Q3 2024 Ivanhoe Mines Ltd Earnings Call
The End
The New Year's Eve, [inaudible]
Speaker Change: Ladies and gentlemen, thank you for sending by your call will begin, Moon Tarily in about 15 minutes. Please remain in a line to Conference will resume shortly.
Speaker Change: The
Speaker Change: Good morning and good afternoon to everybody on the line and we're just experiencing a short technical delay.
Speaker Change: We will start the conference call at 10 45 so in 10 minutes time, the presentation materials are available on the Ivan Hohmine's website, which is www.ivinohomine.com
Speaker Change: The End The End
Speaker Change: The
Speaker Change: Good day everybody on the call just the reminder that we are running five minutes behind the customs and technical difficulties.
Speaker Change: The call will start at 1045 Eastern Time. Please refer to the Ivan Hoemines website for the presentation materials. That's WDW. Ivan Hoemines.com. Thank you.
Speaker Change: Ronald Howard Written by and with Music by
Speaker Change: Thanks for watching and
Speaker Change: Thank you for watching!
Speaker Change: Bye bye.
Speaker Change: Good day, everybody. Just a reminder that the conference call will start in approximately three minutes. Please refer to the website for the presentation materials on www.ivanhomeminds.com. Thank you.
Speaker Change: Thanks for watching!
Speaker Change: See you later.
Speaker Change: Thanks for watching!
Speaker Change: Good day and thank you for stopping by. Welcome to the Ivanhoe Mines third quarter 2024 financial results. At this time all participants are in a listen-only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press star 11 on your telephone. You'll then hear an automated message advising your hand is raised.
Speaker Change: To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I will now hand the conference over to your speaker today, Matthew Keevil, Director of Investor Relations. Please go ahead.
Speaker Change: Matthew, your line is on mute.
Matthew Keevil: Thanks, Operator. Yeah, everybody, thanks very much for joining us today. Our apologies, there was a slight technical glitch on the back end of the system. We will ask you today to refer to the slides that are posted to our website at www.ivanhomines.com. You can click on investors and you'll see the deck there. If you could follow along with management on those slides, that would be great to just deal with this little bit of a technical glitch. We appreciate it very much and thanks for your patience. Welcome today. It's my pleasure to welcome you to the Ivanhoe Mines 3rd Quarter 2024 Financial Results Conference Call. As the Operator mentioned, my name is Matthew Keevil and I'm the Director of Investor Relations and Corporate Communications with Ivanhoe Mines. On the line today from the company
Matthew Keevil: We have founder and executive co-chairman Robert Friedland, President Marna Cloete, Chief Financial Officer David Van Heerden, Chief Operating Officer Mark Farren, Executive Vice President Project Steve Amos, and Executive Vice President Corporate Development and Investor Relations Alex Pickard.
Matthew Keevil: We will be finishing 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.
Matthew Keevil: If your question is not addressed, please do contact our investor relations teams directly for follow-up, and we'll be happy to answer that question offline. Before you begin, I will point to slide 2. We do have to remind everyone that today's event will contain forward-looking statements that involve risks and uncertainties that could cause actual results.
Matthew Keevil: to differ materially from those in the forward-looking statements.
Speaker Change: Details of the four looking statements are contained in today's press release, as well as on CDAR Plus and at www.ivanhomines.com. It is now my pleasure to introduce Ivanhoe Mines' founder and Executive Co-Chairman, Robert Friedland, for opening remarks. Please go ahead, Robert. Thank you.
Robert Friedland: Thank you.
Robert Friedland: Well, greetings everybody and we certainly apologize for the technical delays.
Robert Friedland: trying to get a global system that is reliable. I'm addressing you from Riyadh, Saudi Arabia, where we are at the Future Investment Initiative here in the Kingdom of Saudi Arabia.
Robert Friedland: Our opening photograph shows my standing next...
Robert Friedland: and a lot of our key people and a team of international investors inside the actual
Robert Friedland: furnace in our new smelter under construction.
Robert Friedland: That visit was fantastic. For those of you that haven't been to the Congo recently, the progress on site is stunning and remarkable.
Robert Friedland: So I welcome you all to this.
Speaker Change: to this session. You can walk through the slides with us as I turn this over to Marna, our president. Let's go to the first slide with a picture of the smelter from a drone, and off we go. Thank you, Marna.
Marna Cloete: Thank you Robert and welcome everybody to our third quarter financial results.
Marna Cloete: It's quite an impressive picture, you see there, it's even more impressive when you drive around on site. And it's quite exhausting to walk to the top of that building, when you look down you can see quite a vista.
Marna Cloete: We're looking forward to completing the smelter in December and then start with commissioning early next year, but really a magnificent project.
Speaker Change: I'm moving over to slide number five now, which is the highlights of our third quarter. We were really busy with the ramp-up of our phase three concentrator during this quarter. That will help us increase our annual production capacity to 600,000 tonnes of copper.
Speaker Change: And we see ourselves probably producing slightly less than 600,000 tons of copper next year and then ticking over the 600,000 tons of copper per annum in 2026 once we complete Project 95.
Speaker Change: which is our recovery project that Mark Farren will speak to a bit later in the school.
Speaker Change: We've had another record quarter. It feels like we say that every quarter, but it happens to be true in terms of production as well as revenue at Kamauka Koola.
Speaker Change: Unfortunately, we had to reduce our guidance slightly and that was mainly due to the intermittent power.
Speaker Change: that we experienced earlier in the year. We've really broken the back of our power problems.
Speaker Change: Some of the projects are longer-term projects, so it will take time to sort of get to steady-state power the way we would like to see it.
Speaker Change: But we're currently importing about 65 megawatts of power, we've got 145 megawatts of backup power installed.
