Q4 2021 Ivanhoe Mines Ltd Earnings Call
Everybody is still there.
Good day and welcome to the eye when whole minus Q4, 2021 financial results Conference call. Today's conference is being recorded at this time I would like to turn the conference over to the Vice President Investor Relations. Mr. Benjamin. Please go ahead, Sir the floor is yours.
Thank you operator, and Hello, everyone. It.
It is my pleasure to welcome you to I haven't own minds Q4.
And 2021 financial results conference call.
Please note that we will finish today's event with a question and answer session. You can submit a question using the Q&A area on the webcast H.
Well, let's see what the conference operator, Youre your phone line.
Given our time constraints. It is unlikely that we will be able to answer every question today, our apologies if we run low on time, but our IR team will endeavor to collect all questions for follow up.
Before we begin I'd like to remind everyone that today's event will contain forward looking statements.
The risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements.
Details of the forward looking statements is contained in our news release issued earlier today.
It is now my pleasure to present, the first segment of today's call a brief introductory message our co chairman and founder Mr. Robert Vreeland.
Robert over to you please.
Thank you very much to all of you that are participating today on international Women's day.
On our quarterly and year end financials.
I have to take note that it's rather a bittersweet that women really start wars that are suffering from one tonight and of course the conflict that's going on in Ukraine is causing a lot of human rights violations.
And massive volatility in the markets. So it's difficult to set that aside it once minds, where we talked to you about our 25 or 30 year journey to get to these.
Excellent results.
We are continuing to build the largest highest grade most rapidly growing copper mine in our industry.
As well as other significant projects in platinum palladium nickel and zinc I'd like to keep my opening remarks, very short and go directly to the highlights and then see it.
And again I cant contribute when we get to the question and answers so with that I'd like to turn this over to Myrna.
So I would say our president.
Yeah.
Thank you Robert and I had the privilege of spending a significant amount of John glycerol, but this past week and I must say he has the upcoming ability do you see the world from a million miles away.
File blue dots and predict how all actions to die might influence how would a number of years in the future.
And that is usually wise for that is that a long position when investing in these dangers in my mind, no copper mine with the potential Eskimo come to rely on the wall to die.
And let's not start speculating on the potential success. So far Tonight is true passion, adding value through the job that Alex will touch on all exploration. If it's later in the presentation.
We proudly present, our fourth quarter results and I'm always fortunate to breaching the executive summary, as it benefits spoiler alert on what do you see the time during the race dissipates enticing.
<unk> reduced total of 106000 tonnes of copper in concentrate in 2021 significantly exceeding our initial 2021 production guidance range of 80000 to 90000 tons as well as the increased guidance of 92500.
100000 tons for 2021 .
We promise to hone our forecasting ability as the project matures and operational parameters become more predictable.
In addition.
Now I'll go through last phase two concentrated plant is on track to begin operations in April of this year, which you will see a doubling of the market grew last night like milling capacity stupid to Stephen's point 6 million tonnes of ore on them.
We also have I debottlenecking program underway to expand processing capacity have upsides, one and size too concentrated by 21% to a combined total of $9 2 million tonnes of ore per year.
The Debottlenecking program is projected to boost copper production from Martha Kula says two sizes to more than 450000 tons per year by the second quarter of 2020.
This will position <unk> as the world's largest copper producer. It is remarkable considering we only started producing net last year.
Yeah.
But before we dive into our quarterly financials.
I'd like to briefly remind you about our ESG credentials and just before this call I received an email from one of our valued gene based is saying that's all safety statistics features on this slide is actually one of the most impressive statistics off the di and I tend to agree with him.
Across all of our approach Aix our operational teams have put in a tremendous effort to enhance our culture of safety and you can see this in the slide in front of you. All stats is a testimony to that we are currently right at naval AE are they in ACI and we're all cognizant of the numerous ESG indices.
And their potential impact on our reputation and we are actively working towards improved improved writings.
All have in our minds, he says and believe that.
In stakeholder capitalism, and our partnership with a local cycle basis. It takes them many too bad from our community and entrepreneurial development programs, which are not throw the streets.
Two our government and community shareholder structures, we believe that all stakeholders should benefit from our mining activities.
We have demonstrated this commitment early on even whilst we were still in exploration at our project.
I'll call them agenda is of utmost importance and that the market. You know we are aiming to become the first Nate yeah very much I call. Then you met Jim I'll talk to you a couple of months.
The dlcs placed with an abundance of water and all sizes of online, including all smelter will be powered by hydro electric power.
At our <unk> project in South Africa, we are very excited to imminently receive all electric fleet I think all our mining executives, that's driven to Blackheath already delightful the delivery.
