Ivanhoe Kamoa-Kakula Copper Project

Major changes are happening at Ivanhoe Mines following Executive changes that took place leading to an increase in shareholding by Zijin Mining. Ivanhoe’s Executive Vice President, Operations, has been appointed as the Chief Executive Officer of the Kamoa-Kakula Copper Joint Venture.

In two concurrent moves to further enhance Ivanhoe’s development and operating capabilities, Louis Watum, Ivanhoe’s DRC country manager, has been appointed President of the Board of Directors of Kamoa Copper SA, the DRC operating company of the joint venture between Ivanhoe Mines, Zijin Mining Group, Crystal River and the Government of the Democratic Republic of Congo that is developing the Kamoa-Kakula Project. Mr. Watum’s expanded role includes assisting with infrastructure development. So huge is the Kamoa-Kakula Project that its set to set to be the worlds second largest copper mine. Spanninmg over a size nearly the same size aas Manhattan City, the mine will stretch more than 13 km.

The stage one of the operation will be pegged at 6Mta with an estimated capital development cost of US$ 1.1 Billion The project is projected to have an after tax yield NPV (8%) of US$5.4 Billion and an Internal Rate of Return of 47% over the entire 25 Life of Mine (LOM). The Kakula project is expected to produce very high grade copper concentrate in excess of 57% Copper with very low arsenic levels.

Mining will be undertaken in 6m high panels utilizing 60 tonne trucks and conveyed to the surface for stockpiling and processing. 55% of the tailings will be pumped back into the mine for backfilling.

South African mining veteran Warwick Morley-Jepson has been appointed as Ivanhoe’s new Chief Operating Officer, assuming the duties formerly held by Mr. Farren.

“Louis, Mark and Warwick all have extensive experience in the development, construction and operation of underground mines in the region, and we have the utmost confidence in their abilities to assemble and lead the joint-venture team that will construct and operate the stage-one, six million-tonne-per-annum Kakula Copper Mine, while also advancing development efforts at our Kipushi and Platreef projects and fast-tracking exploration drilling on our 100%-owned Western Foreland licences,” said Mr. Friedland.

Joining Mr. Farren on Kamoa-Kakula’s new executive management team will be Dr. Yong Chen of Zijin Mining, as Chief Operating Officer. Dr. Chen has more than 25 years’ management experience in mining operations, including his most recent role as Director and General Manager of Xinjiang Ashele Copper Ltd., a large-scale underground mining and processing complex majority owned by Zijin Mining.

“The executive management team will work closely with Mr. Watum and senior Congolese management, our government partners and our host communities to help ensure that the Kakula Mine is built on time and budget, and to the best international standards,” added Mr. Friedland.

“The structure of the team reflects the strong degree of cooperation between the joint-venture parties, and we are confident that the individual expertise and leadership qualities of each member of this executive team will help ensure a successful start-up of operations at Kakula.” 

“This is an important stage of growth for Ivanhoe Mines, and I am honoured to lead the development of the tier-one Kamoa-Kakula Project at such an exciting time,” said Mr. Farren. “We are uniquely positioned to build Kakula into one of the world’s greatest copper mines, and I am excited to be part of the team that moves this project forward to production.”

The Kamoa-Kakula Copper senior management team also includes Congolese nationals Ben Munanga – Head of Energy; Teddy Kabongo – Head of Tax; and Dr. Guy Muswil – Head of Sustainability. As well, Rochelle De Villiers of Ivanhoe Mines and David Li of Zijin Mining have been appointed as Kamoa-Kakula’s Co-Chief Financial Officers.

The Kamoa-Kakula Copper Project is a joint venture between Ivanhoe Mines (39.6%), Zijin Mining Group (39.6%), Crystal River Global Limited (0.8%) and the DRC government (20%). Ivanhoe Mines and Zijin Mining are co-funding development of the project. Initial copper concentrate production from the Kakula Mine, the first of at least three mines planned at Kamoa-Kakula, currently is scheduled for the third quarter of 2021.

Warwick Morley-Jepson appointed as Ivanhoe’s new
Chief Operating Officer

The company has appointed Warwick Morley-Jepson as its new Executive Vice President and Chief Operating Officer. Mr. Morley-Jepson is a seasoned mining professional who will assume the duties previously performed by Mr. Farren. He will be responsible for overseeing the technical and development initiatives that Ivanhoe currently is pursuing at the Kipushi and Platreef projects. He also will be a key member of the Ivanhoe team working with Zijin Mining to oversee the development of the Kamoa-Kakula Project.

