Ivanhoe Mines posts near tenfold profit increase in 2022; stock rises

View of the Kamoa-Kakula Mining Complex, with the Kakula North ore stockpiles in front and the Phase 1 and Phase 2 concentrators in the rear. Credit: Ivanhoe Mines

Shares of Ivanhoe Mines (TSX: IVN) rallied on Tuesday after posting record highs in revenue and profit in 2022. The stock was up up 2.5% as of 11:30 Eastern Time in Toronto, valuing the company at C$13.9 billion ($10.1bn).

On Monday, the southern Africa-focused miner announced its financial results for the year ended December 31, 2022, notching a record profit of $434 million, which represents a near ten-fold increase over the $45 million recorded in 2021. Its recognized revenue of $2.15 billion, operating profit of $1.27 billion and EBITDA of $1.39 billion were also record highs, based off 323,733 tonnes of copper sold in 2022.

The company, founded by billionaire Robert Friedland, had strong quarterly performance in Q4 2022, during which it sold 92,208 tonnes of copper and record revenue of $673 million, record operating profit of $418 million and record EBITDA of $451 million.

During the year, its Kamoa-Kakula copper complex in the Democratic Republic of Congo produced 333,497 tonnes of copper concentrates – within its guidance range of 325,000 and 340,000 tonnes – at cash costs of $1.39/lb. Production in the fourth quarter totalled 92,761 tonnes, partly owing to the early commissioning of the Phase 2 expansion that would double the operation’s nameplate production capacity.

Ivanhoe is now advancing the Phase 3 expansion of the Kamoa-Kakula, which includes a 500,000-tonne-per-annum, direct-to-blister flash smelter. This expansion is expected to be completed on schedule in late 2024, and, according to Ivanhoe’s estimates, would lead to improvements in cash costs by between 10% and 20%.

At current copper prices, it is expected that cashflow from Kamoa-Kakula’s Phase 1 and Phase 2 operations will be sufficient to fund the 2023 and 2024 expansion capital cost requirements of $2.53 billion, the company said.

Since entering Phase 1 commercial production on July 1, 2021, Kamoa-Kakula has generated $1.22 billion of net cash from operating activities, which has funded both the Phase 2 and Phase 3 expansion activities to date.

The Kamoa-Kakula copper complex is operated as a joint venture between Ivanhoe and China’s Zijin Mining. The project has been independently ranked as the world’s fourth-largest copper deposit by international mining consultant Wood Mackenzie from 2025.

Elsewhere, Ivanhoe is continuing its copper exploration program on its Western Foreland licences that cover approximately 2,407 square kilometres adjacent to Kamoa-Kakula. The 2023 exploration program is budgeted at approximately $19 million and includes up to 70,000 metres of total drilling.

In mid-2023, the company plans to release an initial mineral resource estimate for its Makoko and Kiala high-grade copper discoveries in the Western Foreland, to be followed by a preliminary economic assessment.

Ivanhoe has also commenced an optimization study at its Platreef palladium, nickel, platinum, rhodium, copper and gold mine in South Africa to potentially accelerate production from the Phase 2 expansion. First production is scheduled for Q3 2024.