Today's DFS, PFS and updated PEA, collectively referred to as the Kamoa-Kakula Integrated Development Plan 2020 (Kamoa-Kakula IDP20), builds on the excellent results of the previous studies announced in
Economics for all three studies modelled on a 100%-equity basis
'The definitive feasibility study is an independent verification by nine of the world's top engineering firms of the robust economics generated by our initial, 6-Mtpa starter mine at Kakula; while the updated preliminary economic assessment is further validation of Kamoa-Kakula's potential to rapidly expand to become the world's second largest copper mine, with annual copper output of more than 800,000 tonnes,' said
'The definitive feasibility study also confirms what we've been telling investors for the past year and a half, and showcasing monthly in our progress galleries - the
'Most importantly, the
'Zijin shares our commitment to build the new mines at Kamoa-Kakula to industry-leading standards in terms of resource efficiency, water and energy usage, and minimizing emissions. We are blessed with ultra-high copper grades in thick, shallow and flat-lying orebodies allowing for large-scale, highly-productive, mechanized underground mining operations and access to abundant clean, sustainable hydro electricity to power our mines providing us with a distinct advantage in our goal to become the world's 'greenest' copper miner and be among the world's lowest greenhouse gas emitters per unit of copper produced.
'Kakula is projected to have an average grade of 6.6% copper over the initial five years of operation a grade that is an order of magnitude higher than the majority of the world's other major copper mines. In addition, approximately one half of the mine's tailings will be mixed with cement and pumped back underground to fill mined-out voids, resulting in a surface tailings containment facility that is tiny compared to other major mines.
'Massive, high-grade deposits like we have found at Kamoa-Kakula which have the potential to produce large quantities of copper for multiple generations are very long-term plays. Conventional discounted cash flow analysis does not appropriately appraise the long-term option value inherent in tier one assets like Kamoa-Kakula. As history has shown, such large-scale assets that produce for decades through multiple commodity cycles tend to generate profound value through phased expansions and exploration over their mine lives.
'People involved in the mining industry understand how incredibly challenging and time consuming it is to discover, permit, and build a tier-one mine anywhere in the world today. Kamoa-Kakula's success is a testament to the perseverance and entrepreneurial spirit of the entire Ivanhoe management team; our talented employees at Kamoa-Kakula, comprised mainly of bright, young Congolese men and women; as well as the outstanding cooperation and teamwork of our joint-venture partners
'Kakula is on track to begin production in under one year from now, which, considering we've been working in
Developing the world's next great copper district
'We will continue working closely with our partners and the Congolese people to realize the full potential of Kamoa-Kakula and Western Foreland, generating widely-shared economic benefits and providing skills training to young Congolese women and men for the thousands of meaningful direct and indirect jobs that will be created in the years ahead,'
Kamoa-Kakula providing good, well-paying jobs for local Congolese and meaningful community benefits
'We also are very proud of the meaningful community benefits and economic opportunities generated by our Sustainable Livelihoods team at Kamoa-Kakula, including new schools, housing, clinics, fish farms and sustainable agriculture initiatives, and enterprise development opportunities in the project's supply chain for local community members.'
Development scenarios at Kamoa-Kakula
The Kamoa-Kakula Integrated Development Plan 2020 encompasses three development scenarios:
Definitive feasibility study for stage one
Pre-feasibility study including
Expanded, subsequent development to four producing mines. The Kamoa-Kakula 2020 PEA includes an analysis of the potential for an integrated, 19-Mtpa, multi-stage development, beginning with initial production from the
The Kamoa-Kakula IDP20, which includes the Kakula 2020 DFS, Kakula-Kansoko 2020 PFS and Kamoa-Kakula 2020 PEA, was independently prepared on a 100%-basis by
The Kamoa-Kakula 2020 PEA is preliminary in nature and includes an economic analysis that is based, in part, on Inferred Mineral Resources. Inferred Mineral Resources are considered too speculative geologically for the application of economic considerations that would allow them to be categorized as Mineral Reserves - and there is no certainty that the results will be realized. Mineral Resources do not have demonstrated economic viability and are not Mineral Reserves.
