Ivanhoe Mines provides update to 2025 capital expenditure guidance
Ivanhoe Mines’ (TSX: IVN) (OTCQX: IVPAF) Executive Co-Chair Robert Friedland and President Marna Cloete announced the company’s fourth quarter and full-year production results for the Kamoa-Kakula Copper Complex in the Democratic Republic of the Congo (DRC) and the ultra-high-grade Kipushi zinc mine, also in the DRC.
In addition, the company has announced its 2025 production guidance for Kamoa-Kakula and Kipushi, as well as updated 2025 group capital expenditure guidance.
Kamoa-Kakula delivered record production in 2024 of 437,061 tonnes of copper in concentrate, a 12% year-on-year increase, following the ramp up of the Phase 3 concentrator in the second half of 2024.
Production for the fourth quarter of 133,819 tonnes of copper in concentrate, a 15% increase from the third quarter, is also a record.
This was a result of strong performance from the Phase 1 and 2 concentrators, delivering record throughput with improved grade and recovery, as well as the Phase 3 concentrator reaching and at times exceeding nameplate design parameters.
Kamoa-Kakula summary of quarterly and annual production data
| Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | FY 2024 | |
| Phase 1 & 2 | |||||
| Ore tonnes milled (000’s tonnes) | 2,061 | 2,288 | 2,215 | 2,329 | 8,893 |
| Copper ore grade processed (%) | 4.80% | 5.04% | 4.86% | 5.08% | 4.95% |
| Copper recovery (%) | 87.4% | 87.0% | 86.6% | 87.0% | 87.0% |
| Copper in concentrate produced (tonnes) | 86,117 | 99,706 | 94,214 | 102,042 | 382,078 |
| Phase 3 | |||||
| Ore tonnes milled (000’s tonnes) | – | 93 | 1,050 | 1,326 | 2,469 |
| Copper ore grade processed (%) | – | 1.67% | 2.64% | 2.82% | 2.70% |
| Copper recovery (%) | – | 83.3% | 79.9% | 85.1% | 82.9% |
| Copper in concentrate produced (tonnes) | – | 1,106 | 22,099 | 31,777 | 54,983 |
| Combined Phase 1, 2 and 3 | |||||
| Ore tonnes milled (000’s tonnes) | 2,061 | 2,381 | 3,266 | 3,655 | 11,362 |
| Copper ore grade processed (%) | 4.80% | 4.91% | 4.14% | 4.26% | 4.46% |
| Copper recovery (%) | 87.4% | 86.9% | 85.3% | 86.6% | 86.5% |
| Copper in concentrate produced (tonnes) | 86,117 | 100,812 | 116,313 | 133,819 | 437,061 |
| Numbers in bold denote a quarterly record |
During the month of December, Kamoa-Kakula delivered record production of 47,058 tonnes of copper in concentrate. The Phase 3 concentrator milled at an annualized rate of 5.7 million tonnes per annum during the month, 13% above design capacity, and achieved an average recovery rate of 86.6%, in line with design parameters.
Kamoa-Kakula’s high- and medium-grade ore surface stockpiles totaled approximately 4.19 million tonnes at an estimated, blended average grade of 3.18% copper. Contained copper in the stockpiles at the end of December totaled approximately 133,000 tonnes.
At year-end, there were approximately 30,000 tonnes of unsold copper in inventory, up from 16,000 tonnes of unsold copper in concentrate at the end of the third quarter.
The inventory of unsold copper is largely undergoing toll treatment at Lualaba Copper Smelter (LCS) and is expected to reduce during the first quarter.
Kipushi produced 50,307 tonnes of zinc during inaugural year, including a monthly record 14,900 tonnes in December as ramp-up approaches nameplate capacity
In 2024, the Kipushi concentrator milled 228,293 tonnes of ore at an average grade of 29% zinc, producing 50,307 tonnes of zinc in concentrate at a grade of approximately 50%.
Following slower than anticipated ramp up progress in the third quarter, operations at the Kipushi concentrator significantly improved during the fourth quarter, with several processing records achieved.
135,285 tonnes of ore were milled at an average grade of 28%, producing a record 32,323 tonnes of zinc. This includes a record 14,900 tonnes produced during December, which is equivalent to an annualized production rate of approximately 175,000 tonnes of zinc.
In addition, during the last day of the year, a record 750 tonnes of zinc were produced over 24 hours, exceeding nameplate capacity. Over the same period, 2,200 tonnes of ore were milled by the concentrator, in line with the design rate. The Kipushi concentrator is expected to consistently achieve its nameplate milling rate during the first quarter.
At the end of December, Kipushi’s high- and medium-grade ore surface stockpiles totaled approximately 344,000 tonnes at an estimated average grade of 23% zinc. Contained zinc in the stockpiles totaled approximately 79,500 tonnes.
