Ivanhoe Mines (TSX: IVN) (OTCQX: IVPAF) today announced its financial results for the year ended December 31, 2022.
Ivanhoe Mines is a leading Canadian mining company that is advancing its four principal mining and exploration projects in Southern Africa: the Phase 3 expansion of the Kamoa-Kakula Copper Complex in the Democratic Republic of Congo (DRC) that commenced commercial operations in July 2021; the construction of the Platreef palladium, nickel, platinum, rhodium, copper and gold project in South Africa, scheduled for first production in the third quarter of 2024; the restart of the historic Kipushi zinc-copper-lead-germanium mine in the DRC, also scheduled for first production in the third quarter of 2024 and the exploration for new copper discoveries on Ivanhoe's 2,407-square-kilometre Western Foreland exploration project, which is adjacent to Kamoa-Kakula.
FINANCIAL HIGHLIGHTS
Ivanhoe Mines reported a record profit of $434 million for 2022, compared with a profit of $45 million for 2021. Ivanhoe's profit in Q4 2022 was $37 million compared to a profit of $24 million in Q3 2022.
Kamoa-Kakula sold 323,733 tonnes of copper in 2022, and recognized record revenue of $2.15 billion, record operating profit of $1.27 billion and record EBITDA of $1.39 billion.
During Q4 2022, Kamoa-Kakula sold 92,208 tonnes of payable copper and recognized record revenue of $673 million, record operating profit of $418 million and record EBITDA of $451 million.
Kamoa-Kakula's cost of sales per pound (lb.) of payable copper sold was $1.08/lb. for Q4 2022 compared with $1.05/lb. in Q3 2022. Cash costs (C1) per pound of payable copper produced in Q4 2022 totalled $1.42/lb., compared to $1.43/lb. in Q3 2022.
Ivanhoe Mines presents adjusted EBITDA for the group of $489 million for 2022, and $162 million for Q4 2022, which includes an attributable share of EBITDA from Kamoa-Kakula.
Since entering Phase 1 commercial production on July 1, 2021, the Kamoa-Kakula joint venture has generated $1.22 billion of net cash from operating activities, which has funded both the Phase 2 and Phase 3 expansion activities to date.
Ivanhoe Mines has a strong balance sheet with cash and cash equivalents of $597 million on hand as at December 31, 2022, and total debt of $739 million, the majority of which relates to the $575 million of unsecured 2.5% convertible notes that mature in April 2026, unless redeemed earlier.
OPERATIONAL HIGHLIGHTS
Production at the Kamoa-Kakula Copper Complex for the fourth quarter of 2022 was 92,761 tonnes of copper in concentrate.
The debottlenecking program of Kamoa-Kakula's Phase 1 and Phase 2 concentrators was completed ahead of schedule, increasing nameplate processing capacity by 22% to a combined total of 9.2 million tonnes of ore per annum. The final installation and commissioning of a fourth Larox filter press are now also complete, increasing copper production capacity to 450,000 tonnes per annum.
Kamoa-Kakula's Phase 3 expansion, 500,000-tonne-per-annum on-site, direct-to-blister copper smelter and refurbishment of Turbine 5 at the Inga II hydroelectric facility are all advancing on schedule and are expected to be complete in late 2024. At current copper prices, it is expected that cashflow from Kamoa-Kakula's Phase 1 and Phase 2 operations will be sufficient to fund the 2023 and 2024 expansion capital cost requirements of $2.53 billion.
In January 2023, Ivanhoe Mines announced outstanding economic results of an updated, independent Integrated Development Plan (2023 IDP) for the world-leading Kamoa-Kakula Copper Complex. The Pre-Feasibility Study (PFS) for a phased expansion from 9.2 to 19.2 million tonnes per annum yields an after-tax NPV8% of approximately $19 billion, over a 33-year mine life. Kamoa-Kakula to rank as the fourth largest copper producer globally from 2025, with lowest-quartile C1 cash costs.
Ivanhoe continues its expansive copper exploration program on its Western Foreland licences that cover approximately 2,407 square kilometres adjacent to Kamoa-Kakula. The 2023 exploration program is budgeted at approximately $19 million and includes up to 70,000 metres of total drilling.
In mid-2023, Ivanhoe plans to release a maiden Mineral Resource estimate for its Makoko and Kiala high-grade copper discoveries in the Western Foreland, to be followed by a Preliminary Economic Assessment.
