lualaba Copper Smelter.
The off-take agreements contain standard, international commercial terms, including
copper payables and treatment and refining charges based on the annual benchmark
across the copper industry. The ultra-high-grade, clean concentrate produced by
Kamoa-Kakula is expected to contain approximately 57% copper and very low levels of
impurities.
CITIC Metal and Zijin will purchase the copper concentrate at the Kakula Mine and the
blister copper at the Lualaba Copper Smelter on a free-carrier basis, meaning the
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buyers will be responsible for arranging freight and shipment to the final destination,
initially via the port of Durban, South Africa.
CITIC Metal and Zijin each will provide an advance payment facility of up to US$150
million (US$300 million in total) to be drawn at the election of Kamoa Copper from June
10, 2021, until May 31, 2023. The facility will bear an annual interest rate of 8% and will
be offset against provisional payments due to Kamoa Copper from product deliveries.
Payment terms include an option to receive a provisional payment on a 100%-basis
within three business days of invoicing, at the end of each delivery month.
Agreement signed with nearby Lualaba Copper Smelter to produce 99%
blister copper in the Democratic Republic of Congo
On May 31, 2021, Kamoa Copper signed a 10-year agreement with the Lualaba Copper
Smelter, located outside the town of Kolwezi, for the processing of a portion of Kamoa’s
copper concentrate production. Kamoa Copper delivered its first copper concentrates
to the Lualaba smelter on June 1, and will receive first blister copper ingots within 30
days of delivery.
The Lualaba Copper Smelter is 60%-owned by China Nonferrous Metal Mining Group
(CNMC) of Beijing, China. Yunnan Copper of Kunming, China, owns the remaining 40%.
The smelter, which began operations in early 2020, will treat up to 150,000 wet metric
tonnes of copper concentrates from Kamoa-Kakula, in return for a treatment charge and
market-based realization fee, and produce blister copper containing approximately 99%
copper that will be returned to Kamoa Copper, and collected by CITIC Metal and Zijin
from a dedicated storage area at the Lualaba Copper Smelter.
The Lualaba Copper Smelter is the first modern, large, pyro-metallurgical copper
smelter built in the Democratic Republic of Congo, and is approximately 40 kilometres
from Kamoa-Kakula via the recently-constructed, dedicated by-pass road.
Marna Cloete, Ivanhoe Mines President and CFO, commented: “We are very pleased to
have reached agreements with our partners CITIC Metal and Zijin at internationally-
competitive terms. The agreements reflect the great partnership we have with CITIC
Metal and Zijin, and the advance payment facilities significantly reduce the mine’s
working capital requirements as Phase 1 production ramps up.
“We also are pleased to secure a long-term tolling agreement with the local Lualaba
Copper Smelter, in keeping with our commitment to in-country beneficiation that
includes Kamoa Copper’s longer-term plan to construct its own direct-to-blister smelter.
“We have all necessary authorizations in place and will commence exports of clean,
hydro-electricity-produced copper products from the Kamoa-Kakula mine to meet the
burgeoning international demand for electrification of the global economy.”
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Copper production guidance for 2021
Ivanhoe’s guidance for contained copper in concentrate expected to be produced by the
Kamoa-Kakula Project for the balance of 2021 assumes a ramp-up from first production
in line with published technical disclosures, and is as follows:
Contained copper in concentrate 80,000 to 95,000 tonnes
All figures are on a 100%-project basis. Metal reported in concentrate is prior to refining
losses or deductions associated with smelter terms. Cost guidance is expected to be
provided once the Kamoa-Kakula Project’s Phase 1 plant has reached steady-state
production.
Kakula is projected to be the world’s highest-grade major copper mine, with an initial
mining rate of 3.8 million tonnes per annum (Mtpa), ramping up to 7.6 Mtpa in Q3 2022.
Phase 1 is expected to produce approximately 200,000 tonnes of copper per year, and
Phases 1 and 2 combined are forecast to produce approximately 400,000 tonnes of
copper per year. Based on independent benchmarking, the project’s phased expansion
scenario to 19 Mtpa would position Kamoa-Kakula as the world’s second-largest copper
mining complex, with peak annual copper production of more than 800,000 tonnes.
Given the current copper price environment, Ivanhoe and its partner Zijin are exploring
the acceleration of the Kamoa-Kakula Phase 3 concentrator expansion from 7.6 Mtpa to
11.4 Mtpa, which may be fed from expanded mining operations at Kansoko, or new
mining areas at Kamoa North (including the Bonanza Zone) and Kakula West.
