Ivanhoe Mines Reduces its Full-Year Guidance for Copper and Zinc Production

Ivanhoe Mines has lowered its 2024 production guidance, despite achieving a record output of 116,313 tonnes of copper in concentrate during the third quarter at its Kamoa-Kakula mine complex in the Democratic Republic of the Congo (DRC). The company attributed this revision to challenges from intermittent grid power prior to the installation of additional on-site generator capacity and agreements to import power from the DRC grid. Following the installation of an additional 72 MW of generators, the site's backup power capacity has reached 135 MW, sufficient to operate Kamoa-Kakula’s Phase 1 and 2 concentrators at full capacity. Ivanhoe stated that it remains on track to have 201 MW of installed backup power generation capacity by year-end.

For the year, the company now expects copper concentrate production to range between 425,000 and 450,000 tonnes, down from the previous estimate of 440,000 to 490,000 tonnes. In the first three quarters, Kamoa-Kakula produced 303,328 tonnes of copper in concentrate, including a record daily production of 1,334 tonnes in September. During the third quarter, the Phase 1 and 2 concentrators processed about 2.2 million tonnes of ore with an average feed grade of 4.9% copper, resulting in quarterly copper production of 94,214 tonnes and an average recovery rate of 86.6%.

The recently commissioned Phase 3 concentrator milled approximately 1.1 million tonnes of ore, primarily from historical stockpiles, at an average feed grade of 2.6% copper, contributing 22,099 tonnes to quarterly production at a recovery rate of 79.9%. Ivanhoe reported improvements in processing throughput and recovery rates following the commissioning of fine-grinding mills in early September. In the last week of September, the concentrator milled 117,484 tonnes, equating to an annualized processing rate of over 5.5 million tonnes. The operations team expects to reach the nameplate recovery rate of 86% in the fourth quarter, achieving steady-state production. Additionally, efforts are underway to increase the feed grade to the Phase 3 concentrator to approximately 3% by the first quarter of 2025, while further developing ore reserves in the Kamoa 1 and Kamoa 2 underground mines.

Ivanhoe has also revised its 2024 zinc guidance due to operational disruptions at the Kipushi mine, which have hindered its ability to maintain nameplate throughput. Since beginning concentrate production in June, Kipushi’s concentrator has ramped up, milling about 88,000 tonnes of stockpiled ore in the third quarter at an average feed grade of 27.1% zinc, resulting in quarterly production of 17,817 tonnes at an average flotation recovery rate of 72%. Zinc concentrate exports began toward the end of the quarter. However, the ramp-up to an annual steady-state production rate of over 250,000 tonnes has been slower than expected, due to several factors: the high iron content of the Big Zinc orebody impacting concentrator recoveries, an increase in fine material in the ore feed limiting throughput, and a rise in power requirements from 5 MW during construction to 18 MW for operations.

Consequently, the full-year production guidance for Kipushi has been halved from 100,000-140,000 tonnes of zinc in concentrate to 50,000-70,000 tonnes. Efforts are underway to enhance recoveries and upgrade mine infrastructure, alongside a debottlenecking program aimed at increasing concentrator processing capacity by 20% to 960,000 tonnes of ore annually, expected to be completed by mid-2025.

In response to the Q3 results announcement, Ivanhoe Mines’ shares dropped 3.5% to C$19.79 by 3 p.m. in Toronto. The company currently has a market capitalization of C$26.8 billion.