Ivanhoe Mines accelerates the expansion of its Kamoa-Kakula mine site
The Kamoa-Kakula joint venture will immediately order long-lead equipment to accelerate the expansion of the Kakula processing plant from 3.8 million tonnes per year (Mtpa) to 7.6 Mtpa. The challenge is to prepare for an expected increase in demand for copper which will exceed supply in the years to come.
Co-Chairs Robert Friedland and Yufeng “Miles” Sun of Ivanhoe Mines announced on Monday, September 21 that the Kamoa-Kakula Copper joint venture has agreed to proceed “immediately with orders for long lead equipment for the second 3.8 concentrator module. million tonnes per year (Mtpa) at the Kakula mine, which will double the mine’s processing capacity from 3.8 Mtpa to 7.6 Mtpa, a statement from Ivanhoe Mines reported.
To this end, the company expects the earlier than expected placing of orders for the long-lead concentrator equipment to accelerate the completion of the Phase 2 plant expansion in Q1 2020 (Q1 2023) in the second quarter of 2022 (Q2 2022).
“There are a lot of smart people in the mining industry who firmly believe that copper is rapidly approaching a divergence between supply and demand; where the amount of copper produced in the world will be greatly exceeded by demand, ”said Friedland. “As such, we want to ensure that the Kamoa-Kakula operation reaches its short-term production potential as quickly as possible, while maintaining our strong balance sheet. “
“Getting into the queue now for critical long lead items, such as ball mills, costs very little upfront money and improves our flexibility to move quickly on the first of multiple planned expansions. “
“The recent independently prepared pre-feasibility study for the extended 7.6 Mtpa mining operation – ore supply to the Kakula and Kansoko mines – highlights the exceptional economic returns from this second phase of development. Notably, the study describes an after-tax NPV of 8% of US $ 6.6 billion and an IRR of 69% over a 37-year lifetime, as well as a return on investment of only 2.5 years. , added Friedland. “This business 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, depending on his view that a supply gap will develop. In 2021,the studies also assume that the financing will be on a 100% equity basis, offering the possibility of increasing returns using commercial or other credit facilities. “
Construction of the initial 3.8 Mtpa Kakula processing plant is well underway, with other long-lead items already delivered to the site, with the exception of transformers, expected in October. Most of the structural steel has already been delivered to the site. Ivanhoe Mines is fully funded with Phase 1 copper production at the Kakula mine, which is scheduled for Q3 2021, with consolidated cash flow of approximately US $ 496 million at the end of June 2020 and no significant debt.
