Ivanhoe Mines reports strong Q1 2024 results amid Kamoa-Kakula expansion and copper market dynamics

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Kamoa Copper Mining Complex in the Democratic Republic of Congo

Ivanhoe Mines, a Canadian mining company focused on advancing its four principal projects in Southern Africa, has announced its financial results for the first quarter of 2024, as released by the company’s President Marna Cloete and Chief Financial Officer David van Heerden.

The report highlights that Kamoa-Kakula, one of the company’s projects, continues to perform well, producing substantial EBITDA (earnings before interest, taxes, depreciation, and amortization) with steady margins and maintaining cash costs at the lower end of the 2024 forecast.

According to Robert Friedland, Ivanhoe Mines Founder and Executive Co-Chairman, this was achieved despite challenges with grid instability during the quarter, which affected copper production.

“Our management team has acted swiftly and decisively to resolve this issue, by securing 55 megawatts of imported power from neighboring countries via the Zambian grid, as well as by expanding our on-site backup generation capacity. As a result of this intervention, we have seen a significantly improved start to the second quarter at Kamoa-Kakula,” said Friedland.

“Kamoa-Kakula’s development milestones consistently meet budget and exceed schedule expectations, with the Phase 3 mill and mine expansion completed two quarters ahead of plan. Phase 3, anticipated to process first ore next month, will increase annual copper production to over 600,000 tonnes, solidifying Kamoa-Kakula as one of the world’s top copper producers. With enhanced power supply and accelerated Phase 3 output, we stand by our annual copper production forecast of 440,000 to 490,000 tonnes,” Friedland stated.

Copper shortage

The financial report indicates that copper prices have reached $10,000 per tonne, pointing to an impending supply shortage. Smelter treatment charges for copper concentrate are approaching zero in the spot market, suggesting producers struggle to keep up with rising demand for copper. Advanced technologies such as data centers are projected to consume over 2 million tonnes of copper by 2030, in addition to increased demand from the global military complex.

Given this backdrop, Ivanhoe Mines aims to accelerate growth plans at Kamoa-Kakula to produce more “green” copper. The company is looking forward to the results of their engineering work on “Project 95,” which aims to improve metallurgical recoveries and increase production. Ivanhoe Mines is also exploring the possibility of optimizing Phase 3 to exceed 5 million tonnes per annum throughput and potentially advancing the Phase 4 concentrator expansion.

“We possess an exceptional resource at Kamoa-Kakula, including high-grade mechanized underground operations currently producing at around 5% copper head grade, with significant potential for expansion. We are also examining the opportunity for world-class open-pit mining north of our Kamoa-Kakula mining license,” Friedland added.

He emphasized the potential of the mining complex, which can operate at over 20 million tonnes per annum capacity for decades, vying to become the world’s top copper producer. He also mentioned the new deposits being discovered in the Western Forelands.

Ivanhoe Mines’ four main projects in Southern Africa

Ivanhoe Mines’ four main projects in Southern Africa include the expansion of the Kamoa-Kakula Copper Complex in the Democratic Republic of Congo (DRC), the phased development of the Platreef palladium, nickel, platinum, rhodium, copper, and gold project in South Africa, the restart of the historic Kipushi zinc-copper-lead-germanium mine in the DRC, and the 2,650-square-kilometer Western Foreland exploration project.

Financial results highlights

The financial results outline the sale of 85,155 tonnes of payable copper during the quarter, generating $618 million in revenue and $365 million in EBITDA. Ivanhoe Mines reported a Q1 2024 loss of $69 million, mainly due to non-cash loss on convertible bonds linked to a 26% quarterly share price increase; however, the company also noted a normalized profit of $70 million and adjusted EBITDA of $126 million.

Kamoa-Kakula produced 86,203 tonnes of copper in the first quarter of 2024, maintaining the annual production guidance of 440,000 to 490,000 tonnes of copper. The mine’s quarterly cost of sales was $1.50 per pound of payable copper, and its C1 cash cost was $1.57 per pound, aligning with the lower end of guidance.

Pre-commissioning of Kamoa-Kakula’s new 5 million-tonne-per-annum Phase 3 concentrator began well ahead of schedule, with first ore expected shortly. The project also secured 15 MW of imported grid power to counter DRC grid instability, improving production in April, with an additional 40 MW expected starting May 1.

Pre-commissioning of Kipushi’s zinc concentrator began ahead of schedule, with first ore expected in June. Kipushi is anticipated to produce over 270,000 tonnes, becoming one of the world’s largest zinc mines.

In the Western Forelands, Ivanhoe Mines completed approximately 17,000 meters of diamond drilling during the quarter, focusing on expanding the high-grade Kitoko copper discovery.

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