Ivanhoe Mines announces capital expenditure guidance to first production for Kamoa-Kakula

All capital expenditure figures are presented on a 100%-project basis. The 2024 capital expenditure guidance for Platreef and Kipushi excludes sustaining capital required in 2024 post-initial production.

Ivanhoe Mines’ capex guidance is based on several assumptions and estimates as of January 31, 2023. These include the assumption that the Phase 3 expansion at Kamoa-Kakula, including the smelter and Inga II refurbishment are completed in Q4 2024, as well as the construction of Platreef’s Phase 1 Mine is completed in Q3 2024, and that the construction of the Kipushi Mine is completed in Q3 2024. Guidance also involves estimates of known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially. This includes assumptions regarding commissioning, price of key materials and equipment, as well as those risk factors and assumptions disclosed elsewhere in this press release.

The full year 2022 capex for Phase 1 of the Platreef Project is expected to be approximately $100 million, and the full year 2022 capex for Platreef’s Phase 2 is expected to be approximately $25 million. This is lower than the total capital expenditure at Platreef of $146 million, as forecasted in Ivanhoe’s management’s discussion and analysis (MD&A) for the three and nine months ended September 30, 2022.

Capital expenditure for Kipushi is expected to be approximately $45 million for 2022, also lower than the $57 million forecasted for 2022 in Ivanhoe’s MD&A for the three and nine months ended September 30, 2022.

The final capital expenditure figures for 2022 will be confirmed in the company’s financial results for the fourth quarter and year ended December 31, 2022.

The capex guidance provided above excludes expenditure at the Western Foreland and other exploration projects, which are generally expensed per the company’s accounting policies, as well as capital expenditure at a corporate level.

Kamoa-Kakula Phase 3 and future expansion capital costs expected to be funded by operating cash flow, at current copper prices

As documented in the Kamoa-Kakula 2023 Integrated Development Plan (IDP 2023) announced on January 30, 2023, the remaining capital cost for the total Phase 3 expansion is estimated at $3.0 billion, including the mine, concentrator, smelter, infrastructure and investment in off-site hydropower infrastructure.

Of the remaining Phase 3 capital cost of $3.0 billion, approximately $2.5 billion is expected to be spent in 2023 and 2024, up to the commissioning of the Phase 3 concentrator and other infrastructure, with approximately 60% expected to be spent during 2023. In parallel, the Phase 1 and 2 operations are anticipated to generate significant operating cash flow in 2023 and 2024 and are expected to fund capital cost requirements at current copper prices.

Kamoa Copper’s unaudited cash balance as at December 31, 2022, was $343 million. Short-term financing facilities at Kamoa Copper are being arranged should a shortfall occur due to a significant decrease in copper prices.

Platreef Phase 1 initial capital currently funded with proceeds from stream facility; $150 million senior debt facility progressing well

Construction for Platreef’s Phase 1 Mine is underway, with the first production on track for Q3 2024. On surface, earthworks and civil construction activities are advancing well. Long-lead equipment orders have been placed and manufacturing is under way.

Underground development work is focused on establishing the required infrastructure, and developing towards the first mining areas, as well as the first ventilation shaft location. The remaining capital cost to the completion of Phase 1 is estimated at $390 million, of which approximately 50% is expected to be spent in 2023.

The $300-million stream facilities already in place have been fully drawn down, and are being utilized for the funding of the development of the Phase 1 project.

The company continues to progress the Platreef Project’s senior debt facility of $150 million with its mandated lead arrangers, Société Générale and Nedbank. The facility, which is targeted to close during the first half of 2023, subject to due-diligence, is expected to limit potential equity contributions for Platreef’s Phase 1 development.

The Phase 2 capital expenditure of $100 million at Platreef represents mainly the continuation of sinking Shaft 2 and the construction of the Shaft 2 headframe, allowing optionality for possible acceleration in Phase 2, which is currently under review.

Kipushi construction activities underway, with $250 million pre-payment financing and offtake discussions nearing completion

Construction of the Kipushi Mine is also underway, with the processing plant scheduled for completion by Q3 2024. Long-lead equipment items have been ordered and manufacturing is underway, and earthworks and civil construction activities are taking place on surface.

Rehabilitation activities for underground mining are complete, and drilling-and-blasting activities have commenced for the development of the Big Zinc orebody.

As the project has advanced into execution, the project team has updated the budget from the feasibility study published in 2022 to reflect work packages placed to date and incorporating any changes associated with the scope and in line with inflationary pressures. Of the $380 million capital budget to completion, approximately $95 million has been committed to date.