Speaker Change: that does have a cost impact, so we're trying to be as green as possible and stay on grid as far as possible. And Mark will also speak a bit later during this call about our power initiatives.
Speaker Change: Very exciting for us as a management team and we've hosted a number of tours to the western four lands over the past quarter.
Speaker Change: is what we're doing at the Western Forelands, really an exciting time and we have indicated that we will put out a press release towards the end of the year with our plans for next year and give you a little bit of an update as to what we've seen at the Western Forelands.
Speaker Change: And we've also deployed two new rigs to the Western Foreland, bringing the total number of rigs drilling to 11. We will probably be able to drill a bit through the wet season because we've prepared the new facilities in our target areas.
Speaker Change: If we move on to the next slide, slide six.
Speaker Change: health and safety. It's a continued area of focus for us. Unfortunately, we did experience a fatality due to a fall off ground during the quarter. I think a picture speaks a thousand words. You can see our workforce increased since 2021.
Speaker Change: to today. Currently we sit with basically over but close to 30,000 people working across Argonau mines.
Speaker Change: And our safety statistics are quite impressive compared to the industry average, but it's never good enough when you do experience a fatality incident on the site.
Speaker Change: We've closed out the report, we've done retraining, we've implemented mitigating factors.
Speaker Change: but every time we experience these incidents it's sort of a reset back to zero and you know it's a collective effort to ensure that all our staff go home safely every day.
Speaker Change: Moving over to the next slide which is a picture of our first inaugural class at the Kamau Centre of Excellence graduating.
Speaker Change: earlier this year. It was quite a joyous occasion, as you can see, and I had the privilege of visiting the Center of Excellence a couple of weeks ago together with an investor group where we
Speaker Change: were greeted by the new 38 students that really applied from across the Congo. We give preference to our communities and people that's in our footprint area, but we really choose the best of the best in the country, and people as far as Kivu have applied to be accepted at the Kamau Center of Excellence. These students were in class for
Speaker Change: for a two-month period and they came to the Center of Excellence basically only speaking Swahili or French.
Speaker Change: or Langala, and they presented in fluent English to us during this presentation. It was really a touching moment for me to see the impact that we are making at the Kamaua Centre of Excellence.
Speaker Change: So with that as an introduction, I will now hand over to David van Heerden, our Chief Financial Officer, to take you through our financial results, and that starts on slide 8.
Speaker Change: Over to you, David.
Speaker Change: Thank you Marna and good morning and good day to everybody joining the call today. As I move over to slide nine
Speaker Change: The increased production in the second quarter, which Marna already mentioned, translated to a record payable copper ton sold for the quarter and an 8% increase when compared to the second quarter of 2024.
Speaker Change: because of the increased...
Speaker Change: With the increase in tons sold, Kamauka Kula achieved record quarterly revenue of $828 million for Q3, even though the realised copper price decreased to $4.16 per pound for the quarter from $4.34 per pound the quarter before.
Speaker Change: and notwithstanding the fact that we had an increase in unsold copper stock in inventory at the end of Q3.
Speaker Change: On the next slide, with Kamauakakula feeding lower-grade material into the phase III concentrator during ramp-up.
Speaker Change: in the quarter, and considering the impact that had on total average grade, we are pretty happy that cash costs came out at $1.69 per pound of payable copper in the third quarter.
Speaker Change: I would add that the $0.17 quarter-on-quarter increase
Speaker Change: of that $0.08 was due to the increase in power cost when compared to the previous quarter where our power needs
Speaker Change: It needed to be supplemented by the use of diesel generators to keep the plant operational.
Speaker Change: Turning to Kamaua Kakula's Kootli Ibeda, as shown on the right hand side of the screen.
Speaker Change: Ibadar for Q3 2024 was $470 million, and that is Kamal Kukula second highest quarterly Ibadar on record.
Speaker Change: Due to the relatively low grade copper concentrate produced by the Phase III plant when compared to Phase I and Phase II plants.
Speaker Change: The Mocha Cooler toll-treated all Phase III concentrate into blister copper at the nearby Lua Lava copper smelter to maximize profitability until the on-site smelter is completed.
Speaker Change: We normally sell
Speaker Change: It generally takes place as soon as the trucks are loaded with the concentrate bags. Toll-treating concentrate adds roughly 30 days to the timeline, as the sales are then only recognized when the blister produced by the Lua-Lava copper smelter is loaded onto the off-tackers' trucks.
Speaker Change: This increased our copper inventory on hand to 16,000 tons of copper at the end of September, impacting on our EBITDA for Q3.
Speaker Change: The Eberdahl waterfall on the next slide nicely shows the drivers of the quarter-on-quarter Eberdahl movements.
Speaker Change: Q3 EBITDA, of course, benefited from the increase in copper tons sold. This was, however, more than offset by the decrease in realized and provisional copper prices.
Speaker Change: from the levels experienced in the previous quarter. Logistic charges for the quarter decreased from the levels early in the year, but as I mentioned when speaking about cash costs, power cost was notably high for the quarter.
Speaker Change: Assuming equivalent tons, the impact of power on the above Eberdahl waterfall was $18 million.
Speaker Change: And, as one would expect, mining and processing for Phase 3 was more expensive in a quarter due to it being in ramp-up.
Speaker Change: Having said that, the EBITDA for Q3 would have been very close to the record EBITDA achieved in the second quarter had we sold all the copper we produced in the quarter.
Speaker Change: even with the lower copper price in Q3.
Speaker Change: Thank you.
Speaker Change: The next slide shows a snapshot of Ivanhoe's consolidated results. I'm on slide 12.
Speaker Change: Ivano recognized a profit of $108 million and a normalized profit of $112 million in the third quarter of 2024, with normalized profit basically being flat quarter on quarter.
Speaker Change: With the last remaining portion of our convertible notes redeemed in Q3, there will be no difference between our profit and our normalized profit in future periods.
