Q2 2022 Ivanhoe Mines Ltd Earnings Call
[music].
Speaker 1: Good day, ladies and gentlemen. Welcome to the Ivanhoe Minds Q2 2022 Financial Results Conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Matthew Kievel, Director of Investor Relations and Corporate Communications. Please go ahead.
Good day, ladies and gentlemen, and welcome to the Ivanhoe Mines Q2, 2022 financial results Conference call. Today's conference is being recorded at this time I'd like to turn the conference over to Matthew Keevil Director of Investor Relations and corporate Communications. Please go ahead.
Speaker 2: Thank you, operator. Hello everyone. My name is Matthew Kievel and I am the Director of Investor Relations and Corporate Communications for Ivanhoe Mines. It is my pleasure to welcome you to our second quarter 2022 conference call. We will finish today's event with a Q&A 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.
Thank you operator, Hello, everyone. My name is Matthew people when I am the director of Investor Relations and corporate communications for Ivanhoe mines. It is my pleasure to welcome you to our second quarter 2022 conference call. We will finish today's event with a Q&A 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 given them.
Speaker 2: Given our time constraints, we will likely be unable to answer every question. Our apologies if we run low on time. Our IR team will endeavor to collect all the questions for follow-up. Before we begin today, I'd like to remind everyone that the 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 state.
Time constraints, we will likely be unable to answer every question. Our apologies if we run low on time, our IR team, we will endeavor to collect all the questions for follow up.
Before we begin today I'd like to remind everyone that the 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 August 15th news release as well as on SEDAR and on our website at Www Dot I've been home minds dotcom.
Speaker 2: Details of the forward-looking statements are contained in our August 15th news release as well as on CEDAR and at our website at www.ivanhomemines.com It is now my pleasure to present Ivan Homine's founder and co-chairman, Robert Friedland.
It is now my pleasure to present I've been home minds, founder and co Chairman Robert Friedland.
Yeah.
Okay.
Okay.
Okay.
Speaker 1: Robert, we are connected. We're not hearing you. You might have self-muted on your end.
Robert we are connected we're not hearing you you're my self muted on your end.
Speaker 3: Yes, thank you very much. Thank you to everybody on this call. It's been a very good quarter for Iverno Mines, underlining the fundamental importance in mining of having a tier one ore body at the bottom of the world's cost curve. It was an excellent quarter given primarily driven by the fact that we're using low-cost hydroelectricity to produce green copper in the Congo.
Yes. Thank you very much thank you to everybody on this call.
It's been a very good quarter for either the mines underlying fundamentals.
Fundamental importance in mining.
A tier one ore body at the bottom of the world cost curves.
Excellent quarter.
You have been primarily driven by the fact that you're right.
Here's a very low cost hydro electricity to produce green copper in the Congo.
Speaker 3: We see a number of factors that give us great optimism for the future. We invite comparison to any other competing operation anywhere in the world. So I want to turn this over to our very, very, very strong operating team, Marna and David and Bob, who will take you through all the details in this video. Later in the call, I'll be back to answer any questions. Thank you very much. Marna.
We see a number of factors that give us great optimism for the future we didn't buy a comparison to any other competing operation.
Where in the world.
So I'm going to turn this over to a very very very strong operating team BARDA and David.
Take you through all the details of this.
During the call I'll be back to answer any questions. Thank you very much.
Yeah.
Thank you Robert.
Speaker 4: And good afternoon everybody from a very chilly Johannesburg.
And good afternoon, everybody throw my theory, Chile Johannes thick.
Speaker 4: The second quarter for 2022 marked a number of significant milestones on our journey to become a major diversified mining company.
Second quoted for 2022 marked a number of significant milestones on our journey to become a major diversified mining company.
Speaker 4: This includes Kamau Kukula declaring commercial production of Phase 2 ahead of schedule, the completion of changeover and equipping of Shaft 1 at our Plattreef project, and in June Ivanow and Jack Amiens approved the development budget at our Capuchin project.
This includes conoco gorilla, declaring commercial production authorized to heat a shade Joel the completion of change of anti clipping off shelf, one adult blotchy each project.
And in June I've been out.
And jacobina attributes the development budget at all Capeci project.
Speaker 4: At Kumaoka Kula, the ramp up of phase two continues, and it is anticipated that Kumaoka Kula will reach combined copper production of 450,000 tonnes by the second quarter of 2023, after the completion of the de-bottle making code.
Economically we loved the ramp up of ice tea continues and each asset. It is anticipated that the market global reach combined copper production of 450000 tons by the second quarter of 2023 after the completion of the Debottlenecking program.
Speaker 4: With the early commissioning of Phase II, it allowed us to tighten the lower end of our guidance and revise our production guidance upwards to between 310,000 tonnes and 340,000 tonnes of copper in concentrate.
If there any commissioning of ice tea, which allowed us to talking to Norway eat up our guidance and she drives our production guidance upwards to between 217000 tonnes and 340000 tonnes of copper in concentrate from 'twenty to 'twenty two.
Speaker 4: During the ramp up of Kamaoka Kula, produced a record 32,877,000 tons of copper in July for an annualized production rate of 387,100 tons of copper. That is significant seeing that those two only were commissioned in April .
During the ramp up of the market.
He is a vehicle to city T 877000 tonnes of copper in July for them and you're not reduction right of 387100 tons of copper that's insignificant thing that's nice to the I D with the commission in April .
Speaker 4: The phase three expansion is ongoing. This will increase copper production to 600,000 tons per annum by Q4 in 2024. This expansion will be funded from cash flows and joint signedsn conceivable such great
So the expansion is on driving this will increase copper production to 600000 tons and then.
By Q4 in 2020 full this expansion will be funded from cash flows and joint venture facilities.
Speaker 4: David von Jeerden, our CFO , will talk you through our quarterly numbers shortly. But it might be worth mentioning here that we did see an increase to our C1 cash cost during the second quarter.
Neither trend yet and I'll see if I will talk you through our quarterly numbers shortly.
It might be worth mentioning here that we did see an increase to our seaborne cash costs during the second quarter.
Speaker 4: Cash cost per pound of viable copper produced totals $1.42 per pound compared to $1.21 per pound and $1.28 per pound in the first quarter of 2022 and the fourth quarter of 2021 respectively.
Cost per pound of fiber copper produced titles adult at 42 per pound compared to adult it when you want the talent in the door between the eye for talent in the food Court 2022 and the full school adults 2021 respectively.
Speaker 4: The increase mainly pertained to logistic charges. And Alex Picard, our VP corporate development, will discuss a number of initiatives currently underway to reduce these tolls.
The increase 92 times, two logistic Georges and Alex be coach our VP corporate development will discuss a number of initiatives currently underway to do do you see still a case.
Speaker 4: We do expect to see a slightly elevated cash cost in the third quarter. We're off the issue to reduce in the fourth quarter. Once the new Aloba copy is now the returns online in early September of the scheduled maintenance, the coming quarter and the cost saving initiatives start yielding results.
We do expect to see a slightly either back to the cashcall seem to third quarter. We all states should reduce into full school to wants to do I know about corporate smelled. Good beacons online in early September of the scheduled 19 inch dispose this coming quarter and the cost saving initiatives start yielding results we.
Speaker 4: We therefore reiterate our C1 cash cost guidance for Kumaro Kapila of $1.20 to $1.40 per pound for the calendar year 2022 and expect our cash cost to be at the upper end of guidance for the year.
