Robert F., Moving Right Along.... January 8, 2015 Ivanhoe Mines releases positive results of independent
pre-feasibility study for planned first phase of its Platreef
platinum-group elements, nickel, copper and gold mine
in South Africa
First phase of development envisages an annual production rate
of 433,000 ounces of platinum, palladium, rhodium and gold,
plus 31 million pounds of nickel and copper
Platreef mine is projected to be Africa's lowest-cost
producer of platinum-group metals
Estimated 150,000 local residents to participate
in Platreef's development as equity partners in broad-based,
black economic empowerment structure
Initial mineral reserve of 15.5 million ounces of platinum,
palladium, rhodium and gold
Optimization study underway by Whittle Consulting ----------------------------------------------------------------------------------------------------------------------------------
MOKOPANE, SOUTH AFRICA – Ivanhoe Mines (TSX: IVN) Executive Chairman Robert Friedland and Chief Executive Officer Lars-Eric Johansson today welcomed the positive findings of an independent pre-feasibility study of the planned initial four million tonnes per annum (Mtpa) mine and concentrator in the first phase of development of the company's Platreef platinum, palladium, rhodium, gold, nickel and copper mine.
The Platreef Project is a Tier One discovery by Ivanhoe Mines' geologists - which contains the Flatreef deposit - on the Northern Limb of South Africa's Bushveld Igneous Complex, the world's premier platinum producing region.
Ivanhoe Mines plans to develop the Platreef Mine in three phases: an initial annual rate of four Mtpa to establish an operating platform to support future expansions; followed by a doubling of production to eight Mtpa; and then a third expansion phase to a steady-state 12 Mtpa. At a projected production rate of 12 Mtpa, Platreef would be among the largest platinum-group metals mines in the world.
Mr. Friedland said that the pre-feasibility study validates the results of Phase 1 of the independent preliminary economic assessment (PEA) released in March 2014, which outlined the phased approach to Platreef's development. A feasibility study of the four Mtpa first phase and a pre-feasibility study of the eight Mtpa second phase are scheduled to begin in the near future.
"The completion of the pre-feasibility study for the first phase of production is another important milestone in Ivanhoe's planned transformation of the Platreef discovery into one of the pre-eminent South African platinum-group metals producers," said Mr. Friedland.
"The results demonstrate the robust nature of the project, which was first highlighted in the March 2014 PEA. Now this latest study has confirmed the excellent economics and technical viability of what is expected to be Africa's lowest-cost producer of platinum-group metals.
"We are proud to have shared our 14 years of exploration and development achievements at Platreef with supportive stakeholders who see international investment and professionally managed development of natural resources as keys to unlock opportunities and prosperity that will be widely shared among Mokopane area residents," Mr. Friedland added.
"With the support of our partners - including our local Mokopane empowerment beneficiaries, our employees, local South African entrepreneurs and our Japanese investors - Ivanhoe's Platreef team is committed to building Africa's safest, large-scale, mechanized, underground platinum-group and base metals mine."
The recently completed pre-feasibility study (PFS) covers the first phase of development that would include construction of a state-of-the-art underground mine, concentrator and other associated infrastructure to support initial concentrate production by 2019. As Phase 1 is being developed and commissioned, there would be opportunities to refine the timing and scope of subsequent phases of expanded production.
Key features of the Platreef PFS include:
- Development of a large, mechanized, underground mine with an initial four-million-tonne per year concentrator and associated infrastructure.
- Planned initial average annual production rate of 433,000 ounces (oz) of platinum, palladium, rhodium and gold (3PE+Au), plus 19 million pounds of nickel and 12 million pounds of copper per year.
- Estimated pre-production capital requirement of approximately US$1.2 billion, including US$114 million in contingencies, at a ZAR:USD exchange rate of 11 to 1.
- Platreef would rank at the bottom of the cash-cost curve, at an estimated US$322 per ounce of 3PE+Au, net of by-products.
- After-tax Net Present Value (NPV) of US$972 million, at an 8% discount rate.
- After-tax Internal Rate of Return (IRR) of 13%.
Ivanhoe Mines owns 64% of the Platreef Project through its subsidiary, Ivanplats, and is directing all mine development work. The South African beneficiaries of the approved broad-based, black economic empowerment structure have a 26% stake in the Platreef Project and the remaining 10% is owned by a Japanese consortium of ITOCHU Corporation; Japan Oil, Gas and Metals National Corporation; ITC Platinum Development Ltd., an ITOCHU affiliate; and Japan Gas Corporation.
The Platreef PFS was prepared for Ivanhoe Mines by OreWin Pty. Ltd.; Amec Foster Wheeler E&C Services Inc.; SRK Consulting Inc.; Stantec Consulting International LLC; and DRA Projects (Pty.) Ltd. The full 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.
Major investment in skills training for mining and other jobs The planned Platreef mine is projected to require a workforce of approximately 2,200 within four years of the start of production.
Ivanhoe Mines intends to invest a total of R160 million (C$14.5 million) in its social and labour plan for Platreef during the next five years. The plan includes R67.2 million (C$6.1 million) for the development of job skills among local residents and R87.7 million (C$8.0 million) for local economic development projects.
"In establishing our social and labour plan, Ivanhoe has been mindful of the South African government's National Development Plan and its priority of securing undertakings that create jobs and advance socio-economic development to alleviate poverty and unemployment," said Dr. Patricia Makhesha, Managing Director of the Platreef Project.
"The programs, which we will be rolling out during the development schedule, demonstrate Ivanhoe's commitment to ensuring that people in our host communities benefit from our operations, directly and indirectly, in ways that contribute to improving their quality of life and expanding their opportunities.
"We will run training programs to prepare young people to qualify for jobs in what will be a world-scale, mechanized mine. Our plan commits to giving priority to local people from Platreef's host communities for enrolment in training programs and in hiring to fill available jobs. We have created a comprehensive database, in partnership with the Department of Labour, to be used in selecting candidates for employment and skills training," Dr. Makhesha added.
Dedicated training centre to be built in Mokopane area Ivanhoe Mines also has committed to building a community skills development and training facility in the Mokopane area at a cost of R26 million (C$2.4 million), within five years, as part of the company's objective of helping to establish a base of qualified, local candidates for jobs at the mine and its associated minerals processing plant. The facility would be accredited by the Mining Qualifications Authority of South Africa.
Other goals include equipping people with portable skills to help enable them to become self-employed or to be productively employed in sectors other than mining, such as construction or agriculture.
In addition, Platreef plans to launch five local economic development projects under the social and labour plan that will result in the creation of at least 820 jobs, including 660 positions that will be created for unskilled and semi-skilled candidates.