Q4 2024 Ivanhoe Mines Ltd Earnings Call
Speaker Change: Good morning, ladies and gentlemen, and welcome to the Ivanhoe Mines Earnings Call Q4 and Annual Financial Results. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. At any time during this call, you need assistance, please press star zero for the operator.
Speaker Change: This call is being recorded on Thursday, February 20th, 2025. I would now like to turn the conference over to Matthew Keevil, Director of Investor Relations with Ivanhoe. Please go ahead. Thank you, Martie.
Congratulations, Alex Pickard.
Speaker Change: We will finish today's event with a question and answer session. You can submit a question using the Q&A box on the webcast page as well as through the conference operator via your phone line. Do please contact our investor relations team directly if your question is not addressed during the call.
Speaker Change: Before we begin, I'd like to remind everyone that today's event will contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Details of the forward-looking statements are contained in our February 19th news release as well as on CDAR Plus and at www.ivanhomines.com. It is now my pleasure to introduce Ivanhomines' founder and Executive Co-Chairman, Robert Friedland, for opening remarks. Please go ahead, Robert.
Robert Friedland: Thank you everyone and greetings from California where we're en route to a major mining convocation in Miami, Florida.
This is a great pleasure to present.
Robert Friedland: which are the result of the efforts of over 30,000 people working at Kamo Kukula and other operations. And with that, in respect of this fantastic year, I'd like to turn this over to Marnie and we'll continue. Thank you.
Marnie: Thank you Robert, that was brief and welcome everyone. In the background is a photo of our newly constructed smelter, the largest in Africa and one of the largest of its kind in the world with a capacity of 500,000 tonnes of blister anode.
Speaker Change: It's currently being commissioned and we anticipate we'll heat it up within the next two months or so.
Speaker Change: We had a very busy year in 2024. We completed the Phase 3 project, which included an additional 5 million tonnes per annum concentrator, and we are already putting plans in place to increase the design capacity and recoveries of that plant.
Speaker Change: We also opened up additional mining footprints at Kamaua 1 and Kamaua 2, together with CONSOCO to feed this plant, and this enabled us to produce over 437,000 tonnes of copper for the year.
Speaker Change: and we have set our guidance for 2025 between 520,000 and 580,000 tonnes of copper with the aim to achieve in excess of 600,000 tonnes of copper from 2026 onwards once our optimisation and the bottlenecking projects are complete.
Speaker Change: We also completed the construction of the smelters that I mentioned earlier, and as I mentioned, that commissioning is underway.
Speaker Change: We expect the smelter to contribute to our margins towards the latter part of this year with a reduction in our transport costs, sulfuric acid by-product sales, as well as a reduction in our taxes.
Speaker Change: From a cash flow perspective, Kamau Copper generated over $3 billion in revenue and over $1.8 billion in EBITDA at an average C1 cash cost of $1.65 per pound of copper produced.
Speaker Change: We also started production at Capuchy in the middle of 2024 and we reached commercial production in the fourth quarter.
Speaker Change: Guidance for zinc production is set between 180,000 to 240,000 tonnes of zinc in concentrate for 2025 and we want to achieve in excess of 250,000 tonnes of zinc in concentrate from 2026 onwards.
Speaker Change: It's been a busy week for our team, so earlier this week we also published an updated independent phase 2 and phase 3 study for our platter reef mine in South Africa.
Speaker Change: And that sets the path for Arden Plats to become a world-scale, low-cost, platinum group metal producer, together with nickel and copper by-product.
Speaker Change: And in the Western Forelands, we have drilled in excess of 80,000 metres in 2024, and we are busy analysing what all of this means, but more on that later.
Thank you.
Speaker Change: But the record we are probably the proudest of is the one that's contained on this slide. As you can see, we trained well below the industry average in terms of our total recordable agency frequency rate, and this is across the group.
Speaker Change: This is extremely remarkable if you take the growth of our company together with the amount of construction and expansion projects that our staff have worked on. And you can see some great statistics specifically around our project teams at the bottom of the slide.
Speaker Change: On the next slide, we are beavering away at compiling our 2024 Sustainability Report. We plan to publish that probably in mid-April. And a few key highlights for the year are contained on this slide. Our local workforce is over 90%, of which 10% is female.
Speaker Change: And at Arlenplatz, we have a 30% female ratio, that's quite significant in the African context.
Speaker Change: We've concluded a number of assessments, including a group-wide Scope 3 assessment, a human rights assessment at both Blattery and Tapuusha, and we've updated our human rights assessment at the MoA.
Speaker Change: And we're also busy with our global industry standards on tailings management assessments at both Blatteries and Capuchin.
We move on to the next slide.
Speaker Change: This is the first time I think we show Equity Shield is this slide, but this...
Speaker Change: is a pie chart that shows the shade value model in terms of what we shade with the DRC.
in general, over the life of mine of Kamau Kukula.
Speaker Change: And as you can see, as a result of the 20% shareholding in Kamauka Kula, of the benefits we will create over the life of these assets, assets 54% will flow through to the DRC.
Speaker Change: and we believe this is a very sustainable model of doing business in Africa.
Speaker Change: It is true that conflict in the East is gaining momentum, and there is increasing pressure on the parties involved to engage in constructive dialogue to resolve this conflict.
Speaker Change: This conflict is still contained to the east of the country.
Speaker Change: It's in excess of 1,500 kilometres away from our operations outside of Kawesie. We are ever actively engaging various stakeholders as this situation unfolds, and we have comprehensive contingency plans in place at both Gamoa and Kapushi.
Speaker Change: With that as an introduction, I will now hand over to David from U.S. Denalty Financial Offices to take you through our financial results.
David: Thank you, Marna, and good day to everybody joining the call today. If you can move over to the next slide.
Speaker Change: Kamau Kukula achieved its highest ever annual revenue of $3.1 billion in 2024 and that's at a realized copper price of $4.09 per pound. Revenue was up from $2.7 billion achieved in 2023.
Speaker Change: The record annual EBITDA of $1.8 billion was delivered at a very healthy margin of 58%.
Speaker Change: Kamau Kakula achieved record quarterly sales in Q4 2024 of $843 million at a realized price of $4.08 per pound with an EBITDA of $432 million for the quarter.