Speaker Change: As usual, our profit, for now at least, is driven mainly by the results from the Kamau Kukula joint venture, where our share of profit decreased slightly from the second quarter to this quarter of $84 million in Q3.
Speaker Change: Thank you for joining us. We will see you next week.
Speaker Change: Although Kapushi commenced production late in the second quarter, sales of Zinc Concentrate only commenced in the fourth quarter. And we will start to reflect on our results from the next time we have an earnings call.
Speaker Change: Looking at Ivanova's Adjusted EBITDA on the next slide, slide 13.
Speaker Change: Thank you.
Speaker Change: Given the environment in the quarter, we are happy with our adjusted EBITDA of $160 million in Q3. However, we continue to drive growth at each of our projects, with the majority of the capital for the short-term growth initiatives already spent.
Speaker Change: So we expect our EBITDA will continue to grow in the upcoming quarters as we reap the rewards of our past investments.
Speaker Change: In the near term, we expect that the increased production from Fraser City at Kamaua, as well as at Kapushi, will drive growth in our ebida, and then there's of course the smelter at Kamaua Kukula, followed by Project 95 and revenue from Blatt Reef.
Speaker Change: And we will, of course, not stop there.
Speaker Change: The next slide, slide 14, shows our guidance for the year.
Speaker Change: All capital guidance for the year.
Speaker Change: We have been spending slightly ahead of schedule at Kamau Kukula, and we therefore expect to be close to the top of our 2024 spending range.
Speaker Change: and that would mean that 2025 would then be at the lower end.
Speaker Change: Spending at Platte Reef will be towards the lower end this year.
Speaker Change: We had cash and cash equivalents on hand at the end of September of 180 million dollars.
Speaker Change: and have added to our liquidity subsequent to quarter end. We recently closed a $75 million working capital facility of which we have already drawn $40 million.
Speaker Change: and are in the process of drawing the first $70 million off the Black Reef Senior Debt Facility with the funds expected to hit our account in early November.
Speaker Change: We still have very little debt for a company of our size and strength, and have a lot of flexibility and many options available to add gearing. And we will continue to do so as needed.
Speaker Change: I will now hand over to Mark Farren and Alex Pickard for the latest updates on our operations.
Speaker Change: Thank you, David, and good day to everybody on the line. It's Alex Pickard here, EVP Corporate Development and Investor Relations.
Speaker Change: I will take you through our productual results of Phase 1 and 2, and then also the progress with Phase 3 that we've been making.
Speaker Change: What you can see on slide 15 here is another fantastic image of the smelter construction site. I'll leave Mark Farren, our COO, to talk about progress at the smelter. So I'll skip now to slide 16, looking at Komodo Kukula's quarterly production.
Speaker Change: So, given the ramp-up of Phase 3, it follows that we had another record quarter, as Marna mentioned, in terms of both mill throughput and copper production, with 116,000 tons of copper in concentrate.
Speaker Change: If we break that out now by the two phases, we milled about 2.2 million tonnes at Sekula at a grade of close to 5% and then just over 1 million tonnes at Kamoa or Phase 3 at a grade of 2.6%.
Speaker Change: At Kamoa in particular, we were feeding quite heavily from existing surface stockpiles at phase 3. So about 40% of the total ore volume was coming from stockpiles, and then the remainder is coming from run-of-mine. This will be a bit of a feature as we continue to ramp up the underground mining rate at Kamoa 1 and Kamoa 2 ore bodies that support the phase 3 plants.
Speaker Change: The good news is that we do have a huge amount of flexibility in this regard. We've got, I think, 4.5 million tons.
Speaker Change: of ore that's been mined and paid for effectively, stockpiled on surface at a grade of approximately 3% copper across the complex. It's obviously slightly higher grade at the cooler side and slightly lower grade at the Kamoa-Kansoko side.
Speaker Change: In terms of the concentrator...
Speaker Change: We are pleased to say that we achieved nameplate capacity just after the quarter-end in early October. I'll come back to that on the next slide. And Marna mentioned the revised guidance for the year, which we announced a few weeks ago, is now 425,000 to 450,000 tonnes of copper in concentrate.
Speaker Change: Just to give some context on that, in terms of the impact of intermittent power, particularly in the first half of the year, for the full year to date we calculate that we lost approximately 36,000 tonnes of copper production to intermittent power, and well over half of that was in the first quarter alone.
Speaker Change: But the good news is that going forward, I think the trajectory is very strong in terms of where we are today in order to catch up from the start of the year. And I think we are looking forward to Q4 to be a really strong quarter and hopefully another significant record.
Speaker Change: As we move into 2025, as Marna mentioned, we're going to be pushing production volumes to get close towards the 600,000 tonnes and then 600,000 tonnes from 2026 and beyond.
Speaker Change: Moving to the next page, 17, just looking in a bit more detail at the phase 3 concentrator ramp-up. So we commissioned the concentrator in May. We had a pretty good quarter but we achieved the nameplate capacity in early October as I mentioned.
Speaker Change: Some real positives here in terms of what the concentrates shown.
Speaker Change: in terms of its potential to mill significantly above the nameplate capacity, so the nameplate is 5 million tonnes per annum.
Speaker Change: We've achieved over 19,000 tonnes daily recently, which implies 30% over that design capacity. So one of the projects is to really try and lock in this optimised throughput over the next 12 to 18 months with a deep bottlenecking programme.
Speaker Change: For the month of October, the recoveries have been around 84%. The recoveries are hampered slightly just because we're feeding all from the stockpiles, as I mentioned before, but we have seen numbers day-to-day at 86% or 87%, so we are well on track for design there.
Speaker Change: and then as David mentioned and just to remind people the concentrate that we produce at phase three is is slightly different from what we produce at phase one and two. Phase three is more chalcopyrite dominant so the concentrate grade is in the sort of 30%.
