April 27, 2023 | 10:02 ET~
Ivanhoe Mines
IVN-TSX Rating Price: Apr-26 Target Total Rtn Outperform $11.98 $17.00 42%
Kipushi Financing Supports Zinc Production by Q3/24
Bottom Line:
Ivanhoe Mines announced a US$250M financing and offtake agreement with
Glencore (Restricted) for the Kipushi zinc mine, in line with previous guidance. The financing covers the majority of the remaining capital cost at Kipushi, and supports first production by Q3/24. Construction is tracking ahead of schedule both at the concentrator on surface and the underground mine, where stoping is expected to begin in January. Ivanhoe is also evaluating an additional border crossing with the Haut- Katanga province in DRC, which would improve concentrate export logistics for both Kipushi and Kamoa-Kakula.
Key Points
Kipushi offtake and US$250M financing term sheet signed. Ivanhoe announced signing of a term sheet for an offtake with Glencore (Restricted) covering 100% of Kipushi's zinc concentrate production over five years. The US$250M term financing facility, also with Glencore, covers most of remaining capex at Kipushi. The loan will be drawn in two tranches and repaid over three years, starting two years after signing.
The financing facility matches previous Ivanhoe guidance and covers much of the remaining US$380M capex at Kipushi. To date, Kipushi has been funded by a shareholder loan from Ivanhoe's subsidiary Kipushi Holding; Ivanhoe is also evaluating up to US$80M from interim bank financing.
Kipushi construction tracking ahead of schedule - first production expected in Q3/24. Construction of the concentrator and surface infrastructure is 27% complete, slightly ahead of schedule. Detailed engineering is complete and procurement is 79% complete with all medium- and long-lead items ordered. Underground mining is also ahead of schedule, with first equipment deliveries achieved and horizontal development of 682m (30% above plan) in Q1. Most of the underground mining equipment will arrive in June as development ramps up, and stoping is expected to begin ahead of schedule in January.
Ivanhoe is working to finalize a new border crossing at Kipushi that would improve export logistics for both Kipushi and Kamoa-Kakula. Border crossings in DRC where mineral products are exported have experienced significant congestion, impacting the shipping costs for Kamoa-Kakula, which exports copper concentrate from DRC by truck. An additional border crossing, for which Ivanhoe signed an MOU with the Haut-Katanga province in Q3/22, would help reduce shipping and logistics costs