A 2020 independent audit of Kamoa-Kakula's greenhouse gas intensity metrics
performed by Hatch Ltd. of Mississauga, Canada, confirmed that the project will be
among the world's lowest greenhouse gas emitters per unit of copper produced.
The Kamoa-Kakula Copper Project is a joint venture between Ivanhoe Mines (39.6%),
Zijin Mining Group (39.6%), Crystal River Global Limited (0.8%) and the Government of
the Democratic Republic of Congo (20%).
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Loading copper concentrate for bulk transportation to the nearby Lualaba
Copper Smelter, outside of Kolwezi.
Samples of Kamoa Copper’s copper concentrate being collected before it is
shipped to the Lualaba Copper Smelter.
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Trucks transporting bulk copper concentrate from the Kamoa-Kakula Project to
the Lualaba Copper Smelter via the recently-completed by-pass road connecting
Kamoa-Kakula to Kolwezi. The new 220-kilovolt powerline carrying clean hydro-
generated electrity to Kamoa-Kakula is on the right.
A blister copper ingot produced at the Lualaba Copper Smelter, containing
approximately 99% copper, ready for export to international markets.
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Qualified Persons
Disclosures of a scientific or technical nature regarding development scenarios at the
Kamoa-Kakula Project in this news release have been reviewed and approved by Steve
Amos, who is considered, by virtue of his education, experience and professional
association, a Qualified Person under the terms of NI 43-101. Mr. Amos is not
considered independent under NI 43-101 as he is the Head of the Kamoa Project. Mr.
Amos has verified the technical data disclosed in this news release.
Ivanhoe has prepared an independent, NI 43-101-compliant technical report for the
Kamoa-Kakula Project, which is available on the company’s website and under the
company’s SEDAR profile at www.sedar.com:
Kamoa-Kakula Integrated Development Plan 2020 dated October 13, 2020,
prepared by OreWin Pty Ltd., China Nerin Engineering Co., Ltd., DRA Global,
Epoch Resources, Golder Associates Africa, KGHM Cuprum R&D Centre Ltd.,
Outotec Oyj, Paterson and Cooke, Stantec Consulting International LLC, SRK
Consulting Inc., and Wood plc.
The technical report includes relevant information regarding the assumptions,
parameters and methods of the mineral resource estimates on the Kamoa-Kakula
Project cited in this news release, as well as information regarding data verification,
exploration procedures and other matters relevant to the scientific and technical
disclosure contained in this news release.
About Ivanhoe Mines
Ivanhoe Mines is a Canadian mining company focused on advancing its three principal
joint-venture projects in Southern Africa: the development of major new, mechanized,
underground mines at the Kamoa-Kakula copper discoveries in the DRC and at the
Platreef palladium-rhodium-platinum-nickel-copper-gold discovery in South Africa; and
the extensive redevelopment and upgrading of the historic Kipushi zinc-copper-
germanium-silver mine, also in the DRC.
Kamoa-Kakula began producing copper in May2021 and, through phased expansions, is
positioned to become one of the world's largest copper producers. Kamoa-Kakula and
Kipushi will be powered by clean, renewable hydro-generated electricity and will be
among the world’s lowest greenhouse gas emitters per unit of metal produced. Ivanhoe
Mines has pledged to achieve net-zero operational greenhouse gas emissions (Scope 1
and 2) at the Kamoa-Kakula Copper Mine when large-scale electric, hydrogen and hybrid
underground mining equipment become commercially available. Ivanhoe also is
exploring for new copper discoveries on its Western Foreland exploration licences in
the DRC, near the Kamoa-Kakula Project.
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Information contacts
Investors: Bill Trenaman +1.604.331.9834 / Media: Matthew Keevil +1.604.558.1034
Forward-looking statements
Certain statements in this release constitute “forward-looking statements” or “forward-looking
information” within the meaning of applicable securities laws. Such statements and information involve
known and unknown risks, uncertainties and other factors that may cause the actual results,
performance or achievements of the company, its projects, or industry results, to be materially different
from any future results, performance or achievements expressed or implied by such forward-looking
statements or information. Such statements can be identified by the use of words such as “may”,
“would”, “could”, “will”, “intend”, “expect”, “believe”, “plan”, “anticipate”, “estimate”, “scheduled”,
“forecast”, “predict” and other similar terminology, or state that certain actions, events or results “may”,
“could”, “would”, “might” or “will” be taken, occur or be achieved. These statements reflect the
company’s current expectations regarding future events, performance and results and speak only as of
the date of this release.