Speaker Change: So what that means in terms of sales strategy is that we have been shipping all of that material to the Lua Laba copper smelter for refining into blister copper to improve the economics.
Speaker Change: We will continue to do that until we start stockpiling concentrate in anticipation of the smelter commissioning, so that stockpiling will take place from early next year.
Speaker Change: Looking at the underground ramp up and actually what you can see in this picture is the ore handling system and the main belt that comes out of the Kamoa 1 and 2 box cuts and declines. So this is the exact same ore handling concept that we have at Kukula. It's really the backbone of the underground production and the tonnes coming out of the mine going forwards.
Speaker Change: The good news and very recent good news is that yesterday we actually tipped the first oar coming from this system.
Speaker Change: And so, going forward, this will allow us to ramp up the mining rate and notably improve efficiency coming from underground. Currently, all the material from Kamoa 1 and Kamoa 2 has been trucked out of the box cut.
Speaker Change: And then also we will be looking to target improved grades towards 3% run of mine over time with this additional oil handling infrastructure. So that's an update on phase 3. I'll pass over to Mark Farren now to talk a bit more about power on page 18.
Mark Farren: Thank you. Thank you.
Mark Farren: Thanks, Alex. I'm going to cover power.
Mark Farren: in five different areas, and then, and that should...
Mark Farren: give a reasonable summary of where we are.
Mark Farren: So, we took a decision about two and a half years ago to make sure that our power was totally de-risked by adding the generating capacity on the mine. It's expensive, but we, by the end of this year, this financial year, we'll have about 220 megawatts of diesel generation on the footprint, which is enough to run Phase 1, Phase 2, and Phase 3 under any conditions.
Mark Farren: So basically, if you have a total blackout, you'll be able to switch in and then run all three concentrators and all three mines. That decision, I think it was a good decision, but obviously it's not something we want to do going forward.
Mark Farren: and
Mark Farren: Take that power and get it through all the way from Kinshasa into the system and into Oman. That's 178 megawatts.
Mark Farren: That one will run in about May, commissioning in quarter one and full steady state, I think, in about May. And then along with that, we've identified and are executing a number of grid stability projects.
Mark Farren: They're big projects, they're not small projects.
Mark Farren: Some were at Inga, so these filter bank projects at Inga itself.
Mark Farren: and then at the local substation in Corwesie you've got a DC line that transmits all the power from Inga through this DC line into another switching station in Corwesie. We've got a major project which is to supply a very modern static compensator.
Mark Farren: and install it. That will run by December next year and in the interim we're using what you call synchronous compensators.
Mark Farren: which we have also, in terms of our engineering and our project management, we are also maintaining and upgrading.
Mark Farren: So, through the last year and through this year, we've been working on the network to de-risk and to stabilize the network, to de-risk the projects that we're going forward with and to stabilize that network.
Mark Farren: In addition to this,
Mark Farren: Import power is very important for us, not so much for the Phase 1, Phase 2 and Phase 3, but for the further phases that are coming.
Mark Farren: So for us to grow into
Mark Farren: The next phase 4, which we'll talk about at the end, and potentially, not potentially, definitely, in the time coming to execute projects in the Western Forelands, we're going to need more and more power as we go, as we grow our footprints.
Mark Farren: So import power, short term, through the Zambian network, Zambian Corridor, but some of the power generation comes all the way from Mozambique, through that network and up to the Marne. We have got 665 megawatts at the moment.
Mark Farren: and agreements that we're working on to increase that in the short term to a hundred.
Mark Farren: and potentially 200 through next year. 200, 215-odd megawatts are all being offered and will be taken as we grow the footprint.
Mark Farren: We are also executing a project with one of the suppliers to do a dedicated line through the Zambian Corridor.
Mark Farren: right up to the mining footprint. That's an independent loan. It'll take about two years, two and a half years to execute, and that will be an additional 350 megawatts. So if you look at the long-term strategy,
Mark Farren: In terms of de-risking power, it's fixing the network here, the backup generation is in place, and we are working with wheeling companies and energy suppliers to help you get dedicated power to Kamoa as we grow the footprint.
Mark Farren: In addition to this, we've been studying solar for this year, right from the beginning of the year. We're at a final bidding stage at the moment. We're sitting with 11 bidders.
Mark Farren: each offering between 10 and 30 megawatts.
Mark Farren: We'll probably end up taking two or three of these bids and going forward with executing some solar projects with storage.
Mark Farren: That will take place, I think, in the next 12 to 18 months. We all expect to see some significant solar installations on the footprint, and that can be grown incrementally over the next couple of years. I do believe that solar is another answer that we must, must pursue.
Mark Farren: in addition to the import power and the generation projects that we're doing in the country. So all in all, Alex, we have lost 36,000 tonnes.
Mark Farren: of COPPA this year, it did influence a lot our forecast.
Speaker Change: I believe we put ourselves in a very good position going into next year, and like Marna says, we're aiming in the high 500s, and we have put enough work in place to be able to de-risk this and make sure that we can actually get it.
Speaker Change: Obviously, we're going to be running the smelter. I'll talk about that again just now, but that's also going to demand some power. But in what I've spoken about now, we've catered for that as well.
Speaker Change: Okay, the smelter, I'm going to ask Stephen just to talk a little bit about the smelter here, Stephen. Where we are, and the heat transfer facility.
Stephen: Sure Mark. So things are going well. It says on the slide 94% complete so we're almost there. I'm busy with the last bit of piping and the electrical installation and we are hoping by the end of this year to be mechanically complete. We're on track for that.
Stephen: It'll take us a few months to heat up, so Q1 2025 heat up, and then first feed by the end of Q1 2025, and then we're hoping for a fast ramp up there. So big project, it's been hard work, but it's going very well.