Ivanhoe has commenced an optimization study at its Tier-One Platreef palladium, nickel, platinum, rhodium, copper and gold mine in South Africa to potentially accelerate production from the Phase 2 expansion. The study will consider the implications of converting the 5.1-metre-diameter ventilation shaft (Shaft 3), which is under construction, to a production shaft with the capability to hoist.
Underground development work at Platreef continues to focus on establishing underground infrastructure on the 750-metre, 850-metre and 950-metre levels around Shaft 1, as well as developing towards the first reef and stoping areas on all three levels. Mine development across all three levels has progressed well, with more than 750 metres of lateral development completed to date. The first concentrate is scheduled for Q3 2024.
The pilot drilling required for the raise-boring of Platreef's Shaft 2 commenced in February 2023. Headgear construction began in November 2022 with more than 70 metres of the 104-metres completed to date. In addition, raise boring of Shaft 3 also commenced in February 2023.
Surface earthworks and civil works for the Kipushi concentrator continue on schedule, with over 1,700 cubic metres of foundation concrete poured to date. First concentrate is on track for Q3 2024.
Underground mine development around Kipushi's Big Zinc orebody is advancing ahead of schedule. Development waste, as well as low-grade mineralized rock from the advancement of the perimeter and access drives surrounding the Big Zinc orebody, is being hoisted to the surface and stockpiled.
At the end of December 2022, Kamoa-Kakula achieved 1.53 million work hours free of a lost-time injury. Zero lost time injuries have been recorded on the construction projects of the Phase 3 expansion, smelter construction and Inga II Turbine 5 refurbishment. In addition, the Platreef Project reached 408,360 hours worked free of a lost-time injury, and the Kipushi Project reached 658,142 hours worked free of a lost-time injury.
According to estimates by the United States Geological Survey, the Democratic Republic of the Congo is now the World's second-largest copper-producing country, tied with Peru, having produced 2.2 million tonnes in 2022. This achievement would not be possible without Kamoa-Kakula, the fastest-growing major copper mine on the planet.
Conference call for investors on Monday, March 13
Ivanhoe Mines will hold an investor conference call to discuss its 2022 fourth quarter and annual financial results at 10:30 a.m. Eastern time / 7:30 a.m. Pacific time on Monday, March 13. The conference call will conclude with a question-and-answer (Q&A) session. Media are invited to attend on a listen-only basis.
To view the webcast please use the following link: https://edge.media-server.com/mmc/p/vcbrd72a
Analysts are invited to join by phone for the Q&A using the following link: https://register.vevent.com/register/BI2a229263d9634c82ab5ad144f57d6398
An audio webcast recording of the conference call, together with supporting presentation slides, will be available on Ivanhoe Mines' website at www.ivanhoemines.com.
Democratic Republic of Congo
The Kamoa-Kakula Copper Complex operated as the Kamoa Holding joint venture between Ivanhoe Mines and Zijin Mining, has been independently ranked as the world's fourth-largest copper deposit by international mining consultant Wood Mackenzie from 2025. The project is approximately 25 kilometres southwest of the town of Kolwezi and about 270 kilometres west of Lubumbashi. Kamoa-Kakula Copper Complex's Phase 1 concentrator began producing copper in May 2021 and achieved commercial production on July 1, 2021. The Phase 2 concentrator, which doubled nameplate production capacity, was commissioned in April 2022.
Ivanhoe sold a 49.5% share interest in Kamoa Holding Limited (Kamoa Holding) to Zijin Mining and a 1% share interest in Kamoa Holding to privately-owned Crystal River in December 2015. Kamoa Holding holds an 80% interest in the project. Since the conclusion of the Zijin transaction, each shareholder has been required to fund expenditures at Kamoa-Kakula in an amount equivalent to its proportionate shareholding interest. Ivanhoe and Zijin Mining each hold an indirect 39.6% interest in Kamoa-Kakula, Crystal River holds an indirect 0.8% interest, and the DRC government holds a direct 20% interest.
These technical reports include relevant information regarding the effective dates and the assumptions, parameters and methods of the mineral resource estimates on the Platreef Project, the Kipushi Project and the Kamoa-Kakula Copper Complex cited in this news release, as well as information regarding data verification, exploration procedures and other matters relevant to the scientific and technical disclosure contained in this news release in respect of the Platreef Project, Kipushi Project and Kamoa-Kakula Copper Complex.
