First Phosphate Corp. press release

Ivanhoe Mines Issues Third Quarter 2024 Financial Results, and Review of Construction and Exploration Activities

2024-10-30

CSE - Canadian National Stock Exchange · Phosphate · Iron · Titanium · Canada · Corporate Finance

Ivanhoe Mines announces a quarterly profit of $108 million for Q3 2024, compared with $67 million for Q2 2024

Ivanhoe Mines reports Adjusted EBITDA of $160 million for Q3 2024, compared with $203 million for Q2 2024

Kamoa-Kakula produced a record 116,313 tonnes of copper in Q3 2024 and 303,328 tonnes of copper year-to-date

Kamoa-Kakula Copper Complex sold a record 103,106 tonnes of payable copper in Q3 2024 and recognized record quarterly revenue of $828 million and EBITDA of $470 million

Kamoa-Kakula's quarterly cost of sales total $1.80 per lb. of payable copper; C1 cash cost of $1.69 per lb., with costs increased by Phase 3 expansion ramp-up

Kamoa-Kakula's year-to-date C1 cash cost of $1.60 per lb. in line with the midpoint of annual guidance

Africa's largest and greenest smelter project on schedule for construction completion this year, to materially drive improvement in margins

Phase 3 concentrator achieves steady state production rate after quarter end, with milling rates regularly exceeding nameplate capacity

Kipushi produced 17,817 tonnes of zinc in concentrate during ramp-up in Q3 2024 and export of concentrates commenced

Johannesburg, South Africa--(Newsfile Corp. - October 30, 2024) - Ivanhoe Mines' (TSX: IVN) (OTCQX: IVPAF) President Marna Cloete and Chief Financial Officer David van Heerden are pleased to present the company's financial results for the three and nine months ended September 30, 2024. Ivanhoe Mines is a leading Canadian mining company developing and operating its four principal mining and exploration projects in Southern Africa: expanding production at the world-class Kamoa-Kakula Copper Complex in the Democratic Republic of Congo (DRC); ramping up the ultra-high-grade Kipushi zinc-copper-lead-germanium mine in the DRC; building the tier-one Platreef palladium, rhodium, nickel, platinum, copper and gold development project in South Africa; as well as exploring and advancing the expansive exploration licenses of Ivanhoe's Western Forelands project, which hosts the Makoko, Kitoko, and Kiala copper discoveries near Kamoa-Kakula. All figures are in U.S. dollars unless otherwise stated.

Watch an October 2024 video highlighting Ivanhoe Mines' financial results, as well as construction and exploration activities: https://vimeo.com/1024391679/4a60c76ad7?ts=0&share=copy

[](https://api.newsfilecorp.com/redirect/X3yXjURY3Z)

To view an enhanced version of this graphic, please visit: https://images.newsfilecorp.com/files/3396/228310_edc50dc874a7dbe6_001full.jpg

Founder and Co-Chairman Robert Friedland commented:

"Kamoa-Kakula has reached a major milestone with the ramp-up of the Phase 3 expansion. Phase 3 provides steady-state milling capacity of 600,000 tonnes of copper per annum. We have reached the top tier of the world's most significant copper complexes, which at every phase were delivered ahead of schedule ... a true rarity in our industry.

"Africa's largest and greenest copper smelter is nearing construction completion this year. The smelter will reduce cash costs and improve profitability. With capital expenditures largely behind us at Kamoa-Kakula, we look forward to a period of strong profit and free cash flow, even as we continue to advance further copper growth initiatives on the joint venture.

"We expect 2025 to be a banner year as we deliver these significant production milestones, as well as advance our industry-leading exploration efforts in the Western Forelands, which continue to deliver some of the world's most significant, tier-one copper discoveries."

FINANCIAL HIGHLIGHTS

Ivanhoe Mines recorded a profit of $108 million for Q3 2024 compared with a profit of $108 million for Q3 2023. Ivanhoe Mines' normalized profit for Q3 2024 was $112 million, compared with a normalized profit of $95 million for Q3 2023.