Mark Farren: Thanks, Stephen.
Mark Farren: Okay then?
Mark Farren: The future, I mean that's what we're here for as well. I think we've gone very fast in building this mine, phase one, phase two, phase three. They've been ahead of schedule. These concentrators are fantastic. They're all, when you optimise them, it's not going to be a 14 million tonne mine, but you can definitely get these three concentrators running at about 17 million tonnes, and I think it'll be happening in the next two years or so.
Mark Farren: So that's where I think we're going. Project 95 is in execution. It will be ready and running in quarter 1.26.
Speaker Change: So that's why Marna said from the year 2026, we'll be over the 600 mark, that implementation gives us about 30,000 to 40,000 tons of extra copper per year.
Speaker Change: and then...
Speaker Change: If you think about the three projects taking us to 17-odd million tons, it means Phase 3 is much bigger than the 5. So Phase 3, we think, is going to be about $6.5 million eventually when we've done some de-bottlenecking. Again, in a year. In a year, in two years max, it won't take two years.
Speaker Change: It will be less than two years to get that running.
Speaker Change: And then we're actually working on...
Speaker Change: What does Phase 4 look like? And we'll come to the market, we'll come to you guys.
Speaker Change: by quarter one next year with a proper study, with a proper plan, and we're looking at how we're going to sequence it, what are the next priorities, how do we do it with the current power constraints, how do we develop enough power in the area to do it.
Speaker Change: Chairman Chen, you would have seen, has a plan to get to a million tons of copper.
Speaker Change: The next steps along the way, to me...
Speaker Change: I'm going to say, I think there's another two steps here on phase 3, phase 4. I think there's another two...
Speaker Change: concentrated the sounds of Phase 3 and potentially getting us to not the 20 million tons here but probably 30 million eventually.
Speaker Change: 30 million will leave you, you can work it out yourself, but between seven and eight hundred thousand tons of copper for the next 40 years. So I think that's where we're going, and that excludes the Western Forelands, which is very interesting, and Robert will talk about the Western Forelands as well.
Speaker Change: So, the focus for now is to...
Speaker Change: Make sure we get the smelter commissioned properly, that we tap into the value of phase 1, phase 2, phase 3. We get the recoveries up to where they need to be. We get our operating costs down. The smelter will have a massive influence on that.
Speaker Change: And then obviously the dependence on diesel, David did speak about.
Speaker Change: David Heerden, Robert Friedland, Matthew Keevil, David Heerden, Robert Friedland, David Heerden,
Speaker Change: enough power sources and getting stability into the networks, designing the project as we always have, properly and responsibly and making sure we execute like that.
Speaker Change: So, all in all, I think next year is going to be a great year.
Speaker Change: Going forward, we are doing a lot of work. We're doing a lot of work to line up the next steps.
Speaker Change: So somewhere between what I'm saying and what Chairman Chen wants, I think that's our future. There's another couple of steps that we'll be taking. We'll come to the market with those next steps, if I call to one next year.
Speaker Change: and Steve Amos. Thank you. Thank you.
Speaker Change: Jack of Imperium.
Speaker Change: So we're on Western Forelands. I think Robert's speaking to the Western Forelands live? Yeah, this is Saudi Arabia coming back on here.
Speaker Change: So, you know, we're
Speaker Change: We're in a world that desperately needs copper, and in particular green copper, copper that is produced without the generation of global warming gas.
Speaker Change: We expect that copper to trade at a premium as we de-risk the hydroelectricity in the country. And we've not mentioned that Angola intends to export 2,800 megawatts or 2.8 gigawatts of excess hydropower to the DRC.
Speaker Change: That would be the final killer. That would be enough copper in this part of the world to produce 5 or 10 million tons a year of copper.
Speaker Change: So, we are limited more by the availability of stable hydroelectricity than we are by our ability to find more copper.
Speaker Change: We told the world we're going to drill 70,000 meters in the western forelands this year.
Speaker Change: We've drilled over 63,000 of those so we'll definitely make that target and we're now up to 11 rigs turning.
Speaker Change: and Landon that camp.
Speaker Change: Because Makoko is the largest copper system found in the world in the last 10 years that is not Kamoa or Kukula.
Speaker Change: to find high-grade copper resources that can be mined in a green, safe, and mechanized manner.
Speaker Change: And, of course, the future of our company, in large measure, is also in the Western Forelands, which is wholly held by Ivano Mines and a few minority pieces.
Speaker Change: This new piece of land that we acquired, and we don't sometimes think it's really in our interest to say too much about what we're doing in the Western Forelands, because some of this license acquisition is somewhat competitive, but this new piece of ground
Speaker Change: which is almost as big as the joint venture area we have.
Speaker Change: with Zijin Mining at Kamau Kukula is in a very attractive
Speaker Change: exploration area based on our 20 years of experience in the Western Forelands. So we're putting two rigs on that right now out of the 11 rigs.
Speaker Change: And we're drilling 24 hours a day, and we've made provision to drill through the wet season.
Speaker Change: You know, south of us.
Speaker Change: The Zambezi River system has been experiencing drought.
Speaker Change: That's putting a lot of pressure on some of the Zambian operators. They also have to import power to Zambia from Mozambique.
Speaker Change: So we're hoping that it starts raining to build up the southern grid. The Congo watershed has had plenty of water, it's a different watershed, and so our hydropower is very well backed by the waters in the Congo River.
Speaker Change: We have a giant mining conference held here in Riyadh, Saudi Arabia yearly now.
Speaker Change: It's the Future Minerals Forum.
Speaker Change: It's been graced by top management from Rio Tindo, BHB, Tech Corporation is coming this year, and others.