Speaker Change: But both revenue and EBITDA would have been a fair bit higher in Q4 if Kamau Kukula had sold all the copper it produced and if we weren't impacted by the negative remeasurement of contract receivables, which was $52 million in Q4.
Thank you.
Speaker Change: Our Q4 revenue was artificially low due to the mark-to-market write-down of the 80,000 tonnes of provisionally-priced copper tonnes sold at the end of December.
Speaker Change: This marked market was at the quarterly bottom of $4.01, and that's really at the low point seen on the copper price graph on the right-hand side of your screen.
Speaker Change: So, we expect this to partially reverse in Q1 2025 and could easily be $20 to $30 million or more, given the current upward trajectory of the copper price.
Speaker Change: If all the copper on hand at the end of the quarter was sold in Q4, revenue for the quarter would have easily been more than a billion dollars.
Next slide.
Speaker Change: On this slide we focus on Kamau Kokula's unrivaled cash flow generation and the cash flow growth.
Speaker Change: 2024 concluded the fourth consecutive year of production, revenue and EBITDA growth at Kamauka Kula and 2025 will again be a step up.
Speaker Change: The three years EBITDA growth shown on the left-hand side, or four years EBITDA growth shown on the left-hand side, with a graph showing the cash generated by operations on the right.
Speaker Change: We also show the income tax paid in sort of dashes to explain the relatively lower operating cash flow in 2024.
Speaker Change: But it's important to note that the $520 million income tax paid in 2024, more than half of that was provisional tax payments of this year's tax liability. So it's not really reflective of what the relative size will be in the future.
Moving to the next slide.
Speaker Change: Kamau Kakula's Ibadar waterfall illustrated on this slide just highlights that the 8% year-on-year Ibadar growth was driven principally by our increased production and the higher copper price throughout the year. Logistics charges was relatively lower year-on-year, while the remeasurement of provisionary price sales had a $59 million negative impact.
Speaker Change: with most of that being in the fourth quarter of 2024, as I already noted.
Speaker Change: Of the increase in costs in 2024, $71 million or 35% was driven by the power, where generators were used in 2024 to protect production levels.
Speaker Change: Import power is also utilized in 2024, which is relatively more expensive than snail power in the DRC.
Speaker Change: Realization costs were 13% higher driven by the higher year-on-year copper price while and the remaining relative increase
Speaker Change: related to mining with phase three and ramp up for part of the year and where we expect efficiencies to increase in the future.
Next slide, please.
Speaker Change: Yeah, we've achieved our cash cost guidance for Kamakukula again, with the 2024 cash cost ending at $1.65 per pound of payable copper produced.
Speaker Change: The fourth quarter cash cost was 4% higher than in Q3 2024, with more than half of that increase being attributable to the higher power costs, as generator power was used to minimise the impact.
of the Intermittent Power on Production.
Speaker Change: of the $1.75 per pound cash cross in the fourth quarter, $0.22 related to power.
Speaker Change: in Q2 2024. But more importantly, production was maintained in the fourth quarter because of this additional spend.
As we look forward in the next slide.
Speaker Change: But we're at the peak. The smelter and the cheaper power from Snell when Ingo is complete will drive a decrease in our C1 cash costs.
Speaker Change: but the results of both those will only really have an impact from the second half of the year. The possible three-month delay in starting the smelter was a consideration in setting the range, but Mark will discuss both the smelter and the progress on Inga later on in the presentation.
Speaker Change: Looking at the pie chart on the right it's easy to say why the smelter will drive down our cash costs in the future.
Speaker Change: as it will at minimum half our logistics charges, which equated to 27% of our C1, as we will only truck 50% of the current volumes. And then there's also, of course, the benefit of the sale of sulfuric acid, which the smelter will produce.
Speaker Change: Yeah, Kapushi achieved commercial production in the fourth quarter of 2024, but was still in ramp up.
Speaker Change: And, yeah, it's the quarter's result isn't really representative of what we expect from Capuchin in 2025. Capuchin sold 17,000 tonnes of zinc at a cash cost of $1.13 per pound of payable zinc. The Capuchin mine produced 32,000 tonnes of zinc.
Speaker Change: in concentrate in the fourth quarter and 50,000 for the year. Cash costs during the quarter were higher than what is expected in 2025 due to it still being in ramp up.
Speaker Change: and the higher zinc production expected in 2025 as a result. So the 2025 cash cost guidance range is between 90 cents and a dollar per pound of payable zinc.
Speaker Change: If we move over to Ivano's consolidated results on the next slide, Ivano recognised normalised profit, which excludes the fair valuation of the convertible notes which we redeemed mid-2024.
Speaker Change: of $386 million for 2024. This was at the same level as 2023 as we had higher share of profit from Kamauka KÅ«lan 2024, but we increased exploration expenditure on the Western Forelands.
Speaker Change: With the convertible notes redeemed in 2024 gone, thankfully, are the reason for us to differentiate between profit and normalized profit going forward.
Speaker Change: Our group level Adjusted EBITDA was $624 million and an annual record for Ivano. The principal driver of our Adjusted EBITDA was again our share of EBITDA from Kamau Kukula, but Kapushu will start to contribute more meaningfully in 2025.
Speaker Change: With Kamau Kukula's Phase 3 now in full swing, the smelter expected to ramp up soon and even Plattree starting Phase 1 production in the fourth quarter of this year, the grafts will continue to grow.
Next slide.
Speaker Change: Our continued investment in growth was a key priority for 2024.
Speaker Change: and our expenditure at each of our projects was within our guidance. We have reached the tail end of the Phase 3 and smelter spend at Kamauka Kula with the immediate focus turning to value-creative projects like Project 95 and the throughput optimisations.
Speaker Change: At Black Reef, we will continue to spend towards Phase 1 and the acceleration of Phase 2, while we are basically done spending on CapEx at Capuchin.
Speaker Change: We have been able to arrange the project level facilities we required throughout the year and, as I will touch on later, had a very successful note raise, enabling further growth funding.
Speaker Change: But we have reached the peak of our CAPEX spending profile, which we can see on the next slide.
