update drc projects: kamoa & kipushi · 2019-08-28 · zinc-copper 100%-owned base metals...
TRANSCRIPT
Update DRC Projects:
KAMOA & KIPUSHI – production under
constraining environment
Katanga Mining Week
October 2015
Current constraints in DRC for mining
investments
1. Current downturn in mining cycle
2. Presidential election scheduled in 2016
3. New Mining Code
4. Bureaucracy and business climate
5. Splitting of provinces
6. Power supply & infrastructure
Copper in 2015 and Beyond……..
3
Reuters: “Is 2015 the beginning of the end for Africa’s China-led boom?”
Glencore: Suspends production at KCC (DRC) and Mopani (Zambia)
CNMC: Zambia threatens to suspend mine license on output halt
ARM: Writes of R784M on Lubambe mine in Zambia
Vedanta: Sends 133 workers on paid leave at KCM during operational review
Codelco: To cut top positions in response to weak copper prices
Macquarie: Global copper use decreased by 3% in H1-2015, compared to H1-2014
Copper in 2015 and Beyond……..
Copper is always and will remain a metal on which
civilizations, new technologies and cities are built.
As long as the world’s population continues to grow and
urbanize……and as long as the world is powered by electricity,
the demand for copper in wiring, cables, electrical machines
and the like will continue increasing in the long term.
2018
$US 3.00 / lb
$US 6,600 / t
Copper in 2015 and Beyond……..
Ivanhoe Mines – 20 Years in Africa
KAMOA DRC Exploration
D.R. Congo
95%-owned *
Copper
South Africa
64%-owned **
PGE-gold-
nickel-copper
D.R. Congo
68%-owned
Zinc-copper
100%-owned
Base metals
Key
Development project
Exploration project
Office
KIPUSHI
PLATREEF
Corporate Information
Trading
symbol TSX:IVN
Share,
options &
warrants (1)
Common Shares: 779
million
Options: 29 million
Warrants: 115 million
Cash
position US$175 million
Top 5 Major
Shareholders
Robert Friedland
Zijin Mining
Ontario Teachers Pension
Plan
Fidelity
Wellington
*KAMOA: Subject to offer by Ivanhoe to sell a further
15% interest to the DRC on commercial terms.
**PLATREEF: Ivanhoe’s 90% interest has been
reduced to 64% after a 26% stake was conferred on the
B-BBEE entity.
Katanga Province in the DRC:
Well Established Copper Mining Jurisdiction
Katanga Province is one of the world’s most significant copper producing regions
DRAFT
Kamoa The world’s largest
high-grade copper
discovery
Kamoa: The Story So Far
5 years of drilling to define a world-class high-grade copper deposit
• MOU with SNEL extended to a 3rd power plant
• Updated PEA includes current mineral resource estimate of 19.7 Mt (Ind) and 4.5 Mt (Inf.) of contained Cu (1)
• Box cut completed
• Partnership with Zijin Mining
• Construction of 2 declines to commence
• Exploitation licences awarded
• Initial PEA includes mineral resource estimate of 9.2 Mt (Ind) and 12.5 Mt (Inf.) of contained Cu (1)
• MOU signed with DRC national electricity co. (SNEL) for rehabilitation of 2 power plants
• Core drilling recognizes laterally extensive stratiform copper mineralization, now known as Kamoa
Ivanhoe acquires exploration permits 2003
2006
• RC drilling begins
267,125 m of drilling completed to date
Kamoa deposit to scale over London
23 kilometres 1. Resources are reported using a total Cu cut-off grade of 1% Cu.