Speaker Change: and so we look forward to that in early January, a very good time for us to be talking about what we've been finding in the Western Forelands. We'll have the entire mining industry there, a lot of state-owned actors.
Speaker Change: And we also will be in a position to update the market about our sister company, Ivano Electric, which has been drilling here in Saudi Arabia.
Speaker Change: So January is the start of the new year. It's not far away.
Speaker Change: By then, we should be seeing our third phase class.
Speaker Change: Phase 3 concentrator running at full speed and we really look forward to it and either an earlier slightly late Christmas present for our shareholders when we tell you what we've been doing at the Western Forelands, but I'll repeat There is no place on this planet
Speaker Change: as attractive to find copper metal? A, the acquisition cost is incredibly low. If we look at the monies we've spent to find copper, it's, you know, a penny or two a pound.
Speaker Change: And these high-grade resources are blessed because they're in a region with hydroelectricity, no ice, no snow, no need to burn coal. It's ridiculous to burn coal.
Speaker Change: Robert, we've lost Robert.
Speaker Change: because the hydroelectric power is coming to scale and the Lobito corridor
Speaker Change: Sorry.
Robert Friedland: Am I back?
Robert Friedland: Am I back?
Robert Friedland: So the last comment to make is the Lobito Corridor is downhill, we're at about 4,500 feet elevation at Kamokukula, so an electric train going west to the Atlantic Ocean will actually generate electricity going downhill to the ocean.
Robert Friedland: So the SCOPE III emissions, once that railroad is up and running, and we will use it next year, will even further place this copper complex as the greenest copper complex in
Robert Friedland: on Planet Earth. And by the way, that also applies to capuche. So I'll now turn this over to Alex or Mark to talk about the ramp-up of our capuche zinc-germanium copper mine. Thank you.
Speaker Change: Thank you, Robert. Okay, Kapushi, I'm just going to touch on it.
Speaker Change: It was a mine, it was obviously flooded for a long time.
Speaker Change: We dewatered it, we built it now.
Speaker Change: It's a fantastic, beautiful zinc mine. It's a very high-grade zinc mine, and we've got the concentrator running. I'm gonna ask Steve to comment on how we battled a little bit with commissioning, but the underground mining is very, very good. We've got a lot of surface stockpiles. The mining conditions are fantastic.
Speaker Change: And I invite anybody to come and have a look at a very modern, beautiful underground mine.
Speaker Change: Stephen, just comment a little bit about...
Speaker Change: How we battled on the...
Stephen: in the beginning with the commissioning, and then I'll talk some more. Yeah, sure. It wasn't easy. Initially we had some metallurgical stroke mineralogical problems. We thought we were depressing pyrite, we were actually depressing zinc.
Stephen: I said we weren't floating anything.
Stephen: Anyway, fortunately that's behind us. We also had some issues with excess fines in the run of mine. So we sort of had to get our heads around how to cope with that, which is also behind us and a number of other odds and sods that crept up.
Stephen: I think the good news is we're on the up now and things are going well. Our recoveries are well north of 90. Our congrave is very, very saleable, well north of 50% zinc.
Stephen: and our plan is Q1 next year to reach nameplate. So definitely all the issues behind us and going from strength to strength.
Stephen: Maybe just to close it off. So we did battle a bit with commissioning. It is running very nicely at the moment.
Stephen: There's a couple of pumps and there's a couple of areas within the plant that need to be upgraded.
Stephen: I call to one next year, pretty much we'll be on what the feasibility number was. And then you can see there on the last bullet, we're aiming to go 20% above that. We will definitely go 20% above that. We know the infrastructure can do it. We've ordered the pumps, we've ordered the switchgear.
Stephen: It's all up and it's going to be going by the quarter three next year, 20% plus and well north of what we plan in the feasibility study.
Stephen: We run it about 33%. The feed grade next year is 33% planned. And I think the average across the world is about 7%.
Stephen: So it's a good, it's a small mind, but it's a wonderful mind. And a lot of good work has gone in there. And I invite anybody to come and have a look and see what a world-class mind looks like.
Stephen: Thank you.
Stephen: and Steve Amos. I'm Steve Amos. I'll see you next time.
Stephen: Alex, are you going to talk about FlatReef? Yeah, thanks Mark. I'll close out the presentation. I'm looking at slide number 24 where you can see the impressive shaft number 2 headframe at FlatReef.
Speaker Change: So, in terms of Plow Reef, we've really discussed this before around the commissioning of the Phase 1 Concentrator. We took the decision to defer that commissioning. Sorry, I'm just hearing...
Speaker Change: background noise. We took the decision before to defer that commissioning until later on in 2025 and the target of that was to focus instead our efforts on shaft development and the underground development ready for the phase 2 expansion.
Speaker Change: In terms of that, we actually hit a significant milestone, I think it was this weekend on Saturday, where we hauled the 5-metre diameter shaft number 3 from 950 metres underground. So we will now move to equipping that shaft to be ready for hoisting from early 2026.
Speaker Change: And that will take our total hoisting capacity from around 1 million tonnes today, from shaft number 1 alone, to about 5 million tonnes per annum.
Speaker Change: You can actually see that in the in the picture it doesn't look like much compared to the shaft 2 headframe in the foreground but where you see the blue crane in the background and that that's the top of the raised bore from 950 meters for shaft number three.
Speaker Change: So once we have that shaft hoisting, that basically provides the platform to build the phase two concentrator. And with the phase two concentrator, that's when we really get meaningful production scale and also cost benefits in terms of economies of scale at Platte Reef.
Speaker Change: We're targeting roughly 400,000 ounces of PGM production, plus significant nickel and copper. Just reminding that about 25-30% of the revenue basket at Flat Reef is coming from these base metals.
Speaker Change: At the same time, we are completing the initial raised floor within the larger Shaft 2 headgear that you see on the page, and that will be completed this year.
