September 6, 2017: Ivanhoe advances discussions to launch a new era of production at the historic Kipushi zinc-copper-silver-germanium mine
Key steps toward the start of a new era of mining at Kipushi
Excellent progress has been made by KICO in modernizing the Kipushi Mine’s underground infrastructure as part of preparations for the mine to resume commercial production. With the underground upgrading program nearing completion, KICO’s focus now will shift to modernizing and upgrading Kipushi’s surface infrastructure to handle and process Kipushi’s high-grade zinc and copper resources.
The current mine redevelopment plan, as outlined in the May 2016 independent, preliminary economic assessment (PEA), has a two-year construction period with quick ramp-up to a projected, steady-state, annual production of 530,000 tonnes of zinc concentrate.
A pre-feasibility study (PFS) is underway to refine the findings of the PEA, and to optimize the mine’s redevelopment schedule, life-of-mine operating costs and initial capital costs required to return the mine to production, taking into consideration the significant capital already invested to date on critical rehabilitation work. Ivanhoe expects to complete the PFS before the end of this year.
Restoration of production will make Kipushi the world’s highest-grade major zinc mine
The PFS will focus on the mining of Kipushi’s Big Zinc Deposit, which has an estimated 10.2 million tonnes of Measured and Indicated Mineral Resources grading 34.9% zinc. This exceptional grade is more than twice as high as the Measured and Indicated Mineral Resources of the world’s next-highest-grade, major zinc project, according to Wood Mackenzie, a leading, international industry research and consulting group.
In addition to the Big Zinc Deposit, Kipushi has several copper-rich zones that also contain silver, germanium and zinc. Measured and Indicated Mineral Resources contained in the copper-rich Série Récurrente Zone, Fault Zone, and Fault Zone Splay total 1.63 million tonnes at grades of 4.01% copper, 2.87% zinc and 22 g/t silver, at a 1.5% copper cut-off, containing 144 million pounds of copper. Inferred Mineral Resources in these zones total an additional 1.64 million tonnes at grades of 3.30% copper, 6.97% zinc and 19 g/t silver.
World’s 10 largest zinc mines, ranked by forecasted production by 2019.
Excellent progress made on mine rehabilitation work
The main production shaft for the Kipushi Mine, Shaft 5, has been upgraded and re-commissioned. The main personnel and material winder has been upgraded and modernized to meet global industry standards and safety criteria. The Shaft 5 rock-hoisting winder, which had an annual hoisting capacity of 1.8 million tonnes, is being upgraded and is expected to be fully operational early next year.
Underground upgrading work is continuing on the crusher and the rock load-out facilities at the bottom of Shaft 5 and the main haulage way on the 1,150-metre level between the Big Zinc access decline and Shaft 5. This work is expected to be completed before the end of the first quarter of 2018.
The planned primary mining method for the Big Zinc Deposit in the PEA and PFS is sublevel long hole, open stoping, with cemented backfill. The crown pillars are expected to be mined once adjacent stopes are backfilled using a pillar-retreat mining method. The Big Zinc Deposit is expected to be accessed via the existing decline and without any significant new development. The main levels are planned to be at 60-metre vertical intervals, with sublevels at 30-metre intervals.
Optimized zinc processing methodology for the PFS
Based on recent, additional metallurgical test work and trade-off studies, Ivanhoe has revised the planned process-plant design for the PFS. The optimized plant utilizes dense media separation (DMS), followed by milling and a flotation recovery plant. The addition of milling and a flotation recovery plant improved the combination of concentrate grades and recoveries from what the recent metallurgical test work determined was achievable from a DMS plant only. DMS is a simple density-concentration technique that preliminary test work has shown yields positive results for the Kipushi material, which has a sufficient density differential between the waste rock (predominantly dolomite) and mineralization (sphalerite). Furthermore, the addition of a milling and flotation circuit to DMS is expected to improve the project economics as a result of higher concentrate grades.
Given the significant, very-high-grade zinc resource at Kipushi, which is rich in potential by-product credits including copper, silver and germanium, Ivanhoe and the Gécamines technical team are continuing to investigate additional downstream processing options.
Drilling program underway to expand and upgrade Inferred Resources
A 41-hole, 6,500-metre underground drilling program at Kipushi is nearing completion. The program includes six metallurgical holes and 35 resource drill holes in the Fault Zone, the Nord Riche and Southern Zinc zones to expand and upgrade Inferred Resources to Indicated Resources. Ivanhoe expects to issue an updated Mineral Resource estimate for Kipushi later this year once all the assays have been received from the drilling program.
Exploration drilling conducted by Ivanhoe in 2015 sucessfully confirmed that both the Big Zinc Deposit and Fault Zones remain open at depth and to the south. Additional high-grade copper-zinc-silver-germanium mineralization also was discovered in the Fault Zone and in the Fault Zone Splay in the immediate footwall of the Fault Zone.
Germanium is a strategic metal that is a key component of fibre-optic systems, infrared optics, high-efficiency solar cell applications, and light-emitting diodes. The current spot price of germanium is approximately US$1,650 a kilogram.
Initiation of cooperation agreement with the Congolese national railway
Ivanhoe has initiated a new cooperation agreement with SNCC to rehabilitate the inactive spur line that connects the Kipushi Mine to the Congolese national railway and to the overall north-south rail corridor that links the DRC Copperbelt to the seaport at Durban, South Africa.
May 2016 PEA findings support Kipushi’s highly attractive economics, particularly in the context of current zinc prices
(All monetary figures in this news release are US dollars (US$), unless otherwise stated.)
The independent PEA for the planned redevelopment of the Kipushi Mine was published in May 2016 and assumed a base case, long-term zinc price of $2,227 per tonne ($1.01 per pound). The report described the redevelopment of Kipushi as an underground mine producing an average of 530,000 tonnes of zinc concentrate annually over a 10-year mine life at a total cash cost, including copper by-product credits, of approximately $0.54 per pound of zinc.
PEA highlights included:
- At a long-term zinc price of $2,227 per tonne ($1.01 per pound), after-tax net present value (NPV) at an 8% real discount rate is $533 million.
- At a long-term zinc price of $2,227 per tonne, after-tax real internal rate of return (IRR) is 30.9%.
- At a long-term zinc price of $2,227 per tonne, after-tax project payback period is 2.2 years.
- Leveraging existing surface and underground infrastructure significantly lowers the redevelopment capital compared to a greenfield development project, as well as the time required to reinstate production.
- Life-of-mine average cash cost of $0.54 per pound of zinc is expected to rank Kipushi, once in production, in the lower quartile of the cash-cost curve for zinc producers globally.
If the PEA assumed a long-term zinc price of $3,000 per tonne (or $1.36 per pound, which approximates the current spot price of zinc), the after-tax NPV8%would be $1.27 billion.
- Similarly, based on the information in the PEA and assuming a long-term zinc price of $3,000 per tonne, after-tax IRR would be 53.3% and after-tax project payback period would be 1.1 years.
- In addition, the PEA used a base-case zinc treatment charge of $200 per tonne, which is substantially higher than rates observed in the current zinc concentrate market.
After-tax NPV8% sensitivity to zinc prices and discount rates ($ millions).
Zinc price ($/tonne)
The PEA for Kipushi’s redevelopment was prepared by OreWin Pty. Ltd., of Adelaide, Australia, and the MSA Group (Pty.) Ltd., of Johannesburg, South Africa, in compliance with Canadian National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101).