Ivanhoe Mines Ltd.

Hello, and thank you for standing by. Welcome to Ivanhoe Mines LTD 2023 Q4 and four-year financial results conference call and webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I would now like to hand the conference over to Matt Keeble, Director of Investor Relations and Corporate Communications. You may begin.

Thank you, Operator, and hello, everybody. It's my pleasure to welcome you to the Ivanhoe Mines fourth quarter and annual 2023 Financial Results Conference Call. I am the Director of Investor Relations and Corporate Communications. On the line today from Ivanhoe Mines, we have Founder and Executive Co-Chairman Robert Friedland, President Marna Cloutier, Chief Financial Officer David Van Heelden, Chief Operating Officer Mark Farron, Executive Vice President Projects Steve Amos, and Senior Vice President Corporate Development and Investor Relations Alex Pickard. We will finish today's event with a question and answer session. You can submit your questions using the Q&A box on the webcast as well as through the conference operator via your phone line. Please do contact our IR team directly if you have follow-up questions or your questions were not addressed during the call. And just ahead of that, we would just like to remind everyone that today's event will contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Details of the forward-looking statements are contained in our February 26th news release, as well as on CDAR Plus and at www.ivanhomeminds.com. It is now my pleasure to introduce Ivan Home Minds founder and executive co-chair, Robert Friedland, for some opening remarks. Please go ahead, Robert.

To all of our shareholders and stakeholders around the world, welcome to our conference call to discuss our annual results. After some 28 to 30 years of efforts, we're very happy to announce we have over 20,000 individuals working directly for Ivano Mines, and we have a lot to go through in this conference call. So without further ado, I'll turn this over to Mara Nicote, our president, who will Just check this right off. Thank you, Maria.

Thank you, Robert. And maybe just a brief introduction. I've been with the company for the past 17 years, going on 18. And what you see in front of you is a picture of our five-speed plant at Kamaukakula that's ready for commissioning in June. So we are, again, ahead of schedule. I think we previously said to the market, We'll have phase three ready in the fourth quarter of this year. And our team's really done it again. So we're definitely getting smarter as we move along. So I always have the privilege of starting with the highlights. And Matt, if you can just quickly put us on the highlights. And I think from a Kamau Kakula perspective, we really had a stellar year. We delivered again. We had some challenges. We did leave some copper on the table, mainly due to grid instability. And Mark Farren will talk you about all the plans we have in place to ensure that we address these issues with the grid stability in the DRC. We've put out our guidance for this year. We're planning to produce between 440,000 to 490,000 tons of copper. And as I just mentioned, this is mainly due to the fact that we are, again, ahead of schedule with the commissioning of our third plant at phase three. It's no easy task to build five major capital projects at the same time. I think we're probably the only team in the world to do that. And that we can only attribute to the wonderful people that we have in place across our organizations. 2023 was probably for me on a personal level one of my toughest years. We've spent a lot of time on planes addressing issues, making sure that we deliver to the market what we promised. We're very excited that now in 2024 we will bring Capuchy into production as well in the second quarter. The mine looks very neat and again Mark and Steve will take you through our development plans there a little later. Just sort of on the statistics side of things, we've produced over 390,000 tons of copper in 2023. We've sold close to 376,000 tons. And the difference between the two is basically what was sitting in inventory and also at the Lualaba copper smelter. Created $2.7 billion worth of revenue. EBITDA of $1.68 billion. And we were in the mid-range of our cash cost guidance. We are also putting out our guidance for this year, and David van Jeuven will take you through our C1 guidance a bit later during the presentation. And then, of course, it's always exciting to hear Robert talk about our exploration success, and we think we've got another one with Kitoko. So our team is very excited about what we are seeing in the Western Forelands. If we go to the next slide. also safety is at the core of what we do being in the mining industry is inherently a dangerous industry but as you can see at all three our major projects our safety statistics are tracking down and we're well below the industry average a statistic that we are very proud of and we work hard at this every day to create a culture of zero harm across our organization next slide And this is one I'm very excited about. The DRC is in fact a copper superpower on the rise. And I think the DRC is poised to overtake Peru as the second largest producer of copper in the world. The DRC contributed to 11% of global mined copper in 2023. This is in fact truly the future of green metal. It's the neighborhood to be. It's prime real estate. It's where you want to buy your next house. We had an election in December. President Felix de Siqueira was re-elected for a second five-year term. We attended the inauguration. And we're very excited for what the future holds for the country. And we're seeing a lot of support from all the superpowers across the world to ensure that there's stability in the DRC. Sort of on a project level, from an ESG perspective, we take what we do very seriously. We work with our communities on a daily basis. And we've also showcased the Centre of Excellence that we launched last year that will be a tertiary educational institution in the DRC. And then last but not least, and Alex will touch on this a little bit later, is the Libido Railway Corridor. That's really opened up a new gateway for us to get our product to market. We're currently running trial shipments. We've reserved significant capacity on this corridor and we're tracking this project, forming strategic partnerships with the developers to ensure that we can move our product. This will also ensure that we have an even lower carbon footprint than what we currently have. So with that as a bit of a lead-in, I will now hand over to David van Dierden, our CFO, to take you through our annual results for 2023.