Speaker Change: Shaft number two is what drives the further expansion to 12 million tons of hoisting capacity and that unlocks the the phase three expansion and the potential to produce roughly a million ounces of PGMs.
Speaker Change: All of this work is being updated in a feasibility study that we're working on now together with a PEA or scoping study, which includes the expansion case and phase 3. That study will be published early on next year.
Speaker Change: So with that I will conclude the presentation and hand over to Matt Keevil to chair the Q&A.
Matthew Keevil: Thanks very much, Alex and management. Yeah, we'll move forward with the Q&As. As mentioned, you can insert a question into the text box on the webcast, as well as use the phone line. First and foremost, we'll go to the phone line. Operator, could we please move over to those waiting on the phone, and we'll move to the phone questions, and then we will field any webcast questions. Thank you very much.
Speaker Change: Sure, and as a reminder, to ask a question, you need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please...
Speaker Change: press star 1 1 again. One moment for our first question.
Speaker Change: Our first question will come from the line of Oris Guelcardo from Scotiabank. Your line is open.
Oris Guelcardo: Hi, good morning.
Oris Guelcardo: I realize your updated mine plan for Kamaukakula will be out in a few months, but I'm wondering if you can give us...
Oris Guelcardo: I guess a sense of when you currently anticipate Phase 4 coming into the plan and whether we should anticipate that to be moved up from the previous plan, which I think had it around 2030.
Speaker Change: So I did speak about it last time that we potentially will do the front end and start treating the old tailings
Oris Guelcardo: and also we have some open pits which we're studying.
Oris Guelcardo: We ourselves don't have a definitive answer of that exact timing, but there's definitely a phase four. And I did speak to you about the size. So you can sort of work around
Oris Guelcardo: sizing it and sequencing probably two more plants over time, but most probably we still need to internally make sure that we're happy with the final profile. Alex, I don't know if you want to add to that?
I would maybe just add, Mark, in terms of what we published in the last integrated plan, or if you correctly said, I think we had phase four coming in 2029-2030. I mean, I would view that as...
Oris Guelcardo: Let's say the long stop date, it certainly is not going to be any slower than that, much more likely to be accelerated.
Mark Farren: It'll definitely be ahead of that, Joe. Yeah, I agree. Okay, perfect. And just to follow up as I could, I mean, obviously, a very perspective in terms of the Western Forelands. I'm wondering from a strategy perspective, from a when you think
Speaker Change: The right timeline is to bring in a JV partner, or do you want to proceed on a 100% basis indefinitely?
Speaker Change: I think that's a Robert question.
Speaker Change: Yeah, is Robert still on? Robert?
Speaker Change: Not hearing Robert, we get this question a lot. I think the landscape for Ivano-Mans has really changed and we don't necessarily have to bring in a partner on the western forelands.
If we do bring in a partner it must be compelling, it must be a partner that would add something to Ivanhoe Mines.
Speaker Change: but we are definitely geared to go at it alone and we will most certainly not do a deal at the wrong time in the value cycle so I think you know it's sort of an open question if we if we will bring in a partner at the Western Forelands.
Speaker Change: Thanks, Marna.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: Our next question comes from Lawson Winder from Bank of America Securities. Your line is open.
Lawson Winder: Thanks very much, Operator. And good morning, Ivan Otien. Thank you for the update today. Could I ask about Western Foreland, actually? And you mentioned that you've actually done some drilling and I think gotten some results at the Sakonama and Lubudi.
Lawson Winder: Ubudi targets. Are there any similarities to either of the existing Western Foreland mineralization that you would observe or share with us? So either Makoko or Kitoko or Kiala?
Speaker Change: Thank you. Bye.
Speaker Change: Yeah, yeah, Mark, I'm back on here in Saudi Arabia. I wanted to carry on. I want to finish the previous remark about
Speaker Change: speculation about partners. I don't think we want to tell you that we need a partner and I don't want to tell you that we don't need a partner.
Speaker Change: We don't negotiate in the media.
Speaker Change: and there's really no worry, nothing really turns on that question.
We're in a very strong financial position. We have no debt. And we're going to tell you a lot more about the Western Forelands in January. We have a board of directors to consider what the right thing to do is.
Speaker Change: It is the world's preeminent exploration area. It could be divided into little pieces. It's an enormous area.
It doesn't take a very big area to host an incredible amount of copper and metal given the grades. And so let's just ask the questioner to exercise a little bit of patience.
and we'll file the center to be continued. Thank you.
Thank you. One moment for our next question. Well, I think, Operator, Mark, if you had lost that, a quick question on geological similarities between the areas, if someone would like to field that one.
Speaker Change: Yeah, so both those two are new. There is work going on on both of them, very new work. They're all highly prospective, like Robert says. They're very prospective.
Speaker Change: And, you know, as we drill, it's just, it's...
It's very exciting, and that's about all I can say. Just very new. There is focus there. We will develop this footprint over time, but there's much more than one or two minds in that place.
Speaker Change: Thank you. And our next question will come from the line of Andrew Megachuk from BMO Capital Markets. Your line is open.
Thank you. Maybe a question for David or someone else. What would be the trajectory or expectations for dividends coming back from
Andrew Megachuk: Kamoa to Ivanhoe in the balance of this year or into next year?
Thanks, Andrew. I'm happy to take that. Firstly, I'd like to note that we are past our
Those, as those are being finalised, we do expect that they would include a sizeable advance payment portion.
That, and then the increased gas generated by Kamoa's operation will give us...
Pretty nice flexibility to flow funds upwards.
Speaker Change: on
On your question, I think more specifically, I think on our agreement with the DRC government is that we distribute 20% of our distributable accounting profit upwards as dividends.
Speaker Change: So we do expect that to occur in 2025.