And none of our achievements would be possible without our people and we can make the resounding efforts of our team.
This workforce, who worked tirelessly behind the scenes you have to balance all vision I will now hand over to dive, which one yet and our chief financial officer to take you through our quarterly financials.
Thank you Martha and good day to everyone joining the call today.
With Q4, 2021 being the second quarter of commercial production at <unk> to come out in the morning conflicts or focus on the results achieved in the quarter and compare that to Q3 2021 .
Nice to computing it to the fourth quarter of 2020, the comparisons of the three and 12 months ending the same between December 31, 2021 to the same periods in 2000.
<unk> is of course elaborated on in our MD&A.
The highlight of the fourth quarter is undoubtedly the exceptional production results achieved that come off of the cooler.
Over 53000 tons of payable copper sold during Q4 was up was 28% up from the 41490 tons of viable copies sold during Q3 2021, the increase in tons sold together with all other average prices in Q4 and debris.
Measurement of contract receivables as at December 31, all.
All contributed to the 43% increase in revenue to $489 million for the fourth quarter.
See you on cash cost was $1 20 pound of payable copper delivered to join them for the fourth quarter, but more in cash cost and I like to slot.
<unk> EBITDA for the fourth quarter was $358 million and increased by mass of 53% due to the increase in revenue and a decrease in cost per pound.
Yeah.
This slides this slide illustrates how the just mentioned highlights combined will become our holding joint ventures profit and how it ultimately translates to ordinary share of the profit attributable to the joint venture partners.
The revenue of $499 million in Q4, 'twenty 'twenty. One includes remeasurement of contract receivables of $3 million at the end of December which represents the effects of mark to market at a copper price of $4 40 per pound.
<unk> cost of sales for Q4, and 2021 was $131 billion in total and the dollar and 12 cents per pound of payable copper sold while cash cost.
See you on cash cost per pound of payable copper.
<unk> totaled $1 20 per pound after deducting general administrate that.
This expenditure the operating profit.
Only the second quarter of commercial production was $348 million and EBITDA $350 million.
Kabbalah holding recorded finance cost of $56 million in the fourth quarter, which sprint, which is principally the interest on children learn from organization as well as the interest on equipment.
Equipment finance facility in the short term facilities are available under the off take agreements.
The $93 million of tax expense $5 million represents minimum income taxes payable equal to 1% of revenue while the remaining $8 million is deferred tax and does not represent a cash outflow. This is due to the fact that development and exploration expenditure incurred from inception is available.
The opposite against taxable income.
More and more towards these stacks for tax purposes over the first two years following commercial production.
The noncontrolling interest of $40 million represents the profit attributable to the DLC government's 20% interest in the game all Qunar mining complex, leaving profit of $158 million attributable to the joint venture partners I've been a shelf, which equaled $78 million for the fourth quarter.
If we turn to <unk> consolidated results for Q4 the chart in the slide deck starts we will all slot with Avonex share of profit from the <unk> joint venture of $48 million.
$78 million from the quarter.
Additionally.
I've been in interest income of $26 million from promote holding in the fourth quarter of 2021 for the shareholder loans that falls to the joint venture.
During the quarter. The company spent 10 million on the Wuxi project 6 million on the wisdom of wisdom for their exploration and 11 million on general.
Choice of expenditure.
Cost of goods at the electric project needs to be to bring the project to commercial production.
April capitalized development costs and property plant and equipment.
I've been a recognized finance cost of $11 million in Q4 relating to the interest on the convertible notes at a fixed interest rate.
The $89 million loss on the fee valuation of the financial liability during the fourth quarter represents the change in the deemed fee value of the conversion feature attached to the $575 million convertible notes, which avenue closed in March 2021 the.
The conversion feature embedded derivative financial liability and fair value changes principally due to the fluctuations that'll shape for us.
And the losses day for <unk>.
<unk> from the increase in argon reshape Ross from interrupting, but 2021 to the end of December .
With completion of the stream facilities in December with a large portion of the luxury projects phase one capital costs now being fully funded.
As well as the excellent results from the <unk> feasibility study. It is now being probable that future taxable profit will be available from the battery project against which the unused tax credits can be used loss as a result, either new launch gets ignites. The previously unrecognized deferred tax asset in the fourth quarter.
Resulting in deferred tax income of $74 million in the period.
The aforementioned items ultimately builds up to organize profits for the three months ending.
Assume between 21 of $48 million with a total profit before the loss of the fair value of a financial liability and the deferred tax income being $63 million for Q4, 2021 .
The cash cost per pound of payable copper produced food delivered to China was $1 28.
Fukumoto second cool stuff commercial production and down from $1 37 per pound in Q3 between between one to.
