TSX-listed Ivanhoe Mines has announced the results of an independent Pre-Feasibility Study (PFS) for the Kakula copper mine in the DRC and an update on the Preliminary Economic Assessment (PEA) for an expanded Kamoa-Kakula production rate of 18 Mt/a. Should this expanded rate be achieved, Kamoa-Kakula would rank as the world’s second largest copper mine, with a peak annual production of more than 700 000 tonnes of copper.
The two studies were released to coincide with the recent Mining Indaba in Cape Town. In his keynote address at the event, Ivanhoe’s Co-Chairman, Robert Friedland, said that the company and its Chinese partners, Zijin Mining Group and Crystal River Global Limited, welcomed the extremely positive findings of the PFS and the updated and expanded PEA.
Kakula’s initial two declines intersected the mineralised reef on the northern edge of the Kakula deposit in late January.
The Kamoa-Kakula project is situated in the Kolwezi District of Lualaba Province approximately 25 km west of the provincial capital of Kolwezi, and about 270 km west of the regional centre of Lubumbashi. Ivanhoe discovered the Kamoa copper deposit in 2008 and the high-grade Kakula deposit in 2015. Both discoveries are in an area previously considered to be beyond the western limits of the Congolese Copperbelt.
“It has been a remarkable 25 years since my first keynote presentation at the very first Mining Indaba in this beautiful city of Cape Town, South Africa,” Friedland told his Mining Indaba audience. “In that inaugural speech in 1994, we shared with delegates how African Minerals, the founding, corporate trailblazer for Ivanhoe Mines, was focused on its quest for major discoveries in and around Southern Africa’s legendary mineral fields.
“Now, after more than a quarter of a century of exceptional field work by our team of visionary and tenacious exploration geologists, we are about to make the ‘Great Leap Forward’ from one of the modern world’s top mine finders to one of the world’s leading producers of copper – as well as palladium, platinum, zinc, nickel, gold, silver and rhodium from the other two major mining projects that Ivanhoe is developing in Southern Africa.”
He said that the two studies clearly proved Ivanhoe’s long-standing conviction that Kamoa-Kakula is firmly on track to become one of the greatest copper mining complexes in the world. “This would not have happened without the extraordinary efforts of the Ivanhoe discovery team and our investment of more than US$800 million in exploration and development,” he said.
“We now look forward to working with the new government of the DRC and the Congolese people to develop Kamoa-Kakula to its full potential, generating widely shared economic benefits that will help to uplift local communities, and provide skills training to help ensure that young Congolese can qualify for the thousands of meaningful direct and indirect jobs that will be created.”
The PFS and updated PEA build on the outstanding results of the previous PEA announced in November 2017. The PFS has advanced the detailed design and engineering in that earlier study and has confirmed the viability of the project. As well, the re-scoped and expanded PEA shows the potential to develop the project to a larger scale and with a larger production capacity.
The PFS and PEA encompass two development scenarios. The Kakula 2019 PFS evaluates the development of a stage one, 6 Mt/a underground mine and surface processing complex at the Kakula deposit while the Kamoa-Kakula 2019 PEA looks at subsequent development to three producing mines, namely Kakula, Kansoko and Kakula West.
The studies were independently prepared by Amec Foster Wheeler E&C Services Inc (a division of Wood Plc) of Reno, USA; DRA Global of Johannesburg; KGHM Cuprum R&D Centre of Wroclaw, Poland; OreWin of Adelaide, Australia; Stantec Consulting International of Arizona, USA; and SRK Consulting Inc of Johannesburg.
“The new PFS and PEA, independently prepared by six of the world’s top engineering firms, reinforces the fact that Kamoa-Kakula is unquestionably the world’s best undeveloped copper discovery,” said Friedland. “Kamoa-Kakula is unique as it combines ultra-high copper grades in thick, shallow and flat-lying orebodies – allowing for large-scale, highly-productive, mechanised underground mining operations. Kakula is projected to have an average grade of 6,8 % copper over the initial five years of operations, and 6,4 % copper over the first 10 years – grades that are orders of magnitude higher than the majority of the world’s other major copper mines.
“This mine is getting built. And, most importantly, it is being built to international best practices that will be a showcase for responsible mine development.
