Ivanhoe Mines Ltd.

Good morning, ladies and gentlemen, and welcome to the Ivanhoe Mines Q3 2022 Financial Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we'll conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded today, November 14, 2022. I would now like to turn the conference over to Matthew Keevil, Director of Investor Relations and Corporate Communications. Please go ahead.

Thank you, Operator. Hi, everyone. My name is Matthew Kuebel, and I am the Director of Investor Relations and Corporate Communications with Ivanhoe Mines. It is my pleasure to welcome you to our Q3 2022 conference call. We will finish today's event with a question and answer session. You can submit a question using the Q&A box on the webcast page, as well as through the conference operator via your phone line. Given our time constraints, we will likely be unable to answer every question, but please follow up with the IR team after the call. Before we begin, I'd like to remind everyone that today's event will contain forward-looking statements, which involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Details of these forward-looking statements are contained in our November 14th news release, as well as on CDAR and at our website at www.ivanhomeminds.com. It is now my pleasure to introduce Ivan Home Minds' president, Marna Cloutier.

Thank you, Matt, and welcome everyone to our third quarter earnings of 2022. We've had an extremely busy quarter with our expansion projects at Kamoa and activities ramping up at Platte Reef and Kapushi. This quarter, Kamoa Kokula kept building on its reputation as a world-class mine with record sales of 94,000 tonnes of payable copper and copper production of 98,000 tonnes of copper for the quarter. This gave us the confidence to up the lower end of our production guidance to 325,000 tonnes of copper and concentrate with the aim to achieve the upper end of guidance of 340,000 tonnes of copper and concentrate. The de-bottlenecking project is now 70% complete and it is expected to reach annualised copper production of 450,000 tonnes of copper in the second quarter of 2023. Our Phase 3 expansion activities are progressing well and is expected to increase production from Kamoa Kukula to 600,000 tonnes by the fourth quarter of 2024. Our C1 cash costs continue to be impacted by higher than expected logistic charges, but with current mitigation measures in place, we reiterate our guidance and expect to be at the upper end of cash cost guidance for the year. To this end, we have tightened the range to between $1.35 and $1.40 per pound. Before our CFO, David Van Yerden, discuss our financial results in more detail, I would like to provide a quick update on the efforts of our sustainability team. During the quarter, Kamauakakura commenced with bulk earthworks at the Kamaua Centre of Excellence. A rendering of this facility is in the background of this slide. This centre, once in operation, aims to create a sustainable and community-centred learning environment in the heart of the DLC. It will be a world-class facility offering degrees, diplomas and short courses in collaboration with internationally accredited institutions. At our livelihood programmes at Kamoa, our teams are expanding our community-forming footprint, which contributes to local entrepreneurs as well as food security. Our team at Platri focus on enterprise and supply development to enable small and medium enterprises to be included in our supply chain. And at Kupushi, we focused on access to water with a borehole program underway to assist our communities. With that, as a short introduction, I would like to now hand over to David van Jeeren for the financial results.