Kamoa-Kakula sold 103,106 tonnes of payable copper during Q3 2024, recognizing revenue of $828 million, an operating profit of $392 million, and quarterly EBITDA of $470 million. Concentrate produced from Phase 3 is being toll-treated into blister copper at the Lualaba Copper Smelter (LCS) to maximize profitability until the on-site smelter is completed. As such, total inventory, including in the on-site warehouse and at LCS, increased to approximately 16,000 tonnes of copper in concentrate at the end of the quarter.

Kamoa-Kakula's cost of sales per pound (lb.) of payable copper sold was $1.80/lb. for Q3 2024 compared with $1.53/lb. and $1.34/lb. in Q2 2024 and Q3 2023, respectively. Over the first nine months of 2024, cost of sales per pound (lb.) of payable copper sold was $1.62/lb.

Cash cost (C1) per pound of payable copper produced in Q3 2024 totaled $1.69/lb., compared with $1.52/lb. and $1.46/lb. achieved in Q2 2024 and Q3 2023, respectively. Cash cost (C1) per pound of payable copper produced for the nine months ended September 30, 2024, was $1.60/lb., in line with the mid-point of guidance.

Cash cost was impacted by the ramp-up of the Phase 3 expansion, including the drawing of lower-grade surface stockpiles to supplement the ramp-up process, and the optimization of the concentrator circuit towards nameplate recoveries of approximately 86%. The ramp-up of the Phase 3 concentrator to steady state was achieved early in the fourth quarter. Ivanhoe Mines' Adjusted EBITDA was $160 million for Q3 2024, compared with $203 million for Q2 2024 and $152 million for the same period in 2023, which includes an attributable share of EBITDA from Kamoa-Kakula.

Ivanhoe Mines has a strong balance sheet with cash and cash equivalents of $180 million on hand as at September 30, 2024, and expects that at current copper prices, cash flow generated from Kamoa-Kakula's operations, as well as project-level financing facilities, will be sufficient to fund the remaining capital cost requirements for the Phase 3 expansion. Major capital cost requirements are expected to be reduced from the fourth quarter following completion of Kamoa-Kakula's direct-to-blister smelter, with construction on track to be complete by year-end, and smelter ramp-up expected from Q1 2025.

OPERATIONAL HIGHLIGHTS

Record quarterly production of 116,313 tonnes of copper in concentrate was achieved at Kamoa-Kakula for Q3 2024, compared with 86,203 tonnes in Q1 2024 and 100,812 tonnes in Q2 2024. Over the first nine months of 2024, Kamoa-Kakula produced a total of 303,328 tonnes of copper in concentrate.

Kamoa-Kakula's 2024 production guidance has been revised to between 425,000 - 450,000 tonnes of copper due to the impact of power intermittency experienced, particularly in the first half of the year.

Kamoa-Kakula's Phase 1 and 2 concentrators milled approximately 2.2 million tonnes of ore during the third quarter at an average feed grade of 4.9% copper. Copper flotation recoveries for the quarter averaged 86.6%.

Following the commissioning of the Phase 3 concentrator's fine-grinding mills in September, sustained improvements in processing throughput and recovery rates were achieved. During the third week of October, the concentrator milled a record 19,198 tonnes over 24 hours, equivalent to an annualized processing rate of over 6.5 million tonnes per annum, which is 30% higher than the nameplate capacity. In addition, in late September, over 24 hours, the copper recovery rate of the concentrator averaged 87%, exceeding the nameplate recovery rate of 86%.

Kamoa-Kakula's 500,000-tonne-per-annum on-site, direct-to-blister copper smelter is advancing on schedule with construction completion expected by the end of 2024, and heat-up to commence in Q1 2025.

During the quarter, DRA Global of Johannesburg, South Africa, and Zijin Engineering of Fujian Province, China were appointed as engineering, procurement, and construction management (EPCM) contractors to execute "Project 95" at Kamoa-Kakula. A capital cost of approximately $200 million is estimated for concentrator modifications. Increased recovery to 95% is expected to boost average annualized copper production by up to 30,000 tonnes from the Phase 1 and 2 concentrators from Q1 2026.

The Kipushi concentrator ramp-up continued during the third quarter, producing 17,817 tonnes of zinc in concentrate. Nameplate concentrator milling rate is expected to be achieved in Q1 2025. Export of concentrates commenced at the end of Q3 2024.