We gave for the U K right I'll see one cash cost guidance will come out because we know of $1 20 to $8 40 per pound for the calendar year 2022 and expect our cash cost to be at the upper end of guidance for the.
Speaker 4: Environmental, social and governance remain at the heart of what we do. And in May, we proudly published our fifth annual sustainability report.
Environmental social and governance remain at the heart of what we do and in my we proudly published our fifth annual sustainability report.
Speaker 4: In June , Ivano attained membership of the United Nations Global Company.
In June our the maritime finish it off the United Nations Global contact and we remain committed to upholding the 10 principles underpinning to finish it this week.
Speaker 4: and we remain committed to upholding the same principles underpinning this initiative.
Speaker 4: We do acknowledge the importance of gender diversity and diversity in all forms, but particularly in the DRC, where female representation in the mining sector was lagging behind. We have established group-wide targets for gender inclusion.
We do acknowledge the importance of gender diversity and diversity in all foods that particularly in the D C with female representation in the mining sector was lagging behind.
We actually established a group wide targets for gender inclusion.
Speaker 4: We are also committed to ensuring that the majority of our workforce is comprised of local employees from the frequent areas of our minds. To achieve this, we have established world-class training centres to capacitate local community employees.
We are also committed to ensuring that the majority of our work force is comprised of local employees from the threep into areas of all bonds to achieve this we actually established world class training centers take a pass at that local community employees.
Speaker 4: acknowledging that not everyone can be employed by our minds. We also place a significant focus on enterprise and supply and oh,More people in this country you still need to ask
Acknowledging that not everyone can be employed by all mines, we all type lines and significant focus on enterprise and supply development.
Speaker 4: seeking to incorporate these local businesses into our supply chain and to capacitate them for sustainable business operations beyond the life of our mom.
To incorporate these local businesses into our supply chain and take a pass at that thing for sustainable business operations beyond the life of our mines.
Speaker 4: At a time when the world is experiencing significant inflationary charges, in particular pertaining to fuels, we are fortunate that in the DRC, our investment in refurbishing existing hydropower facilities provides both against fuel inflation as well as enable us to attain our vision of being a green metal producer.
At the time when the world is experiencing significant deflationary charges.
Let the dining two fields, we are fortunate that in the DLC, our basement and refurbishing existing hydropower facilities provide started again feel inflation as well as you know I will ask the China vision of being a green nickel pig you said.
Speaker 4: I will now hand over to David van Jerden, our Chief Financial Officer, to take you through our second poll to results.
I will now hand over to David Fun year, then our Chief financial Officer to take you through our second quarter results I'd like to you David.
Yeah.
Speaker 3: Thank you, Mada, and good day to everyone joining the call today. The second quarter of 2022 was another quarter of exceptional operational performance at the Moa Kukula. However, the results were impacted by the decline in the copper price at the end of the period and inflation pressures, both of which we will discuss.
Yeah.
Thank you Mike.
Thank you everyone joining the call today.
It can go towards 2023 was another quarter of exceptional operational performance at the Walker cooler.
But the results were impacted by the decline in the copper price at the end of the period and inflation frictionless, both of which we will discuss in more detail.
No.
Speaker 3: This call is of course just a high level summary of our quarterly results and the presentation should be viewed in conjunction with the quarterly financial statements and the MD&A for the three and six months ended.
The school is of course at a high level summary of our quarterly results and the presentation should be viewed in conjunction with fee.
And quarterly financial statements and MD&A for the three and six months ended June 32.
Speaker 3: And just it's forthculted since the commencement of commercial production can be
Okay.
It's fourth quarter since the commencement of commercial production the market cooler sold almost.
Speaker 3: 86,000 tons of payable copper and concentrate leading to quarterly revenue from contract receivables of $699 million before a negative remeasurement of $205 million at the period.
<unk> 6000 tons of payable copper in concentrate leading to quarterly revenue from contract receivables of $699 million before.
They get to pretty measurement of $214 million at period end.
Speaker 3: Paisalbeet, higher diesel prices and other factors combined with new trucking capacity, which was worsened by the marked increase in temperature produced by Khamakuram, resulted in an increase in gas.
Awesome.
Diesel prices and other factors combined with limited trucking capacity, which is worsening followed the marked increase in tons produced.
Resulted in an increase in cash costs more importantly.
Speaker 3: More importantly though, Kamal Kukula was able to sell 1000 tons in excess of playable copper produced in the course.
Gamal Kakuta, what's able to sell 1000 tons in excess of payable copper produced in the quarter.
Speaker 3: The decrease in the market to this EBITDA and $296 million.
The decrease in intermodal kudos to EBITDA to $296 million for.
Speaker 3: for the quarter was largely due to the re-measurement of sales, which I'll explain further now on the next slide, which focuses on the greater detail of Kumala Holdings joint ventures profit.
For the quarter was largely due to re measurement of Upsells, which I'll explain switching now on the next slide which focuses on the Greg which focuses on the greater detail of our holdings joint venture profit.
Speaker 3: Raveny from Contractor Seed Walst looked at the average copper price during the month of sale was up to $699 million in Q.
Revenue from contract receivables looked at the average copper price during the months of sale was up to $699 million in Q2.
Speaker 3: compared to $467 million in the first quarter, with the increase driven by the good production from price.
Compared to $467 million in the first quarter with the increase driven.
Pardon me.
Production from.
From price too.
Speaker 3: Q1 cells was re-measured at the end of March at a copper price of...
Q1 sales was re measured at the end of March.
At the proper price of food.
Speaker 3: $4.69, while the realized copper price for Q2 was $4.34 per pound.
$4 69, while the realized copper price for Q2 was $4 34 per pound.
The outstanding debt.
Speaker 3: balance of provisioning price sales where we measured at the end of June using a copper price of $3.79 per pound with fees collectively resulting in the negative mark to market in Q2 of $205.
The balance of provisioning cross sells were re measured at the end of June using a copper price of $3 79 per pound with these convicted resulting in a negative mark to market in Q2 of $205 million.
Speaker 3: Alcatruel's cost of sales for the second quarter was $217 billion in capital and a dollar 15
Kudos to cost of sales for the second quarter was 217.
And first of all and the dollar 15 ships.
Speaker 3: put down the spade of a copy sold up from a dollar 18 in the first
Found a favorable coffee sold up from $1.08 in the first quarter.
Speaker 3: of the ducting GNI, the operating profit for the second quarter for where it was $253 million. And for now, I will leave the dark $209.
After after deducting G&A to operating profits for the second quarter was $253 million and good luck with you could draw $296 million.
Speaker 3: Kamala holding recorded finance cost of $66 million in Q2, which was principally the interest on the share of the loans from Ibanez and Jijin, as well as interest on Kamala Kundas.
Kumar holding recruited finance cost of $66 million in.
Q2, which was principally the interest on the shoulder learns from INR intrusion.
Well, it's interesting when come all kudos equipment finance facility.
Speaker 3: The third tax was $57 million during the quarter with a current tax expense.
Deferred tax was $57 million during the quarter with a current tax expense of $5 million.
And.
Speaker 3: The non-controlling interest of 27 million represents the profit attributable to the DRC government's 20% interest in the Kamaoka-Kula mining complex, leaving a profit of $100 million attributable to the joint venture partners, Ivanoshia of which equaled for $100 million.
