Name of the Project
Kamoa-Kakula copper project.

Location
Kamoa-Kakula is a very large, near-surface, stratiform copper deposit with adjacent prospective exploration areas within the Central African Copperbelt, about 25 km west of Kolwezi, in the Democratic Republic of Congo (DRC).

Client
Ivanhoe Mines and Zijin Mining each hold an indirect 39.6% interest in the Kamoa-Kakula project, Crystal River Global holds an indirect 0.8% interest and the DRC government holds a direct 20% interest.

Project Description
Three potential development scenarios have been examined for the project.

The initial mine development scenario – the Kakula 2017 preliminary economic assessment (PEA) evaluates the development of a six-million-tonne-a-year underground mine and surface processing complex at the Kakula deposit (a discovery announced in early 2016) as the project’s first phase of development. For this option, the PEA envisages an average production rate of 246 000 t/y of copper for the first five years of operation and 385 000 t/y by Year 4.

The expanded, two-mine development scenario – the Kakula 2017 PEA also includes an option for an integrated, 12-million-tonne-a-year, two-stage development. This entails initial production from the Kakula mine, followed by a separate underground mining operation at the nearby Kansoko mine, along with the construction of a direct-to-blister smelter, with a capacity of 690 000 t/y of copper concentrate. This scenario delivers average production of 370 000 t/y of copper in the first ten years of operation and production of 542 000 t/y by Year 9.

Kamoa 2017 prefeasibility study (PFS) – the PFS evaluates the development of the Kansoko mine as a standalone six-million-tonne-a-year underground mine and surface processing complex, which will be supplied with ore from the planned development of the Kansoko Sud and Kansoko Centrale areas of the Kamoa deposit, which were discovered in 2008. The PFS envisages average copper production at 178 000 t/y of copper for the first four years and 245 000 t/y by Year 7. Kamoa has an estimated mineral reserve of 125.1-million tonnes grading 3.81% copper.
Ivanhoe continues to explore options to increase Kamoa-Kakula production to 18-million tonnes a year and beyond. 
 

The ultrahigh-grade Kakula discovery contains indicated mineral resources of 174-million tonnes at 5.62% copper, at a 3% copper cutoff grade, and 585-million tonnes at 2.92% copper, at a 1% cutoff.

The combined Kamoa-Kakula deposit has indicated mineral resources of 1.03-billion tonnes at 3.17% copper, containing about 72-billion pounds of copper, as well as an additional 183-million tonnes of inferred mineral resources at 2.31% copper, at a 1.5% cutoff.

This mineral resource has established the project as the world’s fourth-largest copper discovery.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The initial mine development scenario has an estimated after-tax net present value (NPV), at an 8% discount rate, of $4.2-billion and an internal rate of return (IRR) of 36.2%, with a payback of 3.1 years.

The expanded, two-mine development scenario has an estimated NPV, at an 8% discount rate, of $7.2-billion and an IRR of 33%, with a payback of 4.7 years.

The Kamoa 2017 PFS estimates an after-tax NPV, at an 8% discount rate, of $2.1-billion – an increase of 109%, compared with the after-tax NPV of $986-million projected in the March 2016 Kamoa PFS. The IRR is estimated at 24%, with a payback five years.

Value
The initial mine development scenario has an initial capital cost of $1.2-billion. For the expanded, two-mine development scenario, the PEA envisages $1.2-billion in initial capital costs. The Kamoa 2017 PFS estimates that the Kansoko mine will cost $1-billion to develop.

Duration
Not stated.

Latest Developments
Ivanhoe Mines had a productive second quarter ended June 30, with underground development at the planned initial copper mine at Kakula making steady progress.

The mine is expected to reach the high-grade copper mineralisation later this year.

The service and conveyor declines have been advanced more than 600 m through underground development work, while the 3.5 km decline development contract is scheduled to be completed by the end of this year.

The detailed infrastructure designs for the bottom of the main decline, including rock tips, conveyor transfers, vent shaft and pump stations, have been completed, allowing for procurement to start.

The designs of the conveyor system and truck-tipping station for the main decline are also well advanced.

Tender enquiries for the various components of the conveyor system and truck-tipping station have been issued.

A prefeasibility study for Phase 1 of the Kamoa-Kakula project is under way and is expected to be completed by the end of this year. The initial, six-million-tonne-a-year mine at Kakula is estimated to cost $1.2-billion to develop.

Subsequent expansions and a smelter will be funded from cash flows or project finance. With the expanded mineral resource estimate done in February, Ivanhoe and its joint venture partner Zijin Mining are exploring options to accelerate the construction of the first two mines at Kamoa-Kakula, and the potential for expanding production to 18-million tonnes a year and more.

About 18.6 km of drilling was completed at Kakula and surrounding areas within the Kamoa-Kakula mining licence during the second quarter, increasing the total drilling completed during the first six months of this year to 36 km.

The exploration programme was revised during the reporting period, taking into account results obtained during the Kakula West expansion campaign.

Additional exploration drilling has been planned to the north of Kakula West, following a narrow but high-grade continuation of Kakula West mineralisation. Further drilling has been directed to infill, and to supply data for metallurgical, hydrogeological and civil geotechnical studies, as well as a condemnation hole for the planned tailings storage site.

Key Contracts and Suppliers
Amec Foster Wheeler (mineral resources estimate – Kakula).

On Budget and on Time?
Not stated.

Contact Details for Project Information
Ivanhoe Mines (North America), tel +1 604 688 6630/+27 11 088 4300 (South Africa) or email info@ivanhoemines.com.