Zijin’s $412m Kamoa investment boosts Ivanhoe’s coffers

JOHANNESBURG (miningweekly.com) – China-based Zijin Mining’s $412-million investment in the Kamoa copper project, in the Democratic Republic of Congo (DRC), has given Ivanhoe Mines a significant financial boost to advance its projects in South Africa and the DRC.

Canada-based Ivanhoe reported on Tuesday that it had $530-million in cash and future payments at its disposal to develop its copper, platinum and zinc projects. Of this, $91-million had been reserved for use at its 64%-owned Platreef project, in South Africa.

Ivanhoe on Tuesday received the first $206-million payment from Zijin Mining for a 49.5% stake in the Kamoa project. The remaining $206-million would be paid in five equal instalments every 3.5 months.

Ivanhoe has also agreed to sell 1% of Kamoa for $8.32-million to Crystal River Global, a private company operated from Hong Kong. Upon the successful arrangement or procurement of project financing by Zijin, the company would have the right to acquire Crystal River's 1% share interest.

Ivanhoe executive chairperson Robert Friedland said that the partnership with Zijin allowed Ivanhoe to develop Kamoa into a tier-one copper mine “at a time when conditions in commodity markets are compelling virtually all others to run in the opposite direction”.

“When the consistent, downward trend in head grades at the world's major copper mines is combined with the current drastic curtailment in exploration and development spending, as well as cutbacks in sustaining capital, we are highly confident we will see a significant copper-supply deficit and a sharp rise in copper prices as this decade draws to a close - at approximately the same time as we expect Kamoa to begin decades of commercial production. The old adage again is proving to be very true: The best cure for low prices is low prices," Friedland commented.

Ivanhoe CEO Lars-Eric Johansson added that Ivanhoe was confident that Kamoa would become one of the world's “truly great copper mines”.

With indicated mineral resources of 739-million tonnes grading 2.67% copper, containing 43.5-billion pounds of copper, and inferred mineral resources of 227-million tonnes grading 1.96% copper, containing 9.8-billion pounds of copper (at a 1% copper cutoff), Kamoa is said to be Africa's largest high-grade copper discovery and the world's biggest, undeveloped high-grade copper discovery.

The 2013 Kamoa preliminary economic assessment (PEA) presented a two-phased approach to development of the project. The first phase of mining would target high-grade copper mineralisation from shallow, underground resources to produce about 100 000 t/y of contained copper in a high-value concentrate. The Kamoa PEA estimated that the preproduction capital required for Kamoa's first phase of development would be about $1.4-billion. The proposed second phase would entail a major expansion of the mine and mill, and construction of a smelter to produce about 300 000 t/y of blister copper.

Ivanhoe reported that the Kamoa prefeasibility study would be finalised in early 2016.