Speaker Change: illustrates quite nicely that it's the peak. The chart shows our prorata attributable CapEx with 2025 and 2026 being the midpoint of our guidance ranges.
Speaker Change: And it's clear that while cash flow from operations will increase in the coming years, our need to reinvest that into CapEx is expected to reduce pretty quickly.
Next slide.
Speaker Change: Yeah, we were very pleased with our inaugural Senior Unsecured Notes offering that closed in January at 7.85%.
Speaker Change: As part of the process, we got greatest ratings from Fitch and S&P, both a notch better than the sovereign rating of the DRC, which would normally be the benchmark. We were able to achieve this improvement through highlighting the DRC's favorable
Speaker Change: repatriation regime that allows you to receive your revenue in an offshore account.
Speaker Change: We also set ourselves a net leverage target of one through the cycle and on the right hand side of the screen is sort of how we guide of how our capital structure should be looked at.
Speaker Change: We include not only the debt at an Ivanomines level, but also our proportionate share of the Kamauka-Kula joint venture debt.
Speaker Change: Looking at it this way, we had a low leverage ratio of 1.36 at the end of 2024, including the pro forma impact of the notes.
Speaker Change: but this will reduce below one pretty quickly with the iwi dog growth expected at Kamau Kukula and Kapushi imminently.
Speaker Change: Yeah, I'll now hand over to Alex Pickard, our Executive Vice President, Corporate Development and Investor Relations to commence operations and project update presentation.
Alex Pickard: Thank you very much, David. As David mentioned, I'll start with some of the production highlights at Kamoaka Cooler and then I'll hand over to Mark Farren to tell you about some of the details in terms of the optimisation projects we're working on.
Alex Pickard: You can see another, it's a really fantastic image here of the director blister smelter that was completed, at least the construction was completed in January. I think we can go to the next slide.
Mark Farren: So we achieved another production record, a consecutive production record at Kamaoka Kula of 437,000 tons of copper.
Mark Farren: which is an 11% year-on-year increase, and that's obviously in part due to the ramp-up of Phase 3 that happened in the second half of the year.
Mark Farren: I'd say as much as the team did fantastically well at Kamoa Ka Kula to deliver this production, it does feel like unfinished business to some extent, given that we were dealing with intermittent grid power through the year.
Mark Farren: We could have perhaps produced 40,000 tonnes additional copper or more had we had consistent grid power 100% of the time. So that really highlights why it's so important in terms of the power initiatives we're working on at the moment.
Mark Farren: In terms of the recoveries, they were very close to 87% for the year, which is quite good considering that Phase 3 was in ramp-up, so you would have seen higher recoveries at Kukula, slightly lower recoveries at Phase 3, but actually from this year onwards we're basically hitting nameplate parameters at Phase 3 as well as Phase 1 and 2.
Mark Farren: Marna mentioned the production guidance for the year, which is 550,000 tons of copper at the midpoint.
Mark Farren: And then from next year onwards, we are targeting 600,000 tons of copper, or hopefully more, as the power improvement projects and some of the low-hanging fruit growth initiatives such as Project 95 are completed.
Next slide, please.
Title Microsoft Office Word Document MSWordDoc Word.Document.8
Mark Farren: So we like this slide because it really gives a good impression of the Phase 3 ramp-up.
Mark Farren: So you can see that that concentrator started in June, which again was ahead of schedule, so full credit to the project team for executing on that.
Mark Farren: And then it was also a very, very successful ramp up in terms of, you know, reaching its nameplate and actually exceeding nameplate design parameters in terms of throughput in the third quarter.
Mark Farren: The month of December was a record at 47,000 tonnes, so you can see that we're already operating at about 550,000 tonnes annualised production, which is the midpoint of that guidance range.
Mark Farren: I think on the next slide I will hand over to Mark just to give a bit of an update on where we are with the smelter and the ramp up there.
Thanks, Alex.
Mark Farren: If you look at this smelt in a picture, you don't really see the size of the complex. But I must tell you guys, it's the most complex project ever executed in the country in the DLC. It's a very modern complex. I think we've done very, very well to get it to where it is.
Mark Farren: And it's basically mechanically complete. We're busy with the C1, C2, C3 commissioning.
Mark Farren: We will probably move the heater, which is actually basically your C4 feed, your heat up and first feed.
Mark Farren: into next quarter. And that's basically because we want to secure a stable, a very stable source of power for that heater.
Mark Farren: And we did speak about power earlier. I will touch on power in a slide or two. But it's important for the smelter itself to get stable power.
Mark Farren: So I think all in all it's mechanically complete. We're ready to get going. It will start up this year.
Mark Farren: The ramp up to 90% will take about nine months generally. It's a big complex with a lot of work that goes into getting it up to a steady state. It's not like a concentrator or just a mine.
to give you some idea. We've had to train.
Mark Farren: More than a thousand people to be ready to be able to run this melter because there's nothing of its sort.
anywhere in the country.
Mark Farren: We've sent people overseas, we've brought in people, experts from all over the world. So it's a proper global team with a very strong owners team that we put in place to actually get this direct to blister smelter working. So I think as a work in progress, something that we've done in the DRC
Mark Farren: I'm very proud of this project. I think it's probably the crown on top of everything else that we've done.
Speaker Change: And as Marna and Alex say, it gives us an ability to not only drop costs enormously, but to add a lot of value by selling the asset and also contribute to the economy inside the country. Thanks. If we can move to the next one.
For power, we speak about power just about every time.
Speaker Change: and we spoke about losing 40,000 tons of copper last year. It's not the volume of power that we didn't have. It's more instability.
Speaker Change: turbine replacement or complete rebuild of a power station, which was Manugusha. That was a few years ago. It executed, I think, from 2016 on successfully and introduced that power into the grid.
Speaker Change: And then we took on Inga, which is G25. Inga is about 1,500 kilometres away from the mine site. It generates power and then it gets transmitted through a direct current line and then it gets reconverted into alternating current at 220 megabits.
Speaker Change: That project is not just as simple as putting in a new turbine. We've had to do a study across that grid, and we've identified a lot of other work which needs to be executed to get the stability right. So within this year,
Speaker Change: There will be a lot more work done and executed to make sure that not only do we execute G25,
but we also stabilise the grid.
