Ivanhoe Mines release Second Quarter 2022 financial results

Ivanhoe Mines President Marna Cloete and Chief Financial Officer David van Heerden are pleased to announce the financial results for the three and six months ended June 30, 2022.

Ivanhoe Mines is a leading Canadian mining company developing and expanding its four principal mining and exploration projects in Southern Africa: the Kamoa-Kakula Mining Complex in the Democratic Republic of Congo (DRC), which commenced commercial production in July 2021; the Platreef palladium, rhodium, nickel, platinum, copper and gold discovery in South Africa; the historic Kipushi zinc-copper-lead-germanium mine in the DRC; and the expansive exploration program for new copper discoveries on Ivanhoe’s Western Foreland exploration licences, near Kamoa-Kakula. All figures are in U.S. dollars unless otherwise stated.

Highlights

Ivanhoe Mines recorded a profit of $351.5 million for Q2 2022, compared to a loss of $108.6 million for the same period in 2021. The profit in the quarter includes Ivanhoe Mines’ share of profit and finance income from the Kamoa-Kakula joint venture of $84.6 million.

Kamoa-Kakula set a new quarterly production record during the period, with 87,314 tonnes of copper in concentrate produced. Commercial production from the Phase 2 concentrator was declared on April 7, 2022.

Ivanhoe Mines increases the lower end of its 2022 production guidance range for Kamoa-Kakula to between 310,000 and 340,000 tonnes of copper in concentrate following the early commissioning of the Phase 2 expansion.

Kamoa-Kakula’s cost of sales per pound (lb.) of payable copper sold was $1.15/lb. for Q2 2022, while cash costs (C1) per pound of payable copper produced totalled $1.42/lb., compared to $1.21/lb. and $1.28/lb. in Q1 2022 and Q4 2021 respectively.

Ivanhoe Mines reiterates its C1 cash cost guidance for Kamoa-Kakula of $1.20/lb. to $1.40/lb. for the calendar year 2022. C1 cash costs over the first six months of 2022 total $1.34/lb. During Q2 2022, Kamoa Copper sold 85,794 tonnes of payable copper and recognized revenue of $494.1 million, with an operating profit of $253.1 million and an EBITDA of $286.3 million.

Kamoa Copper mined 1.66 million tonnes of ore grading 5.57% copper in Q2 2022, including 0.78 million tonnes grading 6.74% copper from the Kakula Mine’s high-grade centre. Over the first half of 2022, Kamoa Copper milled approximately three million tonnes of ore at an average feed grade of 5.59% copper, and produced 142,916 tonnes of copper in concentrate.

After the end of Q2, Kamoa Copper set another new monthly production record, with 32,877 tonnes of copper produced in July, equivalent to an annualized production rate of 387,100 tonnes. Kamoa Copper’s de-bottlenecking program is progressing to schedule.

The program will increase the combined design processing capacity of the Phase 1 and Phase 2 concentrators to approximately 9.2 million tonnes of ore per annum. Copper production from Kamoa-Kakula’s first two phases is projected to reach approximately 450,000 tonnes per annum by Q2 2023.

Basic engineering design for Kamoa Copper’s Phase 3, 5.0-million-tonne-per-annum concentrator is nearing completion with engineering and procurement activities underway. During June, orders were placed for the following long-lead items: ball mills, concentrate filters, cone crushers and flotation cells. The earthworks contract also has been placed.

Earthworks excavation for the Phase 3 direct-to-blister flash smelter is advancing quickly. In June, purchase orders were placed for the smelter’s slag-cleaning furnace and the anode refining furnaces. Ivanhoe Mines has a strong balance sheet with cash and cash equivalents of $507.1 million as at June 30, 2022, and expects that Kamoa Copper’s operating and expansion capital expenditures on Phase 3 will be funded from copper sales and facilities at Kamoa-Kakula.

Ivanhoe continues its copper exploration program on its Western Foreland licences that cover approximately 2,407 square kilometres neighbouring the 400-square-kilometre Kamoa-Kakula mining licences. The extensive 2022 drilling program is well underway, with 39 diamond drill holes totalling 7,539 metres completed during the second quarter.

Lateral underground mine development on Platreef’s 950-metre-level, towards the location of the first ventilation shaft position, progressed well during the quarter. Over 200-metres of lateral development has been completed since work commenced in April 2022.

Construction of Platreef’s first solar-power plant is scheduled to commence in Q3 2022, with commissioning expected in 2023. The electricity generated from this power plant will be used for mine development and construction activities, as well as for charging Platreef’s battery-powered underground mining fleet.

The Platreef 2022 Feasibility Study yields an after-tax NPV8% of $1.7 billion and IRR of 18.5% at long-term consensus metal prices. Based on spot metal prices at the time of the study (February 23, 2022), the after-tax NPV8% increases to $4.1 billion and the IRR increases to 29%.

In June 2022, Kipushi and Gécamines approved the development budget for the Kipushi Project in line with the 2022 Feasibility Study. Ordering of long-lead equipment and other construction activities now has commenced. Financing and offtake discussions are advancing with several interested parties.

The Kipushi 2022 Feasibility Study yields an after-tax NPV8% of $941 million and IRR of 40.9% at long-term consensus metal prices. At a zinc price of $1.60/lb. (the current zinc spot price), the after-tax NPV8% increases to $2.0 billion and the IRR increases to 68%.