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Kamoa-Kakula project study gives Ivanhoe 2 development options

Ivanhoe Mines Ltd. released the results of a preliminary economic assessment for its Kamoa-Kakula copper project in the Democratic Republic of the Congo that indicates the potential for an initial single or two-mine operation.

The single-mine option envisages bringing the Kakula mine into production at a rate of 4 million tonnes per annum for a capital outlay of just under US$1 billion, according to a Dec. 13 statement.

The study estimates that the operation would have an after-tax net present value of US$3.66 billion and an internal rate of return of 38%. Ivanhoe said the NPV is 272% higher and the IRR is more than double what was estimated in a pre-feasibility study completed in March.

Under the single-mine option, Kakula's average annual production rate would be 216,000 tonnes of copper, increasing to 262,000 tonnes by year three, at a cash cost of 37 cents per pound for the first 10 years.

Kakula is expected to have an initial 23-year life.

Meanwhile, a two-mine operation with a 29-year life would involve bringing both the Kakula mine and the Kansoko mine, at the adjacent Kamoa deposit, into production at a rate of 8 Mtpa.

This option requires just under US$1 billion in capital for an operation with an average annual production of 292,000 tonnes of copper, increasing to 370,000 tonnes by year seven, at a cash cost of 42 cents per pound during the first 10 years.

The after-tax NPV and IRR for the two-mine operation is estimated to be US$4.75 billion and 34.6%, respectively.

Ivanhoe is now undertaking a follow-up preliminary economic assessment that is investigating a new option for one mine producing 8 Mtpa.

The company said the single-mine option is expected to have substantial advantages over the development of two mines to achieve the same production rate.

Ivanhoe is also looking at the options to expand output to up to 16 Mtpa from two mines by utilizing high-grade copper mineralization from both the Kakula deposit and the Kansoko Sud and Kansoko Centrale areas of the adjacent Kamoa deposit.

The follow-up study is scheduled for completion in the first quarter of 2017.