Q1 2022 Ivanhoe Mines Ltd Earnings Call

Please stand by, we're about to begin.

Please standby were about to begin.

Good day and welcome to the Ivanhoe Mines Q1 2022 Financial Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to the Manager of Investor Relations, Matthew Keeble. Please go ahead.

Good day and welcome to the island Gold mines Q1, 2022 financial results Conference call Today's conference is being recorded.

At this time I'd like to turn the conference over to the manager of Investor Relations. Matthew. Please go ahead.

Thank you, Alfredo. Hello, everyone. My name is Matthew Keeble, and I'm the manager of investor relations for Ivan Home Mines, dialing from sunny Cape Town, South Africa.

Thank you operator, Hello, everyone. My name is Matthew people without the Badger Investor relations robbing ore mines 70.

<unk> Cape Town South Africa.

It is my pleasure to welcome you to Ag and OMAI's Q1 2022 financial results conference call. We will finish today's event with a question and answer session. You can submit a question using the Q&A box on the webcast page as well as through the conference operator via your phone line.

It is my pleasure to welcome you to optimize Q1 2022 financial results Conference call.

We will finish today's question and answer session. You can submit a question in the Q&A box on the webcast page as well as through the conference operator via your phone lines.

Given our time constraints, we will likely be unable to answer every question. Our apologies if we went low on time. Please follow up with our IR team with further questions.

Given our time constraints, we will likely be unable to answer every question and apologies. If you went below one time, please follow up with our IR team with further questions.

Before we begin, I'd like to remind everyone that today's event will contain forward-looking statements that involve risks and uncertainties that can cause actual results to differ materially from those in the forward-looking statements.

Before we begin I'd like to remind everyone that today's event will contain forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements.

Details of the forward-looking statements are contained in our May 10th press release as well as via CDOM and our website at www.ivanholmines.com.

Details are forward looking statements are contained in our may 10th press release, as well as via SEDAR and our website at Www Dot <unk> Dot com.

It is now my pleasure to present our founder and executive co-chairman, Robert Friedland, for some opening remarks. Robert?

It is now my pleasure to present, our founder and executive Chairman Robert Cleveland for some opening remarks Robert.

Yeah.

Thank you very much to all of our listeners. Most of your management is sitting in Cape Town, South Africa, giving the large Ndaba conference where I'm going to be speaking tomorrow morning.

Thank you very much too.

All of our listeners are most of your management is citizens Cape Town, South Africa, given large jobber conference for.

I'm glad to be speaking tomorrow morning.

We're very happy to present our first quarter 2022.

Well, we're very happy to present, our first quarter 'twenty to 'twenty two.

financial results. A lot of the members speak for themselves, but I'd like to offer some comments.

Financial results.

A lot of the numbers speak for themselves, but I'd like to offer a few comments.

the best numbers associated with the copper production of other mines.

The best numbers associated with the copper production over the months.

are associated with the fact that we produce less global warming gas per unit of copper produced by American competitors.

This is especially with the fact that we produce less global warming gas per year.

Copper produced than our competitors.

And that's the same reason why our cash costs are actually dropping. It's not as easy as it is simply that we have those big yellow charts.

And that's the same reason why.

Our cash costs are actually dropping.

Cruise is simply that we have those big yellow trucks, moving to larger and larger volumes of rock and those big trucks.

We're moving larger and larger volumes of rock in those big yellow trucks.

predicted to hydrocarbon and the hydrocarbon goes up.

It takes it's a hydrocarbon hydrocarbon goes up.

through the war or any other eventualities. There's no way around it. Your costs have to go up.

During the war or any other eventuality, there's no way around it.

Your class starts to go up.

Kamoka Gula is a mine powered essentially by hydroelectricity, and within two years of an all-electric fleet, there'll be no exposure to hydrocarbon at all.

Well, Craig Wheeler is our buying power essentially by.

Hydro electricity is it in two years and then all the electric fleets up with no exposure to hydrocarbon at all.

So we have a very, very good business at $4 a pound copper, lower than we're trading today. And we have an extremely good business even at $3 copper, occupied the bottom of the world's cost curve.

So we have a very very good business at $4, a pound copper lower than we're trading today.

And we have an extremely good business even at $3 copper.

Probably at the bottom of the world cost curves.

We believe, as our production continues to grow dramatically, we'll be amortizing an ever larger productive base against fixed overheads. And when our green smelter comes in production late in 2024, cash costs will drop even further.

We believe as our production continues to grow dramatically.

It'd be amortizing in ever larger.

I forgot to various against fixed overheads.

Our green smelter comes into production late in 2024 cash costs will drop even further.

So I want to thank the thousands of people that have worked so hard to make this a sustainable and different mining operation and given exogenous circumstances having nothing to do with us.

So I want to thank the thousands of people that have worked so hard to make this a sustainable and different mining operation.

Given the exceptional circumstances, having nothing to do with us.

There's a sale on now with Artichokes, Five Fruits, Aller at Faith play.

There was a sale are now with artichokes five fleets are at Safeway.

So, we're going to present our management team and our numbers. We'll put this open to questions. I'm Robert at IV&O.net if anybody would like to email me directly. And with that, let's go on to the next stage of the call. Thank you.

So we were going to present, our management team in our numbers.

So if we get questions on Robert.

If anybody would like to email me directly.

With that let's go onto the next stage of the call. Thank you.

Yeah.

Thank you Robert. Good afternoon and good morning everyone from Cape Town here at the Mining Indaba. If we can move to the next slide. We are very pleased to announce another excellent quarter in our trajectory to become one of the largest copper producers in the world.

Thank you Robert Good afternoon, and good morning, everyone from Python, Yeah actively mining in Alabama.

If we can move to the next slide.

We are very pleased to announce another excellent quarter.

Activity to become one of the largest copper producer in the world.

Tamoakukula never fails to impress, and in April this year, our Phase II plant achieved commercial production, again ahead of the original schedule and even more seamless than anticipated.

Can I look at your land neither final screenplay and denied protests yeah outside plant achieved commercial production again ahead of the original Shake Hill and even more than.

Than anticipated.

The combined annualised production from the first and second plant will be 450,000 tonnes, offered in completion of our deep bottle making project, which we announced earlier this year. And we anticipate to complete this in the third quarter of 2023.