The decrease mainly resulted from the months fixed operating costs being spread over the increased copper production with phase two.
With phase one production exceeding studio stages on throughput most notably was the decrease in cost of mining per pound as well as support services in January .
Al.
Cash cost guidance for 2022 is between $1 20 per pound and that's all a 40 per pound of payable copper.
And we are confident that the downward trend will continue with the addition of increased.
Copper production from phase two concentrate to expect it to further lower the cash cost per pound longer term. We are still looking at projects like the smelter, which may improve cash costs by up to 15%.
So you wanted Cashcall is of course, a non-GAAP measure and a reconciliation from cost of sales to cash cost is provided on page 42 of our Indiana.
Yeah.
We have a strong balance sheet and are well positioned for further development of our fifth.
<unk> with $608 million in cash and cash equivalents on hand, and consolidated working capital of $655 million at the end of December . This was up from the end of September due to the receipt of the fish.
Payment of the streams of $75 million.
All debt of $841 million relates mainly to the two 5% convertible notes with these I need to do in 2026 with a possible earlier redemption.
Our forecast spend for 'twenty to 'twenty, two is $315 million in lotteries Kabuki continued exploration of the waste influence and upgrades. We also expect to receive the sick and prepayment of the streams of 23 to.
$225 million license yet.
Yeah.
Okay.
The planned capital expenditure for 2022.
I'll conclude on mining complex.
Which will be funded from the cash flows from the joint venture type This food celebration of phase II.
It also includes $52 million for the Debottlenecking program model I mentioned earlier.
Which will expand the processing capacity of phase one and phase two concentrates despite approximately 21% other expansion group the phase II also cases.
Sizing up certain infrastructure and foster underground development to ensure we optimize a full phase III.
We have also included direct really works expenditure on phase III and the plant smelter that will be updated on completion of the pre feasibility study.
The planned capital expenditure for 'twenty to 'twenty two.
Battery project will enable the continued development of the project towards completion of its first phase currently scheduled.
Third quarter of 2024, as well as the continuation of the construction of the shelf to hit frame to allow optionality for the possibility of bringing phase two for it.
With the Finalization of the Wuxi feasibility study and the development that agreed we expect to proceed.
With ordering long lead items and other construction activities once the revised joint venture agreement is signed.
And financing agreements are in place.
It's also noteworthy that loans are going on it has its own stupid depreciate project amounted to $528 million at the end of December .
Also at Catarina.
Although no hedge has funded $655 million to platts reef.
Payable to Ivanhoe as well as $277 million.
And the lines to the all to all be baldness.
I'll now hand over to Alex because I've lost presumed corporate development and whatnot to provide a brief update on the development projects.
Okay.
Thank you David and good day to everybody on the line.
Looking first at Comerica cooler phase, one and phase two phase one mine and processing plant continued to deliver exceptional results through the quarter and in the first months of 2022.
As Martin mentioned, we exceeded our production guidance, which was lifted twice in the quarter producing over 105000 tonnes of copper in the first seven months alone an incredible achievement by the <unk> team.
The processing plant has recently been operating at the capacity of over 18500 tonnes of copper per month, and we are also pleased to see copper recoveries are above design, that's around 87% to 88%.
We are looking forward to seeing first production from phase two approximately one month from today and we also anticipate the smooth ramp up of the phase two making use of lessons learned from phase one.
As a result of the performance of the crushing and grinding circuits in particular during phase one we identified a $50 million deep bottlenecking campaign over the next 12 months, which will further increase the combined phase one into production to have a 450000 tons.
The full phase III entered production shortly thereafter.
Moving on to phase III. The expansion is now well underway and we are opening up the mining access to the lower ore bodies that will be ramped up to feed the faith the phase III expansion.
We are expecting to commission a significantly larger concentrates are located close to the existing kind of soco mine by the end of 2024.
This will come in tandem with a 500000 tonne per annum directive blister smelter, which will be the largest in Africa.
As David mentioned, we expect that the smelter project will further improve the cash costs across the come out with a cooler operation.
All of this of course realize on power and we are now mobilized and working towards the refurbishment of turbine five and you can get to them, which will occur in line with the commissioning of the plant.
This will provide enough power for phase III and beyond.
We will be providing the market with a comprehensive updates on the development plan at Comerica cooler with an updated PFS expected in the third quarter.
Now looking at the Western Poland.
We are incredibly excited about the opportunity that we have on our two and a half thousand square kilometer land package, which is 100% owned by I haven't heard of minds.
This is around seven times larger than the land package that contains all the resources of come out of the pool that we have today.
During 2021, we laid the groundwork with road and infrastructure building and running geophysics and geochemical analysis across the expanded license package.
The 2022, we have a 25 million dollar initial budget.