Such statements include without limitation, the timing and results of: (i) statements regarding the ultra-
high-grade, clean concentrate produced by Kamoa-Kakula is expected to contain approximately 57%
copper and very low levels of impurities; (ii) statements regarding Ivanhoe’s guidance for contained
copper in concentrate expected to be produced by the Kamoa-Kakula Project for the balance of 2021 of
80,000 to 95,000 tonnes; (iii) statements regarding Kakula is projected to be the world’s highest-grade
major copper mine, with an initial mining rate of 3.8 Mtpa, ramping up to 7.6 Mtpa in Q3 2022; (iv)
statements regarding Kamoa-Kakula’s Phase 1 is expected to produce approximately 200,000 tonnes
of copper per year, and Phases 1 and 2 combined are forecast to produce approximately 400,000
tonnes of copper per year; (v) statements regarding that, based on independent benchmarking, the
project’s phased expansion scenario to 19 Mtpa would position Kamoa-Kakula as the world’s second-
largest copper mining complex, with peak annual copper production of more than 800,000 tonnes; (vi)
statements regarding that based on a 2020 independent audit of Kamoa-Kakula's greenhouse gas
intensity metrics performed by Hatch Ltd., the Kamoa-Kakula Project will be among the world's lowest
greenhouse gas emitters per unit of copper produced; and (vii) statements regarding Kamoa-Kakula
and Kipushi will be powered by clean, renewable hydro-generated electricity and will be among the
world’s lowest greenhouse gas emitters per unit of metal produced.
As well, all of the results of the Kakula definitive feasibility study, the Kakula-Kansoko pre-feasibility
study and the Kamoa-Kakula preliminary economic assessment, constitute forward-looking statements
or information, and include future estimates of internal rates of return, net present value, future
production, estimates of cash cost, proposed mining plans and methods, mine life estimates, cash flow
forecasts, metal recoveries, estimates of capital and operating costs and the size and timing of phased
development of the projects. Furthermore, with respect to this specific forward-looking information
concerning the development of the Kamoa-Kakula Project, the company has based its assumptions
and analysis on certain factors that are inherently uncertain. Uncertainties include: (i) the adequacy of
infrastructure; (ii) geological characteristics; (iii) metallurgical characteristics of the mineralization; (iv)
the ability to develop adequate processing capacity; (v) the price of copper; (vi) the availability of
equipment and facilities necessary to complete development; (vii) the cost of consumables and mining
and processing equipment; (viii) unforeseen technological and engineering problems; (ix) accidents or
acts of sabotage or terrorism; (x) currency fluctuations; (xi) changes in regulations; (xii) the compliance
by joint venture partners with terms of agreements; (xiii) the availability and productivity of skilled
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labour; (xiv) the regulation of the mining industry by various governmental agencies; (xv) the ability to
raise sufficient capital to develop such projects; (xvi) changes in project scope or design; and (xvii)
political factors.
Forward-looking statements and information involve significant risks and uncertainties, should not be
read as guarantees of future performance or results and will not necessarily be accurate indicators of
whether or not such results will be achieved. A number of factors could cause actual results to differ
materially from the results discussed in the forward-looking statements or information, including, but not
limited to, the factors discussed below and under “Risk Factors”, and elsewhere in this release, as well
as unexpected changes in laws, rules or regulations, or their enforcement by applicable authorities; the
failure of parties to contracts with the company to perform as agreed; social or labour unrest; changes
in commodity prices; and the failure of exploration programs or studies to deliver anticipated results or
results that would justify and support continued exploration, studies, development or operations.
Although the forward-looking statements contained in this release are based upon what management of
the company believes are reasonable assumptions, the company cannot assure investors that actual
results will be consistent with these forward-looking statements. These forward-looking statements are
made as of the date of this release and are expressly qualified in their entirety by this cautionary
statement. Subject to applicable securities laws, the company does not assume any obligation to
update or revise the forward-looking statements contained herein to reflect events or circumstances
occurring after the date of this release.
The company’s actual results could differ materially from those anticipated in these forward-looking
statements as a result of the factors set forth below in the “Risk Factors” section in the company’s 2021
Q1 MD&A and its current annual information form.