The combined annualized production from the fifth I'm thick in Poland will be 450000 tons. After the completion of our Debottlenecking project, which we announced earlier this year and we anticipate to complete this in the third quarter of 2023.

We are firmly on track to reach the upper end of our 2022 guidance of 340,000 tons of copper in concentrate.

Firmly on track to reach the Upper Inc of our 2022 guidance of 340000 tonnes of copper in concentrate.

Our Phase 3 expansion will further increase copper production to 600,000 tons of copper, with the addition of a 5 million ton per annum plant adjacent to the two new mines, which we will develop at Kamoa 1 and Kamoa 2.

Oh I see expansion looks good the increased copper production to 600000 tons of copper with the addition of a 5 million tonne per annum plant adjacent to the premium line, which we will be data.

One and come out of whack.

This expansion will be funded from cash flows from Phase 3, our plant, the mines and smelter, and that's anticipated to be completed by the fourth quarter of 2024.

This expansion will be funded from cash flow from ICT.

Our parents demands and smelter and that's anticipated to be completed by the fourth quarter of clinically meaningful.

I will now go to the next slide, and before we go through our financial results, let's just pause for a minute and reflect on our ESG credentials.

I will now go to the next slide.

Before we go through our financial results, let's just pause for a minute and reflect on all ESG credentials.

On the 2nd of May this year, we published our 5th Annual Sustainability Report, highlighting the significant work we do from an environmental, social and governance perspective.

On the second of my this year, we published our annual sustainability report highlighting the significant work, we do from an environmental social and governance perspective.

As I mentioned in our previous earnings call, we are firm believers in stakeholder capitalism. And to date, our group has created and distributed more than $1.1 billion in national value.

As I mentioned in our previous earnings call we offer.

The leaders in stakeholder capitalism, and two died agree practically hybrid and distributed more than $1 $1 billion in national value.

From 2020, as our activities ramped up at America Cooler, this national value has increased with 43%, and it will continue to do so as we develop and expand our Tier 1 assets.

1000 training I'll call activities ramped Opex America cooler, that's national values increase with 43% and it will continue to do so as we developed.

Expand on tier one assets.

We currently employ over 12,000 people of which 97% is local and we actively set our targets to increase that percentage even further and employ more women across our operation.

We currently employ over 12000 people of which 97% is local and we actively seek out all that is to increase that percentage, even further and employ more women across our operations.

We have helped in excess of 10,000 stakeholder meetings in the 2021 financial year, keeping our communities and host governments informed and addressing queries they may have.

We have held in excess of 10000 stakeholder meetings in the 'twenty to 'twenty, one financial year, keeping our communities and host governments informed and adjacent query spend might have.

As a company, we strive to be a net-zero carbon emitter, and at Kamoa-Kakula, our high-grade, underground, hydropowered mine is well-placed to be an industry leader.

As a company we strive to have Nick could be a net zero carbon emitter and that comerica cooler or high grade underground hydropower with mine is ralph likes to be an industry leader.

I will now hand over to our CFO , David Van Yeerden, to take you through our quarterly financial results.

I will now hand over to our CFO David on yet.

To take you through our quarterly financial results.

Okay.

Thank you, Marna, and good day to everyone joining the call. As Robert and Marna mentioned, the first quarter of 2022 was another quarter of exceptional operational performance at Komar.

Thank you Mark and good day to everyone joining the call.

As Robert mentioned, the critical task trading between two with another quarter of exceptional operational performance of the market.

And with commercial production of phase two concentrator achieved on April 7th and the de-bottlenecking well underway, we are confident that the aggressive trend will continue going forward. But for now, I'm happy to summarize the financial results for the

Got.

Commercial production phase III concentrate to achieve an iPhone six and the Debottlenecking well underway. We are confident that basic trend will continue going forward, but for now I'm happy to summarize the financial results for the quarter.

The school is, of course, just a high-level summary of our quarterly results, and the presentation should be viewed in conjunction with our quarterly financial statements and the NDMA for the period ended March 31.

This is of course, just a high level summary of our quarterly results and the presentation should be viewed in conjunction with our quarterly financial statements and MD&A for the period ended.

March 31 <unk>.

Yeah.

Yeah.

Kamau Kukula sold almost 52,000 tons of viable copper and concentrate.

<unk> cooler sold almost 52000 tons of fiber copper in concentrate.

during the quarter, leading to a record quarterly revenue of $520 million, up from $489 million in the last quarter of 2021. High average prices in the first quarter and the remeasurement of contract receivables as at March 31st resulted in the increased revenue for the quarter.

During the quarter leading to.

Our record quarterly revenue.

$520 million up from $489 million in the.

All schools offering 301.

Average prices in the first quarter and a remeasurement of contract receivables.

As at March 31st result in increased stripping for the quarter.

C1 cash costs continued its downward trend and was $1.21 per pound of barrel copper delivered to China for the first quarter of 2022, but more on cash costs on a later slide.

Q1 cash cost continued its downward trend and was $1 21 per pound of payable copper going over to China for the first quarter 2021.

Non cash costs on a likely slide tomorrow.

Kamau Kukula's EBITDA for the first quarter was $399 million, an increase by an impressive 12% when compared to Q4 2021, driven by the increase in revenue and the decrease in cost of that.

<unk> EBITDA for the first quarter with $399 million and increased by an impressive 12% when compared to Q4 2021 driven by the increase in revenue and the decrease in cost per pound.

If we move to the next slide, and the slide illustrates how the just mentioned highlights.

If we move to the next slide and this slide illustrates how the just mentioned highlights.

combined with the Kamala Haldane Joint Ventures profit and how it will ultimately...

Combined.

The tomorrow holding joint venture profit in house.

It'll ultimately.

translate into Argonaut shape of the profit attributable to the joint claims appartments.

[noise] translate into ordinary shares of the profit attributable to the joint venture partners.

Revenue of 520.

million in Q1 2022 includes the re-measurement of contract receivables of $52 million which represents the effective mark-to-market of provisional sales at the period ending copper price.

Million in Q1 'twenty between to impeach the new measurement of contract you're still holds a $42 million, which would represent the effective mark to market on provisional sales at the period ending copper price.

