Ivanhoe scopes for $1.4bn DRC mine

18th November 2013

By: Henry Lazenby

Creamer Media Deputy Editor: North America


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TORONTO ( – Toronto-quoted Ivanhoe Mines on Monday announced the results of a preliminary economic assessment (PEA) at its Kamoa copper discovery, in the Democratic Republic of Congo (DRC), which gave the asset a $4.3-billion pre-tax net present value (NPV) at an 8% discount rate and confirmed Kamoa to be in a class of its own.

According to the PEA, which was aimed to deliver the best balance of a lower initial capital cost and the shortest time to first output, a mill and a smelting operation, the project would cost $1.4-billion to construct and at a steady-state, would target output of 300 000 t/y of blister copper, which, according to Ivanhoe, would establish Kamoa as one of the world's largest and highest-grade copper mines.

The company, under the leadership of founder and executive chairperson Robert Friedland, used a long-term price assumption of $3/lb for copper and a sales price for sulphuric acid of $250/t.

The economic analysis returned an after-tax NPV, at an 8% discount rate, of $2.55-billion, has an after-tax internal rate of return of 15.2% and a payback period of 8.4 years. The life-of-mine average total cash cost, after credits, was pinned at $1.18/lb of copper, ranking Kamoa near the bottom of the global cash-cost curve.

Ivanhoe, which was mulling a listing on the JSE, possibly before the end of the year, would target a smaller-scale start-up to establish an operating platform to support subsequent expansion phases.

The operation would generate an early cash flow by selling high-grade copper concentrates.

"Kamoa has the rare combination of a very high copper grade and very large tonnage, qualities that position Kamoa to become a substantial copper producer with one of the lowest cash costs anywhere in the world. This thorough, independent assessment gives us added confidence as we proceed with the planning of our next steps to advance Kamoa's development into a world-class copper mine," Friedland said.

The Kamoa project is a newly discovered, very large, stratiform copper deposit, with adjacent prospective exploration areas within the Central African copperbelt, and would be developed into a large mine and smelter in two phases.

The first phase of mining would target high-grade copper mineralisation from shallow, underground resources to yield a high-value concentrate.

Drilling was under way in the Kansoko Sud and Kansoko Centrale regions to obtain samples for the next phase of testwork. The two areas constituted the bulk of the material to be mined during the first phase of development and were important for the Phase 1 concentrator design.

The second phase would entail a significant expansion of the mine and mill and construction of a large smelter.

The initial mining rate and concentrate feed capacity of three-million tonnes a year would in the fifth year be raised by an expansion of eight-million tonnes a year in concentrator capacity and through building an on-site smelter with a capacity to produce 300 000 t/y of blister copper.

Blister copper is an almost-pure form of copper, produced in an intermediate stage of copper refining.

The operation would also produce about 1 600 t/d of sulphuric acid as a by-product in the copper smelting process, which could be sold to copper-oxide mining operations on the Central African copperbelt that currently bought acid from Zambia or from overseas.

The PEA’s production scenario had scheduled 326-million tonnes to be mined and milled at an average copper grade of 3% copper over a 30-year mine life, producing 7.8-million tonnes of payable blister copper, including 500 000 t of payable copper in concentrate in the initial concentrate phase, over the life of the project.

Ivanhoe held a 95% interest in the Kamoa project through subsidiary African Minerals Barbados Limited (AMBL), and a 5%, nondilutable interest in AMBL was transferred to the DRC government for free on September 11, 2012, as required under the DRC mining code. The company had also offered to sell an additional 15% interest to the DRC on terms still to be negotiated.

As of January, Ivanhoe had discovered Canadian National Instrument 43-101-compliant indicated mineral resources of 739-million tonnes, grading 2.67% copper, containing 43.5-billion pounds of copper, and inferred mineral resources of 227-million tonnes, grading 1.96% copper, containing 9.8-billion pounds of copper. A 1% copper cutoff grade and a minimum vertical mining thickness of 3 m were applied when calculating the classifications.

The company’s TSX-listed stock rose as high as C$2.19 apiece on Monday, but had by noon given back some of its gains to trade at C$2.14 apiece.

Edited by Creamer Media Reporter




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