The Noncontrolling interest of 27 million represents the profitable the profit attributable to the DLC government's 20% interest in Docomo cooler mine complex.
A profit of hundreds of millions of dollars attributable to the joint venture Baldwin's I haven't no share, which equal to $50 million for Q2.
Speaker 3: We turn to Arvano's Consolidated Results for the second quarter.
If we turn to <unk> consolidated results for the second quarter.
Speaker 3: The chart in the slide that cut out the last one in there just showing Arunah's share of profit from the Kamala joint venture of $50 million for the quarter. Additionally, Arunah earned interest income of $35 million from Kamala Holding in the second quarter.
The chart in the slide deck starts right. The last one in there just showing ordinary share of profit from <unk>.
Joint venture of $50 million for the quarter. Additionally.
Interest income of $34 million from Kabbalah, holding in the second quarter.
Speaker 3: all the shells and lines advanced to future invention. During the quarter, the company spent $10 million.
Well the shareholder lines advanced joint venture during the quarter the company spent $10 million.
Speaker 3: on the Capushi Project, 4 million on Western Four Lands exploration and 4 million on generalidelands.
On the Wuxi project 4 million on waste and food exploration and 4 million on general and administrative expenditure.
Speaker 3: I think that's a battery project of the industry to bring the project to commercial production and all the effort capitalized as development cost in property.
Think of it as a battery project.
To bring the project to commercial production.
Tax laws.
Looking at cost and property plant and equipment.
Speaker 3: The $184 million gain on the fair valuation of the financial liability in Q2 represents the change in the deemed fair value of the conversion feature attached to the $5 million, serving $5 million, 2.5.
The $184 million gain on the fifth Avenue I shouldn't of H liability in Q2 represents the change in fair value of the conversion feature attached to the problems and saving $5 million two.
Two follow ups.
Speaker 3: and convertible signal, which are going to close in March of 10.
Political senior notes, which closed in March of 2021.
Speaker 3: The conversion feature is an embedded derivative of financial liability and the share value changes principally due to fluctuations in our share price and the gain is therefore resulting from the decrease in Avner share price from the end of March to the end of January .
The conversion feature is basically look at the financial liability.
C value change was principally due to fluctuations in no shape rise and the gang to stay four resulting from the decrease in Lebanon. She brought it from the end of March two.
Sure.
Speaker 3: I'm going to recognize the finance cost of $10 million in Q2. We're lacking money to be interested.
I've been a recognized finance cost of $3 million in Q2.
92, the interest on the convertible notes.
Effective interest rate.
Speaker 3: the agreement of the development plan by the shareholders of Capuchy and the approval of the developing mer textual...
With the agreement.
Of the debate up in planned by the shareholders of depreciate them the approval of the development budget.
Speaker 3: with the Capucci 2022 feasibility study. It is deemed probable that future taxable profit will be available from the Capucci project, at which it can offset its unused tax losses and unused tax credit.
With the completion between 2002 feasibility study it is deemed probable future taxable profit will be available for local bouchey project at which and.
It can often take its unused tax losses and unused tax credits.
Speaker 3: and we therefore recognized the previously unrecognized PFRIT tax asset in June of this year and we went to a gain of $114 million. The aforementioned items ultimately built up to Avanam's profit for the second quarter of 300 and...
And we faithful Richardson my life, the previously unrecognized deferred tax assets in June .
Off this year.
Leading to a gain of $114 million.
The aforementioned items opening T builds up to at a nice profit for the second quarter of $352 million.
Speaker 3: The cash cost per pound of fiber copper produced for delivery to China was $1.42 per pound in the second quarter and up from $1.21 per pound in the first quarter of this year. The cash cost per pound is $1.
The cash cost per pound of payable copper produced and food delivered to China was $1 42 per pound.
The second quarter and up from $8 21 per pound.
The first week of this year.
Cash cost per pound.
Of payable copper for the second quarter.
Speaker 3: We're higher, large heat due to A42 increase in logistics charges for the transportation.
Well Javier largely due to a 42% increase in logistics Georges food food transportation.
Speaker 3: and more quickly, the scope of products. And as Marta mentioned, our cost reduction initiatives will be detailed a little bit later.
And we'll conclude with a couple of products.
As Martin mentioned our.
Our cost reduction initiatives will be detailed a little bit later in the school.
Speaker 3: We also saw a increase in mining costs due to the high diesel prices as well as some of the higher prices seen in consumables, as well as due to the utilization of some of our surface stock bottles, which should at age like it was.
We also saw a increase in mining costs due to the higher diesel prices is one of those and some of it.
The processing and consumables as well as due to the utilization of some of our surface stockpiles, which it's a slightly higher average rate.
Speaker 3: We have a strong balance sheet and our well-positioned to support the development and growth of our project.
We have a strong balance sheet, and all and well positioned to support the development and growth of our projects with $507 million in cash and cash equivalents on hand, and consolidated working capital of $550 million.
Speaker 3: $507 million in cash and cash equivalents on hand, and consolidated with a capital of $530 million. Allow abilities of...
A lot of abilities of.
$734 million.
Speaker 3: and $775 million of that relates to the 2.5% convertible notes.
And Sydney, Sydney, Melbourne, and Sydney $5 million of that relates to the 2.4% convertible notes.
And with these I really do.
26, with a possible or the other.
Fiction.
Speaker 3: forecasted for 32 is $251 million of battery for the pushy and continued exploration on the service
Forecast screened food food for nutrient Dude.
Is $251 million on batteries.
Continued exploration on the recent wins and upgrades.
Operating and capital expansion costs that come up for Google unexpected to be funded from copper sales and facilities.
Speaker 3: capital expansion costs that Kamakukua are expected to be funded from copper cells.
Hello.
Speaker 3: We also expect to receive the second requirement on the Black Reef streams.
We also expect to receive the second payment on the electric streams and likely this quarter, which had a sort of a $225 million to our cash position at that time.
Speaker 3: add a further $235 million to our cash position.
Speaker 3: I will now hand over to Alex Picard, our Vice President of Corporate Development, and find out who to provide.
I will now hand over to Alex because our vice President corporate development and found out to provide.
Any thoughts on the development of that project.
Speaker 5: Thank you David and good day to everybody on the line from a very warm and humid London.
Thank you David and good day to everybody on the line from a very warm and that she can make London.
Speaker 5: I'll take you through the key operational results for both Kamoa Takula and the Western Fallen from the second quarter.
I'll take you through the key operational results for both Comerica cooler on the western fallen from the second quarter.
Speaker 5: Tomoe Kokula had another stellar operational quarter, with the biggest achievement being the very successful Ram Club of Phase 2.
Hello, Okay cool that's had another stellar operational quarter, but the biggest achievement being the very successful ramp up of phase III.
Speaker 5: I think it's worth highlighting the timelines of this incredible ramp up. We commissioned the plant on March 21st, just before the end of the first quarter, and by April 8th, a little over two weeks later, we declared commercial production.
I think it's worth highlighting the timelines, obviously incredible ramp up we commissioned the planet on March 21st just before the end of the first quarter and by April eight a little over two weeks later, we declared commercial production.
Speaker 5: During the first month of production, in fact the first two weeks of production, the Phase II concentrator was already regularly exceeding its design throughput and achieving close to design recovery of 86%.
During the first months of production in fact, the first two weeks of production at the Phase III concentration was already regularly exceeding its design throughput and achieving close to design recovery of 86%.