A National Instrument 43-101 technical report will be filed on SEDAR at www.sedar.com and on the
First copper production expected in less than a year
On
At the end of August, the project's pre-production surface ore stockpiles totalled an estimated 671,000 tonnes grading 3.36% copper, including 116,000 tonnes of high-grade ore grading 6.08% copper. The stockpiles grade will continue to increase as the project approaches initial production, as beginning this month the majority of mining at Kakula is expected to be in ore zones near the centre of the deposit that have copper grades of between 5% and 8%.
Installation of ball mills and other major equipment for Kakula's first, 3.8-Mtpa processing plant module is well underway. The final shipments of long-lead equipment for the processing plant are scheduled to arrive at site by the end of September, 2020.
Ivanhoe is fully funded to first copper production at Kamoa-Kakula, which is scheduled to begin in less than one year from now, in Q3 2021.
Aerial view of the
HIGHLIGHTS
Initial 6 Mtpa mine at Kakula
The Kakula 2020 DFS evaluates the development of a stage one, 6-Mtpa underground mine with a surface processing complex at the Kakula Deposit with a capacity of 7.6 Mtpa, built in two modules of 3.8 Mtpa, with the first already under advanced construction. For this option, the DFS envisages an average annual production rate of 284,000 tonnes of copper at a mine-site cash cost of
Remaining initial capital cost of
Ivanhoe and Zijin will each fund its respective share of approximately 40% of the remaining initial capital costs, plus its share of capital on behalf of the 20% interest owned by the Government of the DRC, of which 5% is non-dilutable and 15% is carried and will be repaid through future cash flows from the project. Ivanhoe's proportional share of the remaining initial capital cost for the stage one, 6-Mtpa underground mine is approximately
Kakula benefits from an ultra-high, average feed grade of 6.6% copper over the first five years of operations, and 5.2% copper on average over a 21-year mine life.
Underground development at Kakula continues to advance ahead of schedule. More than 20.6 kilometres of underground development has been completed to the end of August approximately 6.0 kilometres ahead of plan. The pace of development is expected to continue to accelerate as additional mining crews are added. Initial copper concentrate production is scheduled for Q3 2021.
Construction of Kakula's initial 3.8-Mtpa processing plant is well underway, with manufacturing of all long-lead mechanical items complete, with the crushers, low-entrainment flotation cells and the concentrate filter delivered to site.
Kakula-Kansoko 2020 PFS including Kansoko mine development
The Kakula-Kansoko 2020 PFS evaluates the development of mining activities at the Kansoko Deposit in addition to Kakula, initially at a rate of 1.6 Mtpa to fill the 7.6-Mtpa concentrator at Kakula, eventually ramping up to 6 Mtpa as the reserves at Kakula are depleted. For this option, the PFS envisages an average annual production rate of 331,000 tonnes of copper at a mine-site cash cost of
Remaining initial capital cost of
Ivanhoe's proportional share of the remaining initial capital cost of this option is approximately
Kakula-Kansoko benefits from an ultra-high, average feed grade of 6.2% copper over the first five years of operations, and 4.5% copper on average over a 37-year mine life.
There are currently two mining crews at Kansoko, in addition to the 10 mining crews (three owner crews and seven contractor crews) currently at Kakula, with the ability to increase this number to fast-track the development of Kansoko.
Modular, integrated, expanded development option potential for the Kakula and Kamoa deposits, mining a total of 19 Mtpa, with construction of a direct-to-blister smelter
The Kamoa-Kakula 2020 PEA presents an additional development option of a multi-stage, sequential operation on Kamoa-Kakula's high-grade copper deposits.
Initial production from the
For the integrated, 19-Mtpa, multi-stage development, the PEA envisages
Ivanhoe's proportional share of the remaining initial capital cost of this option is approximately
Under this approach, the PEA also contemplates the construction of a direct-to-blister copper smelter at the Kakula plant site with a capacity to process one million tonnes of copper concentrate per annum to be funded from internal cash flows. This would be completed in year five of operations, achieving significant savings in treatment charges and transportation costs.
The 19-Mtpa scenario shows the potential for average annual production of 501,000 tonnes of copper at a total cash cost of
Ivanhoe to host Investor Day on
Kamoa-Kakula studies
On
The estimated remaining initial capital cost, including contingency, is
Aerial picture of the Mwadingusha hydro-electric dam and power plant, with the new installed penstocks. Mwadingusha will soon be delivering 72 megawatts (MW) of clean, sustainable hydro-electricity to the national grid.
