Kamoa-Kakula positioned to be the world’s fourth largest copper producer by Q2 2023, with projected annual copper output of more than 450,000 tonnes

Construction of Ivanhoe’s Tier-One Platreef palladium, rhodium, nickel, platinum, copper and gold project in South Africa advancing to first production in Q3 2024

New agreement signed to return the ultra-high-grade Kipushi Mine in the Democratic Republic of Congo to commercial production

TORONTO, CANADA ? Ivanhoe Mines (TSX: IVN; OTCQX: IVPAF) today announced its financial results for the year ended December 31, 2021. Ivanhoe Mines is a leading Canadian mining company developing and expanding its four principal mining and exploration projects in Southern Africa: the Kamoa-Kakula copper mining complex in the Democratic Republic of Congo (DRC) that began commercial operations in July 2021; the Platreef palladium, rhodium, nickel, platinum, copper and gold discovery in South Africa; the historic Kipushi zinc-copper-lead-germanium mine in the DRC; and the expansive exploration program for new copper discoveries on Ivanhoe’s Western Foreland exploration licences, near Kamoa-Kakula. All figures are in U.S. dollars unless otherwise stated.

HIGHLIGHTS

Ivanhoe Mines recorded a profit of $48.2 million for Q4 2021, compared to a loss of $10.9 million for the same period in 2020. Ivanhoe Mines’ share of profit from the Kamoa-Kakula copper joint venture (Kamoa Holding) and finance income of $103.9 million were the principal contributors to the profit recorded in the fourth quarter.
The Kamoa-Kakula Mining Complex produced 54,481 tonnes of copper in concentrate in Q4 2021, compared to 41,545 tonnes produced in Q3 2021.
Kamoa-Kakula produced a total of 105,884 tonnes of copper in concentrate in 2021, significantly exceeding the initial 2021 production guidance range of 80,000 to 95,000 tonnes, as well as the increased guidance of 92,500 to 100,000 tonnes for 2021.
Kamoa-Kakula’s copper recoveries increased from an average of 81% in July 2021 to a record of 88.5% in December 2021. The Phase 1, steady-state-design copper recovery is approximately 86%, depending on ore feed grade.
During Q4 2021, Kamoa-Kakula sold 53,165 tonnes of payable copper and recognized revenue of $488.5 million, with operating profit of $198.9 million and EBITDA of $357.6 million.
Kamoa-Kakula’s cost of sales per pound (lb) of payable copper sold was $1.12/lb for Q4 2021, while cash costs (C1) per pound of payable copper produced totalled $1.28/lb; compared to $1.08/lb and $1.37/lb in Q3 2021, respectively. Cash costs are expected to continue to trend down as the Phase 2 concentrator plant is commissioned and the mine’s fixed operating costs are spread over increased copper production.
Kamoa-Kakula’s Phase 2 concentrator plant is on track to begin operations in April 2022, which will see a doubling of Kamoa-Kakula’s nameplate milling capacity throughput to 7.6 million tonnes of ore per annum (Mtpa).
A de-bottlenecking program is underway to expand processing capacity of the Phase 1 and Phase 2 concentrators by 21%, to a combined total of 9.2 million tonnes of ore per year. The de-bottlenecking program is projected to boost copper production from Kamoa-Kakula’s first two phases to more than 450,000 tonnes per year by Q2 2023, positioning Kamoa-Kakula as the world's fourth largest copper producer.
Ivanhoe Mines has a strong balance sheet with cash and cash equivalents of $608.2 million as at December 31, 2021, and expects that the majority of Kamoa-Kakula’s expansion capital expenditures on Phase 2 and Phase 3 will be funded from copper sales and project facilities already in place. Based on current market conditions, it is expected that Ivanhoe Mines will start to receive shareholder loan repayments from Kamoa-Kakula in 2022.
During Q4 2021, Ivanhoe continued its copper exploration program on its Western Foreland licences that cover approximately 2,550 square kilometres in close proximity to Kamoa-Kakula. An extensive drilling program is planned for 2022, commencing with the onset of the dry season in the DRC, which will build upon Ivanhoe Mines’ 2021 work program that was focused on airborne and ground-based geophysics, soil sampling and road construction.
Exploration models that successfully led to the discoveries of Kakula, Kakula West, and the Kamoa North Bonanza Zone on the Kamoa-Kakula joint-venture mining licence are being applied to the extensive Western Foreland land package by the team of exploration geologists responsible for the previous discoveries.
In December 2021, the Platreef Project secured a $200-million gold stream financing and additional $100-million palladium and platinum stream financing, with the first prepayment of $75 million received in December 2021.
In February 2022, Ivanhoe Mines announced the outstanding results of a new independent feasibility study for the Platreef Project that builds on the alternate scenario to expedite production, based on a steady-state production rate of 5.2 Mtpa, confirming the viability of a new phased-development pathway to fast-track Platreef into production in Q3 2024.
Platreef feasibility study’s sensitivity analysis at current metal prices of approximately $1,121/oz platinum, $2,979/oz palladium, $22,200/oz rhodium, $1,995/oz gold, $4.84/lb copper and $13.12/lb nickel (March 7, 2022), results in an after-tax NPV8% of $5.1 billion with an after-tax real IRR of 33%.
In February 2022, Ivanhoe Mines and Gécamines signed a new agreement to return the ultra-high-grade Kipushi Mine back to commercial production.
In February 2022, Ivanhoe Mines announced the positive findings of an independent feasibility study for the planned resumption of commercial production at Kipushi based on a two-year construction timeline. Kipushi feasibility study’s sensitivity analysis at current zinc prices of approximately $1.84/lb (March 7, 2022), results in an after-tax NPV8% of $3.0 billion with an after-tax real IRR of 86%.
At the end of 2021, Kamoa-Kakula had reached 2.7 million work hours free of a lost-time injury, Kipushi had reached approximately 4.0 million work hours free of a lost-time injury, and Platreef had reached 677,450 work hours free of a lost-time injury.
Principal projects and review of activities

1. Kamoa-Kakula Mining Complex
39.6%-owned by Ivanhoe Mines
Democratic Republic of Congo

The Kamoa-Kakula Mining Complex, a 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. The project is approximately 25 kilometres west of the town of Kolwezi and about 270 kilometres west of Lubumbashi. Kamoa-Kakula began producing copper in May 2021 and achieved commercial production on July 1, 2021.

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 the Kamoa-Kakula Mining Complex, Crystal River holds an indirect 0.8% interest and the DRC government holds a direct 20% interest.

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