Modern Mining May 2016

MINING News

Positive PEA completed on Kipushi redevelopment

operation. The combination of extremely high zinc grades, low capital requirements and low operating costs make this a com- pelling development project.” Johansson said that since beginning operations almost a century ago, Kipushi has written a long and storied history of mining achievement in the DRC. “We are optimistic that the release of this independent, preliminary mine rede- velopment plan is a key first step toward redeveloping the mine and beginning the realisation of significant benefits for all of the Kipushi project’s stakehold- ers, including the Congolese people and our joint venture partner, Gécamines. As required by our joint venture agreement, we have shared this study with our partner, Gécamines, for its review and approval, and we look forward to working with Gécamines’ experts to further improve the preliminary mine redevelopment plan, where possible.” Historical mining at Kipushi was car- ried out from surface to approximately 1 220 m below surface (mL) and occurred in three contiguous zones: the North and South zones of the Fault Zone, and the Série Récurrente Zone in the footwall of

Robert Friedland, Executive Chairman of TSX-listed Ivanhoe Mines, and Lars- Eric Johansson, CEO, have announced the receipt of an independent, prelimi- nary economic assessment (PEA) for the planned redevelopment of the company’s historic, high-grade, Kipushi zinc-copper mine in Katanga in the DRC. The PEA plan covers the redevelop- ment of Kipushi as an underground mine, producing an average of 530 000 tonnes of zinc concentrate annually over a 10-year mine life at a total cash cost, including cop- per by-product credits, of approximately US$0,54 per pound of zinc. The Kipushi project is operated by Kipushi Corporation (KICO), a joint ven- ture between Ivanhoe Mines (68 %) and Gécamines (32 %), the state-owned min- ing company. The PEA plan focuses on the mining of Kipushi’s Big Zinc Zone, which has an estimated 10,2 Mt of measured and indicated mineral resources grading 34,9 % zinc. This grade is more than twice as high as the measured and indicated mineral resources of the world’s next-high- est-grade zinc project, according to Wood Mackenzie, a leading, international indus- try research and consulting group.

The PEA for Kipushi’s redevelop- ment was prepared by OreWin of Adelaide, Australia and the MSA Group of Johannesburg. Highlights of the PEA include an after- tax net present value (NPV) at an 8 % real discount rate of US$533 million and an after-tax real internal rate of return (IRR) of 30,9 %. The after-tax project payback period is 2,2 years. Leveraging existing surface and under- ground infrastructure significantly lowers the redevelopment capital compared to a greenfield development project, as well as the time required to reinstate produc- tion. A life-of-mine average cash cost of US$0,54/lb of zinc is expected to rank Kipushi, once in production, in the bottom quartile of the cash cost curve for zinc pro- ducers globally. “This preliminary mine redevelopment plan supports our view that Kipushi is the best brownfield zinc project in the world,” said Friedland. “Kipushi’s zinc grade of almost 35 % puts the project into a class of its own. Most of Kipushi’s underground development and infrastructure is already in place and it is expected to be a straight- forward, underground mining and milling

Underground at Kipushi showing Y-junction on 1 200-m level. Silos to the right and cage to the left (photo: Ivanhoe Mines).

4  MODERN MINING  May 2016