Speaker Change: So, for those that are technical on the call, it's filter banks, it's synchronous compensators that are being upgraded at the moment, and then a static compensator that's going in at Kawesi, which is on its own a $40 million investment.
Speaker Change: So we're investing quite heavily in not only generation, but also getting the transmission and the stability and the grid sorted out at Ingo.
Speaker Change: We believe, in addition to these measures in the country, we're pursuing other projects.
Thank you.
Thank you very much. Thank you. Thank you.
Speaker Change: We've already identified and shortlisted two 30-megawatt projects which will start execution, in other words, physical RPT order placement, at the end of this month.
Speaker Change: and we're looking at the next two. So as a minimum, we will have 60 megawatts of solar with backup, that with backup, that she's on site with a 95% availability. We'll have that in 18 months, between 12 and 18 months. Basically that generation will be available to us.
We
Speaker Change: We're investing, I think it'll be in excess of $500 million when we're finished with Snell to improve their base load and the stability of the network and also the generating capacity that I spoke about earlier.
Speaker Change: And then in the short term, we're importing power from that southern grid. So from Zambia, from Mozambique, and in the longer term, we'll be looking at Angola. And maybe if I can just talk a little bit about that. So there's steps in this too. At the moment, we have an allocation of 50 megawatts.
mainly from
Speaker Change: Mozambique, well, there's a drought in Zambia, and I think people are aware that there's a drought and a shortage of water, and they're battling with the turbines. But in that southern grid, there is enough capacity to be able to import
Speaker Change: generation, and reticulation has been the short-term bottleneck at the moment. So in that short-term bottleneck, we also have identified a project ourselves.
Speaker Change: to be able to create a transmission network from Zambia all the way through to our own, what we call NRO, which is our power station, our network, right within the footprint of the mine.
Speaker Change: So that would sort of get us off the dependency of the SNEL network, or as another network, let's call it, where we can have our own power reticulated from wherever, generated from wherever, but through that line from Zambia into the DLC and onto our footprint.
Speaker Change: and then longer-term Angola is worth mentioning. They have a generating capacity in excess of three gigawatts more than what they require, so it's really a matter of taking excess generation capacity and then moving that into the southern grid.
Speaker Change: with then the southern grid I mean Zambia down to all the way down to Mozambique through South Africa and then north to us in the DLC
Speaker Change: So, those projects are all underway, and I think if you look at the big picture, we do unlock power this year and in the longer term. And if you look at the graph on the right-hand side, you'll see
Speaker Change: that little star thing, which is basically your diesel generators peaking at about 200 megawatts and then staying flat. That capacity should become completely redundant with the planning that we've put in place.
Speaker Change: to get imported power right, to get solar power working, and then obviously the work inside the country. And then it's the longer term network stability and the imports that we're creating for ourselves as well with dedicated lines.
We have a full project team behind Power, well-based people.
Speaker Change: in our project team, our NS team working on power and all these different initiatives are being managed.
Speaker Change: every single day to de-risk power for us and enable us to grow.
The Greenland says that we're going to about 400 megawatts.
Speaker Change: As a requirement for the Marne, that's basically Phase 1, Phase 2, Phase 3 and summer Phase 4.
We want to be able to execute.
More projects?
Speaker Change: Over time, and other projects will include, for example, the Western Forelands.
Speaker Change: So we're looking at all of that, we take it into consideration as we develop the mine. And everything we've done, if you look at our past and you look at us going forward, we've always had to do these things. We've always had to take on challenges.
Speaker Change: and resolve them. And this is exactly the same. It's nothing different from anything else.
and then just talking about the future a little bit.
I'm copying.
Speaker Change: without any additional cost or very little additional cost because remember, you're mining it, you're treating it, and it's going to go straight to your top line, going straight to your revenue line.
Speaker Change: So I think that was a very good decision to do.
Speaker Change: And then just below that we're talking about Phase 3, I think Alex mentioned it, or Marna mentioned it.
Speaker Change: We've just commissioned phase three as a five million ton operation. We believe with a little bit of
Thank you for taking the complex.
Speaker Change: The complex currently, the current complex, Phase 1, Phase 2, Phase 3, to about 17 million tonnes per annum. We want to do that quickly. It's not going to be expensive. And then we're also going to target some optimisation on that plant to get the recoveries from the 88, 89% to 92%. We believe that's very, very possible.
Thank you.
Speaker Change: And then there is for everybody on the call, there is a phase four, there's definitely a phase four and it will be over 20 million tons when you look at it, if you add it. It's probably also a module of 6.5 million tons, which would take us to about 23 million tons.
Speaker Change: The timing of that and the cost of that we're still working on. That will be out in quarter two, but it is exciting. The results look excellent and just maybe just out of interest.
Speaker Change: To get another phase in, we'll be really capitalising a concentrator and some development underground from the current infrastructure that's already been created.
Speaker Change: So I don't believe we need to establish new mines to get up to the 20 million, 23 million tons per annum.
Speaker Change: and there's potentially an upside here where we can do something a bit early and early works that get some copper tonnes for us early and then obviously the fresh ore coming in when the ore reserves are in place. But we'll discuss that in detail in quarter two. Thank you.
Thank you.
Speaker Change: Thanks Mark, it's Alex Pickard again. So this is quite hot off the press, yesterday we announced landmark updated study results for Platte Reefs Phase 2 and Phase 3 expansions and really these studies
Speaker Change: show the pathway for plattery to become not only the lowest cost precious metals and nickel and copper producer in the world, but also among the largest primary PGM producers in the world.
Speaker Change: The studies, so there's two studies, one is a feasibility study for our Phase 2 expansion, so that's up to a throughput rate of 4.1 million tonnes per annum.
Speaker Change: It includes the Phase 1 which is substantially built already and Phase 1 will be starting up in Q4 of this year. Phase 2 will be coming a year earlier in 2027.
Speaker Change: And then the second study is building from that footprint of phase one and two, a scoping study for a third expansion.