Thank you, Marna, and good day to everybody joining the call today. If we go to the next slide, Matt, Kamoa Kukula achieved its highest ever annual revenue of $2.7 billion in 2023, and that's at the weighted average realized copper price of $384 per pound. Revenue was up from the $2.4 billion achieved in 2022, and the strong EBITDA of $1.7 billion was delivered at a very healthy margin of 62%. If we look at Kamal Kukula's unraveled cash flow generation on the next slide, 2023 concluded the third consecutive year of outperformance at Kamakakula. The three years EBITDA growth is shown on the left hand side with a graph showing the cash generated by operations on the right after excluding non-cash working capital. This clearly illustrates that after an initial phase one and phase two investment of just over two billion, Kamal Kukula has returned $3.5 billion of cash in just 13 months. Just before we move over to the next slide, I just want to make a nice clarifying point that the 2022 and 2023 cash from operating activities is the same. It is a coincidence and not a mistake. Moving over to Kamaoka Kula's annual EBITDA waterfall, the waterfall illustrates that the 2022 move to a 1.7 EBITDA in 2023 equates to a 22% year-on-year EBITDA growth driven principally by our increased production. The 2023 results also benefited from the high realized copper price in 2023, when provisional pricing is combined with prices ultimately realized, with this partly offset by cost inflation. If we look at cost a bit further on the next slide, Kamoa Kukula again achieved guidance. with 2023 ending exactly at the midpoint of our initial 2023 guidance. Q4 2023 cash costs is slightly up due to generator power used and the intermittent power on production, as draws were made from the stock file impacting on the grade mold during the quarter. Looking ahead at the next slide, Our cash cost guidance for 2024 is $1.50 to $1.70 per pound of payable copper. Even with the temporary elevated cash cost, Kamau Kakula would still be well placed on the global cash cost curve. The 2024 guidance is impacted by the earlier commissioning of Phase 3, both due to the additional backup generation provided for in the guidance, due to the phase III concentrator coming online before INGAT-II, as well as the slightly lower grade expected to be fed through the phase III concentrator. Completion of the onsite smelter on schedule for commissioning in the fourth quarter of 2024 is expected to drive a decrease in average cash cost over the first five years post-completion from 2025 onwards. If we move to the next slide, please, Matt. As seen on the left, Ivano's EBITDA is up by 23% year on year. When excluding the impact of the revaluation of the convertible notes and deferred tax income from Kapushi recognized in 2022 from a profit, the normalized net profit for 2023 was $388 million. And that's up 30% from the $298 million in 2022. With construction of phase three at Kamoa ahead of schedule and Kapushi commencing ramp up in just a few months, 2024 promises to be another year filled with record results. If we move to the next slide, please. Our capital expenditure in 2023 was effective, and that's clearly illustrated by our projects being on or ahead of schedule and all tracking on budget. And in 2024, we will continue our industry-leading investment growth. We have been active in arranging facilities for each of our projects with $400 million of in-country facilities drawn at Kamaukakula, the $150 million senior tech facility signed for Platte Reef in December 2023, and financing for Kapushi expected to be finalized in Q2 this year. On a 100% basis across our project, We invested almost $2 billion in growth in 2023 alone, and this is set to increase further in 2024. Our investments in 2023 and today are leading to real growth as early as this year. We move to the next. We ended the year with a very strong financial position, with cash of $500 million. $74 million in hand and very little current debt. And our $1.2 billion non-current debt is mainly made up of the $800 million relating to the convertible senior notes due in 2026 and possibly early redeemable in April 2024. Our net debt to EBITDA ratio is tiny and sets us up perfectly for the next phase of growth, of our growth story. And I'll now hand over to Alex Picard, our Executive Vice President, Corporate Development and Investor Relations, to commence the operations and project update presentation.

