Kamoa-Kakula Project

The Kamoa-Kakula Copper Project — a joint venture between Ivanhoe Mines and Zijin Mining Group Co., Ltd. and the Government of the Democratic Republic of Congo — has been independently ranked as the world’s largest, undeveloped, high-grade copper discovery by international mining consultant Wood Mackenzie. It is a very large, near-surface, stratiform copper deposit with adjacent prospective exploration areas within the Central African Copperbelt, approximately 25 kilometres west of the town of Kolwezi and about 270 kilometres west of the provincial capital of Lubumbashi.

On March 21, 2017, Ivanhoe Mines annoucend that a new step-out hole – drilled 5.4 kilometres west of the present boundary of Kakula’s current Inferred Resources – intersected a relatively shallow, 16.3-metre zone of typical Kakula-style, chalcocite-rich copper mineralization similar to holes drilled in the centre of the high-grade Kakula Deposit.

The DD1124 discovery hole is 3.8 kilometres west of the current limit of Kakula drilling and 4.1 kilometres west of the last drill hole with returned assays – DD1093 – that was announced on January 23 this year.

The target area where DD1124 was drilled – now named Kakula West – was selected by the Kamoa-Kakula geological team at the intersection of the axis of the interpreted Kakula trend with a southwesterly-northeasterly-trending antiform (the Kakula West antiform). DD1124 intersected 16.3 metres of visually moderate-strong chalcocite copper mineralization, similar to the mineralization encountered within the core of the chalcocite-rich Kakula Deposit, beginning at a downhole depth of 422.2 metres (410 metres below surface), which included a 4.0-metre zone of strong-to-very-strong mineralization beginning at a downhole depth of 432.4 metres.

Hole DD1124 now has extended the length of the Kakula mineralized trend to approximately 10.1 kilometres, essentially doubling the previously estimated strike length of 5.5 kilometres contained in Ivanhoe’s January 23, 2017 news release. The continuing success also means that the discovery has grown to become six kilometres longer than the deposit’s 4.1-kilometre strike length that was used in calculating the initial Kakula resource estimate in October 2016.

The Kakula Discovery remains open along a westerly-southeasterly strike (see Figure 2). .

On October 12, 2016, Ivanhoe announced an independently verified, initial Mineral Resource estimate for the extremely-high-grade Kakula Discovery on the Kamoa-Kakula Project.

Highlights of the initial Kakula Mineral Resource estimate, prepared by Ivanhoe Mines under the direction of Amec Foster Wheeler E&C Services Inc. (Amec Foster Wheeler), of Reno, Nevada, in accordance with the 2014 CIM Definition Standards for Mineral Resources and Mineral Reserves:

  • Indicated Resources total 192 million tonnes at a grade of 3.45% copper, containing 14.6 billion pounds of copper at a 1% copper cut-off. At a 2% copper cut-off, Indicated Resources total 115 million tonnes at a 4.80% copper grade, containing 12.1 billion pounds of copper. At a higher cut-off of 3% copper, Indicated Resources total 66 million tonnes at a grade of 6.59% copper, containing 9.6 billion pounds of copper.
  • Inferred Resources total 101 million tonnes at a grade of 2.74% copper, containing 6.1 billion pounds of copper at a 1% copper cut-off. At a 2% copper cut-off, Inferred Resources total 51 million tonnes at a 3.92% copper grade, containing 4.4 billion pounds of copper. At a higher cut-off of 3% copper, Inferred Resources total 27 million tonnes at a grade of 5.26% copper, containing 3.2 billion pounds of copper.
  • The average true thickness of the selective mineralized zone (SMZ) at a 1% cut-off is 14.27 metres in the Indicated Resources area and 10.33 metres in the Inferred Resources area. At a higher 3% cut-off, the average true thickness of the SMZ is 5.91 metres in the Indicated Resources area and 5.15 metres in the Inferred Resources area.