Speaker Change: which can take place from 2030, and really at that sort of level, that's when you're making the most of the scale of the flat reef ore body underground, and you get up to a million ounces and above of production. I'll show you that on the next slide.
Well, we have a schematic.
Speaker Change: in the middle of last year, so that will take place in Q4 of this year. And then the major milestone, and Mark will give you some of the project updates on these shafts, but the major milestone is coming in Q1 of next year, which is when we have shaft number three hoisting. So that will basically increase our hoisting capacity.
Speaker Change: by four times, we'll have 5 million tons of total hoisting capacity. And what the chart shows is the build-up of the mining rate over time.
Speaker Change: which allows you to build a stockpile and basically bring on a Phase II concentrator which is 3.3 million tonnes per annum in late 2027.
Speaker Change: So that's stage two. At that point in time, Flat Reef is producing around 450,000 ounces of the four precious metals, so platinum, palladium, rhodium and gold, and then 16,000 tons of nickel and copper, quite a significant by-product.
Speaker Change: which will really be the facilitator for the Phase 3 expansion, which is building two identical modules to Phase 2, so 3.3 million tonnes per annum each.
Speaker Change: which takes your total milling capacity up to the 10.7 million tons per annum. And at that level, you are producing over 1 million ounces of the four precious metals, plus over 40,000 tons of nickel and copper. So you're one of the largest
Speaker Change: sulfide nickel producers in the world at that point in time.
Speaker Change: Also, this is basically a fraction of the overall resource footprint at Platte Reef. There is a huge amount of exploration potential. We haven't actually done any exploration drilling at Platte Reef in over 10 years, and we only really stopped because we had enough to build a multi-generational mine already.
The next slide shows some of the key ...
Speaker Change: financial highlights. I think what this really confirms is what we already knew about Flat Reef and is why we are 100% committed to building Flat Reef and bringing it online. Number one, it's a very long life asset. So on the basis of the reserves only, there's a 35-year mine life. On the basis of the PEA, there's still a 30-year mine life, despite the fact that you are producing at a huge scale.
Speaker Change: It's also a very, very low cost asset. And the reason for that is because you have bulk underground mining methods, it's a 30 meter thick ore body. And you also have the advantage of very large nickel and copper byproducts.
Speaker Change: So even though we've updated all of these numbers quite comprehensively, we still have an all-in sustaining cost of $700 per ounce for the feasibility study, and I would note that that also includes the impact of the streaming transaction, which was not presented.
in our previous study.
Speaker Change: And then in terms of CapEx remaining for Phase 1 and 2, it's $1.2 billion, there's a small sliver of CapEx.
Speaker Change: the finish phase one this year and what we are planning to do over the course of the next year is arrange a financing facility for at least 50 percent of that capex which we should hopefully have in place in 2026.
Speaker Change: So, in terms of the economic results, what you can see is that Platte Reef generates very strong margins through the cycle.
Speaker Change: We've used consensus prices here, but you know, I think it's not...
Speaker Change: too long ago in recent memory that palladium prices, for example, were more than double where they are, well, maybe triple where they are today.
And that's the reason why we build this asset, because...
Speaker Change: It will make money at any price, but there will be years where Platter Reef will be maybe making even more than Kamoa Kakula.
Speaker Change: And then in terms of NPV and IRR, I think those numbers speak for themselves.
to build a very long life and very low-cost asset.
Speaker Change: I would just highlight for the PEA, one of the nice things about the PEA is that
Speaker Change: We've substantially overbuilt the infrastructure during Phase 1 and Phase 2, so the shaft number 2 is included in that $1.2 billion.
which is why you only have
Speaker Change: and building up your mining fleet. And you also have the opportunity to bring down your overall cash costs further, the larger that Platt Reef becomes. So I think those numbers for the larger PEA are quite outstanding.
PGM Minds, the primary PGM Minds in the world.
Speaker Change: And then finally, just looking at the cost curve to give an impression of those margins. So you can see that even with all of the updated numbers and even with the inclusion of the stream, we are still projected to be the lowest cost.
primary PGM producer in the world.
Speaker Change: You can see the basket price overlaying there. So, you know, clearly there is still a lot of the industry is struggling to make money and certainly struggling to continue investing and sustaining capex at current spot prices, which is also one of the reasons why we are
comfortable investing in this asset on a slightly counter-cyclical basis.
Speaker Change: I'll pass over to Mark just to give an update on the construction progress.
Thanks, Alex.
Speaker Change: And then we equipped it to get underground access to shaft number two, shaft number three, and shaft number four. May need to get the raised boards through. So that was actually very good.
Speaker Change: But if you also think about it, that one single shaft has been doing everything.
Speaker Change: Every single thing on the mine. It handles all the underground development, it handles all the men and material, and putting down LHDs and equipment every single day, and the raised board chips with the meters.
Speaker Change: So, we really needed to get shaft number three in place to be able to get something meaningful out of this footprint. And all of this stuff happens at about 1000 meters below surface, or 950 in terms of shaft number three.
So, the Shaft III Ventilation Shaft
Speaker Change: We decided to remit, finish it, and then equip it to hoist. And that's what Alex was talking about, to be able to hoist 5 million-odd tons.
Speaker Change: out of this footprint that we have created, while we are still waiting for show off number two.
Speaker Change: And the end of that work is within sight, thank goodness. So by the end of this year, quarter one next year, we should be hoisting out of shaft number three, which I'm going to use the word unlocks.
Speaker Change: It unlocks the potential of this mind, and the differentiating factor between this mind and anything else is the all-body.
Speaker Change: The ore body is running at about 20 to 30 meters thick. The equivalent grades of other mines, they're running at about a meter mineralized, a meter, maybe 1.5 meters. So it's
Speaker Change: It's going to be a mechanized automated operation and it will be the lowest cost producer.
Speaker Change: and unfortunately it's going to displace some of the other minds in the longer term.
Speaker Change: So, where we are is finally some flippant light at the end of the tunnel, which is not a train.
Speaker Change: to get shaft number three wasting, which I'm aiming at the end of this year, go to the next year at the latest.
and then we can grow the production.