2011
2012
2013
2014
&
2015
2008
19.7
13.8
6.34.6
2.91.4 1.0 0.8 0.8 0.8
4.5
5.4
2.5
3.6
0.6
0.20.4 0.4 0.5
Kamoa TenkeFungurume
KOV KonkolaDeep
Kamoto Kinsevere Sepon Las Cruces Kinsenda Zyryanovsk
World’s Largest High-Grade Copper Discovery
Kamoa ranks as the world’s largest copper discovery with grade >2.5% Cu
2.7%
2.0%
2.5%
1.9%
5.4%
3.6%
4.4%
4.1%
4.6%
5.0%
3.2%
2.4%
2.5%
1.0%
5.4%
1.1%
5.1%
5.3%
2.7%
n/a
M&I Cu
Grade (%)
Inferred Cu
Grade (%)
Source: Wood Mackenzie
Note: Measured and Indicated Resources, inclusive of Mineral Reserves, and Inferred Mineral Resources, for top ten global deposits with grades >2.5% Cu
Inferred resources (Mt)
Measured & Indicated resources (Mt)
25.0
19.7
17.014.7 14.3
12.5
8.7
7.5
7.1 6.7
6.3
4.5 7.6
8.5 10.1
2.7
6.8
1.7
3.8
--
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
Pebble(USA)
Kamoa(DRC)
Udokan(Russia)
CobrePanama
Reko Diq(Pakistan)
Tampakan(PHI)
El Pachon(ARG)
El Arco(Mexico)
Wafi Golpu(PNG)
Frieda River(PNG)
Co
pp
er G
rad
e (%
)
Co
nta
ine
d C
op
pe
r (M
t)
Among the World’s Largest Undeveloped
Copper Deposits
Source: Wood Mackenzie
Note: Measured and Indicated Resources, inclusive of Mineral Reserves, and Inferred Mineral Resources, for top ten global undeveloped copper deposits
Inferred resources and average grade
Measured & Indicated resources and average grade Kamoa 2.7% average copper grade
(at 1% cut-off)
Video – Kamoa Ore Body
Kamoa discovery team receiving the 2015 Thayer Lindsley award for discovery of
the year from the Prospectors & Developers Association of Canada (PDAC)
Thayer Lindsey “Discovery of the year” Award
Source: November 2013 PEA – AMEC
Note: Resources have an effective date of December 10, 2012
NI 43-101 Mineral Resource
Cut-off Tonnage Grade Contained
Copper
(% Cu) (Mt) (% Cu) (Mt)
Indicated
3.00% 224 3.85% 8.6
2.00% 550 3.04% 16.7
1.00% 739 2.67% 19.7
Inferred
3.00% 19 3.40% 0.6
2.00% 93 2.64% 2.5
1.00% 227 1.96% 4.5
Newly discovered, very large stratiform copper deposit
with adjacent prospective exploration areas
First Major Copperbelt Discovery since early 1900s
Resource Location
Note: Resources reported using a total cut-off grade of 1% Cu and a minimum vertical thickness of 3m
• Presence of pyritic siltstone (KPS) above the
mineralisation prevents the formation of oxide species
• Supergene zone is a sulphide zone
Mineral Zonation
Kansoko Sud Box Cut - Aerial view
Box Cut Depth: 35m
Two 6x6m declines
Kansoko Sud Box cut
Amenable to Mechanized Mining
Source: Company filings
Kamoa Phased Approach to Development 065 111 159
237 034 068
134 166 200
149 134 103
220 236 254
188 200 121
140 153 152
000 000 000
-
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
-
2 000
4 000
6 000
8 000
10 000
12 000
14 000
20132014201520162017201820192020202120222023202420252026202720282029203020312032203320342035
FIRST
CONCENTRATE
PRODUCTION
Pre-Production Capital (1):
$1,402M
FIRST BLISTER
PRODUCTION
CONSTRUCTION PHASE I
PHASE II
103ktpa Contained
Copper in Concentrate
307ktpa Contained
Blister Copper
AVERAGE COPPER GRADE: 2.9%
AVERAGE COPPER
GRADE: 4.0%
Phase II Phase I
Mining (ktpa)
--
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
--
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2047
Mill Throughput (Mt) Grade (% Cu)
AVERAGE COPPER GRADE: 4.0%
AVERAGE COPPER GRADE: 2.9%
Preliminary Economic Assessment (Nov. 2013)
Phase I Phase II LOM
Products: Cu conc. Blister Cu
Mining Rate: 3 Mtpa 11-15 Mtpa
Payable Cu: 103 ktpa 306 ktpa (1) 277 ktpa
Cash Cost: (2) $1.76 / lb $1.15 / lb $1.19 / lb
Capital Costs: $1.4 bn $3.5 bn $7.6 bn
Site Operating
Costs: $18.9 bn
Income Tax $7.9 bn
Mine Life: Yr 1-5 Yr 5-30 30 yrs
After-Tax
NPV8%
$3.00 / lb Cu $2.6 bn
$3.50 / lb Cu $4.2 bn
Illustrative Development Scenario
Phase I Phase II
Construction
of Phase 1
103 ktpa Cu in concentrate 306 ktpa contained blister copper
Source: Kamoa PEA
Note: The Preliminary Economic Assessment is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have economic considerations applied
to them that would enable them to be categorized as Mineral Reserves. There is no certainty that the projected results of the Preliminary Economic Assessment will be realized. Mineral Resources are