Speaker 5: This trajectory has been continued by the operations team, which you can see from the record production month of close to 32,900 tons of copper achieved in July . This is close to 400,000 tons on an annualized basis.
This trajectory has been continued by the operations team, which you can see from the record production month of close to 53900 tonnes of copper achieved in July this.
This is close to 400000 tonnes on an annualized basis.
Speaker 5: As a result, we have raised the lower end of our production guidance from 290,000 tons to 310,000 tons, and also maintained the upper end of the guidance at 340,000 tons. And we expect to be comfortably within this range.
As a result, we have raised the lower end of our production guidance from 290000 tons to 310000 tenants and also maintained the upper end of the guidance at 340000 tonnes and we expect to be comfortably within this range.
Speaker 5: The de-bottle-lecking program at Komoha Pukula is also progressing well, and we expect this to be completed by the second quarter of next year, increasing the production capacity to approximately 450,000 tons of copper.
The Debottlenecking program that smoke cooler is also progressing well and we expect this to be completed by the second quarter of next year, increasing the production capacity to approximately 450000 tons of copper.
Speaker 5: In tandem with this, we're also working on mine optimization plans at Kakula, targeting increased mining rates to meet the expanded plant capacity of 9.2 million tons after the de-bottle mine.
In tandem with this we're also working on line optimization project Kula targeting increased mining rates to meet the expanded plant capacity of $9 2 million tons. After the debottlenecking.
Speaker 5: While this ramp up in material handling capacity underground takes place at Pakula, we will be feeding some material from the stockpile, which is at a slightly lower, but still very healthy grade of 4% to 5%. And we will target getting back towards 6% copper head grade later on this year.
While this ramp up in material handling capacity underground takes places to cool that we will be feeding some material from the stockpile, which is at a slightly lower but still very healthy great a 45% and we will target getting back towards 6% copper head grade later on this yet.
Speaker 5: The exceptionally strong production ramp up at Kamauka Kula did mean that we sold a much larger volume of copper products, primarily copper concentrate but also blister copper from a total smelting agreement at the neighbouring Luolava Copper Smelter.
The exceptionally strong production ramp up of clock of call. It did mean that we sold a much larger volume of copper products, primarily copper concentrates, but also a blister card for multiple smelting agreement at the neighboring can do a lot of the copper smelter.
Speaker 5: The chart on the right-hand side puts this in context. We saw an increase of over 70% in terms of the absolute volume of concentrate dispatched during the quarter.
The chart on the right hand side, especially in context, we saw an increase of over 70% in terms of the absolute volume of concentrate dispatched during the quarter.
Speaker 5: Looking more closely at these numbers, you'll see that the volume dispatched for local treatment actually decreased as the lower lava smelter was closed for scheduled maintenance. And we do expect this to continue through the third quarter, which means in total, we will be exporting a larger volume of concentrates until that smelter is running again.
Looking more closely at these numbers you will see that the volume dispatched for local treatment actually decreased at the level of the smelter was closed for scheduled maintenance and we do expect this to continue through the third quarter, which means in total we will be exporting a larger volume of concentrates until that smelter is running again.
Speaker 5: So as David and Marno both pointed out earlier, the main result of this was that we faced a significant cash cost increase in our logistics charge of roughly 42% in Q2.
So as David and monitor both pointed out earlier. The main result of best way that we faced a significant cash cost increase in our logistics charge of roughly 42% in Q2.
Speaker 5: This is partly due to the pressure of these additional volumes on the trucking capacity, as well as some issues ramping up customs clearing procedures and congestion on the DRC Zambia border. But there are also some regional factors at play here, such as the interrupted port operations at Durban caused by flooding and global increases in diesel prices.
This is partly due to the pressure of these additional volumes on the trucking capacity as well as some issues ramping up customs clearing procedures.
Congestion on the DRC, Zambia border, but there are also some regional factors at play here such as the interrupted talked operations that Debbie caused by flooding and global increases in diesel prices.
Speaker 5: Komodo Copper is working very closely with its off-take partners CITIC and Zijin, as well as the DRC government to address these issues. And we already have plans in place, which include the facilitation of increased trucking capacity, helping the DRC government to improve customs clearing administration, and we are also very pleased to note that there is now a second import-export border between the DRC and Zambia open at Circania to add to the previous single border at Casimbalesa, which was the bottleneck.
Copper is working very closely with its off take partners Citic and <unk> as well as the PRC government to address these issues and we already have plans in place which include the facilitation of increased trucking capacity, helping with the government to intervene.
Previous customs clearing administration and we are also very pleased to note that there is now a second import export border between the DRC in Zambia opened its economy to actually the previous single board at catching the LSA, which was the bottleneck.
Speaker 5: In terms of shipping, we are now exporting via four different ports on the African continent, which provides much greater flexibility, with the potential to add a fifth at Lobito in Angola where a concession was recently awarded.
In terms of shipping we are now exporting by four different pulse on the African continent, which provides much greater flexibility with the potential to add a fifth at la Vito in Angola, while concession was recently awarded.
Speaker 5: Finally, coming back to the big picture on cost, we expect a step change improvement once our on-site direct to blister smelter is commissioned, which we conservatively estimated can reduce costs by 10 to 20 percent.
Finally, coming back to the Big picture on cost, we expect a step change improvement once that rolls out.
Director Blister smelter is commissioned which we've conservatively estimated can reduce costs by 10% to 20%.
Speaker 5: The main impact is by significantly reducing per unit the volumes shipped by over 50%, which also includes the phase 3 volumes. But as well as this, the smelter generates valuable byproducts from the sale of sulfuric acid, which demands a high price in the DLC copper belt current.
The main impact by significantly reducing per unit the volumes shipped by over 50%, which also includes the phase III volumes, but as well as this the smelter generates valuable byproducts from the sale of sulfuric acid, which commands a higher price in the DRC Taco Bell currently.
Speaker 5: Turning now to our phase three expansion plans, we are well underway with the 5 million ton per annum mine and concentrator expansion, which is on track for the end of 2024.
Turning now to our phase III expansion plans, we are well under way with a 5 million ton per annum mine and concentrator expansion, which is on track for the end of 2024.
Speaker 5: The graphic on the right hand side shows the location of the Phase III concentrator, which will be close to the new box cuts and declines opening up the Camel 1 and 2 mines that are both progressing well.
The graphic on the right hand side shows the location of the phase III concentrates, which will be close to a new box cut and declines opening up on the combo opening up the kimono wall in two minds that are both progressing well.
Speaker 5: In June we placed orders for key equipment which included ball mills, crushers, float cells and filters for the plant.
In June we placed orders for key equipment, which included ball mills crushes flow cells and filters for the plant.
Speaker 5: For the state-of-the-art 500,000 tonne per annum direct to blister smelter I mentioned before, we commenced earthwork on sites in the quarter, and in June we also placed orders for the furnaces and other long lead time equipment. So that project is also progressing very well.
But the states would be a 500000 tonnes per annum director blister smelter I mentioned before we commenced elsewhere kind of sites in the quarter and in June . We also placed orders kind of finishes and other long lead time equipment. So that project is also progressing very well.
Speaker 5: All of this comes together with the work that Inga do, where we signed up the PC contractor in April and work is now underway to upgrade Turbine 5, which will provide a critical green source of power for all of our expansion plans.
