Ivanhoe Mines Ltd. T.IVN

good news, bad news (question)

[NotSoBrave004]

Bad news: I see in the presentation that our C1 cash costs in the last quarter have risen to $1.57, quantifiably higher than the 1.44 a year ago. I presume it is derived from the amount of money that had to be invested in the generator farm combined with the imported power costs. No idea where to get the precise data and confirmation from. I don’t think general market conditions have contributed to this increase. Am I missing anything?
Good news: the smelter will bring along a 21% reduction in C1 costs. Assuming there is no sand-bagging, this would be around a $0.30 reduction landing just under $1.20. Combined with the yet-not-disclosed savings from the Lobito corridor, this new C1 figure should be really close to $1.00. I base this on an earlier statement according to which logistical costs are 30% of the overall C1 number. There is a lot in logistics, so not sure what the discrete value is in trucking.
Although I am excited about the WF and Makoko, can’t wait to see KK running optimized at its best.

[cashtango00]

Cash costs aren't effected by capital expenditures such as the backup generator investment.  It was covered in the CC, but intermittent power issues in Q1 effected the production levels causing the cost per unit to rise.  They have since stated those issues have been solved and volume is back up to guidance levels in q2, so cash costs will drop again.  As you stated, they will

[NotSoBrave004]

I was actually thinking the same thing except the numbers didn’t add up in my head. The cost increase is indicated on the graphs and has been climbing for the past 12 months. It also suggests that the power outages are getting worse every quarter since 12 months ago. Not sure that was the case though. Also, the “hit” is almost 10% at $1.57 from $1.44. Again, didn’t think it would have that much of

[cashtango00]

I would suggest going back and listening to the Q1-24 conference call.  They spoke about it in some detail as I remember.  Even in the latest presentation you can see production has drifted lower which would result in higher marginal costs.  I also remember they were using lower grade ore for some reason ( they stated a reason, I just don't remember) high 4% instead of low 5

[nextime]

Trucker strike added cost. Seem to remember reading when they are using the generators it was estimated to cost as much as $0.20 per pound more to process .The plant has been running for a year plus, some maintenance cost will start to appear. This is however pretty small at this time.

[nextime]

Increased reliance on backup power can increase cash costs by up to approximately $0.20/lb., which is captured in the guidance range. thought i read that somewhere  MDA quater one page 17

[NotSoBrave004]

Makes sense then. Thanks.

[chintzy]

The Q1 call is crazy and everyone should read the transcript. https://seekingalpha.com/article/4687755-ivanhoe-mines-ltd-ivpaf-q1-2024-earnings-call-transcript?mailingid=35214835&messageid=2800&serial=35214835.643&utm_campaign=rta-stock-article&utm_medium=email&utm_source=seeking_alpha&utm_term=35214835.643 I suggest that it's not worth worrying about the details of

[chintzy]

And the sale of sulphuric acid will also help get C1 close to $1 or below.