Thank you, Maida, and good day to everybody joining us today here. The third quarter of 2022 was another quarter of exceptional performance at the Monaco Cooler. However, the results were impacted by a further decline in the copper price at the end of the period and inflationary pressures, both of which I will discuss in more detail. This call is, of course, just a high-level summary of our quarterly results, and the presentation should be viewed in conjunction with our quarterly financial statements and MD&A for the three and nine months ended September 30, 2022. During the quarter, Kamau Kakula sold almost 94,000 tons of payable copper and concentrate, leading to quarterly revenue from contract receivables of $570 million, before a negative remeasurement of $110 million at period end, bringing us to a total revenue of $460 million for Q3. C1 cash costs for the quarter was a fraction higher due to the ongoing elevated logistics charges, but we will go into that in more detail in an upcoming slide. Notwithstanding the lower copper prices in the quarter, Kamal Kukula generated a very healthy EBITDA of $254 million. Revenue from contract receivables booked at an average copper price during the month of sale was $570 million in Q3 compared to $699 million in the second quarter of 2022, with the sales provisioning priced at $3.48 per pound in Q3 compared to $4.32 per pound in the second quarter 2022. Q2 sales was re-measured at the end of June at a copper price of $3.79 per pound, while the realized copper price for Q3 was $3.50 per pound. And at the end of September, the outstanding balance of provisioning price sales were re-measured using a copper price of $3.36 per pound, with these collectively resulting in the negative mark to market at the end of Q3 of Q3. $110 million. Kamau Kakula's cost of sales for the third quarter was $216 million in total, and $1.05 per pound of payable copper sold, down from $1.15 in the second quarter. After deducting general administrative expenditure, the operating profit for the third quarter of the year was $223 million. and Kamau Kakula's EBITDA was $254 million. Kamau Holding recorded a finance cost of $81 million in Q3, which is principally the interest on the Sheldon loans from Ivan Angi Shin, as well as the interest on Kamau Kakula's equipment financing facility. The default tax and tax expense for the quarter was $57 million, compared to $62 million in Q2 2022. The non-controlling interest, of $20 million for the quarter represents the profit attributable to the DRC government's 20% interest in the Kula Mining Complex, leaving a profit of $69 million attributable to the joint venture partners, other than a share of which equals $34 million in Q3.

We move to the next slide.

Indicated at the top left of the chart is the quarter-on-quarter comparison of Gemara's revenue while also including the realized copper price in the period. The build-up of the year-to-date revenue to $1.5 billion has been exceptional considering the declining copper price. The top right chart indicates the cash Gemara Kukula generated from its operating activities, with the bottom left chart underlining the strong quarter-on-quarter EBITDA performance and margin, which has been more than sufficient to cover the current expansion expenditure with the capital expenditure per quarter summarized at the bottom right-hand side.

We move to the next slide.

The Ibanez consolidated results for Q3 The chart starts with Ivano share of profit from the Kamoa joint venture of $34 million, which was mentioned two slides back. Additionally, Ivano earned interest income of $41 million from Kamoa Holding in the third quarter from share of the loans advanced to the joint venture. During the quarter, the company spent $4 million on Western Forelands exploration and $9 million on general and administrative expenditure. Cost incurred at the Platte Reef and Kapushi project are deemed necessary to bring the project to commercial production and are therefore capitalized as development cost and property plant equipment. The $27 million loss on the fair valuation of the financial liability in the third quarter represents the change in the deemed fair value of the conversion feature attached to the $575 million 2.5% convertible senior notes, which Ivano closed in March 2021. The conversion feature is an embedded derivative financial liability, and the fair value changes principally due to the fluctuations in our share price. And the loss is therefore a result from the increase of Ivano's share price from the end of June 2022 to the end of September this year. Further, Ivano recognized finance costs of $10 million in Q3, relating mainly to their interest on the convertible notes at the effect of interest rates. The aforementioned ultimately built up to Arvinas profit for Q3 of $24 million. We go to the next slide. The cash cost per pound of payable copper produced for delivery to China was $1.43 per pound. of payable copper for Q3 2022, and largely in line with the $1.42 per pound in the second quarter. The volume benefit from additional punch produced in the quarter resulted in decreases in GNA and processing cost, but was offset by the increase in logistics cost. Concentrate production at Kamauka Kula doubled over the last year, which has not been met with a sufficient supply of trucking capacity, and has led to an increase in the trucking contractor market pricing. In addition, the Lua Lava Copper smelter was closed in June for maintenance, thereby temporarily increasing logistics volumes and costs for the last two quarters. The Lua Lava Copper smelter completed its scheduled maintenance in early September, which will assist in reducing overall shipping volumes. The export blistered. copper incurs lower logistics costs per unit compared to copper concentrate. These factors, together with border congestion, further increase trucking demand, resulting in higher logistics costs. Importantly, though, Kamakakula was able to sell almost all tons in payable copper produced in the quarter, with a difference in payable copper sold and payable copper produced being less than 1,000 tons. And as Norma mentioned, we still expect to come in on the upper end of our guidance range. So, though our costs are higher than we like, the previous slide has indicated that Kamoa Kula still generates excellent EBITDA and cash from its operating activities.