All of this comes together with the website and get to where we signed up the EPC contractor in April and work is now underway to upgrade turbine five which will provide a critical green source of power for all of our expansion plans.
Speaker 5: We're in the process of completing a pre-peasability study that brings together all of these Phase III projects, together with the optimization work we're doing at Fikula, and this will provide up-to-date guidance on costs by the end of the year.
We're in the process of completing a pre feasibility study with that brings together all of these phase III projects together with the optimization work, we are doing extra cooler and this will provide up to date guidance on costs by the end of the year.
Speaker 5: Moving on to exploration, at the Western Fallen, we were back exploring in the field during the second quarter, which followed the typical end of the rainy season.
Moving on to exploration at the Western Fall, then we went back and exploring in the field during the second quarter, which followed the typical end of the rainy season.
Speaker 5: Our airborne gravity and electromagnetic surveys of the entire 2,400 square kilometer land package are nearly complete, which allows for significantly improved targeting over what is an extremely large area.
Our airborne gravity and electromagnetic surveys of the entire 2004 hundred square kilometer land package are nearly complete.
Which allows us to significantly improve targeting.
It is extremely large area.
Speaker 5: During the quarter we've been drilling extensions to the existing discovery at Makoko, located to the west of Kokula, as well as regional stratigraphic drilling in the north and far southwest areas of the license package.
During the quarter, we've been drilling extensions to the existing discovery makoko located to the west of cooler as well as regional stratigraphic drilling in the north and far southwest areas, if the license package.
Speaker 5: But we have a lot more drilling planned for the entire season, including 50,000 meters in shallower areas and up to 45,000 meters of deeper regional drilling. So we are very excited to see what that brings.
But we have a lot more drilling plan for the entire season, including 50000 meters and shallow areas and up to 45000 meters of deeper regional drilling. So we are very excited to see what that brings.
Speaker 5: With that update, I will now pass back to Marna to cover the other project.
With that update I will now pass back to Malta to cover the other projects.
Thank you Alex.
Speaker 4: Just focusing on flat refers, following the completion of the shaft equipping and changeover, lateral development commenced in the second quarter. Our underground development is focused on the waste passes on the 750 850 and 950 meter levels with 200 meters completed on the 950 meter level. Lateral development on the 750 and 850 meter level will commence in the third and fourth quarter.
So I could see Blackberry first following the completion of the shaft equipping and change that.
And natural development.
In the second quarter.
Underground development is focused on the wife passes on the savings 50 50 on non 50 meter Naples, that's 200 meters completed on the non 50 muted April .
And that's a real deep it depends on the saving 50, and X 50 meter labor will convene during the third and fourth quarter.
Speaker 4: In August 2022, we completed the construction of the 26-meter concrete each to collar at the 10-meter diameter short tube, which is on the critical path for the future expansion of ice tube.
In August 2022, we completed the construction of the 26 meter concrete teach to call that at the 10 meter diameter shaft.
Which is on the critical path for the future expansion of ice tea.
Speaker 4: We plan to continue with the construction of the 103m tall headgear at 12.2 as this will allow for optionality to bring forward the 5.2 million tonne per annum mine at Patrick.
We plan to continue with the construction of the 100 feet at all Hapke actual SKU.
Now for Optionality to bring full with the Fox, one 2 million tonnes per annum mine Apaches.
Speaker 4: The construction of a five megawatt solar plant is scheduled to commence in the third quarter, with commissioning expected in 2023.
Construction of a five megawatt solar plant is scheduled to commence in the third quarter with commissioning expected in 2020.
Speaker 4: The expenditure for the rest of the year equates to $129 million and as David previously mentioned we plan to draw the remaining $225 million of the $300 million stream facility in the third quarter which will fund our ongoing efforts at Platt.
Expenditures for the Facebook, the yea quite still 129 million and as David previously mentioned, we plan to draw the remaining $225 million of the 300 million until the stream facility in the third quarter, which will fund our ongoing exits at batteries.
Speaker 4: and then back to the DLC. In June , Ivanow and Jeckenings approved a development budget for Kibushi that was in line with the published feasibility study that we released earlier this year.
And then back to the deal see in June .
And taken into proved the development budget for completion, that's the thing.
One with the published feasibility study that we released to India. This year.
Speaker 4: Early works have commenced, which consist of underground preparatory work. This will enable the project to be completed on the planned timelines. Long lead orders are being prepared and preliminary construction work is underway. It is expected that financing discussions will be concluded within the next three months, where also full construction activities will be able to commence.
Anyway, that's good names, which consist of underground prepay right duty Lick. This will enable the project to be completed on the planned time lines long lead or that's all being prepaid and preliminary construction work is underway.
It is expected that financing discussions will be completed within the next three months, we're off the full construction activities will be able to convince.
Speaker 4: IVANO is well underway on our journey to become a leading supplier of critical methods for the clean energy transition. With our Tier 1 assets in various stages of development, we are well placed to realise our vision.
<unk> is well underway and our journey to become a leading supplier of critical meet its clean energy clean energy transition with our tier one assets in various stages of development, we are well placed to realize our vision.
Speaker 4: I will now hand back to Matt Kievos for today's Q&A session. Thank you.
I will now hand back to Matt Keevil 40 days given the isolation. Thank you.
Speaker 2: Thank you, Marna. We will now begin the question and answer session. A reminder that if you would like to ask a question, please submit it via the Q&A box on the bottom left hand corner of the webcast page. We will do our best to answer as many questions as possible with the time we have remaining. Operator, first let's turn it over to the conference line to answer anyone that's waiting on the line with a question. Thank you.
Thank you Marta we will now begin the question and answer session. A reminder, that if you have we'd like to ask a question. Please submit it via the Q&A box on the bottom left hand corner of the webcast page, we will do our best to answer as many questions as possible with the time, we have remaining operator first lets turn it over to the conference line to answer anyone that's waiting on the line with a question.
Thank you.
Speaker 1: Thank you. Ladies and gentlemen on the phones, if you'd like to ask a question, you may do so by pressing star 1 on your touch tone telephone. Star 1 for phone questions.
Ladies and gentlemen on the phones, if you'd like to ask a question may do so by pressing star one on your Touchtone telephone star one for phone questions.
Speaker 1: We'll take our first question from Lawson Winder. Bank of America, please go ahead.
We will take our first question from Lawson Winder Bank of America. Please go ahead.
Hi, good morning, and thank you for the update.
Speaker 6: So, while it is just a hiccup in what would otherwise be a fairly extraordinary ramp up for a new mine, I did want to focus on the cash costs and the guidance for 2022. Marta, you made a comment that.
Got.
Well it is just a hiccup in what would otherwise be fairly extraordinary ramp up for a friend of mine I did want to focus on the cash cost.
And the cat guidance for 2012.
Martin you made a comment that Q.
Speaker 6: Q322 cash cost would be slightly elevated. And it would be really helpful if you just get some clarity on whether or not you meant higher versus Q2, or just elevated versus guidance, or what exactly you might mean by that. That would be very helpful.
Q3, 2000, <unk> cash cost would be slightly elevated and it would be really helpful. Can you just get some clarity on whether or not you've met a higher versus Q2 or just elevated versus guidance or.
What exactly you might mean by that that'd be very helpful. Thank you.
Speaker 4: Thank you, Lucy. Maybe I can start and I do feel free to jump in.
Thank you Louis and maybe I can start and anti they do feel free to jump in.
