Ivanhoe Mines stock dips despite record-breaking performance

• Ivanhoe Mines opened lower after reporting its Q4 and full-year 2023 financial results below analyst estimates
• The Canadian mining stock reported a profit of US$303 million, a record normalized profit of US$388 million in 2023
• Its Kamoa-Kakula copper project recognized record annual revenue of US$2.70 billion and record EBITDA of US$1.68 billion in 2023
• Ivanhoe Mines stock closed at C$14.06 per share

Ivanhoe Mines (TSX:IVN) opened lower after reporting its Q4 and full-year 2023 financial results below analyst estimates.

Despite this, the Canadian mining stock reported a profit of US$303 million, a record normalized profit of US$388 million and record adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of US$604 million in 2023.

Its Kamoa-Kakula copper project recognized record annual revenue of US$2.70 billion and record EBITDA of US$1.68 billion in 2023, compared with US$2.15 billion in 2022. Kamoa-Kakula milled a record 8.54 million tonnes in 2023 at an average grade of 5.23 per cent copper. The project produced 393,551 tonnes of copper in concentrate in 2023, achieving its production guidance range despite intermittent grid instability.

“Kamoa-Kakula continues to exceed expectations in terms of overall performance, with Phase 1 and 2 mill throughput, copper recoveries and underground mining operations registering strong results in 2023 – and in many cases outperforming nameplate capacity,” Ivanhoe’s founder and executive co-chairman Robert Friedland said in an update for investors. “Delivering a project of this calibre and scale on budget and ahead of schedule is a true anomaly in the mining industry, which is often plagued by cost overruns and delays. This track record of success will continue as we ramp up the Phase 3 concentrator and underground mines significantly ahead of schedule late in the second quarter of 2024 … which will position Kamoa-Kakula as the world’s third-largest copper mining complex just eight years after Ivanhoe geologists reported the initial discovery hole at the Kakula deposit.”

The company stated a full-year cash cost guidance of US$1.50 per pound to US$1.70 per pound of payable copper produced. The reason for this increased cash cost is meant to partially reflect the favourable early commissioning of the Phase 3 concentrator by late Q2 2024. The early commissioning of the Phase 3 concentrator would require additional backup power generation for the rest of the year, until the Inga II hydroelectric dam refurbishment is complete at year-end. Phase 3 and its backup power generation is expected to temporarily increase its cash costs by up to $0.20 per pound for 2024.

The Phase 3 concentrator project is said to be 82 per cent complete and ahead of schedule for the targeted June 2024 ramp-up. The smelter complex is 76 per cent complete and on schedule for commissioning in Q4 2024.

As the company also works to restart the historic, ultra-high-grade Kipushi zinc-copper-lead-germanium mine in the Democratic Republic of Congo, construction of the 800,000 tonnes-per-annum (tpa) concentrator is 85 per cent complete and ahead of schedule for commissioning in Q2 2024.

“We are also just a few months away from first production at Kipushi, bringing this legendary mine back to life a century on from when it first produced as the world’s highest-grade open pit copper mine,” chairman Friedland added. “At Platreef, we will complete the construction of the proof-of-concept, ‘baby’ Phase 1 mine this year; however, we now have even greater focus on quickly unlocking the Phase 2 expansion of this remarkable resource endowment. Our team is razor focused on delivering these major milestones for our stakeholders and shareholders, as we take the next vital steps on our journey to emerge as the world’s most dynamic, new major diversified mining company.”

A preliminary economic assessment is in progress ahead of a new Phase 3 expansion to 10 million-tonnes-per-annum (Mtpa) to rank Platreef, its palladium, nickel, platinum, rhodium, copper and gold development in South Africa, as one of the world’s largest and lowest cost platinum-group metals and base metal producers.

Ongoing drilling of the high-grade Kitoko copper discovery in the Western Forelands has expanded its strike length to 2 km.

Ivanhoe Mines is a Canadian mining stock advancing three main projects in southern Africa:

• The Kamoa-Kakula copper complex in the Congo, which is expected to yield 650,000 tonnes of copper in Q4 2024
• The Platreef palladium-rhodium-platinum-nickel-copper-gold project in South Africa, which boasts a phase-II annual production forecast of more than 590,000 ounces of platinum group metals and gold, as well as more than 40 million pounds of nickel and copper
• The restart of the ultra-high-grade Kipushi zinc-copper-germanium-silver mine in the Congo, which is slated to yield life-of-mine average annual zinc production of 240,000 tonnes with C1 cash costs of US$0.65 per pound of payable zinc

The company is also pursuing new copper discoveries across its 2,400 square kilometres of 80-100 per cent owned licenses, as well as 247 square kilometres of joint venture licenses, in the Congo’s Western Foreland adjacent to Kamoa-Kakula.

Ivanhoe Mines stock closed trading 4.06 per cent lower at C$14.06 per share. The stock has gained approximately 27 per cent year-over-year and more than 307 per cent over the past five years.

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