Thank you, David, and good day to everybody on the line. As Marla mentioned, we have a full complement here to take you through the fantastic progress we are making at our operations and our projects. So without further ado, I think we can move to the next slide. So Kamoa Kukula had another outstanding operational year. As Marna mentioned, we produced 393,500 tons of copper, which was within our guidance range. I think we are especially pleased with this performance, given that we're dealing with the constraints around power stability in the DRC. And Mark is going to take you through much more detail on what we're doing on power, which is a very key focus for this year. But really, we see the production as unfinished business in a way. We think that our copper output could have been perhaps even 40,000 tons or more higher with consistent power availability. So that bodes really well when we do solve that issue. Of course, we completed the de-bottlenecking project at Kamoa earlier in the first quarter, and the phase one and two concentrators have subsequently shown the ability to operate at a capacity in excess of 10 million tons per annum with a clean run. And what is also good is that our recoveries have been in excess of design at 87 percent, and that's also a reflection of power stability to some extent, so there's an opportunity to push that further. Steve Amos is going to take you through our very exciting Project 95 that we're launching to increase those recoveries much further. And then just to reiterate on our guidance range for the year, it's 440,000 to 490,000 tons of copper in concentrates. That factors in the early commissioning of the phase three mill. And with the copper that we've produced from phase three, we will be selling some of that concentrate that is coming in advance of the smelter. And we will also be stockpiling a portion to feed that smelter when it becomes available in the fourth quarter.

So with that I will pass to mark far and our chief operating officer And to talk you through the power initiative in the DRC Thanks, Alex The also power is I mean it's been a little bit of a thorn in our side over the last year in particular And and I believe like Alex we've left about 40 to 50 thousand tons of copper on the table because of power Short-term issues really if you take it if we put the whole thing in context And I'm going to start on this first line on what we've done on backup power, and then I'm going to talk you through the longer-term initiatives that we've taken and that we are following through on. So in the short term, we've decided to create enough generating capacity on site, which is obviously very expensive, and it's diesel, so it's not exactly clean either, but it's to reduce the risk and make sure that we have full redundancy within this year to run phase one, phase two, and phase three under any conditions. That decision we made last year, and if you have a look at these dates over here, you'll see that by July, we'll have 128 megawatts, and by December, January, we'll have 210 megawatts of diesel on site. So under any conditions, we can run the three phases, the three concentrators and the three mines. It's very unlikely that you'll have load shedding to the extent of 100% blackout, but it has happened in the past, and it's something that we need to manage. If I can move us to the next slide, which is probably more important, So under what we've been doing in the longer term, we've identified INGA as a project that we need to complete, and we picked one of the turbines. So G25 turbine is a big turbine. It's 178 megawatts. That project was picked two years ago, and it's in execution. We will replace that turbine and have it commissioned by quarter four this year. So it's an additional 178 megawatts that will go into the grid. But with that work that we've done, we've had to do a full study all the way from Inga right up to the gate where we put our power into the mine. And that's about 1,700 kilometers of different areas to study. And we've identified stability issues in the grid, the same grid all the way from Inga to us. And in that work that we've done, There's about $200 million of upgrades that need to take place to make sure that that grid is stable and reliable. That work is in execution at the moment. We're working with the state utility to execute these projects. And that means that that project should be complete within 12 to 18 months. We also have targeted additional power from Zambia. It's taken us some time to be able to organize that power. We're happy to say that we've signed an agreement today, a long-term agreement, and that will be followed by a short-term agreement, which will step up the power from Zambia, which will give us a clean source of hydro power into our mine in stages, starting from 15 megawatts and moving to about 100 megawatts this year. There's a longer-term plan to get it to 150 megawatts. So in addition to the current work that we're doing on stabilizing the grid, increasing the power from Enga and Monongusha that we've already completed, we'll be able to add another 150 megawatts of power into the grid, into the same grid, and it will be stable. So that will be in addition to the work that we've done to create that capacity that I spoke to you about earlier by putting in the diesel generation as a backup. So I think all in all, if you look at where we're going with power, in this year in this year of 2024 we will be able to stabilize power and and make sure that we have sufficient power for phase one phase two phase three and for our smelter and we're looking at how we're going to grow the business over the next couple of years there'll be more initiatives on power to make sure that we create stability and enough energy to power the projects going forward um yeah so it's very important for us because we're growing this mine from the current 400 000 times that we did last year into probably a 500 and north going forward, 600, actually 800,000 tons of copper we need to produce in the next four or five years. That's absolutely within our control. The power has been torn in our side, but we are addressing it. And we've placed, I think, the best project team on this working on Snell, which is the local power utility, and I believe it will be executed properly within this year. So that's it on power. I'm going to ask Steve to talk a little bit about where we are with Phase 3, Stephen. Stephen is our Executive Vice President for Projects. He's been with me. We've worked alongside. for at least 10 years. All these projects that you see, they're on time and on budget. It's basically understated. Stephen, if you can tell us about Phase 3 a little bit.