Kakula to be mined primarily using drift-and-fill method
The Kakula 2020 DFS mine access is via twin declines on the north side and a single decline on the south side of the deposit. One of the north declines will serve as the primary mine access, while the other decline is for the conveyor haulage system, which was recently commissioned.
From the bottom of the north and south declines, a pair of perimeter drifts will be driven to the east and west extremities of the deposit and will serve as the primary accesses to the production areas. These drifts also will be used as the primary intake and exhaust ventilation circuits and will connect with a series of intake and exhaust ventilation shafts. Work is already well advanced on the eastern and western perimeter drives on the north side of the orebody.
A series of twin connection drives will connect the orebody from north to south, providing access to the drift-and-fill panels and ventilation. The first of these mine connection drives 1 and 2 are expected to be connected by crews working from the north and south in
The primary ore handling system will include a perimeter conveyor system connected to truck load-out points along the north side of the deposit. The perimeter conveyor system will terminate at the main conveyor decline.
The mining method for the Kakula Deposit is primarily drift-and-fill using paste backfill; with the exception of a room-and-pillar area close to the north declines, which will be mined in the early years of production. The paste backfill system will utilize a paste plant located on surface connected to a distribution system that includes a surface pipe network connected to bore holes located at each connection drive on the
Approximately 99% of the deposit will be mined using drift-and-fill, which was chosen to maximize the extraction of high-grade Kakula ore.
Expanded Kakula 2020 DFS concentrator design in modules of 3.8 Mtpa
The Kakula concentrator will be constructed in a phased approach with two 3.8-Mtpa modules as the mining operations ramp-up to full production of 6 Mtpa.
The Kakula concentrator design incorporates a run-of-mine stockpile, followed by primary cone crushers operating in closed circuit with vibrating screens to produce 100% passing 50 millimetres (mm) material that is stockpiled.
The crushed ore is fed to the High Pressure Grinding Rolls (HPGR) operating in closed circuit with wet screening, at a product size of 80% (P80) passing 4.5 mm which is gravity fed to the milling circuit.
The milling circuit incorporates two stages of ball milling in series in closed circuit with cyclone clusters for further size reduction and classification to a target grind size of 80% passing 53 micrometres (-microm).
The milled slurry is pumped to the rougher and scavenger flotation circuit where the high-grade, or fast-floating rougher concentrate, and medium-grade, or slow-floating scavenger concentrate, are separated for further upgrading. The rougher concentrate is upgraded in the low entrainment high-grade cleaner stage to produce a high-grade concentrate.
The medium-grade or scavenger concentrate together with the tailings from the high-grade cleaner stage and the recycled scavenger recleaner tailings are combined and further upgraded in the scavenger cleaner circuit. The concentrate produced from the scavenger cleaner circuit, representing roughly 12% of the mill feed, is re-ground to a P80 of 10-microm prior to final cleaning in the low entrainment scavenger recleaner stage.
The scavenger recleaner concentrate is then combined with the high-grade cleaner concentrate to form final concentrate. The final concentrate is then thickened and pumped to the concentrate filter. Final filtered concentrate is then bagged for shipment to market.
The scavenger tailings and scavenger cleaner tailings are combined and thickened prior to being pumped to the backfill plant and/or to the tailings storage facility. Backfill will utilize approximately half of the tailings, with the remaining amount pumped to the tailings storage facility.
Based on extensive testwork, the concentrator is expected to achieve an overall recovery of 85%, producing a very high-grade concentrate grading 57% copper. Kakula also benefits from having very low deleterious elements, including arsenic levels of 0.02%.
Aerial view of Kakula's initial 3.8-Mtpa processing plant under construction, showing the first of two identical ball mills being installed, the flotation circuit in the middle, and the three green-coloured concentrator thickeners under construction.