Kamau Kukula's cost of sales, $41.

<unk> cost of sales for Q1.

$123 million in total, and $1.08 per pound of payable copper sold, while cash cost per pound of payable copper produced totalled $1.21 per pound. After deducting G&A, the operating profit for the first quarter, and

Yeah.

$123 million in title and a dollar and it seems to have found a fiber copper sold while cash cost per pound.

Payable copper produced totaled $1 21 per pound.

After deducting G&A the operating profit for the first quarter.

of the year was $318 million, and Kamau Kukulu-Zibidaw, as I mentioned, $319 million.

Of the year was $318 million.

Come on accretive to EBITDA as I mentioned getting 100.

Kamau holding recorded finance cost of $55 million in the first quarter, which is principally the interest in the share of the loans from, I don't know, HSM, as well as interest on Kamau Kukula's equipment financing.

Yes.

Come all holding liquidity farming softball $55 million in the.

First quarter.

Which is principally interest in the shale the lines from.

Houston as well as interest from kudos equipment financing facility.

Of the $110 million tax expense, $105 million is deferred tax and does not represent a cash outflow due to the ability to offset expirations.

Of the $110 million tax expense $105 million deferred tax and does not represent a cash outflow due to the ability to offset that horizon.

and certainly the relevant expenditure incurred from inception against taxable income over the first two years following commercial tax.

And certain development expenditure and periods from infection taxable income <unk> commercial production.

A reminder, represents the minimum income taxes variable equal to one percent.

And then minder represents the minimum income taxes viable equal to 1%.

The non-controlling interest of $45 million represents the profit attributable to the Diocesan government's 20% interest in the Kamakakuna Mining Complex, leaving profit of $176 million attributable to the Joint Range Departments, five-and-a-half shares of which equaled $87 million for Q1 2022.

The non controlling interest of $45 million represents the profit attributable to the DLC government's 20% interest.

More quickly the mining complex.

Perfect.

<unk> hundred $76 million attributable to the joint venture Balkans, Barbano shape, which equaled $87 million for Q1.

Yeah.

If we move to the next slide.

which highlights Ivanhoe's consolidated Q1.

Yeah.

Rich.

<unk>.

Consolidated.

Q1 financial highlights.

The chart on the deck starts with the last slide, and it's effectively showing either enough share profit from the Kamoa Holding Joint Venture of $87 million. Additionally, either an interest income of $28 million from Kamoa Holding in the first quarter from shares and loans advanced with the Joint Venture.

On the chart on the Big starts with a lot of stock ended effectively shining oven of ship brokers come pick them, all being direct venture off $7 million.

Additionally, our the note.

And interest income opportunity $8 million from <unk> holdings in the first quarter.

Sure the loans at both the joint venture.

During the quarter, the company spent $9 million on the Kapusha project.

During the quarter the company spent $1 million.

We should project.

$4 million on Western Forelands Exploration and $6 million on General Administrative Exploration.

$4 million on wasting fluence exploration and $6 million on general release.

Type of expenditure cost incurred at the Theatrics project next year to bring the project into commercial production vehicles kept losses, developing cross property plant and equipment.

costs incurred at the plattery project are not necessary to bring the project into commercial production and therefore capitalizes the development cost in property plant requirements.

are going to recognize finance costs of $7 million in the first quarter, relating money to interest on the convertible notes at the effective interest rate.

The net finance costs of $7 million in the first quarter, reflecting 90 to interest on the convertible notes at the effective interest rate.

The $66 million loss on the fair valuation of financial liability in the first quarter represents the change in the deemed fair value of the conversion feature attached to the $525 million 2.5% convertible tenure notes, which are going to close in March 2021. The conversion feature is an embedded derivative financial liability, and the fair value changes principally due to the fluctuations in offshear price.

The $66 million loss on the fair valuation of financial liabilities.

Which was linked to the change in the deemed fair value of the translation feature attached to that $565 million two 5% convertible senior notes, which closed in may.

Wall Street, 'twenty, one but.

Revision feature is an embedded derivative financial liability and the feedback changes principally due to the fluctuations akshay for us.

And the loss is therefore resulting from the increase in Argonaut share price from in December 2021 to the end of March 2021.

And the loss of staple, resulting from the increase in the ownership rights from indexing between 21 to the end of March 'twenty two.

The aforementioned items ultimately builds up to Ivan's profit for the three months ending March 2022 of $23 million with a total profit before the loss of the fair value on the financial liability being $88 million for the first quarter.

The afore mentioned items ultimately builds up to organic profit for the three months ending March 'twenty two.

Of $23 million with a total profit before the loss of the fair value on the financial viability.

$8 million.

The first quarter.

The next slide.

just breaks down the cash costs of Kamala Kukuiwana.

Just breaks down the cash cost of <unk>.

Cool.

The cash cost per pound of payable copper produced for delivery to China continued with its downward trend and was $1.21 per pound for the first quarter.

The cash cost per pound.

Payable copper produced for deliveries to peak.

China continued with its downward trend and was $1 21 per pound for the first grouping.

And that's down from $1.28 from Q4 2021 and $1.37 was down in Q3 2021.

And that's down from <unk>.

Q4, 2021 and $1 30 savings with the balance in Q3, 2020 one.

The decrease mainly resulted from the month's fixed operating cost being spread over increased production. And it's extremely encouraging to see Kamau Kukula already at the bottom of our cash trust balance, putting to a deal of between $1.20 and $1.40 per pound of payroll capital due.

The decrease mainly resulted from the months fixed operating cost branch right.

Increased production and.

Premium packaging to see economically level really at the bottom of our cash cost guidance puts you into two of the $3 20, and $1 40 per pound of copper produced.

As Phase 2 is ramped up in the second quarter, we might see a cash flow slightly higher, but only slightly, but that's expected. But I'm excited to see what is achieved in Q3 onwards with the possibility of breaking below the bottom range of our cash flow. Thank you.

As phase two is wrapped up in the second quarter you might see.

Cash flow slightly higher.

But only slightly but that's expected.

But but I am excited to see what it achieved.

Q3 onwards, with a possibility of breaking the law.

It would be.

The bottom range of our cash costs for legal.

We remain optimistic.