This Kakula Mineral Resource has been defined by drilling covering a total area of 8.7 square kilometres within the larger 60-square-kilometre Kakula Exploration Area. The total areal extent of Indicated Resource is 4.6 square kilometres at a 1% cut-off and the areal extent of the Inferred Resource is 3.3 square kilometres at a 1% cut-off. The average dip of the mineralized zone in the Indicated Resource area is 13 degrees, while the average dip is 16 degrees in the Inferred Resource area.

The Kakula Discovery remains open along a northwesterly-southeaterly strike. Significant potential for resource expansion is considered to remain within the Kakula Discovery area. High-grade, chalcocite-rich copper mineralization has been outlined along a corridor that currently is approximately one kilometre wide and at least 5.5 kilometres long (see Figure 1).

Click here to view the Kakula 2016 Preliminary Economic Assessment, January 2017

Figure 1. Planned drilling over the Kakula Exploration Area for Q1 2017 and Q2 to Q4 2017, showing current and future drilling areas and location of recent significant intersections.


Figure 2. Kamoa-Kakula mining licence showing copper grade of Indicated and Inferred
Resources
at a 2% copper cut-off, untested areas and current target areas.


Indicated Resources are defined when the drill-hole spacing approximates a 400-metre grid, while Inferred Resources are defined when the drill-hole spacing approximates an 800-metre grid.

The Kakula Mineral Resource estimate was prepared by Ivanhoe Mines under the direction of Dr. Harry Parker and Gordon Seibel, both RM SME, of Amec Foster Wheeler. Dr. Parker and Mr. Seibel are the Qualified Persons for the estimate, which has an effective date of October 9, 2016. A technical report will be filed on SEDAR at www.sedar.com and on the Ivanhoe Mines website at www.ivanhoemines.com within 45 days of the issuance of this news release. 

The Kakula Mineral Resources, along with sensitivities at various cut-offs, are shown in the following tables.

Indicated and Inferred Mineral Resources at a 1% cut-off grade, Kakula Discovery.

Category

Tonnage
(Mt)

Area
(km2)

Copper
(%)

True Thickness
(metres)

Contained Copper
(kTonnes)

Contained Copper
(billion lbs)

Indicated

192

4.6

3.45

14.3

6,630

14.6

Inferred

101

3.3

2.74

10.3

2,763

6.1

Notes:

  1. Ivanhoe’s Mineral Resources Manager George Gilchrist, a Member of the Geology Society of South Africa and Professional Natural Scientist (Pr. Sci. Nat) with the South African Council for Natural Scientific Professions (SACNASP), estimated the Mineral Resources under the supervision of Dr. Harry Parker and Gordon Seibel, both RM SME, who are the Qualified Persons for the Mineral Resources. The effective date of the estimate is October 9, 2016. Mineral Resources are estimated using the CIM Definition Standards for Mineral Resources and Reserves (2014).
  2. For the Kakula Discovery, Mineral Resources are reported using a total copper (TCu) cut-off grade of 1% TCu and an approximate minimum thickness of 3 metres. A 1% TCu cut-off is a natural cut-off grade on the Central African Copperbelt. There are reasonable prospects for eventual economic extraction under assumptions of a copper price of US$3.00/lb, employment of underground, mechanized, room-and-pillar and drift-and-fill mining methods, and that copper concentrates will be produced and sold to a smelter. Mining costs are assumed to be $38/t. Concentrator and General and Administrative (G&A) costs are assumed to be $19/t. Metallurgical recovery is assumed to be 77% at the 1% TCu cut-off and 88% at the average grade of the Mineral Resource.. Ivanhoe is studying (Preliminary Economic Assessment in progress) reducing mining costs using a convergence backfill method
  3. Reported Mineral Resources contain no allowances for hanging wall or footwall contact boundary loss and dilution. No mining recovery has been applied.
  4. Rounding as required by reporting guidelines may result in apparent differences between tonnes, grade and contained metal content.

Kakula Discovery Indicated Mineral Resources, Sensitivity Cases.