not Mineral Reserves and do not have demonstrated economic viability
1. Blister copper phase average payable copper production, excluding year 5.
2. Life of mine average cash cost after acid credits (before credits: US$1.38 / lb Cu).
Scaleable, long life project as PEA only mines ~33% of current resources
Mine to be developed in two phases
■ Lowers pre-production capital expenditure
■ Provides early cash flow to partially fund future expansions
PEA Operating Plan
0
100
200
300
400
500
0 10 000 20 000 30 000
Cas
h C
ost
(C
1)
Low Cash Costs 065 111 159
237 034 068
134 166 200
149 134 103
220 236 254
188 200 121
140 153 152
000 000 000
2014E C1 Cash Cost (1)
Paid Metal (MMlbs)
Kamoa LOM Average:
US$1.19/lb
c/lb
Source: Wood Mackenzie Note: 1. C1 composite cash costs that reflect the direct cash costs of producing paid metal incorporating mining, processing and offsite realization costs, having made appropriate allowance for the co-product revenue streams.
First quartile cash costs
UNIT OPERATING COSTS $ / lb Payable Copper
LOM AVG CONC.PHASE BLISTER PHASE
Mine Site Cash Cost 1.05 0.85 1.07
Realisation 0.34 0.91 0.30
Total Cash Costs Before Credits 1.38 1.76 1.37
Acid Credits (0.20) - (0.21)
Total Cash Costs After Credits 1.19 1.76 1.15
Kamoa : power & logistic infrastructure • Key agreement signed with state power utility SNEL to
refurbish three existing hydroelectric power plants
• Combined capacity of more than 200 MW targeted for the Mwadingusha, Koni and Nzilo power plants after refurbishment
• Ivanhoe’s entitlement of up to 100 MW from the refurbishment of Mwadingusha and Koni is believed to be sufficient power for Phase I
• Under the SNEL Finance Agreement, Ivanhoe would provide an initial loan of US$141 million to fund the Mwadingusha and Koni work
• An EPCM contractor has commenced the implementation of the project
• Kamoa, located just 25 km west of Kolwezi, is a greenfield project with easy access to local infrastructure:
– Well connected to recently refurbished roads from Kolwezi to Lubumbashi and Zambia
– 20 km away from power lines of the national electrical grid
– 16 km away from the main railway line from Lubumbashi to the Angolan port of Lobito
– Railway between Lobito and the DRC town of Dilolo recently refurbished
– 417 km long portion from Dilolo to Kolwezi/Kamoa requires refurbishment
Operational railway
Railway to be upgraded
Proposed railway
Road used for commodity exports
Hydroelectric power plants
Kamoa project
Mwadingush
a
Koni Luanda
Dondo
Lobito
(international seaport) Luena
Luau Dilolo
Kolwezi
Route to
South Africa
Lubumbashi
Lusaka
Chingola
Namibe
Benguela
0 250
Kilometres ZAMBIA
ANGOLA
DEMOCRATIC
REPUBLIC OF
CONGO
KAMOA
Existing Rail, Road and Power
Infrastructure
South
Atlantic
Ocean
Nzilo
1
Mwadingusha Dam,
Katanga
Electrified Railway Line,
Katanga
Regional Infrastructure
Luano
Dem Rep of Congo
Karavia - Luano Tx line: 144 Km; 220 kV
1750 km
Karavia
500 kV DC
1120 MW 500 MW
500 MW
Inga
Kolwezi
Western network
Southern network
Key Power and Logistic Infrastructure
The two economic pools of the DRC have interconnected electrical networks and significant hydro power generation potential.