Sure. Thanks, Mark, and hi, everyone. Yeah, I think Mark, Marlon, and Alex have both alluded to the fact that Phase 3 is going very well. In fact, we're up to four months ahead of schedule, so we're really getting good at sort of this stuff now. On the mining side, we're busy preparing the mine pad and the run of mine to feed the plants. We've got a mobile crusher on site. We're busy tracking the ore from Kansoke, which is about a kilometer or two away. We're building a large stockpile ahead of the plants. Probably next month we will commission the surface conveyors. The surface conveyors will take the run of mine from the mine effectively to the plant. We plan to build up 20,000-odd tonnes of stock ahead of commissioning for the plant and there's plenty of time to do that. We've got a number of months to do that. Then June, yes, we feed the plant first ore into the mill during June. And then I suppose once the ore is into the mill, it's all about ramp up. Phase one we did very well. We ramped the plant up in three months and phase two we did even better. We ramped the plant up in two weeks. So I'm expecting something good from phase three and I think our track record sort of shows that we'll get to steady state reasonably quickly. I think you can see from the picture that the mechanical completion and all the equipment installation is complete. We're busy with the last bit of electrical installation, the cable pulling, et cetera, et cetera, and we've energized some of the substations and busy bumping a couple of motors to get things going pretty quickly. Next please, Matt. It hasn't changed on my side. Oh, there we go. Sorry, yes. Okay, so it's a bit of a lag. Okay, so this is something quite exciting. We call it Project 95. And the reason for the Project 95 is that the objective, and there's two fronts to it, is to increase copper recovery from the current 88% to 95%. We've been working on this for about six months now, so we've done a lot of work in the lab, and the lab work is nearing completion. The two aspects to this are, firstly, modifying the existing Phase 1 and Phase 2 plants, and additional regrind capacity, a flash float, a couple of other odds and sods to improve recovery from 88 to 95. As I say, test work almost complete and looking very positive. The way we'll implement this, because in fact it's a Redfield site that it's operating, is that these changes will do it similar to like we did in the de-bottlenecking. During the planned shutdowns, we'll do all the construction. During the planned shutdowns, we'll come and do the tie-in, so there'll be minimal effects on existing production. Then the second aspect to this is the current arising, so the current tailings we're producing, and the tailings that are in the tailings dam. What we've done there as well over the last six months or so is we've designed a process where we can take these tailings, regrind them and get about 60 to 70 percent recovery on that feed to the new plant. That's a Greenfield standalone plant and that's effectively taking recovery to the 95 percent. We believe there's about 30,000 tons per annum in those current arisings plus what's in the dam and then some additional recovery from the modifications to the existing plant. All on track, probably April-ish, we'll have some basic engineering. We'll have a cost budget estimate. We'll get approval, and we'll fast-track this as soon as we can. Next, please, Matt. Okay, moving on to the smelter. So state-of-the-art, 500,000 ton per annum, Odotec Director Blister technology, biggest Director Blister smelter in the world. The emissions and the environmental legislation, all world-class, IFC World Bank principles, so absolutely zero pollution to the atmosphere with the smelter. It's been a massive job. It's a totally different league to a concentrator. We are importing 73,000 tons of equipment from abroad into the middle of Africa. We've got about 50% of that onsite at the moment and another approximately 25,000 tons en route. So it's looking good. It's nice when you can see the equipment onsite, especially in the middle of Africa. We're confident of our Q4 2024 startup, commissioning Q4 2024. It also has a significant production in cash costs, and we estimate about 20%. And this, I mean, you could just think for yourself, Shipping 50% copper out of the country as opposed to shipping 100% of the copper out of the country reduces your transport by half. There's also taxes and a TC to go with that and a significant amount of asset production which is a sort of the commodity in the DRC because the bulk of the copper produces leach oxide with acid and produce copper by solvent extraction and electrowinning. Next slide, Matt, and I think it's over to Alex.

Yeah, thank you, Steve. So we did make a landmark announcement at the end of the year that we commenced trial shipments of copper concentrate from Kamoa Kokula via the Lobito Rail Corridor. So the Lobito Corridor is a project that has been very publicly supported by the US government together with the European Union and the G7. And the good news is that the shipments today have been a big success. We've taken only eight days on a one-way journey, which is less than one-third of the time of the alternative exporting by truck via Durban or Dar es Salaam. And obviously that's a reflection of the shipment being on rail, but also of the overall length of the journey. It's roughly, it's almost half of the length of the journey to Durban. So ultimately what this should mean is that the cost of shipment will certainly go down over time, but also it's important to note that the CO2 emissions associated with the transportation by rail are much lower. At Kamoa Kokula, we're very lucky in terms of the grade that we have and the hydropower. We already have the lowest CO2 emissions of any major copper mine. These are set to decrease by approximately half with the commissioning of the smelter and the reduction in the logistic burden, as Steve mentioned. And then that will be further reduced by shipping on the Lobito corridor. Just in terms of the sort of next steps on Lobito, we've recently signed a reserve capacity agreement with the Lobito consortium led by Trafigura, and that is to ship up to 240,000 tons of copper products. Copper products from next year will be largely 99.7% anode coming from the smelter. And then finally, it's also just important to note that the Lubuto Corridor passes directly through the Western Fulham Declaration licenses, so it will play a big role in terms of the construction of future mining operations as well as the exports of copper products. And that's perhaps a good segue onto the next slide. So just looking at our group-wide exploration, we announced late last year that we've quadrupled from 2024 to 2019. But also we are commencing drilling of the Mokopane feeder project adjacent to Platte Reef and also early stage exploration at our new licenses in Angola. I think as Ivanhoe Mines is a group, we firmly believe drilling is the highest possible return on capital we can drive for our shareholders. I think we've demonstrated that with all of our projects, including Komoko Kula, we're founded on exploration effectively by this team. And so we hope to add huge value with the drill bit this year. We did announce late last year the success that we've had already in terms of the initial copper resources. at Makoko and Keala, which are already globally significant, and we're moving those into more of a study phase. And then, of course, we also announced the discovery of Kitoko, which our founder, Robert Friedland, will now explain much better than I'm sure I can.