Kipushi concentrator recovery rates regularly reached over 90% during the quarter. In addition, after quarter end, over 24 hours the Kipushi concentrator milled 2,108 tonnes, producing 1,357 tonnes of zinc concentrate at a concentrate grade of 52% contained zinc. This is equivalent to an annualized zinc production of approximately 220,000 tonnes of zinc, after accounting for availability.

Kipushi's 2024 production guidance was revised to between 50,000 - 70,000 tonnes of zinc in concentrate based on the ramp-up schedule, from 100,000 - 140,000 tonnes previously.

Basic engineering has already commenced on de-bottlenecking initiatives of the Kipushi concentrator, to target a 20% increase in processing capacity to 960,000 tonnes of ore per annum. The de-bottlenecking program is expected to be complete in Q3 2025, based on the availability of long-lead order equipment.

Kipushi will be the lowest greenhouse gas emitter per tonne of zinc produced. On a Scope 1 and 2 basis (reported from ore to mine gate), Kipushi's greenhouse gas (GHG) emissions intensity for 2025 is expected to be 0.019 equivalent tonnes of carbon dioxide per tonne of contained zinc produced (t CO2-e / t Zn). This comfortably ranks Kipushi at the bottom of the Scope 1 and 2 GHG emissions curve, according to independent industry experts Skarn Associates.

Construction of Platreef's Phase 1 concentrator was completed on schedule early in the third quarter. Cold commissioning commenced, with water being fed through the concentrator. The concentrator will be placed on care and maintenance until H2 2025, as Shaft #1 prioritizes the hoisting of waste from the development required to bring forward the start of Phase 2.

Reaming of the 5.1-meter diameter Shaft #3 from the 950-meter level was recently completed and equipping has commenced. Shaft #3 is expected to commence hoisting from Q1 2026 with a capacity of approximately 4 million tonnes per annum.

Work continues on the updated feasibility study to accelerate Platreef's Phase 2, as well as the preliminary economic assessment of the new Phase 3 expansion. Both studies are expected to be published in Q1 2025.

Ivanhoe continues its expansive copper exploration program on its Western Foreland licenses adjacent to Kamoa-Kakula. Diamond drilling during the third quarter of 2024 focused on Makoko West, Kitoko, Sakanama, and Lubudi. Nine drill rigs were in operation across the Western Foreland at quarter end, completing over 23,409 metres of diamond-core drilling, bringing the total to over 63,000 metres completed year-to-date, out of a total 70,000 metres planned.

Positive results from drilling around Makoko and Makoko West led to the addition of three new, adjacent exploration licences, totaling 336 km2, to the Western Foreland package in Q3 2024. Two new rigs were also deployed to the newly acquired licence area after quarter-end.

[](https://images.newsfilecorp.com/files/3396/228310_edc50dc874a7dbe6_002full.jpg)

David Kapembwa, Smelter Foreman, Kamoa Copper, inspecting pressure of cooling water lines during pressure testing at the on-site direct-to-blister copper smelter.

To view an enhanced version of this graphic, please visit: https://images.newsfilecorp.com/files/3396/228310_edc50dc874a7dbe6_002full.jpg

Conference call for investors on Wednesday, October 30, 2024

Ivanhoe Mines will hold an investor conference call to discuss the results at 10:30 a.m. Eastern time / 7:30 a.m. Pacific time on October 30, 2024. The conference call will conclude with a question-and-answer (Q&A) session. Media are invited to attend on a listen-only basis.

To view the webcast use the link: https://edge.media-server.com/mmc/p/cza3bouw

Analysts are invited to join by phone for the Q&A using the following link: https://register.vevent.com/register/BI13b58175fedd463caf90c57c7402aa05

An audio webcast recording of the conference call, together with supporting presentation slides, will be available on Ivanhoe Mines' website at www.ivanhoemines.com.

After issuance, the condensed consolidated interim financial statements and Management's Discussion and Analysis will be available at www.ivanhoemines.com and www.sedarplus.ca.

