From Scotia this MorningKamoa-Kakula Ramp-up Continues to Make Solid Progress
OUR TAKE: Positive.
IVN released its monthly development update on the company's flagship Kamoa-Kakula Cu mine in the DRC. The Phase I 3.8Mtpa concentrator started up on May 25 and commercial production was declared on July 1. In August, the operation achieved an average milling rate of >9,000tpd (~87% of design), Cu recoveries of 83%, and yielded Cu production of 14.8kt. Average Cu recoveries improved from 81% in July and compare to design of 86%.
Kamoa-Kakula is fasttracking the installation of an additional concentrate filter (already delivered to the mine site) to take advantage of Cu feed grades and milling rates in excess of design parameters. The additional filter is expected to boost copper production and is planned to be installed by late October. 2021 Cu production guidance of 80-95kt was reaffirmed (YTD output has reached 36.7kt). Ore stockpiles now total 3.6Mt grading 4.77% Cu (vs. 3.5Mt grading 4.77% Cu at the end of July), containing more than 171kt of copper.
Development of Phase II (7.6Mtpa) remains on schedule for a Q3/22 startup; construction of the second 3.8Mtpy concentrator is ~44% complete (vs. ~35% at the end of July). IVN continues to explore the potential acceleration of the Phase III expansion (11.4Mtpa).
Overall, given the impressive ramp-up of Phase I, which appears well supported by strong mining rates and a significant ore stockpile, we view the update as positive for the shares. IVN's attributable share of Kamoa-Kakula (39.6%) represents 67% of our asset level 10% NAVPS estimate for the company.