The Kamoa-Kakula 2023 PFS and Kamoa-Kakula 2023 PEA were independently prepared by OreWin Pty Ltd. of Adelaide, Australia; China Nerin Engineering Co., Ltd., of Jiangxi, China; DRA Global of Johannesburg, South Africa; Epoch Resources of Johannesburg, South Africa; Golder Associates Africa of Midrand, South Africa; Metso-Outotec Oyj of Helsinki, Finland; Paterson and Cooke of Cape Town, South Africa; SRK Consulting Inc. of Johannesburg, South Africa and MSA Group of Johannesburg, South Africa.
For the recently announced Kamoa-Kakula 2023 IDP (including the Kamoa-Kakula 2023 PFS and Kamoa-Kakula 2023 PEA), a new, independent NI 43-101 technical report will be filed on SEDAR at www.sedar.com and the Ivanhoe Mines website at www.ivanhoemines.com on March 16, 2023.
Contact:
Tel: +44 7866 913 207
Forward-looking statements
Certain statements in this news release constitute 'forward-looking statements' or 'forward-looking information' within the meaning of applicable securities laws. Such statements and information involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company, its projects, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. Such statements can be identified using words such as 'may', 'would', 'could', 'will', 'intend', 'expect', 'believe', 'plan', 'anticipate', 'estimate', 'scheduled', 'forecast', 'predict' and other similar terminology, or state that certain actions, events, or results 'may', 'could', 'would', 'might' or 'will' be taken, occur or be achieved. These statements reflect the company's current expectations regarding future events, performance and results and speak only as of the date of this news release.
Such statements include without limitation, the timing and results of: (i) statements regarding Kamoa-Kakula's Phase 3 expansion targeted for Q4 2024 completion, which is expected to increase copper production to a ten-year average of 620,000 tonnes per annum, at C1 cash cost of $1.22/lb; (ii) statements regarding the ultra-high-grade Kipushi zinc-copper-germanium-silver mine being on track for first production in Q3 2024, and project financing being near completion; (iii) statements regarding the Platreef palladium, nickel, platinum, rhodium, copper and gold project in South Africa being scheduled for first production in Q3 2024; (iv) statements regarding the 2023 exploration program at Western Foreland being approximately $19 million and including up to 70,000 meters of total drilling; (v) statements regarding the planned release of a maiden Mineral Resource estimate for its Makoko and Kiala high-grade copper discoveries in the Western Foreland in mid-2023, which will also be followed by a Preliminary Economic Assessment; (vi) statements regarding the optimization study at its Tier-One Platreef palladium, nickel, platinum, rhodium, copper and gold mine in South Africa potentially accelerating production from the Phase 2 expansion; (vii) statements that the Lualaba Copper Smelter will produce between 650,000 and 800,000 tonnes per annum of high-strength sulphuric acid that is expected to be sold in the domestic DRC market; (viii) statements regarding the Phase 3 concentrator at Kamoa-Kakula being on track for first concentrate in Q4 2024; (ix) statements regarding the Phase 4 expansion of the Kamoa-Kakula concentrator taking total processing capacity up to 19.2 Mtpa; (x) statements regarding the filing of a new technical report with respect to the Kamoa-Kakula project on March 16, 2023; (xi) statements that the completion of Phase 3 is expected to increase copper production capacity to approximately 620,000 tonnes per annum and that this production rate will position Kamoa-Kakula as the world's fourth-largest copper mining complex, and the largest on the African continent; (xii) statements that the turbine replacement will supply an additional 178-megawatts of clean hydroelectric power to the national grid, and provide power for Phase 3; (xiii) statements regarding the first steel erection with respect to the Kamoa Phase 3 concentrator being expected in June 2023; (xiv) statements that commissioning of Phase 3 at Kamoa-Kakula is expected by the end of 2024 and that Kamoa-Kakula will have a total processing capacity of over 14 million tonnes per annum; (xv) statements regarding the Kamoa-Kakula Phase 3 expansion incorporating leading-edge technology supplied by Metso Outotec, which smelter is projected to be one of the largest, single-line copper flash smelters in the world, with a production capacity of 500,000 tonnes per annum of blister copper anodes; (xvi) statements regarding the Kamoa-Kakula Phase 3 smelter having a processing capacity of 1.2Mtpa of dry concentrate feed and being designed to run a blend of concentrate produced from the Kakula (Phase 1 and 2) and Kamoa (Phase 3 and Phase 4) concentrators; (xvii) statements that Kamoa-Kakula will continue to toll-treat concentrates under a 10-year agreement with the Lualaba Copper Smelter, which is