Speaker Change: So what it actually means is your Phase 1 is then completely de-risked because there's no pressure on wasting tonnes, and your shaft number 2 and your Phase 2 can also go as fast as you like, because you can handle the chips from Phase 2.
Speaker Change: which would then be the slump and line actually, and the final sinking, and then you can ramp up.
Speaker Change: seamlessly from, let's call it phase one and phase two. Sort of in chunks that are chewable like we did at Kamoa, except understand that this is down about 950 meters with three levels that you're operating. So it's slightly different, but once you're into that ore body, you can ramp up very quickly.
Yeah. Okay. Next slide.
Yeah, I'll take a beer.
Speaker Change: So I think sometimes, in order for us to look forward, we need to look back a bit.
Speaker Change: And this picture that you see in front of you is the way Capuchin looked back in 2023.
after we cleared all the surface dilapidated infrastructure.
Speaker Change: Kapoosh has been in the group since 2011 and it took a massive amount of effort to dewater this mine.
and to upgrade the underground infrastructure.
Speaker Change: And then if we flip to the next slide, we can see what capuche looks like today. This is the plant at Capuche. And capuche is really a world-class mine that can hold its own anywhere else in the world. So really a significant achievement.
Speaker Change: We can flip to the next slide. Last year, we brought Kapushi into production. We inaugurated the mine. It was basically under care and maintenance for a period of 30 years.
Speaker Change: It took us a bit of time to ramp up and we achieved commercial production in the fourth quarter.
Speaker Change: And our quarterly zinc production was in excess of 32,000 tonnes of zinc in concentrate at a grade of 29%. And we're working on increasing...
Speaker Change: I'm hopeful that all of that will sort of unfold in this first quarter of the year as we continue with our growth projects.
Alex Pickard: If I can maybe just ask you, Mark, to speak the audience through what we anticipate in terms of our growth projects at Kapushi over the next couple of months.
And you can flip to the next slide, thanks.
Okay, so.
The guidance for this year is the 180-240.
Alex Pickard: There's a little bit of work, it's not big work, which is basically committed. It's really upgrading of pumps.
Alex Pickard: It's a couple of clarifiers. There's some work on DMS, but there's nothing massive to be done.
Alex Pickard: and there's still a lot of, let's call it kilowatts or megawatts, a small amount of megawatts left on the mill. To be able to take the production up, and the number for me is to get it stable between
Alex Pickard: like a 250 and 300,000 tons of capacity of production per year of zinc.
Alex Pickard: That work is happening. The big steps or the milestones is really the first milestone is in May and then the second one's October.
We also, for example, on this man...
Alex Pickard: are creating enough generating capacity for the rolling blackout issues, if there are rolling blackout issues, in parallel to us doing the stability work on the grid. So by the end of this year, we'll have full redundancy with generators.
Alex Pickard: although it's expensive. We'll have full redundancy on the wine if we need it. I doubt very much that we're going to need it, but the de-bottlenecking stuff is going to give us
Like I said, a nice increase without much work.
Alex Pickard: Underground the mine is excellent. The conditions are lovely. The ore body is very predictable. It's very easy to mine. We've got our cement aggregate backfill plant working. Everything is working. So I don't see major issues here.
Alex Pickard: to get it stable, to get it operating beautifully. It's a very high-grade mine. I think we've disclosed many times that it's like a 31, 33, 35% zinc.
Alex Pickard: Some of the months we're going to mine 40% zinc as feed grades, where the next in the world, I think the next big mine is running at 7%. So we're absolutely in a very solid position at Kapushi to tweak the concentrator and keep the mine going really nicely.
We've looked at PowerRat as a circuit, a new circuit.
Alex Pickard: And the reason for that is because we need pyrite in our smelter at Kamoa. So the new smelter requires about 700 tonnes per month of pyrite, and we can get it from Kapushi at the right quality.
Alex Pickard: So that's a circuit I think we will commit to within this year and execute that project.
Alex Pickard: It adds some money, not that much, but in the context of Kapushi, it's meaningful money. So we're excited about, number one, ramping it up above my nameplate, which we're doing, and the second thing is bringing in that power out, so it could probably this year, beginning of next year, it will be in.
Alex Pickard: So, I think all in all, Kapushi, it's managing C1 cash costs, we've got the right feed grades, we'll have the right volume levers to pull. It's a great mine and if you guys want to come and visit it, come and have a look. It's modern, it's beautiful, it's a lovely mine as Marna says.
Speaker Change: Thank you for watching. I hope you enjoyed this video. If you did, please click the Like button and subscribe to my channel. I'll see you in the next video.
Speaker Change: And I think now moving over to Exploration, Robert, I think you'll step in here for us.
You know, developing these giant ore bodies is just...
Robert Friedland: It's very similar to the way you eat an elephant one slice at a time.
Speaker Change: Kamau Kukula is a super giant elephant that has been correctly developed in a series of stages. And Mark mentioned the fourth stage. And in the distant future, there's a fifth stage, and then there's the Western Forelands.
Speaker Change: I've always grown through exploration, visionary exploration, and looking for Tier 1 targets.
Speaker Change: Right now we have the first drill hole going into the Mokopani feeder. You can see this target area from our plat reed shaft.
is very close by.
Speaker Change: This is targeting what is one of the world's largest gravity anomalies. It's an enormous gravity anomaly, about four miles by three miles, roughly ovoid in shape.
Speaker Change: and nobody knows what it is. It's been known for years.
Speaker Change: Some of the best geologists in the world have called it the Mokopani feeder and the word feeder
Speaker Change: refer to it as a potential source for the Bushveld complex.
and last month we started drilling.
Speaker Change: So that's an expiration writ large for an extremely large and enigmatic target. And I'm very happy to report for the first time that the drill is turning to the right and we've begun drilling the Mokopani feeder.
Speaker Change: In addition, we've looked at all of the African continent for a more Western Foreland style sedimentary copper.
Speaker Change: And we are very enamored with the situation in Angola. As Mark mentioned, Angola is in a position to export up to 3,000 megawatts or three gigawatts of hydroelectric power. There's excess electricity in Angola.
Speaker Change: and given the visionary support of the G7 nations for the Lobito Corridor.