2025 Production Guidance
Ivanhoe Mines’ 2025 production guidance is based on several assumptions and estimates as of December 31, 2024. The guidance provided involves estimates of known and unknown risks, uncertainties, and other factors that may cause the actual results to differ materially.
In recent months, imported power available to Kamoa-Kakula has been reduced due to drought conditions affecting hydroelectric capacity in Zambia and Mozambique. Although the rainy season has begun, it is too early to predict the degree to which reservoirs that provide hydropower in Zambia and Mozambique will be recharged. Given this uncertainty, 2025 production guidance will be reviewed at the end of the rainy season in the second quarter.
| 2025 Production Guidance | ||
| Kamoa-Kakula | 520,000 – 580,000 | Contained copper in concentrate (tonnes) |
| Kipushi | 180,000 – 240,000 | Contained zinc in concentrate (tonnes) |
| All figures are on a 100%-project basis and metal reported in concentrate is before refining losses or payability deductions associated with smelter terms. | ||
Kamoa-Kakula is targeting a production rate of approximately 600,000 tonnes of copper in concentrate for 2026, following power generation and grid improvement initiatives in progress, together with optimization projects for improved Phase 1 and 2 recoveries (Project 95) and increased Phase 3 throughput underway.
Kipushi is targeting a production rate of over 250,000 tonnes of zinc in concentrate for 2026, following the completion of ramp-up and debottlenecking activities targeted for Q3 2025.
Ivanhoe Mines will provide C1 cash cost (C1) per pound of payable copper and payable zinc guidance for 2025 in its 2024 year-end financial results release. Guidance on Platreef’s production and C1 cash costs will be provided after ramp-up, which is expected to commence in H2 2025.
Ivanhoe Mines provides update to 2025 Capital Expenditure Guidance
The company’s updated capital expenditure guidance is summarized as follows:
| Capital Expenditure | 9M 2024 Actuals(1) | 2024 Guidance(1) | 2025 Guidance | ||||||
| ($’ million) | ($’ million) | ($’ million) | |||||||
| Kamoa-Kakula | |||||||||
| Phase 3 and other expansion capital | 1,397 | 1,350 – 1,750 | 1,300 – 1,050 | ||||||
| Sustaining capital | 220 | 240 | 370 | ||||||
| 1,617 | 1,590 – 1,990 | 1,670 – 1,420 | |||||||
| Platreef | |||||||||
| Phase 1 initial capital | 66 | 110 – 140 | 100 – 70 | ||||||
| Phase 2 capital | 123 | 130 – 180 | 220 – 170 | ||||||
| 189 | 240 – 320 | 320 – 240 | |||||||
| Kipushi | |||||||||
| Initial and expansion capital | 185 | 185 | 25 | ||||||
| Sustaining capital | – | 35 | 40 | ||||||
| 185 | 220 | 65 |
All capital expenditure figures are presented on a 100%-project basis.
(1) As at September 30, 2024.
The guidance ranges previously provided reflected uncertainty in the timing of Kamoa-Kakula Phase 3 expansion and Platreef Phase 2 capital between the calendar years of 2024 and 2025. Guidance for 2024 has been kept unchanged and remains as at September 30, 2024, noting however that capital expenditure for Kamoa-Kakula is expected to be at the top end of the 2024 range, with sustaining capital expected to exceed guidance, and capital expenditure at Platreef is expected to be towards the bottom end of the range.
Construction of Kamoa-Kakula’s Phase 3 concentrator was completed on May 26, 2024, and construction completion of the smelter project is expected imminently.
2025 capital expenditure guidance for Kamoa-Kakula as shown in the above table includes capex recently approved related to the following:
| ($’ million) | |
| Smelter | |
| Increase in capital to completion, mostly related to logistics | 115 |
| Capitalized ramp up costs (not previously capitalized) | 120 |
| Uninterruptible power supply (UPS) and additional generators | 80 |
| 315 | |
| Phase 3 Optimization and Phase 4 Expansion | |
| Phase 3 mine optimization including underground infrastructure | 115 |
| Phase 3 de-bottlenecking initial capital cost | 70 |
| Phase 4 infrastructure early works and TSF expansion | 135 |
| Surface upgrades, including tarred roads and on-site camps | 60 |
| 320 | |
| Sustaining Capital | |
| Increase to support enlarged mining footprint | 105 |
The Kamoa-Kakula’s Phase 1, 2, and 3 operations are anticipated to generate significant operating cash flow and are expected, together with joint venture-level financing facilities, to be sufficient to fund ongoing capital cost requirements at current copper prices.
Construction of Platreef’s Phase 1 concentrator was completed on schedule in July 2024. Hot commissioning and ramp-up of production are deferred to the second half of 2025.