Well, to everybody on this call, exploration is the lifeblood of the mining industry, and I thought I'd spend a few words explaining why the Congo has become so quickly equal to or larger than Peru as the second largest producer of copper in the world. So these are sedimentary copper deposits. They actually share a lot of similarities with oil field geology, and they occur in basins. So I wouldn't call it a bathtub, but maybe the shape of a bird feeder. In this case, the basin is about 150 to 175 kilometers long. and 25 to 40 kilometers wide. If you could think of that as a giant bathtub or bird feeder, very shallow. If you filled that bathtub with layers of different colored sand, you filled your bathtub with two inches of red sand and then two inches of green sand and two inches of blue sand, gradually laying these sands inside the basin. The original discovery of copper at Kamoa was in a particular sand on the eastern side of the basin. And we were astonished that we had an ocean of 3% copper. The second discovery of copper was Kukula, much higher grade, 4.5% to 5.5% copper, and an ocean of it. These flat-lying deposits, when you find them, they can be many, many kilometers long. They can go 10 or 15 kilometers long, 10 or 15 kilometers wide, and they're very They lay there like a potash mine or an oil field. So it's quite remarkable that when we went to the western side of the basin in relatively shallow horizon, we found Makoko in sands that mimic the sands that host the original Kamoa discovery, say 30 kilometers to the east. And then with time and continued drilling, Makoko became about 11 kilometers long. still open, and we found a second mokoko stacked like different layers in a layer cake. And with additional drilling, we went deeper and deeper into the basin, and we finally found two stacked new horizons called kitoko, which means beautiful or gift in the local languages. The deepest hole we've drilled right to the bottom of the basin is running over 11% copper right at the bottom of the basin. This has never happened before in this enormous target area. This is a whole new horizon. As of today, it's approximately two kilometers open, and open in all directions. It's nearly flat-lined, but it's open up-dip and a long strike in virtually all directions, and open down-dip as well. Very, very shallow dip, as we've shown in many cross-sections. So Kitoko has metallurgical characteristics that you see in this picture, almost identical to Cucula. We see boronite and calcacite, which are the very richest copper minerals. We see them in great abundance. And just to make sure that that initial discovery hole at over 11% was not a fluke, we recently put a wedge in the hole and drilled off of it and again intersected the same horizon at well over 11% copper. So It's consistent, it's real, it's open in all directions, and it shows that the land condition can throw off a number of additional Cucula-type discoveries. So I think those of us in the geologic community that understand sedimentary copper think that we could be finding more of these types of deposits for generations. The greatest amount of value that we can add for our shareholders is to add more drill rigs. Seven drill rigs turning now. We'll have two more going very shortly. That's despite the fact that this is the rainy season. In the old days, we would have stopped drilling in the rainy season, but this one has us really excited. The rainy season is going to end in two or three more months, but despite that, we're sure to have nine drill rigs turning on this, and that's going to create a lot of value because this ground is held by Ivano Mines. and a few joint venture partners that hold minority interests. So this vast area is really a very bright future for us. If there was ever a reason to be interested in our efforts to solve the world shortage that is looming for copper metal, both for electrification and national security, this is where you're going to find it. This western four-lens region has brand new railroad coverage going straight to that port in Angola. And it's all downhill, by the way. We're at 1,400 to 1,600 meters elevation in the Western Forelands. And we're going to the Atlantic Ocean, obviously at sea level. So the railroad trains heading that way are actually going to be able to generate electricity going downhill as we go to the seacoast. And so we've learned so much in the last 20 years. We know how to build mines in this region. The hydroelectric power has been developed. all the benefits of having the operating mine nearby enable us to do everything faster, quicker, cheaper, and better than we did in the past. So the future of Ivano Mines and copper lies in the western forelands, and I'm happy to say for our annual results, our team couldn't be more excited, and that's why we've boosted our exploration budget fourfold this year to about $90 million. And with that, I think... I'll turn this over to Mark Ferren so we can tell you about our new thoughts and our new plans to accelerate the production of the world's largest combined precious metals and base metals mine, which is PlatReef. So with that, Mark, turning over to you.