Zijin to increase its shareholding in Ivanhoe Mines to 13.88% in a private share purchase and sale transaction with CITIC Metal Africa and Robert Friedland

In a related move that follows the implementation of Kamoa-Kakula’s new executive management team and which reflects the efforts and importance of Zijin Mining in the ongoing development of Kamoa-Kakula as well as the spirit of genuine strategic cooperation among Ivanhoe Mines’ largest shareholders, CITIC Metal Africa and Robert Friedland have agreed to sell 35,752,011 shares (3.0%) and 12,900,271 shares (1.08%) of their shareholdings, respectively, to Zijin, in a private share purchase and sale transaction.

After the closing of the transaction, CITIC Metal Africa will own approximately 26.4% of Ivanhoe’s issued and outstanding shares, Robert Friedland will own approximately 13.2%, and Zijin will own 13.88%. The price per share will be fixed on the day prior to completion of the transaction at the prevailing one-day volume weighted average price at that time, but with a floor price of C$3.98 – the price of the recently completed second strategic investment by CITIC Metal in Ivanhoe Mines.

“This rebalancing share purchase and sale agreement once again proves the high level of trust and strategic cooperation between Ivanhoe Mines, CITIC Metal and Zijin Mining,” said Mr. Friedland.

The completion of the transaction remains subject to receipt by Zijin of necessary recordals and registrations with Chinese government regulatory agencies, as have been required and obtained in prior transactions. These are expected to be received within two months, with the completion of the transfers following thereafter and prior to the end of 2019.

At the closing of the transaction, Zijin and Ivanhoe Mines will enter into an investor rights agreement that will, among other things, confirm Zijin’s entitlement to one director, currently its Chairman Chen Jinghe who was elected to the board at Ivanhoe’s AGM held earlier this year. Zijin’s existing standstill agreement also will be amended to increase Zijin’s maximum allowable shareholding in Ivanhoe Mines to 13.88% from 9.9% without Ivanhoe board approval. Zijin Mining also will enter into the same reciprocal lock-up arrangements that currently exist between CITIC Metal and Robert Friedland under which each grants the others reciprocal disposition and tag-along rights in the event of certain proposed sales of shares in the future.

The existing standstill agreements for CITIC Metal and Mr. Friedland are unaffected by the rebalancing transaction, and each continues to be restricted from acquiring more than 29.9% and 19.9% of the Ivanhoe Mines’ common shares, respectively, until January 8, 2023.

About the Kamoa-Kakula Project

The Kamoa-Kakula Project is approximately 25 kilometres west of the mining centre of Kolwezi in the DRC. It is a joint venture between Ivanhoe Mines (39.6%), Zijin Mining Group (39.6%), Crystal River Global Limited (0.8%) and the DRC government (20%). Ivanhoe Mines and Zijin Mining are co-funding development of the Kamoa-Kakula Copper Project.

Based on existing mineral resources, Kamoa-Kakula has been independently ranked as the world’s fourth-largest copper deposit and Kamoa-Kakula’s copper grades are the highest, by a wide margin, of the world’s top 10 copper deposits.

Kamoa-Kakula is unique as it combines ultra-high copper grades in thick, shallow and relatively flat-lying deposits – allowing for large-scale, highly-productive, mechanized underground mining operations. Kakula, the first of multiple planned mines expected to be placed into production at Kamoa-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.

About Zijin Mining

Zijin Mining Group Co., Ltd. (“Zijin” or “the Group”) is a large mining group mainly engaged in the exploration and mining of gold, copper, zinc and other mineral resources, dual listed in Hong Kong Stock Exchange (H shares, code: 2899) and Shanghai Stock Exchange (A shares, code: 601899). The main business-gold, copper and zinc metal resource reserves and mineral production have entered the top three in the domestic mining industry, with asset scale and sales revenue exceeding RMB 100 billion yuan. As one of the most profitable and competitive large mining companies in Chinese mining industry with the largest control of metal mineral resources, Zijin ranked the 947th place in the Forbes Global 2000 in 2018 and the 14th place among the global non-ferrous mining enterprises, the 2nd place among the world’s public gold miners, and the 82th place in the Fortune China 500 in 2018.

About Ivanhoe Mining

Ivanhoe Mines (TSX: IVN; OTCQX: IVPAF) is a Canadian mining company focused on advancing its three principal, joint-venture projects in Southern Africa: the development of new mines at the Kamoa-Kakula copper discovery in the Democratic Republic of Congo (DRC) and the Platreef platinum-palladium-nickel-copper-gold discovery in South Africa; and the extensive redevelopment and upgrading of the historic Kipushi zinc-copper-germanium-silver mine, also in the DRC. The company also is exploring for new copper discoveries on its wholly-owned Western Foreland exploration licences, adjacent to the Kamoa-Kakula mining licence.

 

 

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