Yeah, with what the holds, because it's the increased top of production from the phase two concentrate decreasing, what will be giving the possibility to decrease cash flow further?

Yes.

And what the year holds.

Because of the increased total production from the phase II concentrate.

Decreasing.

Giving the possibility to produce cash flow stable.

Cash costs is, of course, a non-GAAP measure, and the reconciliation from cash costs to cost of sales is provided on page 40 of our MD&I.

Cash cost.

It's of course, a non-GAAP measure and the reconsideration from cash costs to cost of sales is provided on page 40 of our and England.

Next slide please.

This slide just indicates where you can now conclude on the cash cost curve to highlight our exceptional approach.

This slide indicates we can monitor kudos on your cash cost base too.

How exceptional project.

It's very encouraging to be comfortably first quarter while still having significant further improvements planned.

It's very encouraging to be comfortably first quarter, while still having significant further improvements.

Next slide please.

Yeah.

We have a strong balance sheet and are well positioned for the further development of our projects with $562 million in cash-in-cash equivalents on hand and consolidated raising capital of $615 million.

We have a strong balance sheet and are well positioned for the further development of our projects with $562 million in cash and cash equivalents on hand.

On a consolidated working capital of $615 million.

Other liabilities in the $122 million, $752 million relates to the 2.5% convertible notes, with these only due in 2026, with possible earlier redemption.

All of our liabilities of <unk> 2 million.

752 relates to the two pharmaceutical goods for months.

These early due in 2006 with possible a year today.

Sure.

Our forecasted spend for 2022 is $286 million on Black Reef, Kapushi, Continued Exploration and Overreach, and all operating and capital expansion costs at the Makakula are expected to be funded from copper sales and facilities in place there.

Our forecast for 2022 is $286 million in luxury Depletions continued exploration and our rates.

All operating and capital expenses cost up remarkably well expect it to be funded from a couple of cells and facilitate some flex ethanol.

We also expect to receive the second requirement on electric streams later in the year, which will add $225 million to our gas position at that time.

We also expect to receive the second prepayments.

Extremes like during the year, which will add $225 million to our cash position at that time.

I now hand over to Alex Picard, our Vice President, Corporate Development, and Marat to provide a brief update on the development of our projects.

I'll now hand over to Alex <unk>.

Our bus business corporate development and model provide a brief update.

I don't watch it.

Yeah.

Thanks, a lot David and good day to everybody who is on the line.

I will now take you through the key results in terms of operations and projects at Kamehameha Takula, and then I'll pass back to Moana to take you through Flat Reef and Kipushi and our closing remarks prior to the Q&A.

I will now take you through the key results in terms of operations and projects that come out of the cooler and then I will pass back to more of that to take you through <unk> and our closing remarks prior to the Q&A.

Next slide please.

We're looking first at Kamarika Kula Phase 1. We achieved a record operating quarter during the first quarter, with 1.08 million tons milled at over 5.9% copper, which produced 55,600 tons of copper in concentrate.

So looking first at the multitude of phase one we achieved a record operating quarter during the fourth quarter with 1.08 million tonnes mode and as a five 9% copper, which produced 55600 tonnes of copper in concentrate.

We also achieved a recovery of 87%, which beats 86% from the previous quarter, which is also our design recovery.

We also achieved a recovery of 87%, which is 86% from the previous quarter, which is also our designers love it.

The phase two concentrator was commissioned towards the end of the quarter, and it achieved commercial production on April 7th, which is around four months ahead of the original schedule.

The phase III concentration was commissioned towards the end of the quarter and it was achieved commercial production on April seven which is around four months ahead of the original schedule.

Since then, the Phase 2 concentrator has been performing strongly, and we expect that before the end of this quarter, we will have the same performance level of Phase 1 consistently, which is 10 to 15% above the design capacity in terms of throughput.

Since then the phase II concentrate that has been performing strongly and we expect.

But before the end of this quarter, we will have the same performance level those phase one consistently which is 10% to 15% above the design capacity in terms of free subs.

What this own commissioning and ramp-up means is that we are confident to point towards the upper end of our 2022 production guidance range at $290,000 for $340,000 of copper and concentrate.

What this all the commissioning and ramp up means is that we are confident to point towards the upper end of our 2022 production guidance range of 390000 tons to 340000 tonnes of copper in concentrate.

Finally, as Marna mentioned, we are well underway with our $50 million decontamination campaign, which takes advantage of the strong performance of the front end of the plant and also the high grades that we're experiencing, and it targets reaching an annualised production rate of 450,000 tonnes of copper by the second quarter of next year.

Finally, as Marty mentioned, we are well underway with a $50 million Debottlenecking campaign, which takes advantage of the strong performance of the front end of the plan and also the high growth that we're experiencing.

Deposits, reaching an annualized production rate of 450000 tons of copper by second quarter of next year.

Next slide please.

Now we are firmly looking to the future with phase three of the Kamauka Kula project underway.

Now we are firmly looking to the future with <unk>.

Three of the promote with a project underway.

We recently announced that we will build an upsized concentrator of 5 million tons per annum, which will be located close to the existing Kansoko Mine and the larger Kamoa Mining Conference, which is just over 10 kilometers to the north of Kitula.

We recently announced that we will build an upsized concentrates that are 5 million tonnes per annum, which will be located close to their existing terms okay.

The larger from a couple of our mining footprint, which is just over 10 kilometers to the north of <unk>.

In order to supply this new concentrator, we are busy expanding our mining activities at Kansoko, as well as preparing a new box cut which will open up the Kamuro-1 and Kamuro-2 ore bodies.

In order to supply it as new concentrate that we are busy expanding our mining activity that can cycle as well as preparing a new box cut which will open up the kimono along on commodity ore bodies.

We also place contracts to break ground on the Kamorokokula smelter, which will be the largest smelter in Africa with a capacity of 500,000 tons of listed copper.

We also placed contracts to break ground on the commodity for a smelter, which will be the largest smelter in Africa with a capacity of 500000 tons a blister copper.

In order to provide power to the phase 3 expansion and the smelter, we recently signed an EPC contract with Boyce Hydro, which is a leading German hydropower company for the upgrading of turbine 5 at the Inge 2 dam.