Thank you.

I will now hand over to Alex Picard, our vice president – no, sorry. One more slide, just looking at our strong balance sheet position which supports our growth. We are well positioned for further development of our project with $663 million in cash and cash equivalents on hand and consolidated working capital of $686 million. Of our liabilities of $999 million, $610 million relates to the comparable notes with these only due in 2026, with possible earlier redemption. While $284 million relates to deferred revenue, which represents the prepayment for future sale of refined gold and palladium and platinum to be delivered by the Platriff project in terms of our streams, which in the future will be amortized as the houses are delivered to the stream purchasers. Our forecasted spend for the remainder of 2022 is $149 million on track reef in Kapushi as well as continued exploration on western forelands and overheads. All operating and capital expansion costs at Kamau Kakula are expected to be funded from copper sales and facilities in place at Kamau. We are forecasting a very healthy cash position at the end of the year. I will now hand over to Alex Pickard, our last resident, Corporate Development and Marna, to provide a brief update on the development of our project.

Thank you, David, and good day to everybody on the line. It's Alex Pickard here, VP Corporate Development, and I'll say I'm very glad you took us through the balance sheet there because I wasn't prepared to take over then. So now I'll take you through a brief update on Kamoa Kukula operations and projects. and also talk a little bit about our exploration efforts out in the field. First of all, looking at Kamoaka Cooler's operational performance, we are very pleased to report another record-breaking production quarter of 97,800 tons of copper conthane in concentrate. This included 33,500 tons produced in September alone, so that comfortably exceeds an annualized production rate of 400,000 tons, And we were pleased to also repeat this level of production during the month of October. The chart on the right-hand side gives a bit of an indication of how this was achieved. So as phase two has reached steady state, we've gradually improved our milling rate. And so for the quarter, we milled close to 2.1 million tons, which was up from 1.85 million tons in the previous quarter. And at this milling rate, we're looking at an annualized overall milling rate of roughly 8.3 million tons. So that's exceeding our original design throughput of 7.6 million tons. We're also very pleased that the grades increased slightly during the quarter to 5.6%. And this is a reflection of the continuing optimization effort that we're going through with our mining activities at Kukula in particular. Given that phase two is also now ramped up to full capacity, we are pleased to see that the recoveries are hitting our design targets of very close to 86% overall. So where that leaves us today is that as at the end of October, we've produced just over 274,000 tons of copper. And as Marna mentioned at the beginning of the call, that's given us the confidence to increase the lower bound of our production guidance to 325,000 tons, up to 340,000 tons of copper for 2022. Finally, just looking at the de-bottlenecking program, that's also tracking ahead of schedule. We are roughly 70% complete today. And so we are targeting to be fully up and running by the second quarter of next year. This will increase the overall milling capacity to 9.2 million tons. So that's roughly 10% higher than what we milled in the previous quarter. Or in terms of copper production, that's around 450,000 tons of copper output. But we will be giving more detailed guidance for 2023 early in January. Next slide, please. So moving on to our larger phase three expansion project at Kamoa-Kakula, the construction activities are going ahead very much as planned, and we have no change to our targets for commissioning in the fourth quarter of 2024. So this phase three project includes the construction of a new mine and concentrator in the Kamoa area of the mining license. So that's roughly 10 kilometers to the north of the existing concentrator at Kukula. And as well as the mine and concentrator expansion, we will also be building the largest direct to blister smelter in Africa, which has a capacity of 500,000 tons of copper anode. And we anticipate that this smelter will be very much a game changer for the overall logistics of Kamoa and will further reduce our cost structure, which we already feel is very competitive. Where we are today, we've completed basic engineering for the entire project, and this will all be incorporated into a new technical report for phase three and beyond that will be published early next year. And on site, we are well underway with the earthworks and the early civil works. We are in the process of advancing new declines in order to open up the new underground mines at Kamoa 1 and Kamoa 2 that will ultimately support the Phase 3 concentrator throughput. On the power side, we are also busy with the refurbishment of Turbine 5 at Inga 2 Dam, which will provide an additional 178 megawatts of renewable power for Phase 3. And at that site at Inga, we recently completed mobilization with the contractors, and we're pleased to say that the manufacturing of the key Longleaf equipment is also well underway in China. Now moving on to our exploration activities and starting with the Western Fallen project adjacent to Kamoa Kukula. So currently we are in the process of wrapping up the bulk of our regional large-scale drilling for this year as we now head into the wet season in the DRC. We've been busy drilling extensions at a zone known as Makoko West, so this is adjoining a copper discovery that we initially made in 2016, I believe it was, known as Makoko. And then in addition to the drilling at Makoko, we are conducting stratigraphic drilling at Lupemba, which is located in the far southwest of the Western Foreland. as well as testing for the edge of the Rhone sandstone, which is to the north of the existing Kamoa far north mining area on the Kamoa Kukula mining route. Finally, a few weeks ago, we made an announcement that we've been awarded new exploration routes in South Africa. These are directly adjacent to Platte Reef's mining route and are actually slightly larger in size than the two farms that make up the Platte Reef mining route at roughly 80 square kilometers. So looking at the diagram on the right-hand side as an illustration, what we are looking to understand is a very significant gravity anomaly, which is known as the Mokopani feeder, and the intersection of this anomaly with a regional fault system, which occurs on these new licenses. So following that award a few weeks ago, we are now kicking off with high-resolution geophysical work, and we look forward to providing more information on this new project in due course. With that, I will hand back to Marna to finish off with PlatReef and Kipushi.