Category

Cut-off Grade
(Cu%)

Tonnes
(millions)

Area
(Sq. km)

Copper Grade

True Thickness
(
metres-m)

Contained Copper
(ktonnes)

Contained Copper
(billion lbs)

Indicated

7.0

27

1.4

8.25%

6.3 (m)

2,242

4.9

Indicated

6.0

42

2.1

7.69%

6.6 (m)

3,220

7.1

Indicated

5.0

51

2.7

7.29%

6.5 (m)

3,711

8.2

Indicated

4.0

62

3.4

6.78%

6.1 (m)

4,211

9.3

Indicated

3.0

66

3.8

6.59%

5.9 (m)

4,351

9.6

Indicated

2.5

75

4.0

6.13%

6.3 (m)

4,579

10.1

Indicated

2.0

115

4.3

4.80%

9.2 (m)

5,504

12.1

Indicated

1.5

139

4.4

4.24%

10.9 (m)

5,899

13.0

Indicated

1.0

192

4.6

3.45%

14.3 (m)

6,630

14.6

Kakula Discovery Inferred Mineral Resources, Sensitivity Cases.

Category

Cut-off Grade
(Cu%)

Tonnes
(millions)

Area
(Sq. km)

Copper Grade

True Thickness
(
metres-m)

Contained Copper
(ktonnes)

Contained Copper
(billion lbs)

Inferred

7.0

1

0.1

7.47%

4.2 (m)

72

0.2

Inferred

6.0

8

0.4

6.50%

6.2 (m)

490

1.1

Inferred

5.0

18

0.9

5.89%

6.4 (m)

1,076

2.4

Inferred

4.0

23

1.3

5.60%

5.8 (m)

1,283

2.8

Inferred

3.0

27

1.8

5.26%

5.2 (m)

1,445

3.2

Inferred

2.5

31

2.0

4.98%

5.2 (m)

1,537

3.4

Inferred

2.0

51

2.2

3.92%

7.7 (m)

2,018

4.4

Inferred

1.5

75

2.6

3.21%

9.8 (m)

2,412

5.3

Inferred

1.0

101

3.3

2.74%

10.3 (m)

2,763

6.1

Kamoa-Kakula Project map shows the planned initial mining area at Kansoko Sud and the adjacent Kakula Discovery exploration area.

Consolidated Mineral Resource Statement, Kamoa-Kakula Project – October 9, 2016, 1% copper cut-off over minimum thickness of 3 metres.

Deposit

Category

Tonnes
(millions)

Area
(Sq. km)

Copper Grade

True Thickness
 (metres-m)

Contained Copper
(kTonnes)

Contained Copper
(billion lbs)

Kamoa

Indicated

752

50.5

2.67%

5.2 (m)

20,110

44.3

Inferred

185

16.8

2.08%

3.8 (m)

3,840

8.5

Kakula

Indicated

192

4.6

3.45%

14.3 (m)

6,630

14.6

Inferred

101

3.3

2.74%

10.3 (m)

2,763

6.1

Total

Kamoa Project

Indicated

944

55.1

2.83%

6.0 (m)

26,740

58.9

Inferred

286

20.1

2.31%

4.9 (m)

6,603

14.6

Notes to Accompany Kamoa Project Mineral Resource Table:

  1. Ivanhoe’s Mineral Resources Manager, George Gilchrist, Professional Natural Scientist (Pr. Sci. Nat) with the South African Council for Natural Scientific Professions (SACNASP), estimated the Mineral Resources under the supervision of Dr. Harry Parker and Gordon Seibel, both RM of Society of Mining, Metallurgy and Exploration (SME), who are the Qualified Persons for the Mineral Resource estimate. The effective date of the estimate is 9 October 2016. Mineral Resources are estimated using the 2014 CIM Definition Standards for Mineral Resources and Mineral Reserves.
  2. Mineral Resources are estimated assuming underground mining methods, a copper price of US$3.30/lb (Kamoa) and US$3.00/lb (Kakula Discovery), a cut-off of 1% total copper, a minimum thickness of 3 m, and that concentrates will be produced and sent to a smelter.
  3. Tonnage and contained-copper tonnes are reported in metric units, contained-copper pounds are reported in imperial units and grades are reported as percentages.
  4. Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content.