Road and Rail Infrastructure for Kamoa
Luanda
Dondo
Lobito (international seaport)
Luena
Luau Dilolo
Kolwezi
Route to South Africa
Lubumbashi
Lusaka
Chingola
Namibe
Benguela
0 250
Kilometres
ZAMBIA
ANGOLA
DEMOCRATIC REPUBLIC OF THE
CONGO
KAMOA
South Atlantic Ocean
Phase II to Lobito
Menongue
Ndola
Operational Railway
Railway to be Upgraded
Proposed Railway
Road Used for Commodity Exports
International Border
417 km from Dilolo to Kolwezi to be refurbished
Phase I to Durban
Phase I : 3 options: - By road Kamoa – Lubumbashi – Sakania – Ndola – Durban, South Africa
- By road Kamoa – Ndola & by rail Ndola – Durban, South Africa
- By rail Kamoa – Durban, South Africa
Phase II : By rail Kamoa – Lobito, Angola once the final section from Dilolo to Kolwezi is refurbished
500 km trucking distance to railway at
Ndola
New rail line from Lobito to Luena (976 km); current capacity of 4 Mtpa
Kipushi high grade
Zinc-Copper Project
Democratic Republic
of the Congo
Infrastructure, Big Zinc & Kipushi Fault Zone
850
900
950
1000
1050
1100
1150
1200
1250
1300
1350
Me
tre
s b
elo
w g
rou
nd
leve
lKipushi Mine - Long Term Water Level
MR
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oin
ted
by
KR
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ece
mb
er
20
10
Iva
np
lats
en
ters
Kic
o J
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ov
em
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1
Kic
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on
soli
da
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n 1
7 A
pri
l 20
13
1210m Main P5 pump station
1150m Haulage Level
1272m Drill Drift
Cascades
Shaft #5
Kipushi infrastructure maintenance & upgrade
Kipushi infrastructure maintenance & upgrade
Kipushi underground: Core drilling rig at 1272m
Ivanhoe Mines Community Outreach
Maize, vegetables, honey, poultry, conservation
400 participants; 340 ha maize
More than 90 % Employees from local communities
(<20km)
Ivanhoe Mines Social Performance
Ivanhoe Mines social licence earned through proactive engagement with local
communities and firm commitments to the environment and sustainability
Source: Company filings
Community members receive training in
agricultural skills
Ivanhoe Mines Supports Local Communities
■ Ivanhoe Mines contributes to
Community Development by
supporting the DRC Government
led Local Development Plans
■ Roll out of ground breaking Fionet
program designed to have a
massive impact on Malaria in the
DRC.
■ At Kipushi Ivanhoe maintains the
Kipushi power and water
distribution networks, established a
relationship with local businesses
for concrete aggregates and fresh
produce and has rehabilitated the
Kipushi radio station
■ Support provided to traditional
ceremonies
■ Ivanhoe is committed to support
the Presidential fund
Educating host communities about
the construction of the box cut Local women in sewing skills
development programme
Local woman trained and employed as
agricultural community developer
Aerial View of the Kamoa Box-Cut
Kamoa – Muvunda Chefferie
More than 20,000m underground drilling program at Kipushi Mine
Secondary school students training in Kipushi Mine workshop
Malaria Control Program
Kamoa Sustainable Livelihood Programme
Learners at newly constructed Kaponda school in Kamoa
Ivanhoe Mines Environmental Performance
Ivanhoe Mines social licence earned through proactive engagement with local
communities and firm commitments to the environment and sustainability
Source: Company filings
Educating host communities about
the construction of the box cut
Ivanhoe Mines adopts the best recognized environmental, health and safety management practices
Reforestation program. Establishment of a nursery and
collection of native seedlings. Monitoring: air-quality water vibration Radiation noise. Site rehabilitation. Environmental mitigation hierarchy
to manage impacts. Biodiversity studies.
Ascolepis metallorum
Thank You!