Kamoa and Kakula Mineral Resources
The Kamoa Indicated and Inferred Mineral Resource estimate was prepared by
Ivanhoe's Vice President, Resources,
Mineral Resources at Kamoa are reported using a total copper (TCu) cut-off grade of 1% TCu and a minimum vertical thickness of 3 m. There are reasonable prospects for eventual economic extraction under assumptions of a copper price of
Mineral Resources at Kakula are reported using a TCu cut-off grade of 1% TCu and a minimum vertical thickness of 3 m. There are reasonable prospects for eventual economic extraction under assumptions of a copper price of
Reported Mineral Resources contain no allowances for hangingwall or footwall contact boundary loss and dilution. No mining recovery has been applied.
Tonnage and contained-copper tonnes are reported in metric units, contained-copper pounds are reported in imperial units, and grades are reported as percentages.
Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content.
The Kakula 2020 DFS Mineral Reserve targeted in the mine plan focused on maximizing the grade profile for a 6-Mtpa full production rate for 15 years, a four-year ramp-up, plus an 85% extraction and recovery allowance. As such, a range of net smelter returns (NSR) cut-offs were evaluated that identified a targeted resource of approximately 110 million tonnes at the highest NSR.
Tonnes and grades were calculated for the mining blocks, and allowances for unplanned dilution and mining recovery were applied to estimate the Mineral Reserve Statement.
Mine geologists
Key initial projections from the Kakula-Kansoko 2020 PFS
The study evaluates the development of mining activities at Kansoko in addition to Kakula, initially at a rate of 1.6 Mtpa to fill the 7.6-Mtpa concentrator at Kakula, eventually ramping up to 6 Mtpa as the reserves at Kakula are depleted. The life-of-mine production scenario provides for 235.2 million tonnes to be mined at an average grade of 4.47% copper, producing 20.0 million tonnes of high-grade copper concentrate, containing approximately 20.0 billion pounds of copper.
The economic analysis uses a consensus, real long-term copper price of
The estimated remaining initial capital cost, including contingency, is
Expanded 19-Mtpa development scenario for the Kakula and Kamoa deposits
The Kamoa-Kakula 2020 PEA also assesses an additional development option of mining several deposits on the
Each mining operation is expected to be a separate underground mine with a shared processing facility and surface infrastructure located at Kakula. Material will be transported to the Kakula processing complex by a system of overland conveyors. Included in this scenario is the construction of a direct-to-blister copper smelter with a capacity of one million tonnes of copper concentrate per annum.
The Kamoa-Kakula 2020 PEA is preliminary in nature and includes an economic analysis that is based, in part, on Inferred Mineral Resources. Inferred Mineral Resources are considered too speculative geologically for the application of economic considerations that would allow them to be categorized as Mineral Reserves - and there is no certainty that the results will be realized. Mineral Resources do not have demonstrated economic viability and are not Mineral Reserves.
Ultra-high-grade drill core, comprised almost entirely of chalcocite, from a hole drilled at Kamoa North. Kamoa North is an important source of high-grade ore in Kamoa-Kakula's expanded 19 Mtpa development scenario. Chalcocite has the greatest percentage of copper of all the common sulphide-copper-bearing minerals almost 80% copper by weight.
Summary of the PEA's key results for the 19-Mtpa development scenario
Very-high-grade initial phase projected to have a grade of 6.8% copper in the first year of production and an average grade of 5.1% copper during the first 10 years of operations, resulting in estimated average annual copper production of 501,000 tonnes.
Recovered copper production is estimated at805,000 tonnes in year 8, which would rank the
Remaining initial capital cost, including contingency, is
Average total cash costs of
After-tax NPV, at an 8% discount rate, of
After-tax IRR of 56.2% and a payback period of 3.6 years.
Kamoa-Kakula isproud of its talented team of Congolese women includingMichelineKyenge, Mine Geologist inspecting a sample of the ultra-high-grade fine-grained, gray-coloured chalcocite Kakula'spredominant type of ore.