Speaker 4: I think our expectation was to trend below our existing guidance.
Our expectation was to train B now all existing guidance, but we do anticipate that we will trend slightly above guidance for the third quarter, just as a result of the well all of our copper smelter undergoing a scheduled maintenance and because the niches that we are implementing that Alex you can do it.
Speaker 4: but we do anticipate that we will drink slightly above guidance for the third quarter, just as a result of the Luoloba corpus melt undergoing scheduled maintenance.
Speaker 4: and because the measures that we are implementing that Alex is alluding to will take a bit of time to to bear fruit. We are speaking to custom authorities as Alex mentioned we are adding trucking capacity and all of that will alleviate the pressures on our logistical charges. We also believe that fuel prices will ease.
<unk> will take a bit of time to do a big fruit.
We are speaking to test them authority says.
Alex mentioned, we are adding trucking capacity and all of that really D V. At the patients on the outage ethical charges. We also believe that fuel prices will ease off.
Speaker 4: and that the shipping charges rates will come down. So we think all those will culminate in lower results during the fourth quarter, but we do expect the third quarter to be sort of in line with what we've seen in the second quarter.
And that the shipping charges and rates will come down and so so we think all of those will culminate in in language results during the fourth quarter, but we do expect the third call that you'd be sort of in line with what we've seen in this in the second quarter.
Speaker 6: Okay, that's very helpful. And then in terms of the logistics cost that you guys are looking to manage away, do you have a sense now at this point what proportion can realistically be managed away and how much might persist, just maybe in terms of percentages, at least until the smelter is ready to go.
Okay, that's very helpful.
And then in terms of logistics costs that you guys are.
Looking to manage away do you have a sense at this point.
What proportion can realistically be managed way and how much might persist just maybe in terms of percentages at least until the smelter is is ready to go.
David would you like to venture a guess.
Speaker 3: Yeah, I think I'm happy to jump in. I think returning to the labels of Q1, once all the...
Yeah.
And I think.
I'd be happy to jump in I think.
Turning to the the labels of.
In Q1 once all the once.
Once.
The.
Speaker 3: measures have been implemented. I don't think it's unrealistic.
They should have been implemented I don't think is unrealistic.
<unk>.
Speaker 3: So, there are things we all looking at during, is just looking at the alachrido of couple of coverage sources, constant-try-try to get in just to see where the assortment.
So the things we are looking at doing is just looking at all the trade off.
Of copper recovery citizens concentrate grade again, just to see what is the sweet spot is on.
Speaker 3: And that also obviously has a...
And that also obviously has.
Speaker 3: Specifically, I logistics George and impact
Specifically.
Logistics, George and in fact, it's just about the funding that's been spoken making sure we maximize that you're sorry.
Speaker 3: about finding that sweet spot and making sure we maximize value. So, you know, a number of things looking into, but basically the Q1 labels on.
You know a number of things looking into but based on the Q1 levels.
Speaker 3: what you know aren't unachievable but and they are a bit of work to be done.
What you aren't an achievable, but they all a bit of.
Work to be done.
Speaker 5: Okay, that's great color. Maybe if I could just add to that as well, David. I mean, the African continental logistics market is a very competitive market, and I think we do expect...
Okay, that's great color, maybe if I could just.
Add to that as well David I mean, they the African Continental logistics market is a very competitive market and I think we do expect that to be a market driven respond this way we've seen them.
Speaker 5: there to be a market-driven response where we've seen on-land freight rates.
You know on lung freight rates in the past two to three years. It has probably increased by more than 50% in terms of the actual trucking cost.
Speaker 5: in the past two, three years have probably increased by more than 50% in terms of the actual trucking cost. But that's been as a lot more volumes have come online from Camo, Coocooler and elsewhere. But of course with those costs being so high, trucking operators are probably making pretty reasonable profits right now and it will certainly draw new entrants in. And that's part of the initiative that Marna mentioned is that we're trying to facilitate winning just because of our beach
As a lot more volumes have come online from Coca Cola and elsewhere, but of course with those costs being so high the trucking operations that probably made some pretty reasonable profits right now and it will certainly draw.
New entrants in and that's part of the initiatives that Martin mentioned is that we're trying to facilitate.
Speaker 5: new trucking operators to come in and respond to the market dynamics and bring those costs down to more normalised levels. So I think there is an opportunity from that point of view as well.
New trucking operators to come in.
And and and and respond to the market dynamics and bring those costs down to more normalized levels. So I think there is an opportunity from that point of view as well.
Speaker 6: Okay, thanks Alex. Also, if I can just follow up, obviously the smell of their holds excellent potential to dramatically lower your costs and just do away with these logistics issues altogether, you're now targeting year end 2024 for that. When you think about the path to starting that up, what are the critical path items and is there the potential to accelerate that timeline?
Okay. Thanks, Thanks Alec.
Also if I could just follow up obviously the.
The smelter holds excellent potential to dramatically lower your costs and just do away with these logistics issues altogether.
Now targeting year end 2024 for that.
When you think about the <unk>.
She's starting that up.
What are the critical path items.
The potential to accelerate that timeline.
Okay.
Perhaps I'll take a stab at that one Wilson I mean, the critical path item for the smelter.
Really the power.
And so that's the work that we're doing and get too to bring turbine five online.
While we have the availability of that power from <unk> five you wouldn't really want to ramp up a smelter in an environment, where you can't guarantee and a steady supply of power to that smelter.
Speaker 5: you wouldn't really want to ramp up a smelter in an environment where you can't guarantee.
Speaker 5: a steady supply of power to that smelter. So that's really what we're kind of hanging our hat on in terms of the Q4 2024 guidance. Of course we'll look for any way that we can to complete those works at Inga quicker if possible but we also don't want to be unrealistic.
So that's really what we're kind of hanging our hat on in terms of the Q4 2020 for guidance of course, we'll look for any way that we can complete those works at Zynga quicker if possible, but we also don't want to be unrealistic.
Okay excellent. Thank you all very much.
Speaker 1: As a reminder, star one for questions on the phones. We'll take our next question from Andrew Mitchook with BMO Capital Markets.
As a reminder, star one for questions on the phones, we will take our next question from Andrew the choke.
With BMO capital markets. Please go ahead.
Speaker 6: Good morning, good afternoon, depending on time zones. I just had a couple of small questions. I was wondering if we could get just some additional commentary broadly on your CAPEX.
Good morning, and good afternoon.
And then on time zones.
I just had a couple of small questions I was wondering if we could get just some additional commentary broadly on on your Capex.
Speaker 6: I'll let experience in terms of all this ordering of long lead time equipment.
I'll, let experience in terms of all of this ordering of long lead time equipment.
Speaker 6: whether it's inlined, at least generally with what was expected or budgeted and or even availability and timeline of this equipment.
Whether it's in line at least generally with what was expected or budgeted and or even availability and timeline of this equipment.
Speaker 6: generally across your projects since I think you've probably got a broader experience and exposure than maybe other parts of the market and I'm sure investors would be interested in getting your sense of how that looks.
Generally across your projects since I think you've probably got a broader experience.
Experience and exposure than maybe other parts of the market and I'm sure investors would be interested in getting your sense of how that looks.
Speaker 5: David, do you want to take this one or should I have the first one? No, happy to take it initially Alex, but feel free to...
David do you want to take this one or should I haven't said Oh that'd be.
Happy to take your initially unexpected and feel free to them.