Read Ivanhoe's Third Quarter 2024 Sustainability Review:

[](https://api.newsfilecorp.com/redirect/W0yN4IApem)

To view an enhanced version of this graphic, please visit: https://images.newsfilecorp.com/files/3396/228310_ivanhoe1en.jpg

For the third quarter, the group achieved an industry-leading combined Lost Time Injury Frequency Rate (LTIFR) of 0.50 and a Total Recordable Injury Frequency Rate (TRIFR) of 1.11 per 1,000,000 hours worked. Regrettably, there was one fatality in the group during the quarter, which occurred at Kamoa-Kakula.

For more information on each project's health and safety performance, as well as more information on the various sustainability initiatives underway across the group, read Ivanhoe's Q3 2024 Sustainability Review: https://www.ivanhoemines.com/investors/document-library/#sustainability

Principal projects and review of activities

1. Kamoa-Kakula Copper Complex 39.6%-owned by Ivanhoe Mines Democratic Republic of Congo

The Kamoa-Kakula Copper Complex is operated as the Kamoa Holding joint venture between Ivanhoe Mines and Zijin Mining. The project is approximately 25 kilometres southwest of the town of Kolwezi and about 270 kilometres west of Lubumbashi. Kamoa-Kakula's Phase 1 concentrator began producing copper in May 2021. The Phase 2 concentrator, completed in April 2022, doubled nameplate production capacity to 400,000 tonnes of copper per annum. A debottlenecking program, completed 10 months later in February 2023, further increased copper production capacity to 450,000 tonnes per annum. The Phase 3 concentrator completed in June 2024 expands annual production capacity up to approximately 600,000 tonnes of copper, ranking the Kamoa-Kakula Copper Complex as the world's third-largest copper mining operation by international mining consultant Wood Mackenzie.

Ivanhoe sold a 49.5% share interest in Kamoa Holding Limited (Kamoa Holding) to Zijin Mining and a 1% share interest in Kamoa Holding to privately owned Crystal River in December 2015. Kamoa Holding holds an 80% interest in the project and the DRC government holds the remaining 20% interest. Ivanhoe and Zijin Mining therefore each hold an indirect 39.6% interest in Kamoa-Kakula, with Crystal River holding an indirect 0.8% interest. Kamoa-Kakula's full-time employee workforce is approximately 5,500 and is over 90% Congolese.

Kamoa-Kakula summary of operating and financial data

| | | Q3 2024 | | | Q2 2024 | | | Q1 2024 | | | Q4 2023 | | | Q3 2023 | | | | | | | | | | | | | | | | | | | | Ore tonnes milled (000's tonnes) | | 3,266(1 | ) | | 2,381(1 | ) | | 2,061 | | | 2,133 | | | 2,236 | | | Copper ore grade processed (%) | | 4.14%(1 | ) | | 4.91%(1 | ) | | 4.80% | | | 4.95% | | | 5.37% | | | Copper recovery (%) | | 85.3%(1 | ) | | 86.7%(1 | ) | | 87.4% | | | 87.9% | | | 87.2% | | | Copper in concentrate produced (tonnes) | | 116,313 | | | 100,812 | | | 86,203 | | | 92,215 | | | 103,947 | | | Payable copper sold (tonnes)(2) | | 103,106 | | | 95,900 | | | 85,155 | | | 90,967 | | | 96,509 | | | Cost of sales per pound ($ per lb.) | | 1.80 | | | 1.53 | | | 1.50 | | | 1.50 | | | 1.34 | | | Cash cost (C1) ($ per lb.) | | 1.69 | | | 1.52 | | | 1.57 | | | 1.53 | | | 1.46 | | | Realized copper price ($ per lb.) | | 4.16 | | | 4.34 | | | 3.82 | | | 3.71 | | | 3.84 | | | | | | | | | | | | | | | | | | | | Sales revenue before remeasurement ($'000) | | 836,871 | | | 813,817 | | | 612,496 | | | 625,983 | | | 681,821 | | | Remeasurement of contract receivables ($'000) | | (8,983 | ) | | 3,256 | | | 5,824 | | | (8,365 | ) | | 13,014 | | | Sales revenue after remeasurement ($'000) | | 827,888 | | | 817,073 | | | 618,320 | | | 617,618 | | | 694,835 | | | | | | | | | | | | | | | | | | | | EBITDA ($'000) | | 469,735 | | | 547,257 | | | 364,893 | | | 343,899 | | | 423,211 | | | EBITDA margin (% of sales revenue) | | 57% | | | 67% | | | 59% | | | 56% | | | 61% | | | All figures in the above tables are on a 100%-project basis. Metal reported in concentrate is before refining losses or deductions associated with smelter terms. This press release includes "EBITDA", "Adjusted EBITDA", "EBITDA margin", and "Cash cost (C1)" which are non-GAAP financial performance measures. For a detailed description of each of the non-GAAP financial performance measures used herein and a detailed reconciliation to the most directly comparable measure under IFRS Accounting Standards, please refer to the non-GAAP Financial Performance Measures section of this press release.