Thank you, Alex. Just a quick reminder that we are currently executing Phase 1, a 700,000 tonne per annum mine at our PlatReef project in South Africa, which is anticipated to start first production in the third quarter of 2024. Our aim is to seamlessly

Her line just dropped. Can somebody please take over?

Sure. I'm happy to do so. So where we are with Platte Reef today is based on the completed shaft one. We are well underway with the underground mining. So we've completed over 300 meters of lateral development work. What we're doing right now is working towards the bottom of of the first ventilation shaft, which will allow us to significantly increase the number of crews in the mining activity underground. On surface, we have a lot of activity going on. We started the construction of the processing plant for phase one. So the civil works are underway there. The long lead time orders have been placed. We are also in construction with the first five megawatt solar power plant for Platte Reef and that's largely to support our our construction activities and also to charge the battery electric underground fleet that we are trial using at Platte Reef today. In terms of the remainder of this year, we are forecast to spend $72 million. As David mentioned, all of our expenditures at Platte Reef are currently being funded by the streaming agreements, and we made the final drawdown on those $300 million facilities. So we are very much targeting first production in Q3 of 2024. There's no change there. But really with Platte Reef, we're much more excited about the ultimate expansion and scale of this project, which will be dictated by SHAP2. So we are continuing with the thinking works of SHAP2. You will start to see the head frame going up very quickly there. And ultimately, the goal with Platte Reef is to become one of the largest and lowest cost producers of of the PGM metals, platinum, palladium, rhodium, gold, as well as a significant quantity of nickel and copper, which contribute roughly up to 30% of the total value of the resource at Platte Reef. Next slide, please. And at Kipushi, we've also had a very busy quarter in terms of we... kicked off with a breaking of ground ceremony in August. So that was attended by Ivanhoe Mines, members of the DRC government, as well, of course, as our partners, Giacomines. So the first concrete port took place last month, and we are in the process of ordering the long lead items for the processing plant. That is all underway. We have mining crews operating underground now at Kikushi for the first time since the early 1990s, so that's a very exciting event. milestone for the team on site. And also, we announced that we have a study underway, which is to investigate options to upgrade the DRC Zambia border crossing at Kipushi, which will allow Kipushi to have a direct access for commercial imports and exports, and will also hopefully have knock-on positive effects for Kamoa. We hope to come to the market soon with an update on our financing and offtake discussions, but it's safe to say they are well advanced with several interested parties. And looking at the overall schedule for Kipushi, we are keeping the project on track for an 18 to 24 month construction timeline overall. So looking to have Kipushi together with Plat Reef, together with the third phase of Kamoa Kukula all in production, by the end of 2024. Perhaps with that, I will pass back to Matt Keevil to conduct the Q&A.