Indicated and Inferred Mineral Resources, Kamoa-Kakula Project – October 9, 2016.

Category

Cut-off Grade
(Cu%)

Tonnes
(millions)

Area
(Sq. km)

Copper Grade

Contained Copper
(kTonnes)

Contained Copper
(billion lbs)

Indicated

3.0

304

18.0

4.43%

13,471

29.7

Indicated

2.5

458

27.9

3.86%

17,669

39.0

Indicated

2.0

665

38.7

3.37%

22,384

49.3

Indicated

1.5

825

48.2

3.05%

25,179

55.5

Indicated

1.0

944

55.1

2.83%

26,740

58.9


Category

Cut-off Grade
(Cu%)

Tonnes
(millions)

Area
(Sq. km)

Copper Grade

Contained Copper
(kTonnes)

Contained Copper
(billion lbs)

Inferred

3.0

47

3.5

4.50%

2,145

4.8

Inferred

2.5

83

6.1

3.74%

3,107

6.9

Inferred

2.0

144

9.8

3.12%

4,488

9.8

Inferred

1.5

211

14.5

2.67%

5,652

12.4

Inferred

1.0

286

20.1

2.31%

6,603

14.6



In February 2016, an independent pre-feasibility study (PFS) for the first phase of development of the Kamoa-Kakula Copper Project was prepared by OreWin Pty Ltd., Amec Foster Wheeler E&C Services Inc. and SRK Consulting Inc. The report reflects the initial phase of project development and describes the construction and operation of a three-million-tonne-per-annum (Mtpa) underground mine, concentrator processing facility and associated infrastructure. The first phase of mining would target high-grade copper mineralization from shallow, underground resources to yield a high-value concentrate. The planned second phase would entail a major expansion of the mine and mill, and construction of a smelter to produce blister copper.

The Kamoa 2016 PFS includes an economic analysis that is based on Probable Mineral Reserves.

Click here to view Kamoa Project - Pre-Feasibility Study NI 43-101 Technical Report, March 2016

Highlights of the Kamoa 2016 PFS:

  • Annual mine production of 3 Mtpa at an average grade of 3.86% copper over a 24-year mine life, resulting in annual copper production of approximately 100,000 tonnes.
  • Initial capital cost, including contingency, is US$1.2 billion, approximately US$200 million lower than estimated in the Kamoa 2013 PEA.
  • Life-of-mine average mine-site cash cost is US$0.75/lb of copper.
  • After-tax net present value (NPV) at an 8% discount rate of US$986 million.
  • After-tax internal rate of return (IRR) of 17.2% and a payback period of 4.6 years.
  • High-grade copper concentrate with an average grade of 39.2% copper and very low arsenic levels.
  • Improvements to the mining method have the potential to reduce average mine site cash cost during the first phase to US$0.61/lb of copper, and improve the after-tax NPV at an 8% discount rate to US$1.182 billion, the IRR to 18.9% and the payback period to 4.3 years.

The Kamoa 2016 PFS has identified several areas for further evaluation to optimize the project’s economics, including:

  • The use of controlled convergence room-and-pillar mining, which has been successfully used by KGHM Polska Miedź S.A. (KGHM) at its copper-mining operations in Poland for the past 20 years. Based on detailed analysis by KGHM Cuprum R&D Centre Ltd., this mining method appears to be well suited to the Kamoa deposit and, if implemented, potentially could provide significant cost savings as there would be no requirement for cemented backfill and ore extraction ratios would increase. 
  • Increased production up to 4 Mtpa from the proposed initial mining area, with only limited adjustments to the ore-handling and ventilation systems, thereby resulting in a more efficient use of capital.

The base case described in the PFS is the construction and operation of an underground mine, concentrator processing facility and associated infrastructure. The base-case mining rate and concentrator feed capacity is 3 Mtpa. The life-of-mine production scenario schedules 71.9 million tonnes at an average grade of 3.86% copper over 24 years, producing 6.1 million tonnes of copper concentrate, containing approximately 5.3 billion pounds of copper.