In order to provide power for the phase III expansion on the smelter. We recently signed an EPC contract with voice Hydro, which is a leading German hydro power company.

<unk> five at the end of two of them.

And works are now commencing, which should be ready in time for our phase three target production by the end of 2024.

And with some occupancy which should be ready in time for our phase III target production by the end of 2024.

It's worth adding that all of this work will be documented in a new confusability study for the North Polar which will be published later on this year.

It's worth adding that all of this work will be documented in the new pre feasibility study.

It will be published later on this year.

Slightly.

This finally just puts the Phase 1 and Phase 2 debotnecking program, as well as the Phase 3 expansion, into context.

This slide really just the phase one and phase two debottlenecking program as well as the phase III expansion into context.

So we're targeting to ramp up the motor cooler from approximately 400,000 tons of copper annualized today to around 600,000 tons of copper production by the end of 2024.

So we're targeting to ramp up some of the crude oil from approximately 400000 tonnes of copper annualized today.

600000 tons of copper production by the end of 2024.

Digital Rank, tomorrow can call it the third largest copper producer in the world, but our target is to ultimately become the second largest producer through a phase four expansion.

This will rank <unk> as the third largest copper producer in the world, but our target is to ultimately become the second largest producer of food for expansion.

My target.

Finally, moving next door to Kamoa Kekua, we are advancing the work program at our vast, 100% owned Western Korland Exploration Ground.

Finally, moving next door.

Moving across the commodity cooler we are advancing the work program above that 100% owned western Poland exploration ground.

With the recent onset of the dry season in the DRC, we are recommencing in full our drill campaign to explore for high-priority drill targets identified during the last year.

With the recent impact of the dry season in the DRC. We are recommencing in full drill campaign to explore for high priority drill targets identified during the last year.

We have an initial budget for this year of $25 million, which includes over 90 kilometers of drilling across the license package, which will be four to five drill rigs in operation.

We have an initial budget for this year $25 million, which includes over 90 kilometers of drilling across the license package, which will be four to five drill rigs in operation.

I'll now hand back to Marna to take you through our other activities. Thank you.

I'll now hand back to Manav to take you through all other activities.

Thanks, Alex. We also published an update on our efforts at Platte Reef yesterday, and you can read that press release on our website. But we completed the equipping of Shaft 1, and on 22 April we initiated the first blast on the 950 metre level to commence lateral development toward the ore body.

Thanks, Alex and we all have published an update on our.

<unk> yesterday.

You can read that press release on our website.

In fact, we completed the equipping offshore Gabon, and I'm 22, IPO, we initiated the first graph on the 950 <unk> tomato to Canadian natural development towards the oil body shelf.

Shaft 1 will serve as Blattery's initial production shaft and is approximately 450 meters away from the first high grade area of the ore body.

<unk> one word matrix initial production shaft and is approximately 450, new take away from the first high grade area of the ore body.

Other plans also to delivery of its third battery electric mining fleet and plans for an initial five megawatt solar plant is well underway.

And then perhaps also took delivery of its first battery electric mining fleet and plan for an initial five megawatt solar plant is well underway.

The remainder of the spent for 2022 is approximately $150 million, with ground breaking for the initial 770,000 ton plant expected within the next month.

Mindful of the spend for 2022 is approximately $150 million with ground breaking for the initial 770000 tonne currently expected in the next month.

Phase 1 mine production is expected to commence in the third quarter of 2024.

Just one mine production is expected to commence in the third quarter of 2024.

And then over to our completion project.

The Kapushi Project economics are extremely compelling at current big prices. Underground early works have commenced, and we are in the process of recruiting key personnel for the construction of the plant and the operation of the mine. Our financing and off-tag discussions are advancing with a number of interested parties, and we are targeting an accelerated return to production within the next 18 to 24 months. And then some

Appreciate project economical extremely compounding that currency prices.

Underground earlier have committed and we are in the prices of recruiting key personnel for the construction of the plant and the operation of the mine.

Financing and offtake discussions are advancing with a number of interested parties and we are talking targeting and extended regulatory tend to production within the next 18 to 24 months.

And then some concluding remarks.

In summary, we are confident in our team's ability to bring you the world's next diversified major mining company. With our production success at Gamoa and our established track record in exploring for Tier 1 assets, we are sure to continue our story of growth and discovery.

In summary, we are confident in our team's ability to bring use of both mix countries declined 19 mining company without production successes from Iowa, and established track record and exploding for tier one assets should continue our story of graph and discovery.

That's our concluding remarks today. I will now hand back to Matt Keeble to facilitate the question and answer session for today. Thank you.

That's how concluding remarks with that I will now hand back to Max people to facilitate the question and answer session for today. Thank you.

Thank you, Marta, and we will now move on to the question and answer portion of the day operator. Do we have any questions waiting on the line?

Thank you Marta and we will now move on to the question and answer portion of the day.

Operator, do we have any questions waiting on the line.

And if you'd like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, that's star 1 to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions.

And if you'd like to ask a question. Please signal by pressing star one on your telephone keypad. If you are you may speaker phone. Please make sure. Your mute function is turned off to lighter signal to reach our equipment. Once again Thats star one to ask a question we'll pause.

For just a moment to allow everyone an opportunity to signal for questions.

And we'll go first to Andrew Mitchcock with BMO Capital Markets.

And we'll go first to Andrew <unk> with BMO capital markets.

Good morning, good afternoon, depending on time zones. Congratulations on a very strong start to the year and a good trajectory for Kamoaka Kula. I wanted to look forward to Phase 3.

Good morning, good afternoon, depending on time zones. Congratulations on a very strong start to the year in a good trajectory for.

For <unk> cooler.

I wanted to look forward to phase III and.

In your release, you're guiding for something just over $480 million of kind of a placeholder budget for Phase 3 for the balance of the year. I was wondering if we could get a few general comments on how that could possibly be spread out over the balance of the year and what the general components of that expenditure for this year are. Sure. Absolutely.

In your in your release, you're guiding for something just over $480 million of kind of a placeholder budget for phase III for the balance of the year I was wondering if we could get a few general comments on how that could possibly be spread out over the balance of the year.

And what's the general components of that.

That expenditure for this year are.

Thanks, Andrew.

