Kamoa-Kakula joint venture to immediately order long-lead equipment to accelerate the expansion of the Kakula processing plant from 3.8 million tonnes per annum (Mtpa) to 7.6 Mtpa Kamoa-Kakula joint-venture partners assessing project-level
September 21, 2020
Kamoa-Kakula joint venture to immediately order long-lead
equipment to accelerate the expansion of the Kakula processing
plant from 3.8 million tonnes per annum (Mtpa) to 7.6 Mtpa
Kamoa-Kakula joint-venture partners assessing project-level
financing proposals to accelerate Phase 2 development
KAMOA-KAKULA, DEMOCRATIC REPUBLIC OF CONGO – Ivanhoe Mines (TSX: IVN;
OTCQX:IVPAF) Co-Chairs Robert Friedland and Yufeng “Miles” Sun are pleased to
announce today that the Kamoa-Kakula Copper joint venture has agreed to
immediately proceed with orders for the long-lead equipment for the second, 3.8
million-tonne-per-annum (Mtpa) concentrator module at the Kakula Mine, which will
double the mine’s processing capacity from 3.8 Mtpa to 7.6 Mtpa.
The earlier than planned placement of the orders for the concentrator’s long-lead
equipment is expected to accelerate the completion of the Phase 2 mill expansion
from Q1 2023 to Q2 2022.
“There are many smart people in the mining industry who strongly believe that copper
is quickly approaching a supply and demand divergence; where the amount of copper
being produced globally will be far outstripped by demand,” said Mr. Friedland. “As
such, we want to ensure that the Kamoa-Kakula operation reaches its near-term
production potential as expeditiously as possible, while also maintaining our strong
balance sheet.”
“Getting into the queue now for the critical long-lead-time items, such as the ball mills,
costs very little up-front money and enhances our flexibility to quickly move ahead on
the first of multiple planned expansions.”
“The recent, independently-prepared pre-feasibility study for the expanded, 7.6 Mtpa
mining operation – sourcing ore from both the Kakula and Kansoko mines – highlights
the exceptional economic returns of this second phase development. Notably, the
study outlines an after-tax NPV8% of US$6.6 billion and an IRR of 69% over a 37-year
mine life, as well as payback of just 2.5 years,” Mr. Friedland added. “This economic
model assumes a copper price of US$3.10 per pound, although at least one major
global investment bank is forecasting prices ranging from US$3.20 to US$3.60 per
pound over the next six to twelve months based on its view that a supply deficit will
form in 2021. The studies also assume that financing will be on the basis of 100%
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equity, providing the opportunity to increase returns by leveraging commercial or
other debt facilities.”
Construction of Kakula’s initial 3.8-Mtpa processing plant is well underway, with the
remaining long-lead items already delivered to site, with the exception of the
transformers, expected in October. The bulk of the structural steel has already been
delivered to site. Ivanhoe Mines is fully-financed to Phase 1 copper production at the
Kakula Mine, which is scheduled for Q3 2021, with consolidated cash of approximately
US$496 million at the end of June 2020 and no significant debt.
Aerial picture of Kakula’s initial 3.8-Mtpa processing plant under construction.
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Flotation cells, manufactured by Outotec, in Finland and South Africa, installed
at Kakula’s initial 3.8-Mtpa processing plant.
With first phase production less than a year away, Kamoa-Kakula partners
accelerate expansion plans and bring Phase 2 copper production forward
In order to bring forward the expansion of the Kakula processing plant from 3.8 million
tonnes per annum (Mtpa) to 7.6 Mtpa from Q1 2023 to Q2 2022, the Kamoa-Kakula joint
venture will order long-lead items with a total commitment value of approximately
US$100 million within the coming weeks, of which an estimated US$25 million is
expected to be spent this year.
In parallel, Ivanhoe and Zijin are in advanced discussions with respect to various
financing proposals at the joint-venture level, including an equipment-financing
facility, a line of credit, and project financing. Ivanhoe expects that one, or more, of
the financing facilities will be successfully concluded in the fourth quarter of this year.