Platreef’s 2024 capital expenditure guidance in the above table is unchanged, the 2025 guidance is provisional and will be updated upon the completion of the updated Feasibility Study later in Q1 2025. The 2025 capital expenditure is expected to remain within the range outlined in the above table.
Construction of the Kipushi concentrator facility is complete and is ramping up to nameplate production. Kipushi’s 2025 capital expenditure guidance increases by $20 million to incorporate the concentrator de-bottlenecking program, which is expected to increase processing capacity by approximately 20% from Q3 2025, as well as for the purchase of additional on-site back up generating capacity.
Ivanhoe Mines will provide 2026 capital expenditure guidance in its 2024 year-end financial results.
Kamoa-Kakula signs offtake agreement and advanced payment facility for copper anodes produced by the on-site smelter
CITIC Metal Limited and Gold Mountains International Mining Company Limited, a subsidiary of Zijin Mining, have each signed an offtake agreement with Kamoa Copper for a combined 80% of the smelter’s anode production.
The agreements were entered into on competitive arm’s-length commercial terms, over a three-year term. Production from the smelter, once fully ramped-up, is projected to be up to 500,000 tonnes of 99.7%-pure copper anodes per annum.
The offtake agreements contain standard, international commercial terms, including refining charges based on the copper industry annual benchmark.
CITIC Metal and Gold Mountains will purchase the copper anodes on a free-carrier (FCA) basis from Kamoa-Kakula’s mine gate. CITIC have elected to use Ivanhoe’s trading subsidiary to arrange the inland transportation of copper anodes to the port of loading in Africa.
In addition, under the offtake agreements, CITIC Metal and Gold Mountains have provided an advance payment facility of $250 million each, totally $500 million, the full amount of which has been received.
The advance payment facility will bear an annual interest rate of the 1-month Secured Overnight Financing Rate (SOFR), plus 3.75%.
Kamoa Copper is also in advanced discussions to sign a third offtake agreement for the remaining 20% of smelter production on the same terms. Negotiations are expected to conclude in the coming weeks.
Kamoa-Kakula 2025 Integrated Development Plan, including future growth initiatives such as Project 95, Phase 3 debottlenecking, and Phase 4 expansion, expected in Q2 2025
Following the last Integrated Development Plan, released on January 30, 2023, Kamoa’s engineering team is working on an updated 2025 Integrated Development Plan (2025 IDP), expected to be published in Q2 2025 The 2025 IDP will include initiatives targeting increased processing recoveries and processing throughput from the Phase 1, 2, and 3 concentrators, as well as a new Phase 4 expansion.
Kamoa’s engineering team is targeting to increase recovery rates of the Phase 1 and 2 concentrators and the Phase 3 concentrator, from the current nameplate rates of 87% and 86%, up to 95% and 92%, respectively, including Project 95. In addition, the processing capacity of the existing Phase 1, 2 and 3 operations is targeted to be boosted by up to 20%, from 14.2 Mtpa to 17 Mtpa.
The Phase 4 expansion involves doubling the size of the milling and flotation circuit adjacent to Phase 3. Like the Phase 2 expansion with Phase 1, the front-end crushing circuit installed for Phase 3 has already been oversized to accommodate Phase 4.
Phase 4 will be fed by ramping up new mining areas on the Kamoa-Kakula complex, timing of which is under study for the 2025 IDP.
Updated feasibility study for optimized Platreef Phase 2 and PEA for new Phase 3 expected in Q1 2025, ranking Platreef as one of the world’s largest producers of precious and base metals
In 2023, Ivanhoe’s engineering team completed an internal optimization study of the phased expansion of the Platreef Project. Current underground development and operations are dependent on the initial 1-Mtpa Shaft #1 until the 10-metre-diameter, 8-Mtpa Shaft #2 is commissioned. The study concluded that accelerating the startup of Phase 2 will create significant project value.
Following the completion of the optimization study, DRA Global of Johannesburg, South Africa, were appointed to update the Platreef 2022 Feasibility Study for the optimized and accelerated Phase 2 expansion. Study work is nearing completion, with results expected to be released in the first quarter of 2025.
In parallel with the release of the updated Phase 2 feasibility study, Ivanhoe also commissioned a preliminary economic assessment (PEA) for an additional expansion, Phase 3, taking the total Platreef processing capacity up to approximately 10 Mtpa.
The new Phase 3 expansion is expected to consist of two additional 3.3-Mtpa concentrator modules, to be located adjacent to the Phase 1 and 2 concentrators. Phase 3 is anticipated to rank Platreef as one of the world’s largest and lowest-cost platinum-group metal, nickel, copper and gold producers.
The 10-Mtpa concentrator capacity of the Phase 3 expansion will be 12.5 times greater than that of Phase 1 and 2.5 times greater than the processing capacity of the optimized Phase 2 expansion. The results of the Phase 3 PEA will be released at the same time as the updated feasibility study for Phase 2.