David here. I'll take that one. And the first part of your comment is I think important that this is effectively just a provisional amount of placeholder.

To start with you I'll take that one.

And.

The first part of your comment is I think people think that this is effectively just.

<unk> and <unk>.

and budget for what is expected at this point in time to be spent during this year. And that will obviously be re-looked at as the pre-consumability study is completed and expected in the first

For what is it.

We expect it at this point in time two distinct strength during this year.

That will obviously be looked at.

The piece of the <unk> study is completed and <unk>.

Given the first quarter.

The majority of that cash flow we do expect to be

The majority of that.

Cash flow, we do expect to be.

to only flow in the latter part of the year, and some of the expenditure.

John you flow into <unk>.

The parts of the year.

Some of the expenditure.

less than $100 million in Q2, with the reminder pretty right towards the end of 2022. But those funds are effectively being made available to the project team to ensure they can drive the timelines of Phase B and then a split between

Less than $100 million.

Hum.

Q3 with the remainder.

Pretty wide to towards the end of <unk>.

These funds are effectively.

Being made available to the project team to ensure that can drive.

The timelines are for ICD.

Split between them.

the smelter continued work on the in the field, but underground mining, but then also some allocations to general infrastructure and very early works on the concentrator.

The smelter.

Continued.

Work on the <unk>.

And in that too.

The underground mining.

Some allocations to general infrastructure.

Very early works on the.

Concentrate.

Okay.

I think that that's a fair answer, and I guess we're going to get a little bit more detail here going forward in this, I guess, Q3 or maybe a little later for the PFS.

I think.

That's a fair answer and I guess, what we're going to get a little bit more detail.

Here going forward in the second I guess Q3, or maybe a little later for the PFS.

Just one last kind of conceptual question on phase three. A lot of the improvements that you guys are...

Just one one last kind of conceptual question on phase III.

A lot of the.

Improvements that you guys are working or debottlenecking or optimizing that you're working on for phase one and phase two are those going to be directly.

optimizing that you're working on for phase one and phase two, are those going to be directly

reflected into the phase three PFS or, you know, should there be some concept of ability to exceed the five million?

Reflected into the phase III.

Or.

Should there be some concept of ability to exceed the 5 million tonnes.

that was headlined recently for the Facebook.

It was headlined.

Recently for the phase III capacity.

Maybe I'll take that one, Andrew. It's Alex here. So just in terms of what will be in the PFS, just to be clear, you'll see 9.2 million tons per year from Phase 1 and Phase 2, so that will be at the fully de-bottlenecked rate, and then there will be an additional 5 million tons from Phase 3, bringing the total to 14.2 million tons.

Maybe I'll take that one Andrew it's Alex here.

So just in terms of what will be in the PFS just to be clear.

Youll see $9 2 million tonnes per year from phase, one and phase two so that will be out.

The Debottleneck, great and then there will be an additional 5 million tonnes from phase III, bringing.

Bringing the total to $14 2 million tonnes.

In terms of maybe what you were asking about, you know, phase three and can you expect

In terms of maybe what you were asking about phase III and how do you expect.

and some additional performance on top of that 5 million tons, it's a bit too soon to say.

Some additional performance on top of that 5 million tons, it's a bit too soon to say I mean, there is the potential that because some.

I mean, there is the potential there because some of the front-end components of that five million ton mill will be.

Some of the front end components of that 5 million tons available.

will already be able to operate at double the rate to accommodate a later phase 4 expansion.

We will already be able to operate at double the rate to accommodate a later phase four expansion. So there is the ability to really push that from that front ended the circuits and then figure out what what else we need to do at the backend of the circuit to produce more copper.

So there is the ability to really push the front end of the circuit and then figure out what else we need to do at the back end of the circuit to produce more copper, and we obviously had a good experience on phase one and phase two, but it's too soon to really give guidance on that.

<unk>, obviously had a good experience on phase one and phase two.

But it's too soon to really give guidance on that.

Okay, well, it's good to hear that you have all kinds of capacity and then the...

Okay well that's.

Good to hear that you have all kinds of capacity and then.

We'll wait to see what the team does. I'll step back and let others ask questions.

Well wait to see what the team does.

Step back and let others ask questions.

Yeah.

And once again to ask a question Thats Star one.

We will go next to Greg Barnes with TD Securities.

Yes, thank you, Alex. Jump ahead a little bit. I think you just said that you're going to potentially building enough infrastructure to double the capacity of phase 3. Is that what phase 4 is going to look like 5 million times a year at that location?

We had a slightly Alex.

I had a little bit I think you just said that you're going to potentially build enough infrastructure to double the capacity of phase three is that let's say for example looks like $5 million a year at that location.

Hi, Greg. It's basically the same as what we did with phase one and phase two where the crushing circuit, so the very front end is sized for 10 million tons per annum and then that's the point at which it splits in two parallel circuits of ultimately 5 million tons each. So that'll be phase three and later on phase four. But it does mean that when phase three is operating, we have a greater capacity in terms of crushing.

Hi, Greg it's basically the same as what we did with phase one and phase two.

B the crushing circuit. So at the very front end asides for 10 million tonnes per annum and then that's not the point at which it splits into two parallel circuits and ultimately 5 million tons. Each so that'll be phase III and lighter on faithful, but it does mean that when phase III is operating we have a great day capacity.

In terms of crushing.

Okay, so page four is going to effectively be mining from Kamoa then.

Okay. So phase four is going to.

Effectively be mining from come all of them.

I don't know if it's 5 million tons a year, or we'd be bringing all from other locations to that new mill or that parallel mill I come up with.

A rate of 5 million tons of agree with you Brian or from other locations too.

To that email that Palo Alto.

I can now.

It should be fed primarily from the different ore bodies that we're opening up at Kamoa. So just remembering there's this Kansoko where we're mining already, but then there will be two larger mines at Kamoa 1 and Kamoa 2, which are fed from the same twin decline system. And then later on, we'll figure out where Kikula West fits into the mix.

It should be.

Is that primarily from the different ore bodies that were opening up to come out of it. So I'm just remembering that this kind of telco, where we're mining already but then there will be two larger mines at the metal one come out too which is that from the same twin decline system.