(1)Blended figures across the Phase 1, 2, and 3 concentrators, following the commencement of the Phase 3 concentrator in June 2024. Excluding Phase 3, the Phase 1 and 2 concentrators milled 2.21 million tonnes of ore at an average feed grade of 4.9% with an average recovery of 86.6% in Q3 2024.

(2)Payable copper sold is net of the payability factor of circa 97%. Copper in concentrate produced net of the payability factor is noted in the non-GAAP Financial Performance Measures section of this press release. | | | | | | | | | | | | | | | |

C1 cash cost per pound of payable copper produced can be further broken down as follows:

| | | Q3 2024 | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | | | | | | | | | | Mining | ($ per lb.) | 0.62 | 0.45 | 0.44 | 0.38 | 0.41 | | Processing | ($ per lb.) | 0.26 | 0.21 | 0.23 | 0.24 | 0.20 | | Logistics charges | ($ per lb.) | 0.42 | 0.48 | 0.50 | 0.50 | 0.46 | | TC, RC, smelter charges | ($ per lb.) | 0.26 | 0.25 | 0.25 | 0.26 | 0.25 | | General & Administrative | ($ per lb.) | 0.13 | 0.13 | 0.15 | 0.15 | 0.14 | | Cash cost (C1) per pound of payable copper produced | ($ per lb.) | 1.69 | 1.52 | 1.57 | 1.53 | 1.46 | | Cash cost (C1) is prepared on a basis consistent with the industry standard definitions by Wood Mackenzie cost guidelines but are not measures recognized under IFRS Accounting Standards. In calculating the C1 cash cost, the costs are measured on the same basis as the company's share of profit from the Kamoa Holding joint venture that is contained in the financial statements. C1 cash cost is used by management to evaluate operating performance and include all direct mining, processing, and general and administrative costs. Smelter charges and freight deductions on sales to the final port of destination, which are recognized as a component of sales revenues, are added to C1 cash cost to arrive at an approximate cost of delivered, finished metal. C1 cash cost excludes royalties, production taxes, and non-routine charges as they are not direct production costs.

All figures are on a 100% project basis and metal reported in concentrate is before refining losses or deductions associated with smelter terms. | | | | | | |

Kamoa-Kakula's Phase 1, 2, and 3 concentrators produced a record 116,313 tonnes of copper in concentrate in Q3 2024

Kamoa-Kakula produced 116,313 tonnes of copper in concentrate in the third quarter of 2024, including 94,214 tonnes of copper from the Phase 1 and 2 concentrators and 22,099 tonnes of copper from the Phase 3 concentrator. Over the first nine months of 2024, Kamoa-Kakula produced a total of 303,328 tonnes of copper in concentrate.

Kamoa-Kakula's Phase 1 and 2 concentrators milled approximately 2.2 million tonnes of ore during the third quarter at an average feed grade of 4.9% copper. Copper flotation recoveries for the quarter averaged 86.6%. Kamoa-Kakula's Phase 3 concentrator, which produced first concentrate on June 10, 2024, continued its ramp-up to steady state production during the third quarter. During the quarter, the Phase 3 concentrator milled approximately 1.1 million tonnes of ore at an average feed grade of 2.6% copper with an average flotation recovery rate of 79.9%.