Name of the Project
Kamoa copper project.

Location
Democratic Republic of Congo (DRC).

Client
The project is a joint venture (JV) between Ivanhoe Mines and Zijin Mining.

Project Description
The project has been independently ranked as the world’s largest undeveloped, high-grade copper discovery by international mining consultant Wood Mackenzie.

An independent prefeasibility study (PFS) on the first phase of 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. Although the discovery represents a major extension of the Kamoa copper deposit, it has not been included in the independent PFS.

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.

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
The 2016 drilling campaign at the Kakula discovery is continuing to demonstrate that it is substantially richer, thicker and more consistent than other mineralisation at the Kamoa project.

The company has noted that Kakula’s copper mineralisation is consistently bottom-loaded and chalcocite dominant, which supports the creation of selective mineralised zones at cutoffs of between 1.0% and 3.0% copper, and potentially higher.

The Kakula copper mineralisation displays vertical mineral zonation – from chalcopyrite to bornite to chalcocite – with the highest copper grades associated with the siltstone unit consistently characterised by chalcocite-dominant mineralisation.

Chalcocite is a high-tenor mineral that is opaque and dark-gray to black with a metallic lustre.

Owing to its very high percentage of contained copper by weight and capacity to produce a clean, high-grade concentrate, chalcocite is considered to be the most valuable copper mineral.

The Kakula discovery remains open along a northwesterly-southeasterly strike, while high-grade copper mineralisation has been outlined along a corridor that is now at least 3.5 km in length.

The high-grade copper zone is less than 300 m below surface in the central section and gently dips to the south-east and north-west.

Initial metallurgical test results received in July from a sample of drill core from the Kakula discovery zone showed copper recoveries of 86% and produced a copper concentrate with an extremely high grade of 53% copper.

The July results also indicated that material from Kamoa's Kakula and Kansoko zones could be processed through the same concentrator plant, which would yield significant operational and economic efficiencies.

Earlier metallurgical testwork has indicated that the Kamoa concentrates contain arsenic levels of 0.02%, which are extremely low by world standards.

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 help to enable high-arsenic concentrates from mines in Chile and elsewhere to meet the limit of 0.5% arsenic imposed by Chinese smelters to meet China's new environmental restrictions.

Key Contracts and Suppliers
OreWin (prefeasibility study).

On Budget and on Time?
Not stated.

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