Thanks. Thank you, Alex. We'll now begin the Q&A session. Just a reminder that if you'd like to ask a question, please submit it via the question box on the bottom left-hand corner of this webcast page or via the conference line. We will again do our best to answer as many questions as possible with the time remaining, but may not get to all of them. So please do follow up with our IR team if you have an unanswered question. First and foremost, I think we'll hand it back to the operator just to get to everyone who's waiting on the line. Operator, could we jump over to some questions on the line, please?

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star key followed by the number one on your touchtone phone. You'll hear a three-tone prompt acknowledging your request. Questions will be taken in the order they are received. If you're using a speakerphone, please lift up your handset before pressing any keys. We'll take our first question from Lawson Winder with Bank of America Securities. Your line's open.

Hi. Good afternoon, guys. Can you hear me fine? Yes. Go ahead. Okay. I just wanted to ask about the logistics costs. So just To begin with, the $56 per pound reported in Q3 2022, are you able to kind of break down for us how that splits between Lululaba being closed versus trucker availability and border issues?

David, would you like to take this?

Yeah, I think, Lawson, it's I mean, it's a bit of an interesting mix, although with the, we would say, border issues probably around, and these are organized magnitude estimates, but border issues around, you know, three cents per pound. If we look at the, just the the increase in costs from our logistics service providers, that's gone up around 20%. I think if we look at ocean freight, that we have seen an increase, I think, globally over past quarters, but we've seen that sort of come down in Q3. So it's a combination of everything. If we compare the smelter with concentrate logistics charges on a like-for-like comparison, there's about a 20% difference per pound between the two.

Okay.

Maybe I'll ask it. Thank you for that. I'll ask this question again, but maybe from a different point of view, which is like looking into 2023, I mean, do you expect 56 cents per pound to be the transportation cost going forward?

Lawson, I think we would like to see where logistics cost goes with our current initiatives that we've announced and see what impact that's got on the cost in the near terms. And as that becomes, you know, apparent, we will, you know, look to include that in our guidance provided for 2023, which we will issue early next year.

Okay. And then also, you know, a similar question. What was kind of the exit rate cost from the quarter? So as of, like, September 30th, 2020 to where would you have been, Ron? Would it have been above 56 or below that 56 then?

So exit costs at the end of the quarter and below 56 because of the fact that we utilized a new law in September.

Do you have a specific number by chance?

I think I don't want to be too specific and and give too much information other than that we still expect to be within our guidance range for the fourth quarter.

Okay. And then just maybe one final question for me on the head grade. So I think, I mean, the expectation for a couple of quarters has been that head grades would start to approach 6%. Why do... Do you think it's still running a little bit below 6% and then, you know, in the Q4 and in the 2023, I mean, is 6% head grace to the mill a reasonable expectation?