So we moved from one fantastic mine to the other one. And I know that PGM space is a bit of the ugly sister at the ball moment that it's going through right now. But let's just talk a little bit about Platriff, a tiny bit on what the actual ore body looks like first before I talk about the phases. So the ore body, what's different about this ore body is that it's 20 to 25 meters thick compared to the rest of the Bushveld Complex, which is about one meter thick on average, and with the same grades, the same grades. So you're still sitting with your four to five grams per ton, 4E, and huge nickel and copper credits. So you've got like a 0.3% nickel, which differentiates it massively from anything else, and then the thickness of this ore body, which makes it completely unique and amenable to mechanization and automation across the ore body. I was in Anglo-Platinum for about 23 years, and I can tell you now, as me, this is the best ore body in the world, definitely. It's got the grade and it's got the thickness compared to anything else. So, What we did do is we started off with a phase one, which we call a baby mine. It's a test mine. It's just something we've put together with a concentrator that Steve will talk you through just now to get ourselves going and understand the ore body. With us getting moving on phase one, we've looked at how can we accelerate the development of this mine? How can we accelerate this development and bring in phase two and a meaningful level of production as early as possible. With the big shaft that you see in the background of the picture, that's basically a phase three portion. It's a huge shaft. It's going to be able to waste 8 million tons a year. But the phase one and two, we're trying to use to optimize what we have in the footprint before this huge shaft is in place. So phase one and two together will give us the potential to waste 3 million tons and therefore process 3 million tons instead of the 1 million tons odd that you're going to get out of phase 1. So the work that we've done really now is to be able to accelerate phase 2 and then also start looking at phase 3. When you look at the end of the day, we'll have at least a 10 million ton operation running there, which is over a million ounces of 4E and huge credits of nickel. So the timing of this, we'll have a PEA done and an FS done. The phase two FS will be complete mid-year, quarter three at the latest, and a PEA for the 10 million ton case that we're busy with. And while we're talking about these things, we're actually in execution. So we're doing a lot of work at the moment to de-risk phase two and phase one and accelerate the development of the mine. Another area I think to talk about is the fact that we had to place the offtake. For phase one, it's been placed with Northam. And the phase two, we've managed to place a big chunk of it with Savania. We do have terms for that, very favorable terms in the South African market. And the further downstream, we've been working with as a joint investment with other big players in South Africa to do some in-house beneficiation. So I think all in all, if you look at what we have, the best platinum ore body in the world, accelerated development, and a quartile. Alex, if you could just show the Q1 cost position of where it's going to be on the next slide. You'll see from the next slide that it's actually going to be the best placed, lowest cost producer in the world. And that's simply because you have the ore body that's amenable to mechanization and automation. It's a very thick ore body. It's very high grade. There is nothing else like this oil body in the world. I know that for sure because I've been in that space for a very long time. Okay, we can move on. Stephen, are you gonna carry on or just give an update on where we are with the construction? Yes, if you can just move to the next slide, Matt.

So in terms of the concentrate construction, we're about 80% complete. We'll cold commission this plant in August this year, and then we'll start the plant up on run-of-mine H1 next year. What you see there is the Phase 1 plant. The Phase 2 plant will be adjacent to this plant, and it'll be a similar size to Kamoa Phase 1. A total of 4 million tons of run-of-mine treatment, phase 1 plus phase 2, and that'll give us about half a million ounces of 3E plus gold and about 10,000 tons of nickel production. There is space on the mine footprint for the phase 3 concentrators as well. Maybe just to add, we recently secured water for the mine. We redid a water treatment plant called Masodi, a few k's away from the mine, and we're receiving clean water for the mine now, and our connection to the ESCOM grid is imminent. We've just constructed a 28-kilometer line from a Barutu substation onto the mine. So everything going well at Platte Reef. Focus on Phase 2 and Phase 3. Thanks, Matt. That's all from me. Next slide, please. I think it's over to Mark.

It's over to me. Sorry. Yeah, no problem. So maybe just quickly on Kapushi. We announced earlier last year that we've reached terms in terms of offtake, but we were surprised as to the favorable conditions that we could find in the local market for financing. To date, we've managed to conclude a $80 million facility with one of the local banks. We're very close to closing another facility with a local bank. And then we've also entered into discussions with multiple off-take partners. Those discussions are nearing completion and it will include a prepayment portion that will be associated with the off-take. And title facilities that we are planning to raise for Kapushi would be in the order of between 100 million to 200 million to facilitate with working capital. We're also planning to embark on logistics ourselves for Kapushi. So we've set up our own logistics company and we will be handling the logistics in-house with delivery at port terms with the off-takers. If we go into the next slide, I think Mark will just quickly discuss the mining currently at Kapushi and then Steve will just talk you through the project update.