And then later on we will figure out where to cool the west fits into the mix.

because we do have some slightly higher grade Kukula West. So you will see in the press release there was a reference to the fact that later on we will start to develop declines into Kukula West to try and get a head start on that whole body as well. But Kukula West material will probably more naturally report to the Kukula Mill.

Because we do have some slightly higher grades in the west. So so you'll have seen in the press release, there was a reference to the fact that later on we will start to.

Develop declines in particular west to try and.

Can we get a head start on that the ore body as well.

Equally the less material will probably more naturally reported it to the mill.

And just coming to inflation, we've heard a lot about that from other mining companies through the certain season and.

And just turning to inflation, we've heard a lot about that from other mining companies through this earnings season.

Obviously, you seem to be a bit insulated from that. But are you seeing cost pressures from various inputs, reagents, what have you, feeding through?

Obviously, you seem to be insulated from that.

But are you are you seeing cost pressures.

Inputs reagents, what have you.

Feeding through.

Thank you Tom Davis.

Alright, so modest well thank you Alex.

No, I think if you look at our continued decrease in our castros, I think we are handling it well, but we're definitely not immune, and processes are being put in place just to limit the effect specifically on feeling etc. And I think one thing that has

I think if you.

Look at our continued decrease in our gas processing.

The ore handling it well.

But I mean, we do differently.

<unk>.

And processes.

Being put in place with just to limit the spread.

Specifically on fuel.

<unk> et cetera.

I think one thing to that.

It has.

help us as well as just the fact that the hydro power, the price of the hydro power is fixed. So I think that's just one additional benefit we do get from actually getting that power. But yeah, we're definitely not immune. But yeah, I think the performance has been really exciting. And yeah, I think we look forward to good numbers for the remainder of the year.

It helped us as well as just the fact that the odds are solid.

<unk> larger.

So I think that's just.

One additional benefit we get from.

From actually getting better.

Yes.

If you can email <unk>.

But the I.

I think the performance has been really exciting.

Are you asking.

We look forward to.

Good numbers for the remainder of the year.

Okay.

a grinding media reagent, things like that, if you have stores on hand, or you have long-term contracts that fix prices, things like that that help you insulate a little bit from

Grinding media reagents things like that.

If you have stores on hand, or where you have long term contracts at fixed prices things like that for the houses you escalate a little bit from <unk>.

Cost inflation out there.

Yeah, exactly. It's a bit of a mix in having the right amount of inventory on board and in just de-risking possible future supply issues. Certain processes has been helping us.

Yes exactly.

So sort of a mix in having been about the amount of inventory.

Inventory onboard.

Just derisking.

Possible future supply issues.

Certain processes has been helping us.

Okay, great. Thank you.

We'll go next to Dalton Barreto with Canaccord.

Thank you. Good day, everybody. Two questions from me. First question, given the recent flooding in Durban, United States,

Thank you good day, everybody two questions from me.

First question.

Given the recent flooding in.

But.

It's obviously highlighted a lot of investment at this point.

Is there.

As you guys go through these phase expansion.

How are you thinking about.

The grasberg.

Thank you.

Sorry, Dalton, I just missed the last part of your question there. How are you thinking about...

Sorry, Jonathan I just missed the last part of your question about how you're thinking about.

About egress getting product out.

Okay, I'll take the question and then perhaps others can chime in. I mean, you know, the first thing to say about the

Okay I'll take the question of when perhaps.

Others, others can chime in so I mean, the first thing to say about the.

The recent issues at Durban Port were that they didn't really have a material impact on our operations and also remembering that our revenues are recognized.

The recent issues of Durban pulp was that they didn't really have a material impact on our operations and also remembering that our revenues are recognized when the material leads the mine gate.

when the material leaves the mine gate under the terms of our phase one and now phase two offtake agreement. What it does mean is that you might be paying a little bit more at the margin to have material in a warehouse somewhere waiting for shipment.

Under the terms of our phase one and now phase II offtake agreements what it does mean is that you might be paying a little bit more at the margins.

Material in a warehouse somewhere waiting for shipments.

But on that front, you know, we've also been doing a lot of work together with CITIC and Dijin and all of our logistics service provider partners in order to streamline the Kamoa Kikula concentrate logistics operation as a whole. So we're looking at things like warehousing capacity in Zambia and also, you know, trying to spread the load through different ports on the African continent.

Im not from we've also been doing a lot of work together with which they take things agenda in all of our logistics service provider partners in order to streamline the comerica cooler concentrate logistics operation as a whole.

So we're looking at things like warehousing capacity in Zambia.

We're also trying to spread the load through different ports on the African continent.

And longer term, you know, we are also still very keen supporters of the Western Line project to the Angolan port of Libido, which will completely change the face of the whole logistics chain in the DRC, and it will really reduce the bottleneck there.

And longer term, we are also still very keen supporters of the.

The Westin line project to the Angolan pointedly veto.

Which will completely change the face of that.

The whole logistics chain in the DRC and it will greatly reduce the bottlenecks there.

And then I think the other thing to bear in mind is that's also one of the key advantages of the smelter, of course, is that we, instead of shipping 1.3 million tons of wet concentrate in

Then I think the other thing to bear in mind is that is also one of the key advantages of the at the smelter it causes that.

Instead of shipping one 3 million tons.

Concentrate in bags.

Instead, that becomes 500,000 tons of polyester copper, which is obviously less than half the volume, but also much easier from a handling point of view.

That becomes 500000 tons of listed talked about which is obviously less than half the volume, but also much easier from a handling points of view.

Makes sense, but the Angola option, that's still very much off the table how much debt.

Oh, absolutely. I mean, it's not, it's not something that is going to happen in the next year, but it's definitely still ongoing in the background. Okay, great. And then my second question is on cloud rate, but just given the.

Oh, absolutely I mean, it's not it's not something what is going to happen in the next year, but it definitely.

Ongoing in the background.

Okay, Great and then my second question is on spot rates It just <unk>.

Given the implications to PGM echo market.

The Russia and Ukraine.

Situation is there an opportunity for you guys to accelerate shop too.

I mean, look, I think in terms of the engineering that we put out in our feasibility study, we were sort of pointing towards Shaft 2 being a 2027 project.

I mean look I think in terms of the the.

