The Kamoa Project is a newly discovered, very large, stratiform copper deposit with adjacent prospective exploration areas within the Central African Copperbelt, approximately 25 kilometres west of the town of Kolwezi and about 270 kilometres west of the provincial capital of Lubumbashi. Ivanhoe Mines holds its 95% interest in the Kamoa Project through a subsidiary company, African Minerals Barbados Limited SPRL (AMBL). A 5%, non-dilutable interest in AMBL was transferred to the government of the DRC on September 11, 2012, for no consideration, pursuant to the DRC Mining Code. The company also has offered to sell an additional 15% interest to the DRC on commercial terms to be negotiated.
In January 2013, a new independent mineral resource estimate was prepared for the Kamoa Copper Discovery by AMEC E&C Services of Reno, Nevada. The new estimate ranks Kamoa as Africa's largest high-grade copper discovery and the world's largest undeveloped high-grade copper discovery. As of January 2013, Ivanhoe Mines had discovered 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. A 1% copper cut-off grade and a minimum vertical mining thickness of three metres was applied in each classification.
Kamoa Mineral Resource December 2012
Contained Copper (billion lbs)
Note: Mineral Resources have an effective date of December 10, 2012. Harry M. Parker and Gordon Seibel, both SME Registered Members, are the Qualified Persons responsible for the Mineral Resource estimates. The Mineral Resource estimate was prepared by Mr. Seibel. Mineral Resources are reported using a total copper (Cu) cut-off grade of 1% Cu and a minimum assumed mining thickness of 3 metres. A 1% Cu cut-off grade is typical of analogue deposits in Zambia.
Two-phased approach to the development of a large mine and smelter
On November 18, 2013, Ivanhoe Mines announced positive findings of an independent, Preliminary Economic Assessment (PEA) of the company's major Kamoa copper discovery.
The PEA reflects a two-phased approach to development of the Kamoa Project. The first phase of mining would target high-grade copper mineralization from shallow, underground resources to yield a high-value concentrate. The second phase would entail a major expansion of the mine and mill and construction of a smelter to produce blister copper.
The PEA contemplates the establishment of a conventional copper mine and concentrator complex at Kamoa with an initial mining rate and concentrator capacity of three million tonnes per year. Initial mill feed would come from the Kansoko Sud mineralized zone and lead into the Centrale area of Kamoa's mineralized zones.
The initial mining rate and concentrate feed capacity of three million tonnes per year would be followed in Year 5 by an additional expansion of eight million tonnes per year in concentrator capacity and the construction of an on-site smelter with a capacity to produce 300,000 tonnes per year of blister copper. In addition, an estimated 1,600 tonnes of sulphuric acid per day would be produced as a by-product in the copper smelting process.The PEA contemplates that the sulphuric acid produced at Kamoa would be sold to copper-oxide mining operations on the Central African Copperbelt that currently purchase acid from Zambia or from overseas.
The production scenario schedules 326 million tonnes to be mined and milled at an average copper grade of 3.0% copper over a 30-year mine life, producing 7.8 million tonnes of payable blister copper (plus 0.5 million tonnes of payable copper in concentrate, in the initial concentrate phase) over the life of the project.
The PEA is preliminary in nature and includes an economic analysis that is based, in part, on Inferred Mineral Resources. Inferred Mineral Resources are considered too speculative geologically to have the economic considerations applied to them that would allow them to be categorized as Mineral Reserves, and there is no certainty that the results will be realized. Mineral Resources do not have demonstrated economic viability and are not Mineral Reserves.
Highlights of the Preliminary Economic Assessment (PEA):
A large mine and smelter would be developed using a two-phased approach.
A smaller-scale start-up would establish an operating platform to support expansion.
Early cash flows would be generated from the sale of high-grade copper concentrate.
Low pre-production capital requirement of approximately US$1.4 billion.
Steady-state production target of 300,000 tonnes per year of blister copper, which would establish Kamoa as one of the world's largest copper mines, with the highest grade.
Cash costs of US$1.18 per pound of copper would rank Kamoa near the bottom of the global cash-cost curve.
Pre-tax Net Present Value, at an 8% discount rate, of US$4.3 billion.
After-tax Net Present Value, at an 8% discount rate, of US$2.5 billion.
Pre-tax internal rate of return of 18.5%; after-tax IRR of 15.2%.
Construction underway of first box cut for planned underground mine
The construction of the box cut for the first access declines to the planned underground mine is progressing well and on schedule to be completed by the end of 2014. This will enable commencement of construction of the twin declines designed to intersect the high-grade copper mineralization in the Kansoko Sud area, approximately 150 metres below surface. Ivanhoe's drilling program in this area has defined a thick, near-surface zone of high-grade copper mineralization, where a recent drill hole intercepted 15.7 metres (true width) of 7.04% copper, at a 1.5% total copper cut-off.
Progress on pre-feasibility study, with initial mining planned at Kansoko Sud
In line with the phased approach to project development outlined in the 2013 updated Kamoa preliminary economic assessment (PEA), the Kamoa PFS is progressing based on the planned first phase of the project having an underground mine producing three million tonnes per annum (3 Mtpa) and feeding a concentrator. Development plans will be refined following completion of the PFS. Work on the PFS design, scheduling and cost estimation of the mine is progressing well. To maximize margins, the target of the early years of mining is the near-surface material in Kansoko Sud and high-grade material in Kansoko Centrale.
Given the favourable geological characteristics of the Kamoa Deposit as derived from the December 2012 mineral resource -- including its relatively undeformed, continuous mineralization -- it is considered amenable to large-scale, mechanized, room-and-pillar and drift-and-fill mining. The overall dip and geometry of the resource make it conducive to room-and-pillar mining in the shallow portions of the deposit, which will transition to stepped room-and-pillar mining in the steeper sections and to drift-and-fill mining in the deeper sections. These methods are the accepted industry standards for mining deposits such as Kamoa.
Metallurgical test work for PFS design of the concentrator is underway at the XPS laboratory in Sudbury, Canada, and the Mintek laboratory in Johannesburg, South Africa. This test work is being carried out on a composite sample representing the first four years of mining, during which flotation concentrate will be produced and sold. Recent test work and flow-sheet development have resulted in significant improvements in copper recovery (88.3%) and copper concentrate grade (39.0%). Furthermore, very low arsenic levels were reported (0.01%), which could attract a premium.
In August 2012, the government of the DRC granted the mining licences for the Kamoa Project that cover 400 square kilometres. The licences are valid for 30 years and can be renewed for 15 years at a time, until the end of the mine's life.
Agreement signed to upgrade existing hydroelectric power plants
In March 2014, a financing agreement was signed between Ivanhoe and the DRC's national electricity company, La Société Nationale d'Electricité (SNEL). Ivanhoe is working with SNEL to upgrade two existing hydroelectric power plants -- Mwadingusha and Koni -- to recover up to 113 megawatts of capacity to be made available to the national power supply grid. SNEL will provide the Kamoa Project with up to 100 megawatts from the grid, which would be sufficient to operate the initial phase of the Kamoa mine.
A third hydroelectric power plant -- Nzilo 1 -- would follow under the same financing agreement. Nzilo 1 will have a capacity of approximately 108 megawatts upon completion, entitling Kamoa to receive an additional 100 megawatts from the grid. The upgraded technology planned to be applied will increase the original design capacity of these power plants by up to 10%.
A combined total of 200 megawatts from the grid would provide sufficient power for Kamoa's 300,000 tonnes per year smelter and the associated future mine expansions.
In March 2015, Ivanhoe's exploration team received the 2015 PDAC Thayer Lindsley International Discovery Award for Kamoa