Thanks, Mona. Yeah, so the Kopushi mine underground is a very nice, if you like mining, it's a beautiful mine. It's long oil stoping. It's in fantastic ground. It's de-risked completely. We've opened up seven levels already for the long oil open stoping. And we've put a stockpile on surface, which people would laugh about. I mean, low-grade, we're calling it 22%, 220 tons, 220,000 tons of oil, which we call low-grade at 22%. The mine's grade runs at 35% average, so it's a fantastic zinc orebody as zinc orebodies go, and it's well set up. Again, Stephen will talk to you. We are ahead of schedule on the concentrator. The mining footprint is ready to go, and I don't believe there's any major risks to that there will be at Kapushi. Stephen, you want to talk a little bit about the concentrator?

Yes, if you can just put the next slide up, please, Matt. Yeah, so very excited about Kipushi. We've transformed the landscape at Kipushi. It's really looking fantastic. We're slightly ahead of schedule, sort of same timeline as Kamoa, commissioned in June. Busy with the last electrical installation and energizing of substations. The process is exceptionally simple. I mean, if you can just have a look, there's five float cells in the whole plant. Very easy metallurgy. And the design throughput, 800,000 kTPA. But I think what we'll probably do is a debottlenecking exercise and increase that fairly significantly. But all looking good for Kipushi. No issues whatsoever. Very excited about Kipushi. Thanks.

Thank you.

Sorry, go ahead, operator.

Ladies and gentlemen, as a reminder to ask the question, please press star 11 on your telephone and then wait to hear your name announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Andrew, Michael Chuck with BMO Capital Markets. Your line is open.

Good morning. Congratulations on a lot of updates that went into this press release and a lot of hard work. Just kind of forward looking, when all this power arrives from Zambia and Inga and even the backup power on site plus the rail, is there any sense that this would cause kind of a rethinking or optimization of the mine plants around Kamoa phases 1, 2, 3 and I guess 4.

Yes, definitely Andrew. So you'll see what we're doing now and it will be announced in the next couple of months is the same thing you saw with phase 1 and 2. Phase 3 will also do de-bottlenecking and I think we can probably tweak up that production on all three concentrators to It's a seven, we call it 14, but it's probably going to end up being 16 or 17, plus all the recovery work that we're doing. And that's a few extra megawatts. And that gives us a little bit of time to get stability into the grid and then time phase four, phase four when we want to. And I think it's in about two or three years time we need to start executing. So no risk, I don't think, short term. But power is the issue that we need to just get over the line with.

Okay. And just a second question on the exploration. Obviously, they're encouraging that further progress is being made on Kitoko. What kind of timeline should investors be expecting for updates and pushing this ahead at the usual Torrid-Ivanhoe pace?

You want me to keep that, Robert?

Usual Torrid-Ivanhoe pace. Well, we found 50 million tons of copper, the highest grade, largest copper mine found in the world in recent memory, for sure. We have no intention of slowing that down. We have every incentive in the world to find more copper on the western forelands. So we're talking about 500, 600, 700, 800,000 tons of copper a year on our original joint venture ground. That's on 400 square kilometers. And we're into, you know, designing and developing a new production in Makoko and Sitoko. So here we go. We're going to keep drilling. And if it gets bigger, we'll just add more drill rigs and keep going. As I said earlier, this is going to be quicker than in the past. When we started 25 years ago, that was a very different DRC Congo than we have today. Today we have 4G wireless, we have a new international airport, we have fantastic access, we have a brand new railroad that goes downhill to the ocean, and we're going to have too much electrical power rather than not enough. So I guess a good way of saying that is we don't really have a shortage of copper. We can find copper faster than we can build the concentrators to bring it to market. We can build concentrators faster faster than we can build smelters to produce copper metal. But we are the fastest growing copper company in the world, mining the highest grade ores and with the lowest global warming gas due to production. So why quit? We have 20,000 people there. The median age of a person in the Congo is less than 19 years of age. The workforce is fantastic. And the support we've had from the government for our training programs, our environmental programs, and our ESG programs are without parallel. So I think all we need to do is get you out there, Andrew, and you can stand at the drill rig and see this core come out of the Totoko discovery. And even though I'm a grandfather, I got to tell you, finding something like that is exciting. It's anything you achieve in life, even for any geologists. Many geologists go through a lifetime and never get near a discovery like a Kukula or a Kotoko. So we're going to put the pedal to the metal and help the Congo get to its rightful position as the largest producer of sapper in the world. There's no doubt that's achievable. The power line that we brought in from the Inga dams can carry 900 megawatts. we're doing close to 400,000 tons of copper on 78 megawatts. If you've got the highest grade copper ore bodies in the world and you couple them with hydroelectric power, then you've got a really green long life power. Nothing can beat that. And so thanks for your enthusiasm and interest, Andrew, and your support over the years. And let's extend that to all of BMO, who've been a big supporter of all of our efforts because we're speaking to you today from the BMO conference. I'm scheduled to go downstairs and give a speech in about 15 minutes. Thank you, Andrew.

