Ivanhoe Mines Co-Chairs Robert Friedland and Yufeng “Miles” Sun say that the Kamoa-Kakula Copper JV has agreed to immediately proceed with orders for the long lead time equipment for the second, 3.8 Mt/y concentrator module at the Kakula mine in the DRC, which will double the mine’s processing capacity from 3.8 Mt/y to 7.6 Mt/y.
The earlier than planned placement of the orders for the concentrator’s long lead time equipment is expected to accelerate the completion of the Phase 2 mill expansion from Q1 2023 to Q2 2022. “There are many smart people in the mining industry who strongly believe that copper is quickly approaching a supply and demand divergence; where the amount of copper being produced globally will be far outstripped by demand,” said Friedland. “As such, we want to ensure that the Kamoa-Kakula operation reaches its near-term production potential as expeditiously as possible, while also maintaining our strong balance sheet. Getting into the queue now for the critical long-lead-time items, such as the ball mills, costs very little up-front money and enhances our flexibility to quickly move ahead on the first of multiple planned expansions.”
Construction of Kakula’s initial 3.8 Mt/y processing plant is well underway, with the remaining long-lead items already delivered to site, with the exception of the transformers, expected in October. The bulk of the structural steel has already been delivered to site. Ivanhoe Mines is fully-financed to Phase 1 copper production at the Kakula mine, which is scheduled for Q3 2021, with consolidated cash of approximately $496 million at the end of June 2020 and no significant debt.
In late August, the shells, discharge end and trunnion were installed for the plant’s first, 9.75 m-long and 6.1 m-wide, ball mill, manufactured by CITIC Heavy Industries in Luoyang, China. The 7 MW, variable-speed-drive motor for the first ball mill, manufactured by WEG Industries in Brazil, was installed in early September. The second ball mill will be installed on the adjacent concrete foundation.
In order to bring forward the expansion of the Kakula processing plant from 3.8 Mt/y to 7.6 Mt/y from Q1 2023 to Q2 2022, the Kamoa-Kakula joint venture will order long-lead items with a total commitment value of approximately $100 million within the coming weeks, of which an estimated $25 million is expected to be spent this year.
In parallel, Ivanhoe and Zijin are in advanced discussions with respect to various financing proposals at the joint-venture level, including an equipment-financing facility, a line of credit, and project financing. Ivanhoe expects that one, or more, of the financing facilities will be successfully concluded in the fourth quarter of this year. Ivanhoe will continue to fund its share of approximately 50% of the expansion costs until such a time that an alternative financing facility has been concluded.
Kakula is projected to be the world’s highest-grade major copper mine with an estimated average ore feed grade of 6.6% copper over the first five years of operation, and 6.2% copper over the first 10 years.
At the end of August, the project’s pre-production surface ore stockpiles totalled an estimated 671,000 t grading 3.36% copper, including 116,000 t of high-grade ore grading 6.08% copper. The stockpile grade should continue to increase as the project approaches initial production; as beginning this month the majority of mining at Kakula is expected to be in the ore zone near the centre of the deposit that has copper grades of between 5% and 8%.
Given that the underground development completed to date is well ahead of schedule, the project’s engineers are working to further optimise the mine plans outlined in the recent definitive feasibility study and pre-feasibility study in order to accelerate the ramp-up of the mine and increase the tonnes of ore in the stockpile which may be processed through the expanded processing plant.
Phased expansion to 19 Mt/y in the new Kamoa-Kakula IDP 2020 would position Kamoa-Kakula as the world’s second largest copper mining complex, with peak annual copper production of more than 800,000 t. On September 8, Ivanhoe announced the outstanding economic results of the independent Integrated Development Plan (IDP) for the tier one Kamoa-Kakula Copper Project. The IDP comprises three development scenarios: Kakula definitive feasibility study (DFS), Kakula-Kansoko pre-feasibility study (PFS), and Kamoa-Kakula preliminary economic assessment (PEA).
The estimated remaining initial capital cost is approximately $0.7 billion, based on commissioning the Phase 2 mill expansion in Q1 2023. Ivanhoe’s share is approximately 50%, with subsequent expansions funded by cash flows.
The new DFS evaluates the stage-one, 6 Mt/y Kakula mine currently being constructed. The PFS evaluates mining 1.6 Mt/y from the Kansoko mine, in addition to 6 Mt/y from Kakula, to fill a 7.6 Mt/y processing plant at Kakula. The PEA evaluates an integrated, multi-stage development to achieve a 19 Mt/y production rate.
The full scope of the expanded facilities covered by the PFS includes: underground expansion at the Kakula mine to reach an annual production rate of 6 Mt/y; the ramp-up of mining operations at the Kansoko mine to a steady state 1.6 Mt/y; a second 3.8 Mt/y concentrator module at Kakula; and associated surface infrastructure to support the expansion at the various sites.
The Kamoa-Kakula Copper Project is a joint venture between Ivanhoe Mines (39.6%), Zijin Mining Group (39.6%), Crystal River Global Ltd (0.8%) and the DRC government (20%).