This includes a targeted drill campaign, which will start in full in the dry season, which would should occur next month with over 90000 meters of drilling planned across the western fallen licenses through the year, but this budget is always subject to expansion.
I will now hand back to Manav for an update on <unk>.
Okay.
Thank you, Alex so and we've had quite a busy quarter publishing G. Feasibility studies in one quarter. So I'll take nickel team and squad exhausted, but in South Africa, we have been Tonight should lead chipping away at night.
Our dreams that he had at the adult World Class <unk> project.
And we announced the phenomenal results as just independent feasibility study in February and our first size mine is scheduled for first production in the third quarter. After we need 24, but we have much higher aspirations and we will simultaneously have continued with the development of shelf to full commissioning in 'twenty 'twenty statement.
To accelerate the phase two expansion to $5 2 million tonnes per annum in conjunction with bringing phase one into production.
And we've also had some good extreme as David mentioned, the $300 million and we are in the process of negotiating a senior debt facility that could be said they explained it to cover the development beyond phase one but that doesn't introduction I will just ask Alex to take us through the project economics.
Thanks Manav.
Just before I begin I should mention the full results of our 2022 feasibility study are available in our press release, which was last Monday and will soon be published in the technical reports on SEDAR and on the Ogden, who minds website.
As Martin mentioned the initial phase of production at the <unk> mine is now funded and under construction, which includes a 700000 ton per annum mine and concentrator.
Are you seeing around 110000 ounces of PGM and concentrate which is only the first step of this great Mike.
At the same time, we are also focused not focused on advancing the phase two expansion of flat reef as fast as possible three shop too.
At which point plot reef will become among the world's largest PGM operations, producing close to 600000 ounces of PGM ounce as well as being a world class producer of sulphide nickel and copper.
The flat roof is an exceptionally large thick ore body, which can be mined using highly productive and highly safe methods.
As a result of this as well as the base metal endowment that we have we expect <unk> to be one of the lowest cost producers in the world at around $500, an ounce, which compares to today's basket price in excess of two and a half thousand dollars an ounce.
In terms of the overall economics, we think that without plot reef demonstrate exceptional returns for what is a multi generation my of its incredible size at a cost profile.
Plot revisit unique mineral endowment with a huge amount of scalability beyond the feasibility study.
We believe that in today's copper price sorry, today's commodity price environment. It is greatly undervalued within Ivanhoe mines portfolio as demonstrated by the MPV and IRR that we show here at spot prices.
I'll pass back to Mona I take you through the basic.
Yeah.
Thanks.
And while our team with focusing on bringing to market new light into production over the past two years, they stuff assay whereby styles, we didn't sit by idly and we've spent a lot of time in Congo, and working with our partners and chicken means to carve out a unique.
Partnership agreement to bring.
Bouchey back into production and we were very excited to release the results of that term sheet that we've that we've reached with the agreement that we reached with chicken means and the stage is now seats lots to bring this mine back into production within 24 months from the construction decision.
Currently our joint venture teams actively working on financing alternatives for the development of the project and the team on the ground has already started with some <unk> with zinc trading near record highs and inventory at historic lows. They could please see project has the potential to be restored to its former glory.
Declaring a new light of zinc instead of caught that.
With that as an introduction and then I'll ask Alex to please all set that goes through the project economics Fukushima that we recently published thanks Alex.
Thanks Paula.
Again, the full results of our 2022 feasibility study for <unk> were just published a few days ago on our website and on SEDAR.
Keep pushy is a relatively simple project compared to plot reef and comerica cooler, which really requires restarting the underground mining infrastructure that we have and constructing a small 800000 tonnes per annum processing plant on surface as Martin mentioned this can be achieved in under two years from the construction.
Decision.
But despite the small scale, we might exceptionally high grades at kikuchi around 35% zinc and set you and as a result, we will still be one of the biggest producers of zinc in the world I have to have a 240000 tonnes per annum.
Another benefit of the incredible grades that we have is low cash costs and at 65 cents.
That could push you will be in the first quartile of the industry.
And as well as this the capital cost is exceptionally low for a mine at this scale because we have the benefit of a huge amount of existing underground infrastructure, which has been newly refurbished by the key account team.
As a result, I think it's quite clear that keep Wuxi has exceptional economics at consensus prices and even more so at current prices what do we see an NPV of close to $3 billion and an IRR after tax of over 80%. So we are very excited to move this project forward as fast as possible.
I will pass back to <unk> for closing remarks. Thank you.
Thank you Alec.
We commonly get the question. So what's next for Iron ore mines do you have a lot on your plate.
I think they would doubt whether we could do it when we think conferences nowadays we walk around very proudly because of what we achieved at <unk> I think we now have the credibility under the belt and we all are very very excited about what our teams think their teeth at Blackheath introducing next.