Speaker Change: Angola has superb railroad infrastructure to the port of Lobito so there you have power
and Ray Etol.
and you have
Speaker Change: hidden under the Kalahari sands that blew in from the Kalahari Desert, the potential for Western four-limbed style copper mineralization. We have an enormous
100% on landholding in Angola.
Speaker Change: and we will begin drilling that massive land holding in the April-May season as the seasonal rainfalls come to the end. We've seen some big rains now in Zambia.
Speaker Change: and and the southern part of the African grid really needs that rain but as you can imagine
Speaker Change: The rain that's good for filling those hydroelectric dams is not great for getting into new exploration areas, so when it dries out in April or May, this massive Angolan project can begin. And it's 100% owned by Ivano Mines.
Speaker Change: And then we've announced our old stomping grounds, Kazakhstan, a country that we're very proud of.
Speaker Change: The largest sedimentary copper basin in the world is in the Democratic Republic of the Congo. That's why we went there in the first place in 1995.
Speaker Change: We're early and we were first. The second largest has been in Poland.
But the Polish asset is getting deeper and older.
Speaker Change: and is not as attractive to us as the massive, unexplored, sedimentary copper basin that exists in central Kazakhstan, which hosts three of some of the largest copper mines in the world with other byproducts, including silver.
Speaker Change: So these tend to be giant silver-bearing copper systems with other metals.
Speaker Change: and we've teamed up with a local partner, they're based in England, a private company that has top flight geologists.
Speaker Change: And we've acquired a very large land package of up to 16,000 square kilometers.
Speaker Change: I did have the privilege of meeting with a foreign minister of Kazakhstan at the invitation of the United States government a few years ago in New York.
He encouraged us to come into the country.
Robert Friedland: And the previous iteration of Ivanhoe Mines developed gold assets that have been very successful in-country and opening up a footprint in Kazakhstan with knowledgeable local partners who worked there for many years.
Robert Friedland: shows that we can expand internationally, take our expertise in exploration and in mine development globally, and continue with our ambition.
Robert Friedland: to build Ivanhoe Mines into a Tier 1 major global integrated major mining company.
Can we see the next slide, please?
Speaker Change: and opening soon at a theater near you we're going to talk more about the Western Forelands.
Speaker Change: You know, when you look at our earnings last year, a lot of people get cranky because we expensed about $100 million of expiration. We drilled...
Speaker Change: And we're going to continue drilling this year in the Western Forelands. We haven't said much about it publicly, but in the near future.
We will be telling you more.
Speaker Change: about what's been going on in the Western Forelands. We'll be explaining.
Speaker Change: I don't know how much we spent, but we'll also be explaining what we're finding.
and what its impact would be.
on African American Minds.
Speaker Change: And we prefer to talk about these things not on conference calls, but in front of live audiences. So, please get a ticket for these upcoming events, and we'll be seeing you soon to talk about the Western Forelands. Next slide, please.
Speaker Change: So that can you know really summarizes how we've been eating these elephants one slice at a time. I want to thank
Speaker Change: all of the Congolese people who have been so dedicated to our efforts and the supportive governments in our local province in the Congo and the Lululaba government, the people in the central government, the people of Snell.
Speaker Change: I want to thank Marna and her team of remarkable women that have done so much.
Thank you very much.
Speaker Change: to establish a corporate culture that has a software component that is the best in the industry. We urge all of you to read all of our reports that are independently audited on the social work we do there, the fish farming, the agricultural development, education, right through to university level in our schooling.
Speaker Change: and the support of our major institutional shareholders that realize a super giant major mining company is not built overnight.
I want to thank everybody for their continuous support.
They're going to be serving me for lunch.
Speaker Change: as the keynote speaker on Monday at the Banco Montreal Annual Mining Conference.
Speaker Change: We are also going to be going to the Bank of America in May, in Barcelona, Spain. That's in a beautiful venue as well. And so we look forward to seeing the world's largest institutional investors who are so interested in the myriad of uses for the metals we produce.
Speaker Change: And we're going to explain what metals actually go into these data centers, what metals are actually required for artificial intelligence in these data centers.
Speaker Change: data centers, and you'll be surprised what metals go in these data centers besides copper, and all of them are produced by Ivano mines. So with that I will turn this over to Matt Keevil.
Speaker Change: Matt will start fielding questions to anybody in the management team. Thank you so much.
Matt Keevil: Thanks, Robert. Yeah, we'll now begin the question and answer session. I'll just first and foremost hand it back to the operator to proceed with any questions we have waiting on the phone line. And then pending time remaining, we'll look at the web for any questions on the web-based application. So, operator, could you please proceed with filling the questions we have waiting on the phone?
Speaker Change: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have any questions on the phone, please press star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. And if you are on a speakerphone, please lift the phone before pressing any keys.
Speaker Change: First question on the line comes from Daniel Major at UBS. Please go ahead.
Speaker Change: Hi, thanks for the questions. So first question, just wondering if you'd make any comment around your interaction with the government, any commentary on the M23 rebels sort of insurgency in the northeast of the country, whether that's having any impact on regional politics?
Speaker Change: Robert Friedland, Alex Pickard, Mark Farren, Steve Amos, David Heerden, Mark Farren, Matthew Keevil, David Heerden, Matthew Keevil, Steve Amos, Steve Amos, David Heerden, Marna Cloete.
Speaker Change: I think our comments remind us, as I said earlier during the presentation, it's definitely a situation that has escalated.
Speaker Change: It is very far removed from our operations, but we do have
Speaker Change: On-site intelligence, we engage with local authorities, we engage with national authorities, we're tracking the situation, we're monitoring it.
Speaker Change: And obviously, we are hoping that it stays contained to the East and do not fall further into the country.
We do have full contingency plans in place.
Speaker Change: should we need to put those into force? You know, we have backup plans in place for both Capuchin and Kamaua, but obviously it's not something that...
Speaker Change: that one wants for a country. One wants to have these sort of conflicts to be resolved through dialogue and I think there's mounting pressure.
Speaker Change: on the parties involved to engage in dialogue to try and settle this matter peacefully. And we hope that sanity will prevail and that we will get to a negotiated solution soon.
Okay, thanks. Thanks for that.