Speaker 3: to jump in. But thanks for the question, Andrew. On our current CapEx costs, we are not seeing the selling flash rate pressures as seen on topics and consumables, but obviously the logistics and population are under threat from future fiscal year 2019.
Jumping.
And thankfully Christian country on an.
Our current capex costs, and we all seen but we are not seeing the same inflection ratios.
As seen on Opex and in consumables, but obviously.
Logistics and.
Speaker 3: that logistics goes both ways. So there are a little bit of an impact on deliveries and specifically for and what's being...
The logistics starts back twice so they all are.
Little bit of Britain and impact on deliveries, specifically for what's being rich.
Speaker 3: purchased for Kamala and for Fukubushi. And in South Africa, because of the weakening of the South African Rand, I think that's sort of played into our hands a little bit. So we are not seeing a US dollar increase for our capital expenditure at the moment. So good on that front for now. And but.
Purchased for Milwaukee tool Wuxi.
South Africa, because of the weakening of the South African Rand I think that's sort of played into our hands a little bit. So we are not seeing a huge dollar increase.
For our capital expenditure.
Expenditure at the moment.
So good on that front for now.
But.
Speaker 3: And then also just like that, the factories and the pushy studies were obviously completed at the beginning of this year. So those cost-easiness are still pretty current. We will, however, update the market if we feel we are moving.
And then.
So I'd just.
Just like to see.
Luxuries.
Bouchey studies will obviously completed at the beginning of this year sorry.
Costly if that's all still pretty good.
Pretty current.
We will.
The market. This week, if we feel we all moving.
Speaker 3: away from our current study significantly, but not the case at present. And maybe Alex, you can just augment on Kamaua a little bit and the pre-feasibility.
Oh why from our current study significantly Oh my gosh.
Maybe Alex you can just make on and come off a little bit and the pre feasibility study.
Speaker 5: Yeah thanks David, so obviously we can't go into specifics around the numbers until we have everything together in one package and there's obviously a number of different elements to that being the mine concentrator, the smelter and the power coming together. But as you pointed out Andrew, we did place orders during June so we've locked in pricing for some pretty big pieces of equipment including major components for the mill.
Yeah. Thanks, David So obviously, we can't go into specifics around the numbers until we have everything together.
One package and there's obviously a number of different elements to that being the mine concentrate to the smelter.
On the power coming together.
But as you point out Andrew I mean, we did place orders during June so we've locked in pricing for some.
Some pretty big pieces of equipment, including.
Major components to the mill.
Speaker 5: And I think where we're sitting today we're not particularly alarmed by the costs for any of those components and there are signs that the market more broadly is easing.
While we're sitting today, we're not particularly alarmed by the you know the.
It costs four for any of those components and there are signs that the market more broadly.
Is easing.
Speaker 5: In any case, I think we feel very confident that we have the funding in place both from the cash flow from Kamoah-Kakula itself and the possibility to raise facilities at the community level.
And in any case I think we feel very confident that we have the funding in place from the cash flow from come out the cooler itself and the possibility to raise facilities as they come out of a level.
Speaker 6: Great. David, if you're still available, can we get you just to comment quickly on the trajectory for
Okay great.
David if you're still they all can we get you just to comment quickly on.
The trajectory for <unk>.
The repayment.
Speaker 6: of the development expenses on, I guess, phase one and two. And when we would see more substantial cash taxes payable versus, versus deferred tax.
Of the development expenses on I guess phase, one and two in and when we would see.
More substantial cash taxes payable.
As.
Versus deferred tax.
Sure Andrew.
Yes.
Speaker 3: We also have our own worst enemy in that regard in the things that we are, especially at Kamaku, that are probably eating into our...
We also did well.
And what that could go up in the things that we all species and welcome to the probably eating into all of them.
Speaker 3: tax asset pretty quickly. So we do expect to have more substantial tax expenditure rather than cash tax expenditure starting from as soon as we can.
The tax assets pretty quickly and so we do expect to have more substantial tax expenditure rather than deferred tax cash tax expenditure starting from.
That's next year.
Speaker 6: Okay, well, that's, I have in mind with the previous commentary. Thank you very much. I'll step back and let others ask questions. Congratulations, Linda Strong quarter. Thanks, EG. Thank you.
Okay, well, that's kind of in line with our previous commentary. Thank you very much I'll step back and let others ask questions. Congratulations on the strong quarter.
Thanks, Andrew.
We have no further phone questions at this time.
Speaker 2: Thank you, operator. We'll move over to our web questions now. As usual, we do have some repeats, so we'll probably amalgamate a few of them and ask them to be appropriate members of management. We'll start off with one for Robert, which is a fairly popular question in our box here today. Robert, following the recently announced bid by BHP to buy Oz Minerals.
Thank you operator, we'll move over to our web questions now as usual, we do have some repeat so we'll probably amalgamate a few of them and ask them to the appropriate members of management will start off with one for Robert which is a fairly popular question and in our box here today, Robert following the recently announced bid by BHP.
To buy Oz minerals, clearly the copper M&A market is.
Speaker 2: Clearly the copper M&A market is picking up a little bit here. People are interested in your take.
Picking up a little bit here people are interested in your take on that market and how ivanhoe might fit in in terms of its M&A focus.
Speaker 2: on that market and how Ivanhoe might fit in in terms of its M&A focus.
Yeah.
Hum.
Speaker 7: Well, uh, cover mine's don't go on trees.
Well.
Copper mines don't grow on trees.
Speaker 7: and we're not going to have clean air or make a meaningful impact on the climate.
And.
We're not gonna have clean air.
Making a meaningful impact on the climate.
Speaker 7: Nor are we going to be able to act on this so-called inflation reduction bill without a massive increase in demand for copper metal.
Nor are we going to be able to act on the so called inflation reduction bill without a massive increase in demand for copper metal.
Speaker 7: and the policy response to recession is inherently reflationary.
And the policy response to recession.
Inherently reflationary.
Speaker 7: The worldwide response to the Russian invasion of Ukraine is resulting in the militarization of the world's militaries.
Worldwide.
Response to the Russian invasion of Ukraine.
Resulting in the militarization work the world's militaries determines happen to have I don't know what.
Speaker 7: The Germans haven't had an army worthy of the name.
Army worthy of the name.
Speaker 7: It's World War II. Even the Dutch are raising their defense budget.
I'm thrilled war to even the Ducks you raised in your defense budgets.
Speaker 7: But both on the military side and on the side of the green planet, there's an astronomic demand.
So both on the military side is on the side of the Green Blue Planet.
An astronomic demand for copper metal.
Speaker 7: The most foolish scenario is that capital markets are scared to invest, copper mines take a decade or two to build, and very few of them can legitimately claim to be tier one.
Most bullish scenario.
Capital markets are scared to invest copper mines take a decade or two to build and very few of them can legitimately claim to be tier one.
Speaker 7: The BHP bid is a 32% premium for us minerals. There's a case in point.
The PHP.
32% premium for Oz minerals.
Case in point.
Speaker 7: One could argue whether that's actually a Tier 1 company or not to the deposits, but the bid was rejected and more recently, 32% premium for Turquoise Hill and Mongolia. An asset that I know better than anyone.
One could argue whether that's actually a tier one company or not in terms of its assets.
It did was rejected.
More recently.
Right.
Premium for.
Turquoise Hill in Mongolia, and I would say because I know better than anyone.