The engineering that we put out in our feasibility study, we were sort of pointing towards shaft to being a <unk>.

1027 projects.

which then allows you to save the expansions of the two concentrates to get up to 5.2 million tons thereafter.

Which then allows you to save the expansions of the two concentrate just to get up to $5 2 million tonnes thereafter.

You know, what I can say is the team on the ground, now that we've moved from that kind of feasibility stage into really the detailed nitty-gritty of the engineering, you know, we're looking at everything we can in terms of whether we can accelerate that thinking, looking at different thinking methodologies.

What I can say is the team on the ground now that we've moved from that kind of feasibility stage into really the detailed nitty gritty of the engineering.

We're looking at everything we can in terms of whether we can accelerate that thinking looking at different thinking methodologies.

like rave-boring instead of blind thinking and we have that optionality in terms of having the access from the bottom of shaft two and not just the top of shaft two.

Like rate barring instead of line thinking when we have that optionality.

In terms of having the access from the bottom of shaft, two and not just the top of the Shep II.

But it's.

It still takes.

take time and I don't think we're guiding that it's going to be any quicker but we're really working hard at it.

Takes time.

I don't think we're guiding that it's going to be any quicker, but we're really working hard at it.

Okay, but it sounds like the constraint is an engineering problem not a capital question.

Yeah, exactly. You can move a certain amount of meters in a day when you're sinking a shaft. And regardless of how much capital you throw at it, that's one blast or two blasts a day.

No I, yes, exactly I mean, you could exactly it just you can you can move a certain many certain amounts of meters in a day when youre thinking of shaft.

Regardless of how much capital you throw at it at that.

One box to box today.

Understood. Thank you very much that's all.

And at this time there are no further questions.

Thank you operator. We will step over and take a look at our webcast questions and pick a couple of the most popular inquiries and answer a few of those before we wrap up. So first and foremost I think we'll start off one of the more popular questions is about the drilling program at Western Foreland and in terms of timelines the number of drill rigs and when results can be expected. So I'll turn that over to management and if anyone would like to pick up some details on the Western Foreland drilling that would be great.

Thank you operator, we will step over and take a look at our webcast questions and pick a couple of the most popular inquiries and that's.

A few of those before we wrap up.

So first and foremost I think we will start off one would be more part of your question is both a drilling program at Western Portland.

In terms of timelines the number of drill rigs and when results can be expected. So I'll turn that over to management and if anyone would like to pick up.

Some details on the western Portland drilling that would be great.

I'm happy to take that one Matt. I mean I can't add too much more beyond what we went through in the presentation but you know really the first quarter we weren't doing a whole lot in terms of drilling meters. It's always difficult to get out there during the wet season and we're also moving out to the sort of more remote parts of this this huge land package remembering that it's almost 170 kilometers of strike along the entirety of the western foreland.

I'm happy to take that one Matt I mean, I can't add too much more beyond.

While we went through the presentation.

But really the first quarter, we werent doing a whole lot in terms of drilling me says, it's always difficult to get out there during the wet season and we're also.

Moving out to the sort of more remote parts of this huge land package remembering that it's almost a 170 kilometers of strike along with the entirety of the western programs.

But now that the wet season is over and we're moving into the dry season, that's where we're really going to accelerate our drilling activities through the winter in the southern hemisphere.

But now that the wet season is over and we're firmly moving into the dry season, that's why we're really going to accelerate.

Drilling activities.

Through the well I guess the winter in the southern Hemisphere.

And as I mentioned, we're looking at four to five rigs as the sort of provisional budget. But obviously, you know, I think people are very familiar with our approach when it comes to exploration that we, you know, we won't fail to stretch that budget if we start to explore a trend that we've become very interested in and we'll certainly move in more rigs at the right point in time. That's great, thank you.

And as I mentioned, we're looking at four to five rigs.

Sort of provisional budget, but obviously.

I think people are very familiar with our approach when it comes to exploration that we.

We won't fail to stretch that budget, if we start to explore a trend that will become very interested in and we will certainly move and more.

More rigs at the right point in time.

Yeah.

That's great. Thanks.

I'm, sorry, Matt I don't hear you right now.

Sure he might be on mute.

Okay.

Please standby.

Sorry about that guys, a little bit of an interruption in the call. This one more of a broader macro question, maybe for Robert talking about building the next large diversified minor. It seems Ivan has a large portfolio, but what about outside acquisitions and the potential looking at new exploration opportunities?

Sorry about that guys a little bit of an interruption in the call.

This is one more of a broader macro question maybe for Robert I'm talking about building. The next large diversified miner. It seems <unk> large portfolio, but what about outside acquisitions and the potential looking at new exploration opportunities.

Well, well, I've got a mind that's already with the industry leading exploration. So we have.

Wow.

Well all of your minds is already good.

With industry, leading exploration of these.

So we have.

Literally hundreds of proposals.

coming to our attention monthly, and we keep our mind open about all manner of things.

Sure essentially monthly.

We'll keep our mind open about all manner of things.

So, certainly the door is wide open, and if anybody has any great ideas, on rob.rodrigo.net. On the fourth stomach of the cow, we have a great idea to get through the first three stomachs. I'll take a good look at it, and we'll see if our board is interested in finding anything that's better than what we already have. But I rather doubt it, but we keep an open mind. Thank you.

So certainly the doors wide open and if anybody has any great ideas I'm wrong, because I have to go with that.

On the forthcoming because they call it.

Great idea through the first three stomach I will take a good look at it and we'll see if our board was interested.

Finding anything that's better than what we already have but I rather doubt it.

I don't know if remarks, thank you.

Thank you, Robert. And with that, we're wrapping up on the 45-minute mark. So, operator, I think we'll wrap the call up for today. Thank you very much, everybody, for attending, and we look forward to talking to you soon.

Thank you Robert and if that were wrapping up on the 45 minute Mark. So operator, I think we'll wrap the call up for today. Thank you very much everybody for attending and we look forward to talking to you soon.

Yeah.

This does conclude today's conference. We thank you for your participation.

This does concludes today's conference we thank you for your participation.

[music].

? ? ? ? ? ? ? ? ?

Take care.

? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?

Yeah.

[music].

? ? ? ? ? ? ?

Yeah.

Yeah.

[music].