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MODERN MINING
May 2016
MINING News
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
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
Underground at Kipushi showing Y-junction on 1 200-m level. Silos to the right and cage to the left (photo: Ivanhoe Mines).
Positive PEA completed on Kipushi redevelopment