Maybe I'll color out that one for you, Lawson. So, look, I guess in terms of where we are today, it's really a function of how much can Cucula on a standalone basis, because of course Cucula has significantly higher grades than Cansoco. So how much can Cucula support the current milling rate, which as I mentioned in my section, as of the last quarter was about 8.3, 8.4 million tons per annum. And today Cucula was not necessarily planned to be able to support that in full, but that is a work in progress. And what that means in practice is doing effectively more development along the sides of Kukula to open up more panels so that we can have a greater availability of these high-grade panels for the mining crews at Kukula. So that sounds very simple in theory, but in practice it does take some time to get it right. There is a bit of a lag. It will require putting in, you know, more ore handling infrastructure. So, for example, we're looking at an additional conveyor to complement the Kikula South decline. And all of this will take, you know, some months to get up to speed. We're very confident that we will get there. But in the meantime, you know, we will continue to feed ore from the run of mine, or sorry, I should say really the development stockpiles, which comes in at a slightly lower grade, but the advantage is that's already been paid for effectively from a cash flow point of view. And we can keep our mill as full as possible in the meantime. So looking forward to 2023, we've got this kind of double effect because while we should be catching up from a mining point of view and having more availability, the mill also isn't standing still. We'll probably have an additional 1 million tons of capacity following the de-bottlenecking, so the mine will continue to catch up through 2023. In terms of where we get to, I'd say we'd hopefully be somewhere between 5.6% and 6%, but we will probably give a more firm view on that at a later date.

Yep. Okay. Thanks a lot for that call, Alex. Thank you all for those responses.

Okay, next we'll go to Farouk Hamed with Raymond James. Your line's open.

Hi, good morning or good afternoon, everyone. My question is maybe a little bit bigger picture. Just looking at your CapEx expenditures, they seem to be ramping up as we get into the fourth quarter here. And as you talk about your project timelines with all three projects, you know, either the expansion or with Platt Reef and Kapushi, you know, being delivered in the second half of 2024, It looks like there's going to be, you know, quite an increase in intensity here at all three sites. So I'm just wondering, you know, we've looked at other companies when they start expanding and start, you know, trying to do work on multiple assets at the same time. There tends to be an increased risk of timeline slippage of projects, you know, starting to have, like, creep in different ways, cost creep, whatever it may be, because you have just so many fronts that you're moving forward at the same time. So can you talk a little bit about what kind of fail-safes or what processes do you have in place to ensure that you can move all three projects forward on the timelines that you have guided for without having these risks that we've seen multiple companies in the mining industry have in the past?

Maybe I'll take this one. We've made a great effort in ensuring that we learn from what we've done at Kamoa, and we've recently announced that Mark Farran is joining us as our Chief Operations Officer, and he started on the 1st of November, so he's fully back in the saddle. He'll probably join us on the next quarterly call. We've also pulled Steve Amos, who did the project execution at Kamoa Kukula, into the group to ensure that we take the learnings forward from Kamoa Kukula. What we've also done over the past year is capacitating both Kapushi and Platrief with the right skills levels to ensure that we can deliver these projects because we do know what it takes. And we are ensuring that we remain on track with long-lead order items. We schedule things well in advance. And I must say we do have a competitive edge with our Chinese shareholders assisting with procurement out of China and ensuring that everything remains on track. So I think we actually have an edge over our peers in terms of our structures with our shareholders to deliver these projects. In terms of capital allocation, in the earlier part of your question, we've carefully crafted each and every project to be able to sustain itself with local facilities and also be augmented by Ivano Mines for Kopushi and for Platrief in terms of our treasury projects. we flushed all those numbers through until we are comfortable that we will be able to execute these projects with confidence over the next two years.

Okay. Now, that's helpful to understand kind of what you've done internally and, you know, the benchmarking you've done on the capital. Just a follow-up to that then, given that these projects are really getting started and obviously they've been started before, but in earnest here, Do you intend to provide kind of milestone updates on a quarterly basis to the market so that we can see how these projects are tracking individually so that we know when to anticipate production and if there are issues that arise along the way?