Oh exploration geologist all in a legal thing. It's the same set of geologists that we use that tomorrow cotulla and I think I've never mind, its not I think I'm not I haven't have mines will be the world's next time, there's a five major miner with a difference.
We all responsible miners who care about the communities that you listen to us who work with our partners.
We are excited about the change we bring in the jurisdictions, where we operate.
And it's easy to do so it was the top of ore bodies that we all developing.
I'm very excited about our fourth quarter results, who Mustang into our first quarter results for this year. Thanks for joining to dial will now hand back to the operator to open the line for live Q&A. Thank you.
Yeah.
Yeah.
Okay.
Okay, we are well, we wait for the operator to allow.
Incoming phone questions.
It's still kind of a minute here and I will ask some of the questions have come in via the webcast.
And Robert I think this one is probably best answered by you we've got a lot of questions regarding western for land.
And the kind of the summary would be do you think western for Atlanta will progress as a joint venture or a standalone ivanhoe basis.
Hum.
Just after midnight here in Singapore, and a separate question.
Portland.
What's your filings could have a week of discussion, but at the moment I think it's better for us to say lesser people we can find.
It's fair to say that we have.
Been approached by a number of major industry participants.
Sovereign wealth funds.
Very interested in joining us in the development of the luxury fallen because it's been apparent.
From an ESG perspective, the logical place to be mining copper I understand it is the Democratic Republic of Congo.
It's very important for the <unk>.
I understand that the geology.
Of the copper that we've discovered in the western provinces more similar to an oilfield.
It is through a porphyry copper.
The world's largest mineral discovery was the discovery of the guar oilfield in the eastern Portland.
Of Saudi Arabia, and actually the geology there we're looking at is the western Portland.
Congo is remarkably similar to the city of a major sedimentary oilfield. So this is a base level of debt.
There are essentially four critical components that have to coalesce.
It created a cooler ore body.
Three of those components out of the four come together, you get something more similar to a cum ore body.
The various scale of this project requires a lot of infrastructure development and at the moment, we're carrying this project completely I dunno mindful that initiative.
Obviously, we don't negotiate in public it is very possible that we'll bring a partner on that.
The development of this project at any point, but at the moment, while we do the fundamental work and continue to.
Consider increasing our lateral lengths in certain areas. We're doing this entirely on our own.
I hope that answers your question Bill.
Thanks Robert.
Operator can we now turn it over I believe we have some incoming phone questions from analysts. Thank you.
Thank you. Thank you so much sir.
If you would like to ask a question. Please signal by pressing star one on your phone keep it if youre using a speakerphone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment. We will take the next the first question from Lawson Winder from Bank of America Securities. Your line is open. Please go ahead.
Yes, good morning afternoon, and good evening. Thank you for the update and congratulations on a remarkable first year come Olga cooler.
I would like to ask about the cash cost guidance. So it is noted in the release through 2022 cone cash costs are expected to decline from Q4 2021 level of $1 28 and.
That stands out is remarkable to me is it implies you're already expecting cash costs to be at the lower half of the 2022 guidance of $1 20 to $1 40.
And so I just appreciate your thoughts on the extent to which come out of the cooler is experiencing any cost inflation and whether beating the low end of the 2022 cash cost guidance is within the realm of possibility at this point thanks very much.
Oh, Hi, Lawson business Davidson Jordan, So I definitely think the lower end of the cash cost range is.
Within the realm of possibilities we all.
We are hopeful that.
That will we'll achieve that.
I'm very confident we'll be very close to it.
Later in the year.
You're thinking of cost inflation.
We have experienced some methods of cost inflation and that is included in the thinking on olive garden's range I wouldn't say it's.
Material and definitely not material FUA fukumoto cooler.
Having said that the recent.
The recent increase in.
Fuel prices et cetera would we do foresee that impacting you won't come out can cooler.
But still confident of.
Getting very close to the bottom end of the range.
Okay.
Excellent given the time constraints I will just leave it at that thank you very much.
We will take the next question from Andrew making sure from BMO capital markets. Your line is open. Please go ahead.
Thank you very much rose Nicole and congratulations on the strong close to 2021.
My question I think you will go towards good David and the finance team.
I think you already mentioned that Youre expecting cash flows that could cool tomorrow too.
Cover costs.
Both expansion and and sustaining at that mine.
For the other two principal assets flat range and kept Wuxi what portion of those costs would we should we expect are going to be covered by <unk>.
The financing that's already been announced or being pursued when we look at.
Under the 2022 total guidance for those numbers.
Hi, Andrew So full full flat reef.
The funds, we would we expect to receive from the stream.