Speaker 7: was also rejected as being unfair by an independent committee of the directors.
What's also rejected this thing on.
Fair by an independent committee of directors.
Speaker 7: So if you're a sovereign wealth fund or you're a major mining company or you're a major manufacturer, consumer of copper, and you're looking for a tier one asset.
So if you're a sovereign wealth fund or a major mining company.
A major manufacturer of consumer copper.
And Youre looking for a tier one asset.
Speaker 7: you can count all of the potential acquisitions on less than one of your hands. You don't need both of them.
You can count all of the potential acquisitions on less than one of your and you don't need both of them.
Speaker 7: And sort of in an anaerobic environment, that's an environment without oxygen for a lot of the juniors. The pipeline is stressed and we don't see significant copper coming into production.
And then it sort of an anaerobic environment, that's an environment without oxygen for a lot of the juniors.
The pipeline of stress and we don't see significant copper coming into production.
Speaker 7: The world needs to essentially double copper production to maintain 3% GDP growth over the next 22 years.
The world needs to essentially double our copper production to maintain 3% GDP growth over the next 22 years.
Speaker 7: The recent S&P study headed by Dan Jurgen has stunning statistics that everybody should read. We see financial markets driven by computers and algorithms, but they really have their head like hostages stuck firmly in the sand with no understanding of our industry. I recently spent a day with senior management at one of the world's largest copper traders.
Recently S&P S&P.
Study, how does like Dan Yergin is stunning statistics, because everybody should read you see her.
National markets.
Driven by computers and algorithms that they really have their head like Oscar stuck firmly in the sand, but no understanding of our industry I recently spent a day with.
Senior management at one of the world's largest.
Corporate traders.
Speaker 7: And we see an incipient train wreck coming in 2024, 2025, as demand for copper metal explodes and as inventories get virtually down to nothing.
And we see an incipient train wreck.
In 2020 for 2025.
As demand for copper metal explodes and as inventories.
Virtually down to nothing.
Speaker 7: We also see reduction in legal cost coming, reductions in shipping indexes coming, and we see interest rates being cut in China. So I think we're very near the absolute sweet spot where...
We also see a reduction in legal cost cutting reductions in shipping indexes coming in we see interest rates being cut in China. So I think we're very near absolute sweet spot there.
Speaker 7: it would be wise to be long copper assets at this point in the cycle.
It would be wise to be long copper assets at this point in the cycle.
Speaker 7: We could be happier with our fundamental position as a very low producer of global warming gas. You've seen some spectacular increases in capital costs in the mining industry.
We couldn't be happier with our fundamental position as it grow.
Very low producers.
Global warming, yes, you've seen some spectacular increases.
Capital cost and the mining industry.
Speaker 7: But if our copper mine is 10 times the grade of your copper mine, we're using a tenth of the steel, a tenth of the electrical energy, and a tenth of the hydrocarbon. So this is exactly what I have been telling you all about. When push comes to shove and you go through an anaerobic period in mining, that's when you want to be building.
But if I were a copper mine is 10 times the grid.
Or a copper mine, where using a tentative deal it tends to be electrical energy and a temple of the hydrocarbon.
That's exactly what I have been telling you all about.
When push comes to shove and you go through an anaerobic period in mining that's when you want to be building.
Speaker 7: We want to be building a mine as the world is in the session. We want to be building a mine while the Chinese supply chain is looking for expansion. And actually, this is a very good time to be buying steel and fabricated items from China. In fact, a perfect time. So we think we have our timing right.
Wanted to be building a mine.
World is in recession.
Wanna be building in mind, while the Chinese supply chain is looking for expansion.
And actually this is a very good sounds to be buying steel and fabricated items from China.
Okay perfect.
So we think we have our timing right.
Speaker 7: We're a very, very bright future at the bottom of the world cost curve from 2024 in a situation that will last for decades.
We're very very bright future at the bottom of the world cost curves.
2024.
In a situation that will last for decades.
Speaker 7: And for our kids and for our grandkids, if you want a greener world.
For kids or Grandkids, if you want a greener world.
Speaker 7: Hats off to our management team that are reinventing mining. That's an unprecedented amount of input from women and an unprecedented amount of benefits to the communities that host our efforts.
Hats off to our management team that are reinventing mining, it's an unprecedented amount of input from women.
And an unprecedented amount of benefits at the communities that host our efforts.
Speaker 7: And in terms of exploration potential, not only in the Congo, but also in South Africa, I can assure you our teams are well in hand.
And in terms of exploration potential not only in the ground, but also in South Africa I can assure you our teams are well in hand.
Speaker 7: So with that, I think that's a good enough answer for your general question. And I think all of you that elicited this call, it's very important to remember to buy on Red Days so that you can sell one of the days to agree. Thank you.
So with that I think that's a good enough answer for your general question.
And I think all of you listen to this call. It's very important to remember to buy on Red days. So that you can sell when the days are in green.
Thank you.
Speaker 2: Thank you, Robert. And I think just going on the clock, we have time for one more. Marna, this is a rather high level one for you as well. Following the company's excellent performance building and commissioning phase one and phase two of Kamua Kukula, what knowledge and skills are you planning or have planned to transfer to ensure that phase three, the smelter, as well as the Platte Reef project will also be built and commissioned on time and on budget.
Thank you Robert and I think I just got to look at the clock. We have time for one more Martin of this this is a rather high level one for you as well following the company's excellent performance building in commissioning phase one and phase two have come over to cooler what knowledge and skills are you planning or have planned to transfer to ensure that phase III the smelter as well as the plywood reef project will.
Also be built and commissioned on time and on budget.
Yeah.
Thanks, Matt.
Speaker 4: I would say success depends on people and planning and the trick is to keep it simple, try and standardise designs where possible.
I would try to say depends on our people and planning and the cheeky to keep it simple try and standardized designs made possible.
Speaker 4: and use the same contractors and suppliers if they performed well. At Kumaoka Kula we completed a full licensed learned review after we completed files 1 and 2.
And you used the term contract is in technology is that the film trial aftermarket pillar, we completed a full license Didnt review after we completed phase one and T <unk>.
Speaker 4: And we did identify some shortcomings which we are busy sort of rectifying and also adapting our plans for the execution of 5-3.
And we did identify some shortcomings, which we all busy sort of rectifying. It all started and adapting our plans for the execution of phase III.
Speaker 4: So we plan to do the same at Placiv and at Kapushi and leverage all of those lessons that we've learned at Kamawa and follow the same form.
We plan to do the same at <unk>.
<unk> and depreciation would lead reach of those lessons that we've learned at Camilla and further at this time for me.
Speaker 2: Great, thank you, Marta. And we've run up just about our hour here today, so this will conclude Ivan Holmines' second quarter, 2022 financial results call. Thank you all again for attending today's event, and we look forward to speaking to you very soon. And again, if you have further questions that we're not answered today, please do reach out to our IR team. Thanks again.
Great. Thank you Marta and we've run up just about our hour here today. So this will conclude Ivanhoe mines second quarter 2022 financial results call. Thank you all again for attending today's event and we look forward to speaking to you very soon and again. If you have further questions that were not answered today. Please do reach out to our IR, our IR team. Thanks again.
Speaker 1: Ladies and gentlemen, this concludes today's conference. We appreciate your participation. You may now disconnect.
Ladies and gentlemen. This concludes today's conference. We appreciate your participation you may now disconnect.
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