Ivanhoe will continue to fund its share of approximately 50% of the expansion costs
until such a time that an alternative financing facility has been concluded.
Kakula is projected to be the world’s highest-grade major copper mine with an
estimated average ore feed grade of 6.6% copper over the first five years of operation,
and 6.2% copper over the first 10 years.
At the end of August, the project’s pre-production surface ore stockpiles totalled an
estimated 671,000 tonnes grading 3.36% copper, including 116,000 tonnes of high-
grade ore grading 6.08% copper. The stockpile grade should continue to increase as
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the project approaches initial production; as beginning this month the majority of
mining at Kakula is expected to be in the ore zone near the centre of the deposit that
has copper grades of between 5% and 8%.
Given that the underground development completed to date is well ahead of schedule,
the project’s engineers are working to further optimize the mine plans outlined in the
recent definitive feasibility study and pre-feasibility study in order to accelerate the
ramp-up of the mine and increase the tonnes of ore in the stockpile which may be
processed through the expanded processing plant.
Miner Jacques Kitobo, examines a piece of ore from an ultra-high-grade
working face in the room-and-pillar section of Kakula Mine, near the northern
declines. Kakula’s high concentration of the gray-coloured, chalcocite ore
(chalcocite is almost 80% copper by weight) accounts for the mine’s estimated
high average feed grade of 6.6% copper over the first five years of operations,
and 5.2% copper on average over a 21-year life.
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Recently arrived transport trucks carrying structural steel and the mill shell in
four pieces for the second of two identical ball mills to be installed at Kakula’s
initial 3.8-Mtpa processing plant.
In late August, the shells, discharge end and trunnion were installed for the
plant’s first, 9.75-metre-long and 6.1-metre-wide, ball mill, manufactured by
CITIC Heavy Industries in Luoyang, China. The 7-megawatt, variable-speed-
drive motor for the first ball mill, manufactured by WEG Industries in Brazil, was
installed in early September. The second ball mill will be installed on the
adjacent concrete foundation.
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Phased expansion scenario to 19 Mtpa in the new Kamoa-Kakula IDP 2020
would position Kamoa-Kakula as the world’s second largest copper mining
complex, with peak annual copper production of more than 800,000 tonnes
On September 8th, Ivanhoe announced the outstanding economic results of the
independent Integrated Development Plan (IDP) for the tier one Kamoa-Kakula Copper
Project. The IDP comprises three development scenarios: Kakula definitive feasibility
study (DFS), Kakula-Kansoko pre-feasibility study (PFS), and Kamoa-Kakula
preliminary economic assessment (PEA).
The estimated remaining initial capital cost is approximately US$0.7 billion, based on
commissioning the Phase 2 mill expansion in Q1 2023. Ivanhoe’s share is
approximately 50%, with subsequent expansions funded by cash flows.
The new DFS evaluates the stage-one, 6-million-tonnes-per-annum (Mtpa) Kakula Mine
currently being constructed. The PFS evaluates mining 1.6 Mtpa from the Kansoko
Mine, in addition to 6 Mtpa from Kakula, to fill a 7.6-Mtpa processing plant at Kakula.
The PEA evaluates an integrated, multi-stage development to achieve a 19-Mtpa
production rate.
The full scope of the expanded facilities covered by the PFS includes: underground
expansion at the Kakula Mine to reach an annual production rate of 6 Mtpa; the ramp-
up of mining operations at the Kansoko Mine to a steady state 1.6 Mtpa; a second 3.8-
Mtpa concentrator module at Kakula; and associated surface infrastructure to support
the expansion at the various sites.
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 DRC
government (20%).
Qualified Persons
Disclosures of a scientific or technical nature regarding 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-Kakula Project. Mr. Amos has verified the technical data disclosed in
this news release.