“As good as the economic numbers are in this PFS for Kakula, you simply cannot apply conventional discounted cash flow analysis to Tier One projects like Kamoa-Kakula and expect to get a sensible answer on long-term value. Massive, high-grade deposits like we have found at Kamoa-Kakula – which have the potential to produce large quantities of copper for multiple generations – are very long-term plays. The real value is generated over time, in the phased expansions.”
Lars-Eric Johansson, CEO and President of Ivanhoe Mines, said that discussions for financing the construction of the initial 6 Mt/a mine at Kakula were progressing well with China-based financial institutions. CITIC Metal, Ivanhoe’s largest shareholder, is assisting with the discussions.
Johansson said the 18 Mt/a development scenario clearly showed the economic potential for a phased development plan for Kamoa-Kakula to become one of the largest copper mines in existence. He referred to the remarkable discovery hole drilled at Kamoa North which was announced recently which had returned the thickest high-grade intersection yet at Kamoa-Kakula – 13,05 % copper over 22,3 m starting at a depth of only 190 m below surface – and said Ivanhoe was confident that there were more high-grade copper discoveries to be made in the area and that the ultimate scale of operations at Kamoa-Kakula could be much larger. “We see no geological limitation to the goal of eventually producing one million tonnes of copper per year,” he said.
As mentioned, the Kakula 2019 PFS analyses the development of an initial 6 Mt/a operation at the Kakula deposit in the southerly portion of the Kamoa-Kakula project’s discovery area. For this option, the PFS envisages an average annual production rate of 291 000 tonnes of copper at a mine-site cash cost of US$0,46 per pound (lb) copper and total cash cost of US$1,11/lb copper for the first 10 years of operations, and annual copper production of up to 360 000 tonnes by year four.
An initial capital cost of US$1,1 billion for this option would result in an after-tax net present value (NPV) at an 8 % discount rate of US$5,4 billion, an internal rate of return (IRR) of 46,9 % and a project payback period of 2,6 years.
Kakula benefits from an ultra-high, average feed grade of 6,8 % copper over the first five years of operations, and 5,5 % copper on average over a 25-year mine life.
The Kakula mill would be constructed in two smaller phases of 3 Mt/a each as the mining operations ramp-up to full production. The life-of-mine production scenario provides for 119,7 Mt to be mined at an average grade of 5,48 % copper, producing 9,8 Mt of copper concentrate, containing approximately 12,4 billion pounds of copper. Kakula is expected to produce a copper concentrate in excess of 55 % copper, with extremely low arsenic levels.
Basic engineering is underway, expected to be completed around mid-year, running in parallel with a definitive feasibility study expected to be completed around year-end.
Development of twin underground declines has been completed at Kakula, with ongoing underground development activities, including access drives and ventilation raises. In addition, a boxcut for a ventilation decline on the southern side of the Kakula orebody is nearing completion.
The Kamoa-Kakula 2019 PEA presents the alternative development option of a three-phase, sequential operation on Kamoa-Kakula’s high-grade copper deposits.
Initial production would occur at a rate of 6 Mt/a from the Kakula mine, before increasing to 12 Mt/a with mill feed from the Kansoko mine. A third 6 Mt/a mine would then be developed at Kakula West, bringing the total production rate to 18 Mt/a. As resources at Kakula and Kansoko are mined, the PEA envisages that production would begin at several mines in the Kamoa North area to maintain 18 Mt/a throughput over a 37-year mine life.
For the three-phase sequential operation, the PEA envisages US$1,1 billion in initial capital costs. Future expansion at the Kansoko mine, Kakula West mine and subsequent extensions could be funded by cash flows from the Kakula mine, resulting in an after-tax NPV at an 8 % discount rate of US$10,0 billion and an IRR of 41 %.
Under this approach, the PEA also includes the construction of a direct-to-blister flash copper smelter at the Kakula plant site with a capacity of 1 Mt/a of copper concentrate to be funded from internal cash flows. This would be completed in year five of operations, achieving significant savings in treatment charges and transportation costs.
The 18 Mt/a scenario delivers average annual production of 382 000 tonnes of copper at a total cash cost of US$0,93/lb copper during the first 10 years of operations and production of 740 000 tonnes by year 12 of the project.
Photos courtesy of Ivanhoe Mines