Name of the Project
Kamoa/Kakula copper project.

Location
Democratic Republic of Congo (DRC).

Client
The project is a joint venture (JV) between Ivanhoe Mines, and Zijin Mining and the Government of the Democratic Republic of Congo.

Project Description
The project has been independently ranked by UK-based mining consultancy Wood Mackenzie as the largest copper discovery ever made on the African continent and the world’s largest, undeveloped, high-grade copper discovery.

An independent prefeasibility study (PFS) on the first phase of the Kamoa/Kakula development envisages the construction of an underground mine, a concentrator processing facility and associated infrastructure.

The PFS proposes a yearly mine production of three -million tonnes at an average grade of 3.86% copper over a 24-year mine life, resulting in production of 100 000 t/y.

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

The planned second phase will entail a major expansion of the mine and mill, and construction of the smelter to produce blister copper.

Ivanhoe announced in January 2016 that the Kamoa exploration team had discovered a major new high-grade and flat-lying stratiform copper discovery, named Kakula, about 5 km south-west of Kamoa’s currently defined resources. The 60 km2 Kakula exploration area is about 10 km south-west of the Kamoa project’s planned initial mining area at Kansoko Sud.

The Kansoko Sud initial mining footprint contains high-grade intercepts of up to 7.04% copper and a potential mining thickness of more than 15 m. The mineralised horizon is expected to be intersected by the declines at about 150 m vertically below surface, where initial mining operations will start.

Jobs to be Created
Not stated.

Net Present Value/Internal Rate of Return
The life-of-mine average mine-site cash cost is $0.75/lb of copper.

The project has an after-tax net present value (NPV), at an 8% discount rate, of $986-million and an internal rate of return (IRR) of 17.2%, with a payback period of 4.6 years.

Improvements to the mining methods could potentially reduce average mine-site cash costs during the first phase to $0.61/lb of copper, and improve the after-tax NPV, at an 8% discount rate, to $1.18-billion, the IRR to 18.9% and the payback period to 4.3 years.

Value
The initial capital cost of the project, including contingency, is estimated at $1.2-billion, about $200-million less than estimated in the preliminary economic assessment completed on Kamoa in 2013.

Duration
Not stated.

Latest Developments
Ivanhoe Mines subsidiary Kamoa Copper has retained Australian consultancy OreWin to prepare a preliminary economic assessment (PEA) for the development of the Kakula deposit. The PEA is expected to be completed before the end of the year.

The PEA will concentrate on establishing the economic parameters of potential mining operations at Kakula, including capital and operating costs for an underground mine.

It will also analyse process facilities, mine planning and scheduling, including capital costs and operating costs for mining and concentrator operations. The PEA will draw on recommendations from the Kamoa 2016 prefeasibility PFS, including the potential to increase production to four-million tons a year from the proposed initial mining area.

The PEA follows November’s announcement of excellent metallurgical results from tests conducted on drill core samples from the Kakula discovery – the southerly portion of the Kamoa/Kakula copper project.

Bench-scale metallurgical flotation testwork was carried out at metallurgical engineering business XPS Consulting & Testwork Services’ laboratories in Falconbridge, Canada.

The results achieved copper recoveries of 87.8% and produced a concentrate with an extremely high grade of 56% copper using the flowsheet developed during the Kamoa PFS. The material tested was a composite of recent, chalcocite-rich Kakula drill core, assaying 8.1% copper.

The XPS bench-scale testwork findings will be used in the ongoing PEA now under way for Kakula. The XPS results corroborate the results from the testing of a Kakula drill core composite sample that was conducted at Zijin’s laboratory in China, in July.

The initial metallurgical results achieved copper recoveries of 86% and produced a copper concentrate with a grade of 53% copper. The results also indicated that material from Kamoa’s Kakula and Kansoko zones could be processed through the same concentrator plant, which could yield significant operational and economic efficiencies.

Zijin’s tests of the Kakula sample also used the flowsheet developed during the Kamoa PFS. The material tested was a composite of drill holes assaying 4.1% copper. In comparison, testing of a previous development composite sample from the planned, initial mining deposit at Kamoa’s Kansoko Sud zone and the adjacent Kansoko Centrale zone, assaying 3.61% copper, achieved an 85% recovery and a concentrate grade of 37% copper.

Additionally, earlier metallurgical testwork indicated that the Kamoa concentrates contained extremely low arsenic levels by world standards – about 0.02%. Given this critical competitive marketing advantage, Kamoa’s concentrates are expected to attract a significant premium from copper-concentrate traders for use in blending with concentrates from other mines. The Kamoa concentrates will allow for the other concentrates to meet the limit of 0.5% arsenic imposed by Chinese smelters to meet China’s new environmental restrictions, explains Ivanhoe.

In October, Ivanhoe released the initial resource estimate for its Kakula discovery. Highlights of the initial estimate, prepared by Ivanhoe under the direction of engineering firm Amec Foster Wheeler, comprise an indicated resource of 192-million tonnes at a grade of 3.45% copper, containing 14.6- billion pounds of copper at a 1% copper cutoff grade, with the average true thickness of the selective mineralised zone at 14.27 m.

The initial Kakula mineral resource was defined by drilling covering 8.7 km2 within the larger 60 km2 Kakula exploration area. The Kakula high-grade mineralisation remains open for significant expansion along trend to the north-west and the south-east, while the remainder of the Kakula exploration area remains untested. The mineral resource estimate was based on the results from about 24 000 m of drilling in 65 holes.

With the significance of the Kakula discovery now firmly established, the Kakula exploration programme has been significantly expanded by a further 60 000 m. The expanded programme is planned to continue to the end of the second quarter of 2017 and will consist of infill drilling, resource expansion and exploration.

The combined Kamoa/Kakula indicated mineral resource is 944-million tonnes, grading 2.83% copper, containing 58.9-billion pounds of copper at a 1.0% copper cutoff grade and a minimum true thickness of 3 m.

Key Contracts and Suppliers
OreWin (prefeasibility study), Amec Foster Wheeler (technical report – Kakula).

On Budget and on Time?
Not stated.

Contact Details for Project Information
Ivanhoe Mines, tel +27 11 088 4300 or +1 -604 688 6630 or email info@ivanhoemines.com.