Other disclosures of a scientific or technical nature in this news release have been reviewed
and approved by Stephen Torr, who is considered, by virtue of his education, experience and
professional association, a Qualified Person under the terms of NI 43-101. Mr. Torr is not
considered independent under NI 43-101 as he is the Vice President, Project Geology and
Evaluation. Mr. Torr has verified the other technical data disclosed in this news release.
The stockpile grade estimates contained in this news release are based upon bulk ore
sampling from underground headings. Sampling is done on each heading every second blast
and three 5-kilogram samples are taken. The samples are pulverized at the project’s onsite
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laboratory and analyzed used using a portable XRF (pXRF) instrument. Kamoa Copper has
routinely analyzed its exploration drill core for copper using pXRF, in addition to analysis at a
commercial laboratory using four acid digest and ICP-OES. This data has demonstrated that
pXRF results can be relied upon for grade control and run-of-mine sampling.
Ivanhoe Mines has prepared a current, 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:
The Kamoa-Kakula 2020 Resource Update dated March 25, 2020, prepared by
OreWin Pty Ltd., Wood plc, DRA Global, SRK Consulting (South Africa) (Pty) Ltd and
Stantec Consulting International LLC.
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.
A new independent, NI 43-101-compliant technical report for the Kamoa-Kakula Project, is
being prepared and will be filed on SEDAR at www.sedar.com and on the Ivanhoe Mines
website at www.ivanhoemines.com within 45 days of the issuance of Ivanhoe’s September 8,
2020, news release.
About Ivanhoe Mines
Ivanhoe Mines is a Canadian mining company focused on advancing its three principal
projects in Southern Africa: the development of new mines at the Kamoa-Kakula copper
discoveries in the Democratic Republic of Congo (DRC) and the Platreef palladium-platinum-
nickel-copper-rhodium-gold discovery in South Africa; and the extensive redevelopment and
upgrading of the historic Kipushi zinc-copper-germanium-silver mine, also in the DRC.
Ivanhoe also is exploring for new copper discoveries on its wholly-owned Western Foreland
exploration licences in the DRC, near the Kamoa-Kakula Project.
Information contacts
Investors
Bill Trenaman +1.604.331.9834
Media
Matthew Keevil +1.604. 558.1034
Website www.ivanhoemines.com
Forward-looking statements
Certain statements in this news 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
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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.
Such statements include without limitation: (i) statements regarding Kamoa Holding's use of the
secured term loan funds; (ii) statements regarding first copper concentrate production at the Kakula
Mine in Q3 2021; (iii) statements regarding doubling the mine's processing capacity from 3.8 Mtpa to
7.6 Mtpa; (iv) statements regarding the Kamoa-Kakula joint venture will order long-lead items with a
total commitment value of approximately US$100 million within the coming weeks, of which an
estimated US$25 million is expected to be spent this year and Ivanhoe will fund its share of
approximately 50% of the expansion costs until such a time that an alternative financing facility has
been concluded; (v) statements regarding the estimated remaining initial capital cost for all three
development scenarios is between US$0.6 billion and US$0.7 billion and Ivanhoe’s share is
approximately 50%, with subsequent expansions funded by cash flows; (vi) statements regarding the
increase of both the grade and tonnages of the stockpiles in coming months; and (vii) statements
regarding by placing orders now for the concentrator’s long-lead items, the project accelerates the
Phase 2 mill expansion from Q1 2023 to Q2 2022.
As well, all of the results of the pre-feasibility study for the Kakula copper mine and the updated and
expanded Kamoa-Kakula Project 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, 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, nickel,
zinc, platinum, palladium, rhodium and gold; (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 labour; (xiv) the regulation of
the mining industry by various governmental agencies; (xv) the ability to raise sufficient capital to
develop such projects; (xiv) changes in project scope or design, (xv) political factors, and (xvi) the
impact and effect of COVID-19.
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, 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 news 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 news release and are expressly qualified in their