expected to account for approximately 150,000 tonnes of copper concentrate annually; (xviii) statements that construction of the twin declines to the Kamoa 1 and Kamoa 2 underground mines and excavation access to Phase 3 mining areas are advancing well; (xix) statements that underground mining activities at Kamoa 1 are expected to commence in 2023 and at Kamoa 2 in 2025; (xx) statements regarding the future expansions of the Kamoa-Kakula Copper Complex being powered by clean, renewable hydro-generated electricity which will be developed in partnership with the DRC's state-owned power company SNEL; (xxi) statements that the refurbishment of the Inga II hydropower facility on the Congo River is scheduled for completion in Q4 2024; (xxii) statements regarding plans to update backup power generation capacity at Kamoa-Kakula to 132MW, which is expected to be sufficient for emergency power for Phase 1, 2 and 3, as well as sufficient to run one of the concentrators at Kakula; (xxiii) statements regarding Kamoa-Kakula 2023 guidance including contained copper in concentrate of 390,000 to 430,000 tonnes and cash cost (C1) of $1.40 to $1.50 per lb; (xxiv) statements that a senior debt facility for Platreef is targeted for completion in the first half of 2023; (xxv) statements that Shaft 3 at Platreef is scheduled to be completed in Q4 2023; (xxvi) statements that first production at Platreef's Phase 1 concentrator is scheduled for Q3 2024; (xxvii) statements that the commissioning of Platreef's first solar-power plant is expected in 2023 and that the solar-generated power from the plant will be used for mine development and construction activities; (xxviii) statements regarding Platreef's 10-metre diameter Shaft 2, which will be the among the largest hoisting shafts on the African continent; (xxix) statements that Platreef's Shaft 2's headframe will be equipped with up to 8Mtpa of hoisting capacity; (xxi) statements regarding the pilot drilling required for the raise bore center hole of Platreef's Shaft 2 being scheduled to finish during Q2 2023, after which reaming of a 3.1-meter diameter hole is planned; (xxx) statements regarding the raise-boring of the 5.1-meter diameter ventilation shaft (Shaft 3) expected to be completed in Q4 2023; (xxxi) statements that equipping Shaft 3 at Platreef with hoisting capacity will provide alternative option to remove ore and waste from the underground mine, which may accelerate ramp-up of underground mining activities for Phase 2; (xxxii) statements that underground mining activities for Phase 2 at Platreef are expected in 2027; (xxxiii) statements that long lead order equipment packages for Kipushi are expected to commence delivery to the site in late summer 2023; (xxxiv) statements that first concentrate at Kipushi is on schedule to occur during Q3 2024; (xxxv) statements that Shaft 5 at Kipushi is planned to be the main production shaft with a maximum hoisting capacity of 1.8Mtpa; (xxxvi) statements that mining at Kipushi will be performed using highly productive, mechanized methods and that cemented rock fill will be utilized to backfill open stopes with tailings from the surface to reduce surface tailings and maximize ore extraction at Platreef; (xxxvii) statements that stoping at Platreef is expected to commence in January 2024 and that ore stockpiles will increase to approximately 330,000 tonnes ahead of plant commissioning in Q3 2024; (xxxviii) statements that a new commercial border crossing between DRC-Zambia will provide significant advantage to Kipushi Mine as a direct means of importing materials and consumables and clearing customs, and that it will provide socio-economic benefits to the town and Province of Haut-Katanga; (xxxviii) statements that a new commercial border crossing between DRC-Zambia will benefit logistics for Kamoa-Kakula's operations; (xxxix) statements that diamond drilling is expected to be conducted on the Mokopane Feeder Exploration Project in 2023; (l) statements that Phase 1 and Phase 2 operations at Kamoa-Kakula are anticipated to generate significant operating cash flows in 2023 and 2024, and are expected to fund capital cost requirements at current copper prices and (li) statements that 2023 exploration activities have an initial budget of $31 million.
As well, all of the results of the feasibility study for the Kakula copper mine, the Kakula-Kansoko 2020 pre-feasibility study and the updated and expanded Kamoa-Kakula Copper Complex preliminary economic assessment, the Platreef 2022 feasibility study, and the Kipushi 2022 feasibility study constitute forward-looking statements or information and include future estimates of internal rates of return, net present value, future production, estimates of cash cost, proposed mining plans and methods, mine life estimates, cash flow forecasts, metal recoveries, estimates of capital and operating costs and the size and timing of phased development of the projects.
IVANHOE MINES LTD. 