Most definitely, absolutely. We joke because everything's happening in 2024 for us. We'll be delivering the Smelter and Phase 3 at Kamau Kakula in 2024. Platrief will go into production in Q3 of 2024. Kapushi will go into production in 2024. So you will see a lot of news flow from us over the next couple of quarters to show you the progress as we do the builds at both Platrief and Kapushi. and as we ramp up our construction activities at Kamau Kakula.

Okay, thanks for that. And then maybe just one last one for me, just as it relates to the CAPEX estimates. So for Platte Reef, I believe it was $488 million and $382 million at Kapushi. Those numbers were provided earlier in the year. Across the industry, we've seen, you know, inflation impact CAPEX estimates for projects in Brownfields. projects and greenfield projects. So can you tell us how are you tracking to those estimates that you provided at the beginning of the year? Are you seeing inflation pressure on those costs? Do you anticipate having to remeasure those costs in the coming quarters? Or at this point, are you still comfortable with those CapEx estimates?

So we are comfortable to a large degree because we did place a large number of the long lead order items based on our cost estimates. But we are seeing some element of inflation and where we are seeing inflation that will be communicated once those numbers are firmed up. But it's not inflighting the numbers to a degree where you know, the project will be impacted severely negatively, but it is normal inflation that we are seeing coming through. I don't know, David, if you maybe want to add a bit more granular information on the capital inflation we are seeing.

No, thanks, Mona. I think you've summarized it well. Together with our production guidance, which we will issue early next year, we will also update the market on our... guidance around our capital expenditure for 2023 and that would include a more detailed indication of where we see there has been inflationary pressures and increases. It's just maybe a bit more granular detail I think on Platte Reef specifically because of the weakening of the South African Rand and the The impact of inflation has been less felt when compared to Kibushi, for instance. And then on Kamawa, we've got the benefit of being busy with the pre-feasibility study at this stage. So we can build in any, you know, the latest estimates on inflation as well. And that will be reflected in the study.

Okay. And sorry, did you just say the timing of that study?

So the timing of that study is like this year, early next. Okay.

Okay. Thanks very much.

No problem.

Next, we'll go to Andrew McKitchick with BMO Capital Markets. Your line is now open.

Hi. I just want to go back to the Western Four Lines exploration that the It's slide 16, if I'm reading this correctly. Can I just go back to the significance or the prioritizing of lupemba and nushiji versus, you know, the regional work and extending the known renovations at Makoko?

Hi Andrew, perhaps I'll take this one. It's difficult to give a definitive view on priority ranking, but they are sort of looking to achieve different things. So perhaps starting with Makoko, that is more, I would view it as low-hanging fruit in terms of expanding our knowledge of an existing deposit and seeing what sort of additional resources we can add to that area. So we're drilling there with a sort of reasonable degree of certainty. Whereas what is going on elsewhere in the license, whether that is Lupembe, which is in the far southwest, or Mushuji up in the north, is what we're trying to do really is cast the net as wide as possible to begin with on the Western Forelands as a whole to test our knowledge based on the geophysics and the geochem information that we've acquired over the last couple of years. And really what we're doing is testing our knowledge of the underlying basinal structure and what leads to the sort of Kamoa-Kakula-style mineralization that ultimately we're searching for. And then if we don't find exactly what we're looking for because we've sort of gone beyond the bounds of the Rhone sandstone, which is the horizon that we're looking for in particular, we sort of bring the net back narrower and closer towards our existing operations. But obviously there's a very rational reason for testing the edges and the perimeter. of the portfolio first because, you know, we're not sort of done in terms of looking at what else might be out there in the Western Foreland. So hopefully that just gives a bit of context as to the, yeah, it's not so much the ranking but how we see things.

That's great. Thank you very much for the added detail. Some of my other questions are already been asked, so I will sign off. Thank you.

Not sure we have no further questions on the phone. I'll turn it back over to Matthew Keeble for further questions.