Speaker Change: Second question on COMOA. I think when you provided the guidance for 2025, you mentioned the change in the mining method to more bulk mining. Can you give us a sense of how that's impacted the grade profile, not just this year but over the next two, three years? You mentioned peak production north of 600,000.
Speaker Change: a great profile and a similar question on cash costs. I mean, I think you previously targeted somewhere around $1.20 or so once power is restored and you hit full production.
Speaker Change: using the rail corridor. Is that still where the mine should be landing in terms of cash costs, medium-term?
Speaker Change: I can take the mining method and then just comment and somebody can just add. So on the mining method itself,
Speaker Change: It's actually a breakthrough, if you want to look at it anyway, it's actually a breakthrough. The previous method was drift and fill, basically taking one cut and then ramping up after fill onto another cut.
Speaker Change: So it wasn't exactly the most efficient way of getting the all-body out.
Speaker Change: In this new method, we basically, I need to actually show it to you in sequence, but you sort of develop to the end of the area.
Speaker Change: and then you use what you call long-haul stoping and that doesn't have to be that long. You still use whatever cut-off grade you've designed and because the ore body is bottom-loaded.
Speaker Change: You use your cut of grade to dictate how long your top holes are and your side holes are.
Speaker Change: and you basically then blast that and you do automated mining backwards.
Speaker Change: So, it's remote control loading, it's modern, it's mechanised, it's typical long-haul methodology.
and it allows you to do...
Speaker Change: So you get a lot more efficiencies out of your fleet.
Speaker Change: And it also happens to be a hell of a lot safer than what we had ramping up on top of full into a hanging wall.
Speaker Change: So, all in all, let's put the mining method to bed, it's a fantastic ore body, that mining method works, it's more than tested, we're actually using it nicely.
Speaker Change: And we will apply that to everything else that we do, whether it be Kamoa, Kansoko, that whole area will be mined in exactly the same fashion, and probably the Western Forelands. What's quite interesting about this mining method is
Speaker Change: Let's say for example you want to choose a very low cut because your seam thickness
Speaker Change: is either steep or it's thin, then you can do your development and then do like a thin long hole cut if you want to.
Speaker Change: So technically it works well. It's slightly different to typical long-haul stoving that you'll see elsewhere in the world, but it really works.
Speaker Change: it's efficient. And in terms of getting C1 cash costs down, this mining method is cheaper, much cheaper than let's call it the drift and fill development mining method.
Speaker Change: The other work that's got to take place is really, it's getting the smelter running, it's getting the logistics cost down, the mining cost will come down with a new method. And then obviously the power, the power source, the power.
Speaker Change: to get back to like clean power, hydropower, getting off the use of diesel generators. David pointed out that I think it's a 20 cent.
Speaker Change: per pound impact on power if you're using the diesel mix that we use for the hydro. So longer term we will bring the power cost down and then the big picture stays intact. Very efficient mining, low cost mining, bulk mining and efficiencies will be driven.
I don't know, Marna, if you want to add.
Now I think that covers it, Mark.
Mark Farren: Great, thanks very much. I look forward to the update on the Western Faluns next week. I'll go back in the queue.
Speaker Change: Thank you, ladies and gentlemen. As a reminder, should you have any questions on the line, please press star 1.
Mark Farren: The next question comes from Andrew Mikuchuk at BMO Capital Markets. Please go ahead.
Andrew Mikuchuk: Thank you. Thank you for a very comprehensive review here on the year-end. Can we just come back quickly to the power? And Mark, I think, is it fair to say that
The existing Backup Generation Plus.
Supplies from Grit and Imports.
Andrew Mikuchuk: It sufficiently covers Phase 1, 2, and 3, or at least has minimal impact on Phase 1, 2, and 3 mining and processing itself, and that the constraints
Andrew Mikuchuk: you know, currently or recently is more as to going forward on the next step with the smelter.
That's exactly right, Andrew.
Andrew Mikuchuk: and we can run the three concentrators under any conditions. That's why we made that decision.
Speaker Change: The big next step is obviously the smelter, getting a stable power source into that smelter area so we can ramp up nicely, because a smelter needs stable power. It's not really about the megawatts, it's about stability, and that work is ongoing. That will be in the next quarter, I guess.
and the repair of the
Speaker Change: Majority of the generators that were involved in the fire that's progressing as well.
Speaker Change: Yes, it's going well. Between six, you can work on six and nine months, six months by the end of this year, quarter one at the very latest, everything will be restored.
Speaker Change: So, I think we start handing over generators in September, October.
Speaker Change: September at the latest. By October, the bulk of them will be restored and then there's a few other pieces of work that will carry on. But within a year, everything, six to nine months, we should have everything running.
If I could indulge in one more question on exploration.
Speaker Change: It's good to see a ramp up on various portions of the portfolio. I was wondering if there are any thoughts for Kipushi, you know, chasing some of the high-grade copper or defining some of the by-product metals.
Maybe I can just...
Speaker Change: We have certain rights that we are entitled to under our revised joint venture agreement.
Speaker Change: and that basically is confined to what was included in our feasibility study that was published on PAPU-SHE.
So exploration outside of that area.
Speaker Change: falls under the revised joint venture agreement and would be for the economic benefit of mainly Mijica means but we are studying
Introducing a copper circuit.
Speaker Change: which we will negotiate with Jekimins and that would be copper that's contained within the current footprint area but it's something that's still under review so we are actively looking at additional income streams for Kabushie but it would not include a bigger exploration program outside of the current footprint area
at this point in time.
Speaker Change: Okay, well, I'll sign off and definitely look forward to the Exploration Update as well. Thank you.
Unidentified Operator: Thank you. We have no further questions on the line. I'll turn the call back over to Matthew Keevil.
Unidentified Operator: Thanks very much, Operator, and thank you, everyone, for attending today. We've already run a little bit over time, so we'll just wrap up the call here. I'd again like to thank you for joining us today, and I look forward to all the exciting things we'll be speaking about in 2025. And as Robert mentioned, we look forward to seeing everyone next week at the BMO Conference. So have a great day, and, Operator, you can wrap it up.
Speaker Change: Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and we ask that you please disconnect your lines.