The economic analysis used a long-term price assumption of US$3.00/lb of copper and returns an after-tax NPV at an 8% discount rate of US$986 million. It has an after-tax IRR of 17.2% and a payback period of 4.6 years.

The initial capital cost, including contingency, is US$1.2 billion. The initial capital cost includes a US$104 million advance payment to the DRC state-owned electricity company, SNEL, to upgrade two hydro power plants (Koni and Mwadingusha) to provide Kamoa with access to clean electricity during the initial phase of operations. The upgrading work is being led by Stucky Ltd., of Switzerland, and the advance payment is expected to be recovered through a reduction in the power tariff once Kamoa is in operation. The life-of-mine average mine site cash cost is US$0.75/lb of copper. Key results of the PFS are summarized in Table 1.1.

Table 1.1 PFS Results Summary

Item Unit Total
Ore Processed (Life of Mine)
Quantity Ore Treated kilotonne (kt) 71,893
Copper Feed Grade % 3.86
Concentrate Produced (Life of Mine)
Copper Concentrate Produced kt (dry) 6,106
Copper Recovery % 86.36
Copper Concentrate Grade % 39.20
Contained Metal in Concentrate million pounds (Mlb) 5,277
Contained Metal in Concentrate kt 2,394
Key Financial Results
Initial Capital US$M 1,213
Mine-Site Cash Cost US$/lb Payable Cu 0.75
Total Cash Cost US$/lb Payable Cu 1.48
Site Operating Costs US$/t ore 53.22
After-Tax NPV8% US$M 986
After-Tax IRR % 17.2%
Project Payback Period Years 4.6

Table 1.2 summarizes the financial results and Table 1.3 summarizes mine production and processing statistics. 

Table 1.2 Financial Results

Before
Taxation
After
Taxation
Net Present Value (US$M) Undiscounted 5,791 4,096
4.0% 2,979 2,036
6.0% 2,152 1,429
8.0% 1,549 986
10.0% 1,104 657
12.0% 768 409
IRR 20.7% 17.2%
Project Payback (years) 4.1 4.6

Table 1.3 Mine Production and Processing Statistics

Item Unit Total LOM Years 1-5 Years 6-10 LOM AVG
Ore Processed
Quantity Ore Treated kt 71,893 2,934 3,008 2,996
Copper Feed Grade % 3.86 4.35 4.08 3.86
Concentrate Produced
Copper Concentrate Produced kt (dry) 6,106 283 271 254
Copper Recovery % 86.36 87.06 86.68 86.36
Copper Concentrate Grade % 39.20 39.20 39.20 39.20
Contained Metal in Concentrate
Copper kt 2,394 111 106 100
Copper Mlb 5,277 245 234 220
Payable Metal
Copper kt 2,314 107 103 96
Copper Mlb 5,102 237 227 213

August 2016 - New drilling leads to a substantial expansion of the Kakula Discovery on the Kamoa Project

The primary objective of the drilling program at Kakula is to confirm and expand a thick, flat-lying, bottom-loaded zone of very high-grade, stratabound copper mineralization at the southern part of the Kakula Discovery area that has the potential to be amenable to bulk, mechanized mining and have a significant, positive impact on the Kamoa-Kakula Copper Project’s future development plans. Ivanhoe expects to have an initial independent Mineral Resource estimate prepared for the Kakula Discovery around the end of Q3 2016.

Kakula drilling results support findings that mineralization at Kakula is consistently bottom-loaded, with grades increasing downhole toward the contact between the host Grand Conglomerate and the underlying Mwashia sandstone. The highest copper grades are associated with a siltstone/sandstone unit occurring within the Grand Conglomerate, located approximately one metre above the top of the Mwashia sandstone unit.

Mineralization displays vertical mineral zonation from chalcopyrite to bornite to chalcocite, with the highest grades associated with the siltstone unit consistently characterized by chalcocite-dominant mineralization (see Figure below for a schematic strip logs showing typical, Kakula-style mineralization).

Strip logs of holes DD1011 and 1017, showing typical, Kakula-style mineralization.