Would we expect to exceed the.
The expenditure for the year. So some of that could obviously be available for the <unk> 'twenty 'twenty three spend.
We all working on securing funding for the reminder of the phase one capital.
As well as continuing to work with senior leaders on the Phys to expenditure for depreciation.
We all working on something solutions for that as well, we do expect to spend.
I spend quite a bit.
Does she was expenditure ourselves.
But I mean as.
As I mentioned earlier I would say that those funds will effectively be funded by Ivanhoe as illogical pushy and so we will we will fun times with the seat, but fund debt to depreciate them.
Learn of LIBOR plus.
With an interest rate of LIBOR plus 6%.
And hopefully I am I able to secure funding in time food food could be should you be funded from a financing facility from next year onwards.
Yeah.
And maybe just as a quick follow up there. So it's fair to say that there'll be a modest draw on the cash balance.
At the corporate level.
Queen.
So as we talked about in other corporate costs, but probably.
Not a significant one.
Characterization.
Yes.
That's fine jewelry, we expect.
Cash balance to exceed $500 million at the end of this year and that's even without factoring in any funds received from <unk>.
It would be higher.
Yeah.
Great.
Let other people have questions again, congratulations and thank.
Thank you very much.
The next question is from Auris Walker, though from Scotiabank. Your line is open. Please go ahead.
Hi, Good morning, I guess good evening overseas.
Question about the Debottlenecking program at Kimball Walker cooler your release talks about increasing the throughput for phase one and phase two to nine point too and I'm wondering how we should think about the ultimate throughput now when you start including phase III.
Do you see the combined throughput, reaching north of 19 million tons or I'm, just wondering what the actual final number might look like when we incorporate phase III here.
Perhaps I can take that one our estate sorry, it's Alex here and thanks for the question.
Lucky raise you raise a good point and this will be addressed to some extent in a.
Q3, PFS, which will really outline the big picture development plan to come out the cooler I mean in terms of the phases beyond phase one and phase two as you say, we'll get up to $9 2 million tonnes per annum. We've said that phase III will be bigger than each of those phase, one and phase III sizing and but we will.
Come back to you in terms of how much bigger that will be.
And in terms of the Big picture you know another factor that we have to take into consideration here as the copper price I think when we put together on 19 million tonne per annum plant, we were looking at a $3 copper world.
Today, we're looking at a significantly more bullish copper price environment from our point of view, we would like to continue expanding cooler bigger and faster.
And if you look at your reserves and resources from a sort of $44 $55 a couple of points obviously incur.
Increases very very significantly.
You'll have more than enough resources within them they come out with a cool a joint venture to feed a bag of concentrate the facility, but I think we will still maintain our approach which is to do it in bite sized chunks on a on a modular basis focusing on opening up new mining areas in order of the best grade.
And bringing on stream.
Concentrate is that.
They use the same technology and the same process flow sheets as phase one and phase two.
Perhaps in a slightly bigger sizes.
Yes.
Thanks, Alex does that imply then we should anticipate beyond phase III, we're gonna hear about phase four phase five down the road.
Yeah that that will be captured within this TFS say why don't just stop at phase III, but obviously phase III will be what we have kind of committed to today.
Phases.
They may be they go in.
In future kind of like a decision we made going from phase II to phase III, you know that that didn't necessarily reflect what we had in all off P. A but we made the decision based on the market conditions that we see today.
Thank you very much that's perfect.
We'll take the next question from Greg Barnes TD Securities. Your line is open. Please go ahead.
Yes. Thank you a question for Alex as well just on the Western fault lines exploration project this year.
Maybe you mentioned it Alex but I didn't hear a number in terms of meterage planned in drilling and.
What do you think that could go going into 2023.
Yeah. So I did I did mentioned is 90000 meters of drilling overall Greg.
50000 of those meters are shallow drilling so sub 150 meters. So thats really drilling out targets that we are the highest priority targets I should say that we've identified through the through the geophysics and the <unk> that we did in 2021.
And then there is a further 40000 meters of more stratigraphic drilling.
Which is sort of testing the furthermost reaches off the western fallen license in terms of the underlying stratigraphy looking for those key ingredients to find day at lower or to cooler.
Okay.
The specific targets.
Focusing on Alex 123, or their numerous targets beyond that.
Four or five.
We're always numerous targets and you know there are priority rankings in terms of what we're most excited about but I think the good news now is that before you know before last year. All targeting was always always limited by the fact that we didn't have the infrastructure in to necessarily reach than most interesting places.
Based on the G. The geological data, whereas now we have that spine roads that that crosses the entire license package. It makes it much easier to get drill rigs in and test some of the higher priority areas.
Okay. Thank you guys.
