BMO's Bottom Line on Kipushi News Kipushi Construction Ahead of Schedule and 79% Complete; Commissioning in Q2/24
Bottom Line:
Construction of the Kipushi concentrator is tracking ahead of schedule with commissioning of the plant expected to begin in Q2/2024. We are encouraged by the project's progress towards first production in the near term. Furthermore, risk to the project has been lowered with Glencore (Restricted) and KICO expected to complete financing negotiations by quarter-end. The $200mm or more of financing should cover the majority of the remaining initial capex estimated at $240mm (September 2023).
Mining at Big Zinc began in December.
Key Points
Construction of the new 800,000tpa Kipushi concentrator is 79% complete with commissioning expected to commence in Q2/2024. All major equipment is onsite including the ball mill, dense media separation (DMS), and floatation cells. Photos included with today's update show most of this equipment already installed and construction focusing on piping and wiring. Once in operation, Kipushi is expected to produce 250,000 tonnes of zinc per annum in the first five years of production.
Underground development is also ahead of schedule. Mining of the Big Zinc orebody began in December using the transverse sublevel open stoping method.
Ivanhoe intends to stockpile ore ahead of the Q2/2024 commissioning.
Support has been received by the Haut-Katanga government and national authorities in the DRC for a dedicated road boarder crossing south of the town of Kipushi. Road construction/upgrades on both sides of the crossing is ongoing or imminent. The crossing between Zambia and the DRC will benefit both Kipushi and Kamoa-Kakula with an additional export route.
Negotiations are advancing with Glencore (Restricted) for an off-take and financing agreement. Following the April announcement, Glencore has expressed continued interest in Kipushi. Financing negotiations are expected to conclude by quarter-end for a facility anticipated at $200mm or more. The added financing is expected to cover the majority of the remaining initial capex for the project. As of September 30, 2023, the estimated remaining spend at Kipushi was $240mm.
Terms of the JV agreement have now been fully executed. Terms of the JV agreement signed between Kipushi Holding, Gcamines and KICO (Kipushi Corporation) have not changed since announced in February 2022. Upon completion of the terms, Kipushi Holdings has transferred 6% interest in KICO to Gcamines. This brings Gcamines' ownership to 38% (from 32%). A future 5% transfer to Gcamines is