Direct-to-Blister Flash (DBF) smelter included in expanded PEA case
The Kamoa-Kakula 2020 PEA also includes the construction of a smelter complex, based on
Concentrate is first dried in a steam dryer and sent to the DBF where it is smelted in the reaction shaft with oxygen-enriched air to produce molten slag containing oxide minerals, blister copper and sulphur-dioxide (SO2) rich off-gas. The oxidation reactions provide a portion of the heat required to melt the charge, with external fuel (in the form of pulverized coal and fuel oil) used to supplement the energy demand. Molten slag and blister copper collect in the DBF settler and are intermittently tapped (drained from the furnace) via dedicated tapholes. DBF slag, still containing appreciable amounts of copper, is further treated using metallurgical grade coke in an electric slag cleaning furnace (SCF) to recover oxidized copper in the form of blister. The SCF slag is slow cooled, crushed, milled and processed by flotation to recover residual copper in the form of slag concentrate, which is recycled back to the DBF. The SO2-rich off-gas is de-dusted, dried and sent to a double-contact-double-adsorption acid plant for production of high strength sulphuric acid that is sold to the local market.
An on-site smelter offers numerous cost savings, including treatment charges, certain taxes and transportation costs. In addition, the sale of the sulphuric acid by-product would generate additional revenue. Sulphuric acid is in short supply in the DRC, and is imported for use in processing ore from oxide copper deposits.
The independent Qualified Persons responsible for preparing the Kakula 2020 DFS, Kakula-Kansoko 2020 PFS and Kamoa-Kakula 2020 PEA, on which the technical report will be based, are
Data verification and quality control and assurance
Amec Foster Wheeler, a Wood company (Wood), reviewed the sample chain of custody, quality assurance and control procedures, and qualifications of analytical laboratories. Wood is of the opinion that the procedures and QA/QC control are acceptable to support Mineral Resource estimation. Wood also audited the assay database, core logging, and geological interpretations on a number of occasions between 2009 and 2020, and has found no material issues with the data as a result of these audits.
In the opinion of the Wood Qualified Persons, the data verification programs undertaken on the data collected from the
For detailed information about assay methods and data verification measures used to support the scientific and technical information, please refer to the Kamoa-Kakula 2020 Resource Update,
Study Assumptions Regarding the 2018 DRC Mining Code
The Kakula 2020 DFS, Kakula-Kansoko 2020 PFS and Kamoa-Kakula 2020 PEA have all been prepared on the assumption that the 2018 DRC Mining Code applies to the project, including the super profits tax that was introduced by that code in 2018.
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Cautionary statement on forward-looking information
Certain statements in this release constitute 'forward-looking statements' or 'forward-looking information' within the meaning of applicable securities laws, including without limitation: (i) the results of the Kakula 2020 DFS, the Kakula-Kansoko 2020 PFS and the Kamoa-Kakula 2020 PEA, including the development of a 6-Mtpa operation at Kakula, a 7.6-Mtpa operation at Kakula-Kansoko and an expanded 19-Mtpa operation at Kamoa-Kakula; (ii) statements regarding the construction of the mine at any of the deposits; (iii) the construction of a direct-to-blister flash copper smelter with a capacity of one million tonnes of copper concentrate; (iv) the development of mines at Kamoa North and (v) mining at Kakula to be primarily using the drift-and-fill method and (vi) the design and specifications of the Kakula concentrator.
Such statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of
As well, all of the results of the Kakula 2020 DFS, the Kakula-Kansoko 2020 PFS and the Kamoa-Kakula 2020 PEA constitute forward-looking information or statements, including estimates of internal rates of return after-tax of 77.0% (Kakula), 69.0% (Kakula-Kansoko) and 56.2% (Kamoa-Kakula) with payback periods of 2.3 years, 2.5 years and 3.6 years respectively; net present values including a Kakula project NPV at an 8% discount rate of
Furthermore, with respect to this specific forward-looking information concerning the development scenarios for the
This release also contains references to estimates of Mineral Resources and Mineral Reserves. The estimation of Mineral Resources and Mineral Reserves is inherently uncertain and involves subjective judgments about many relevant factors. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. The accuracy of any such estimates is a function of the quantity and quality of available data, and of the assumptions made and judgments used in engineering and geological interpretation (including estimated future production from the
Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indicators of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed here, as well as unexpected changes in laws, rules or regulations, or their enforcement by applicable authorities; the failure of parties to contracts with
Although the forward-looking statements contained in this release are based upon what management of
The company's actual results could differ materially from those anticipated in these forward-looking statements as a result of the factors set forth in the 'Risk Factors' section in the company's Q2 2020 MD&A and its current annual information form.
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