Thanks very much, operator. We have time for a few from the web, so we'll dive in. There's a few repeats here, so we may consolidate some questions as we move forward just to get through as many as possible. But first and foremost, we'll start at the top. Marta and David, this is probably a good question for you. This is a popular one on the web client. Given sort of the volatile copper environment recently, How have your expectations changed in terms of shareholder returns, dividends, and sort of the repayment of those loans over the next five years?

Thanks, Matt. I think dividends and shareholder returns are obviously copper price dependent. I think at the moment the focus is is on expansion because we do feel that firstly expansion of phase three at the Makakura is the most value created thing we can do and then also the continued development at Black Reef and Kipuchi. I mean, as we've highlighted on the call already, everything sort of comes to an end in 2024. And I think after that, there will definitely be a lot of options open to us.

Great. Thanks, David. The next one, Marta, I think this is probably well placed for you to just elaborate a little bit on the logistic situation within Congo as well as sort of what's going on regionally in terms of those transport items.

We've experienced a few issues this past quarter around border congestion. And I think, you know, we had a couple of breakthroughs. During the previous quarter, there was only one border, which is Casambalesa, that was open for imports and exports. Subsequently, Sacana also opened for imports and exports. And we've got a third border that's available for imports called Macambo. We ourselves are currently working on a solution at Capuche. that will also cater potentially for volumes from Kamoa, which would further alleviate pressures. But ultimately, we are also looking at rail solutions, which we see as the medium to long-term solution for Kamoa Kukula. Not only is it a greener solution, but it will be a cheaper solution. a much shorter route if we follow the Western Corridor. So that's a development that we have a keen interest in. We have been working with our local logistic service providers to ensure that we get guaranteed trucking availability to Kamaoka Kula. We haven't really experienced truck shortages over the past quarter. We've had enough availability of trucks. but it's really been around turnaround times on borders. One of the big items that we did also manage to negotiate was longer operating hours at some of the borders, and that also made a huge difference. It does take, however, a bit of time for these costs to flush through your balance sheet and income statement, so we are hoping to see some of the fruits of our efforts in the fourth quarter. Thank you.

Thanks, Morna. And just one, another popular question on the web. Alex, this is probably best positioned for you. Talking a little bit about the company's broader sort of not necessarily M&A strategy but growth strategy following the Mokopani feeder acquisition and what you see moving forward in terms of exploration and development.

Thanks, Matt. That's a good question. Look, I think our announcement with the Mokopani feeder hopefully it illustrates to the market that we're certainly not done with the three projects that we are advancing into production, or sorry, in the case of commercial cooler in production, but expanding. And as we've alluded to on this call, we see a really pivotal year for Ivanhoe Mines in 2024, where we will be a material producer with three effectively diversified assets online and that naturally leads to a bit of a question about what's next in the hopper. You know, I think where Ivanhoe Mines has had its greatest successes in the past have been with the drill bit but also with our sort of differentiated approach to project development and the project development expertise that we've certainly built up with Kamoa Kukula And we feel that there are value accretive opportunities out there to find things in a similar vein where we can apply our model and hopefully generate the fourth and fifth and sixth projects, major projects for the Ivanhoe Mines portfolio. So, yeah, we're certainly interested. We're certainly looking around.

Great. Thanks, Alex. Thanks, Alex. And with that, we've run slightly a bit over our hour time, so we'll conclude the call. So, yeah, this concludes Ivanhoe Mines' third quarter 2020 new financial results call. Thanks again for everyone attending, and we look forward to speaking to you about the exciting milestones coming in 2023. Again, if you had outstanding questions, please do not hesitate to reach out to our IR team, and we can answer those on a one-on-one basis. And with that, I will pass it over to the operator to close the call.

Thank you. Ladies and gentlemen, that concludes the conference call for today. We thank you for your participation. You may now disconnect your lines.