Okay.
The next question from Dalton Barreto from Canaccord. Your line is open. Please go ahead.
Great. Thank you guys and maybe this.
This question is for Robert.
There's been some noise recently around turnkey bunk room in a dispute between Jackup means and China Moly and I'm just wondering how much of this is it asset specific issue versus kind of a more.
Broad based issue and then B. This recent deal.
Capuche at that stage transfer of ownership the Jack I mean to what extent does that insulate <unk> from any disputes with the state. Thank you.
To begin with.
Not have any disputes for the state.
And we make our own reality.
Because we are absolutely.
A little later in the Democratic Republic of Congo.
Our local and national stakeholders with the greatest respect.
And because we employ women and young people.
Empower them.
And because we have scored so highly on ESG characteristics, we do not have any of the skus for the state.
We would expect that to remain and sites. We're very happy with this growth we've had with the governor of who love a province.
The new Prime Minister in the country Prime Minister Soma.
The spirit of the President's office right through the government talks about them.
I'll remind you that the Coca Cola licenses, but.
I have in my mind.
How does the landlord we acquired the Atlanta Nashville, five mining law, we stay because isn't required.
Do not have a landlord.
The issues around and thank you for grooming or not for me to comment on other than to point out.
The roommate.
Landlord landlord is jacking means.
It's not uncommon for landlords.
And the people that rent from them to have their disputes, but it's certainly not a national issue.
There've been a number of changes politically in the country at all for the better.
Uh huh.
We've seen.
Passage or the consolidation of Felix.
Visionary approach towards.
The gradual but very real elimination of corruption and drugs and the government.
Looking historically haven't been there since 1996.
It's been an enormous amount of progress.
And the business climate in the Congo.
Represented.
On the planet wanting to be there.
Historical disputes about what agreements were reached in the past are not unknown resources group.
So the economy alere assets like crummy.
Been around for 100 years.
And there's.
Less than transparent history about what transpired plenty of plenty of room for argument, but come on.
To conclude it was just a clean sheet of paper.
We entered the country with 50000 square kilometers.
Fresh and ground it had never been touched.
The ground is covered with 20 or 30 meters of Italy, and sand that blew in from.
The Kalahari desert.
We took a 20 year exploration effort to find this deposit or system.
<unk>, it's rich.
<unk> is the largest and highest grade copper bearing system.
Higher copper belt, which also goes into Zambia.
So I think it's well understood.
Our deep and long standing commitment going back decades, which resulted in the discovery and then this <unk>.
Archivolt sort of clean sheet design of a mine.
Stands as sort of a beacon for foreign investment in the country.
Interest from virtually everybody.
It would be hard for you not to think.
Not to people and then one of the major mining companies of this.
Congratulations to the management.
This line was brought on.
How well it was brought on it was only a little over five years ago that we discovered cooler.
And so we never would have been able to do that with other supportive government believe me.
You Youll see other mines in Chile for example that are five or 10 years.
Schedule and had massive cost overruns.
You've seen the same phenomenon in Mongolia, ridiculous cost overruns and delays by comparison.
And so I think the last thing you need to worry about are the Congolese people.
Certainly any disputes.
All of the other operations are completely irrelevant.
I might add that Eric sort of bet their future on it.
Development of a magnificent golar outside of the northeast and there again.
Bristow is team has made their own reality theres going into a remote location and build a spectacular mine. So I think.
You make your own reality in the developing world.
What distinguishes kind of in your mind.
Jenny wine as opposed to optical connectors.
ESG characteristics have become so fundamental to all of you investors. So.
There's nothing.
With our history bears any relationship whatsoever to any issues and thank you for grooming.
Thanks Robert.
Got a number of questions inbound questions on the webcast with.
With respect to a supplemental or additional listing for iron ore mines, given the ex extremely a strong share price performance over the past year I'm not sure. If you want to handle this robert or Marta or Alex can you give some <unk>.
As to what those plans are.
Going forward.
I don't think we really wanted to publicly speculate about where we will list or when or why.
Question remains a possibility.
The previous I have at our mines, which we did about call. It was listed on the New York Stock Exchange, that's certainly a possibility in the future.
But I don't think it's appropriate to reflect this.
Closure on that subject.
For the moment Americans can easily buy our shares on a secondary listing in the United States and we have shareholders from all over the world.
Liquidity is totally in this year as the market compensation increases.
Certainly possible that we will seek additional loose-leaf.
Great. Thanks.
Maybe a question for either Alex or David.
Can you. Please provide a estimate of the timing and dollar amount of possible shareholder loan repayments, we expect from <unk> can cooler in 2022.
Yeah.
I'm I'm I'm happy to take this one bill, but I don't think we should necessarily be providing.
