Ivanhoe Mines: ‘Temporary’ Cost Bump Provides Brief Bargain
Tuesday Trading: Ivanhoe Mines shares rebounded 2%.
TCRs, a pesky cash cost increase for electricity at Ivanhoe Mines’ copper in DRC Congo is giving us what I think is a brief shot to purchase cheaper shares of the $13 billion USD company.
The Monday share price fall after the Africa miner’s year-end round-up amounted to 4%, perhaps whetting an appetite for takeover talk.
Buried in the Internet, vis Bloomberg: RBC says the Kamoa-Kakula mining complex operated by Ivanhoe Mines is set to become the world’s third-biggest copper production site in by 2027. A Royal Bank of Canada analyst says the company may well become a takeover target.
A “temporary” use of diesel for power backup at Kamoa-Kakula-Makoko will bring the copper mining and processing cost to $1.50 a pound to $1.70 a pound this year. That is up from $1.45 in 2023.
Copper’s price Monday fell 1.5% to $3.83 a pound in futures trading.
Hydroelectric energy from a dam will go full stream by year’s end, Ivanhoe explained in its fourth quarter conference call just now. Call replay here please.
Robert Friedland downplayed the “temporary” cost increase. He was due to speak after the call at the yearly Bank of Montreal mining conference in southern Florida.
The lead executive’s comments in the call are (or will be regarded as) touchstones for the miner’s streak of copper output records at Kamoa-Kakula. Each quarter’s production will continue to notch new highs, executives said.
Addressing costs, the miner said on the call, “This power issue will be going away.” IVN IVPAF
Boilerplate: Cash cost of payable copper produced in 2023 was $1.45 pound vs. $1.39 in 2022.
Kamoa-Kakula in 2023 produced 393,000 metric tons of copper concentrate from the sedimentary deposits, a record amount in a streak of record-setting production figures.
Worth listening to on the call are references from the co-executive-chairman and his top lieutenants about ongoing exploration at the Western Foreland’s Kitoko targets.
Also about the DRC’s No. 2 spot as copper producer, after Peru. About the rising cost of sulphuric acid, used in extraction and processing. About looming production from the Kipushi Mine: zinc, copper, germanium.
Q4-year-end report here please.
“We can find copper faster than we can build concentrators,” Robert Friedland said. “Think of this as a bathtub filled with copper.”
Regarding ownership, I added Monday to what is our largest and longest-running resources stake — approx. 82,000 shares.
[TCRs, this report is meant as color and not as analysis. I am not addressing the platinum-nickel-gold-etc. operation at Platreef in South Africa. Once again, consider listening to the 58-minute call and view the new deck out today please. ]
“Exploration is the lifeblood of mining,” the Ivanhoe founder said, using a phrase, “new horizons,” that he has employed since the original Ivanhoe Mines in Mongolia, circa 2003.
“We have 20,000 people there. Many geologists in a lifetime never get near a discovery like Kakula or Makoko. I can’t think of anyone building tier-one mines as fast as we can,” he said.
That speed — a new concentrator is 82% completed, the company says — could be a driver for an acquisitive tier-one copper miner.
Thom Calandra is a writer and an investor. Research and material are meant as editorial opinion. He is not a professional investment adviser. Please do not consider his reporting as a recommendation to buy or sell securities.