Ivanhoe Mines Ltd. T.IVN

BMO July 9 : End of IVN's Power Instability

[guarantor1]

Bottom Line:
Q2 production highlighted a strong output of 100,812t of copper in concentrate from
Kamoa-Kakula, in line with our estimates. Improved power stability in Q2 enabled
access to higher grade areas of the mine, increasing mining rates and head grade.
Annual guidance was maintained at 440-490,000t of copper in concentrate with Phase
3 ramp up in Q3 expected to allow H2 production exceed H1 production (186,925t). The
company will report Q2 financial results and host a conference call on July 31.
Key Points
Yesterday, Ivanhoe Mines announced a strong Q2 production of 100,812t of copper
in concentrate from Kamoa-Kakula, in line with our expectations. Phase 1 and 2
concentrators produced 99,706t while Phase 3 produced 1,100t of copper in concentrate.
Annual guidance was maintained at 440-490,000t of copper in concentrate and Ivanhoe
reiterated that first concentrate for Phase 3 was achieved on June 10 with a steady
ramp up in Q3 expected to allow H2 production exceed H1 production (186,925t).
Compared with Q1, improved power stability in Q2 enabled access to higher grade
areas of the mine, increasing mining rates, and head grade — Q2 mill feed from
Phase 1 and 2 was 2.3Mt of ore at an average grade of 5.3% Cu. Recent corporate
updates had already disclosed strengthening operations in April and May benefiting
from stabilizing power through a combination of power imports and greater backup
capacity. The company has been importing power via the Zambian interconnector,
currently at 55MW and negotiating to increase to 100MW by year-end, and is expanding
backup generator capacity to 135MW by early August (>200MW by end of the year) to
ensure power redundancy for Phases 1, 2 and 3. The company also highlighted that it
continues to work with the DRC state-owned power company on grid infrastructure
upgrades targeted for completion by late 2025.
Earlier this month, Ivanhoe completed the restart of the Kipushi Mine setting 2024
guidance at 100-140,000t of zinc in concentrate. Ivanhoe is also working on an
updated life-of-mine integrated development plan for the Kamoa-Kakula copper
complex (scheduled for completion by the end of 2024) that includes Project 95 and an
accelerated/expanded planned Phase 4 expansion.

[NotSoBrave004]

At the risk of sounding like a broken record, this generator farm still baffles me. By the end of the year, we will have some 200 MW backup power capacity. As far as I know, a single 2 MW generator burns 500l of fuel per hour at full tilt. Simple math shows to run generators for 200 MW would result in 50000 l/hr of fuel consumption. That is a lot of liters. Maybe my data is out of date, but not

[LittleMoney]

They're producing 600,000 Mt/ year which would be over 150,000 lbs of copper every hour! At $4.50 copper they can easily afford the diesel, and would make much more money than shutting down....also it's just a back up for what will likely be very rare occasions.

[NotSoBrave004]

Evidently. The cost is not what got me thinking. Where do you put this amount of fuel (flammable) for, say one day? NVM, I really hope that Inga 5 comes online before the end of the year to supply reliable green power.