Okay. No, thank you, Robert. I'm going to sign off as well and hand the microphone to someone else. Thank you.

Thank you. As a reminder, ladies and gentlemen, that's star 11 to ask the question. Please stand by for our next question. Our next question comes from the line of Lawson Winder with Bank of America Securities. Your line is open.

Thank you very much, operator. Good morning, Robert and team. Thank you for today's update. Fantastic as always. Just wanted to ask about the temporarily high cash costs and the outlook for 2025. So last quarter, you guys had to do a 20% reduction versus I think what was the midpoint of the 2023 guidance. So that would imply about $1.15 per pound. I just Just wanted to make sure I had my numbers roughly correct.

Yeah, well, I'd like to take a stab at that because I think people get very confused. You know, we have 78 megawatts of hydroelectric power we've developed so far. And good news is bad news here. We've developed this concentrator at least six months ahead of the schedule we told you about last year. I can't think of anybody else building tier one mines ahead of schedule. Can you? So with a concentrator starting up in June, we have to burn diesel for six months until the Inga Dam comes on. So we're not going to burn diesel as soon as the Inga Dam comes on. And we just announced an agreement. We just signed an agreement today with Zambia to bring in hydroelectric power. So this power issue, this limiting factor is going away. So once the smelter is running and the Angolan Railroad is running, We're saving about 20 cents a pound on transportation costs because we're moving half the volume. Shipping 99% copper instead of shipping 50% copper cuts the cost in half per pound. We're going to get the benefit of sulfuric acid, and the price of sulfuric acid loss is very high in the Congo. And the higher the copper price goes, the higher the price of sulfuric acid goes. in the Congo. You get a leverage effect because everybody screams for it for their oxide copper mines. Right now, current production consumption of sulfuric acid in the Congo is six or seven million tons a year. But that's going up. And so maybe our smelter can provide 10% of what's required in the Congo. But I think the pricing that we assumed on sales of sulfuric acid are very So when we're running at 100% hydropower and we've got three mills going above their nameplate capacity, I think $1.15 is a perfectly realistic target. Let's say $1.10 to $1.30 in the midpoint of that range might be $1.20 or $1.15. Sounds about right to me. Would anybody else on our team like to comment? Yeah?

Agreed. That's it.

Yeah? Mark agrees. That's a reasonable target. That's right at the bottom of the world cost curve in money, but at the bottom of the world cost curve in global warming gas produced per unit of copper, for which we're going to get a premium. We're absolutely certain we're going to get a premium for clean copper. That's opening soon at a theater near all of us.

Okay, thanks very much for that detail. I also wanted to congratulate you guys on getting that agreement with Sabanier. Nice that it's potentially expandable. What are you guys thinking about in terms of options for processing the remaining part of Phase 2 concentrate from Platte Reef? And is a base metal refinery on the table for something that Ivanhoe might build down the road, or is Is the proposed map the solution to avoiding having to do that? Thanks very much.

Marna and Mark, could you talk a little bit, without mentioning names, about the nature of our discussions about going further downstream?

I'm going to ask Alex to chip in. But definitely for phase two, I don't think we're at risk. Alex, you want to carry on there?

No, I totally agree, Mark. I think for phase two, especially given that we've sort of modified the size around this four million tonne hoisting capacity, we definitely see that there will be capacity in the South African market for that concentrate. And then really what we're looking at is a joint venture partnership on downstream processing. that's more geared towards phase three, when we have that huge shaft number two available, we can increase our processing capacity up to 10 million tons per annum. And at that point, we're, if not the biggest, one of the absolute biggest PGM mines and also a huge producer of nickel and copper. So that becomes the limiting factor in terms of base metal refinery capacity in South Africa. But what we're looking at is potentially, well, either building a greenfield site or even better to repurpose an existing brownfield site in South Africa, of which there are many good candidates, which can save significantly on time and capex. And then the idea being that we would produce a nickel mat, so it's about 50% nickel by content, including the PGMs, and then that becomes a much more marketable product internationally to various different refineries.

So out of the way to phase two, we think, and then it's obviously phase three is that decision point that we need to make. Okay. Thank you all very much.

Thank you. I'm sure no further phone questions. I would now like to turn the call back over to Matt.

Thank you very much. We are coming up on the top of the hour. So I think we will wrap the call up there. And as Robert mentioned, he's got to give his keynote speech here. So we will wrap up today. I'd just like to thank everyone for joining us. If you did have any questions that were not answered on the call, please do reach out to the IR team, Tommy, Alex, and myself, and we'd be happy to find the answers for you. But we're looking forward to a very exciting 2024, and thanks again for joining us. We can wrap up, operator.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.