And estimates in terms of a dollar amount I mean, it's obviously subject.
Subject to a great deal to the copper price I mean, what I will say is that while there will be no repayments at least until we get phase III up and running at capacity and then I think you can obviously you can obviously see that phase one right now is doing a run rate of call it $3 $53 million $360 million of EBITDA.
Central to double that with phase two and you contrast that to what our capital commitments are and you realize that they should hopefully be a surplus but it will only come off the phase III is in production and we already gave an indication of how much that will be today.
Great. Thanks, Alex.
I think we have time for one or two more questions before we wrap up so we've got a couple of questions of a similar vein.
On the Platte reason, given the extreme movement in copper and other commodities that the plant will be producing.
Is there any chance to fast track Platt reefs production.
To capture some of these incredible a.
Commodity prices, we're seeing right now.
[laughter] shall I. Thank you all right.
We are we are we are.
Our fast tracking flat rate that we've been moving as fast as possible for the last 25 years.
Discovering and developing the largest precious metals development in the world.
It always sort of amuses me to get these kinds of questions.
It's really important to actually physically go there and get the idea of the scale of what we're talking about.
If you can picture going down an elevator shaft.
That's gonna be 10 meters in diameter.
Going down or resets as thick as in its variability.
And watching that risk over my left or my left your mile and see that fully mechanized.
Whereas nobody is going to be lifting anything heavier than a pencil.
And then in air conditioning cap.
Well the hanging wall that's rock solid.
Basically Iraq factory.
It takes a lot of work a lot of development work. So the beauty of phasing these projects.
We're really engage and uplifting, our labor force and training them to it.
A very high level, they're becoming at least dental technicians, if not attentive.
So you start by training people on the Baby mine.
Like you would a training wheels on your bike.
Once you get stable you go bigger.
We've announced our intention today to accelerate Jeff too.
But of course, the nickel price went hyperbolic I think that's sort of a one or two day phenomena.
But nickel has a very very important metal for the future as a.
Platinum and palladium, so the longer we have sustained high metals prices.
The greater the menu of options, we have to further accelerate the project.
Like everyone on this call to understand that the flat rate goes basically forever.
There's about 150 million ounces of metal drilled up in various categories, but it's still open in every direction and there are numerous other nickeliferous.
Mineralized bodies that are much closer to surface.
So if the nickel price remains very sustained we think probably we have the largest nickel environment on a planetary basis.
The Bush felt around our holdings and we actually have a work that's been done by our geological team contrasting the nickel environment and already being greater than a real risk.
So it's always possible to take more share.
Sovereign wealth fund wants to get involved.
If unconventional investors come forward, we could see the number of shares right now.
We like working in a steady modular fashion fast track on phase one.
Everybody underground and show them that we're in production.
And then develop the first Super large mine or we have to do this in the context of the continuous expansion.
Cooler.
And putting into production of completion.
If you start modeling this.
Massive cash flows that are potentially available in the future.
To grow out if you don't mind and a world class major mining company.
Right now, we're either the world's largest junior mining company.
We're the world's smallest major mining company, we prefer the letter.
And we would invite everybody to pay attention to provide relief, it's very unusual to have a poly metallic ore body.
Because as you well know all metals don't move in tandem recently Palladium has gone crazy north of $3000 an ounce.
Or or nickel is going crazy and maybe the platinum is relatively quiet in the future maybe platinum that catches up or maybe the gold and the deposits or the copper in the deposit.
Basically you have a self hedged portfolio of metals and the priorities.
Many people ask me, what's my favorite discovery her favorite projects unequivocally the world's largest precious metal system that reduces.
The best project that I've ever seen it just takes more capital and takes more time.
100 year tier one mine up and running but once it gets started it'll be in line for our children and our grandchildren.
Or are you all of you to come take a look at it we're gonna be speaking.
Darva, which I believe is in May this year.
And then shortly after that we will select a few institutional investors to come and take a look at collaboration come out controller for if you're interested I'm Robert Robert.
Contact Bill tournament.
We can do to show you how what the scale of these operations really are then you will understand why good things take a little bit of time.
Thank you Robert I thought that was a perfect way to end today's call now I'd like to thank all the shareholders and analysts and investors who joined our call today.
And we look forward to providing you with frequent updates as we continue.
Continue the growth into what to Robert described as the next.
World scale diversified mining company.
And thank you I'm Bill T R. At Ivan Karp Dot net please feel free to reach out to me by email or by phone call and we will answer any questions that we did not have a chance to get to today. So thank you and I wish everyone either good morning, and good afternoon or good evening.
Okay.
Although that concludes today's call. Thank you for your participation you may now disconnect.
Just going back.
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