Just a clarification note on the 2024 dividends.
and so the dividends declared in 2024.
has for now only been flowed up to Kamaua Holding.
and not all the way up to Ivana Mines and Jijin. That's just to maximise flexibility for Kamaua, noting that that might still be sent upwards if Kamaua has excess cash. So looking at the current forecast, we do expect...
exceeding Kamauka Kula's operational requirements and what it needs for approved future growth project, then that excess cash will be utilized to start the repayment of shareholder loans under the current agreements in place.
So, I know it's not a definitive answer with an exact date, but I think that does give you a bit of a framework to make your own assumptions, Andrew.
Okay, and if there's time, could somebody just briefly comment on the...
on the license of neighboring Flat Reef in terms of timelines and what to expect, please.
and the Mokopuni Feeder. At the moment we've defined the target areas, there's three of them. We've mobilised the drilling contractor.
Patricia is one of our VPs, she's busy helping us with that and we believe that those holes will start being drilled in quarter one next year.
potentially this year but I think go to one next year.
Perfect. Well, thank you very much. I'll pass the microphone to the next questions.
Thank you.
One moment for our next question.
Our next question will come from the line of Carlos de Alba from MS. Your line is open.
Speaker Change: Yeah, thank you very much. Just a very quick question, maybe for Marna or Alex. You mentioned that in 2025, copper production is expected to be maybe slightly below or close to 600,000 tons. That could be a wide range or a wider range?
Speaker Change: We've got a bit of an echo there, we will put out guidance.
We will put out guidance towards the end of this year where we will give you a narrow range. We just wanted to guide you to the fact that it might be slightly below 600,000 tonnes for next year and then will definitely be 600 and above in 2026 once we've completed Project 95. But we will provide a more definitive number in due course.
Speaker Change: Fair enough. Thank you, Marna. Thank you, Marna.
Yeah, sorry, just to add, that guidance will be when we announce our...
Speaker Change: Q4 production numbers, so it'll be kind of first, second week in January.
Speaker Change: Thank you. Thank you. Thank you.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: Our next question comes from Daniel Major from UBS. Your line is open.
Daniel Major: Hi there. Yeah, thanks for the questions.
Daniel Major: Just a few from my side. Yeah, the first one.
Daniel Major: Your sales at Kamoa are a bit below production. The 16,000 tonne build in inventory this quarter, would you expect a reverse in Q4 or carry into 2025? And then the second part of that question, what would be the expected concentrate inventory build during the smelter ramp-up? So what should we expect as a gap between production and sales in 2025?
So for the quarter four we will reverse it to concentrate cells and in ahead of the smell to ramp.
Ahead of the concentrator ramp up, after a smelter ramp up, we'll stock probably
30,000 tons of copper equivalent, and that will halve as we ramp up the smelter. So we think there will be a lockup of about two weeks or 15,000 tons continually out of that smelter at steady state.
and we believe steady state will be quarter four. So quarter three, 75 percent. Quarter four, we're hoping to get 100 percent capacity going and then lock up about two weeks off.
of COPPA, 15,000 odd tons.
Okay, so $15,000 over the full year. Next year. So this year we'll wipe out the deficit and next year we'll probably lock up about $15,000.
Daniel Major: roughly
Speaker Change: Okay, thanks. And then the second one, Alex, you mentioned, we'll get the guidance update for...
Speaker Change: the group with the 4Q production update. Robert, you mentioned around the resource update at Western Porlands. When should we be expecting that? Is that kind of with the production numbers or later in the quarter?
I don't know, we'd like to make you as nervous as possible.
Christmas comes once a year. We might do it at Christmas. We might wait until we come to Saudi Arabia in January. We might wait for the BMO conference in February. We'll do it when we feel like doing it. We'd like to keep you on your toes. We don't want to keep you fully satisfied.
We have 11 rigs turning, man. Think about that. There's nobody on planet Earth that's
with 11 rigs turning in the high-grade sedimentary copper. So I think that's enough for now.
We love you though, you know, we love you though, you know, don't take it personally it's just
Speaker Change: Good things take a little bit of time.
Speaker Change: And your mother taught you to be patient when you were a kid. So let's just exercise a little bit of patience. And at the right time, we'll have more to say. We just acquired some really important ground in the Western Forelands. I want to emphasize that.
Speaker Change: and better down is.
It's not easy. It has to be done right.
and then you have to build roads out there and infrastructure and camps. But we'd love you to come out there and take a look. I think you'll really enjoy it. We just had an institutional tour and I can assure you it was extremely well received. So come on out and we'll show you what we're doing with your own eyes.
Speaker Change: We'd like that
Thanks. Thank you.
Thank you. I'm not showing any further questions at this time. I would now like to turn it back over to Matthew Keevil for any further questions.
Matthew Keevil: Thank you, Operator, and thanks to all our analysts for the great questions. In light of time and our slightly delayed start, again, thank you so much for bearing with us and your patience. I think we'll wrap the call up here for today. If there were any questions unaddressed, please do reach out to the IR team directly at www.ivanhomines.com and we'd be happy to answer them. But once again, thanks everyone for joining us and we look forward to providing some very exciting news as we move into the fourth quarter in 2025.
Thanks, Operator.
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone have a great day.
Speaker Change: New York Police Department New York Police Department New York Police Department Forcepel Forcepel Forcepel
Daniel Major, Andrew Makitchhok, Marna Cloete, Matthew Keevil, David Heerden, Andrew Makitchhok, Marna Cloete [inaudible]
Speaker Change: [music]
Instagram Name Facebook Name Twitter Name Facebook Logo
Likes This Video! Comment Below! Subscribe!
Speaker Change: Thanks for watching!
Music Music Music Music Music Music Music Music Music
Speaker Change: Thanks for watching!
Speaker Change: PRE-ORDER NOW!