Ivanhoe Mines Ltd. [IVN-TSX; IVPAF-OTC] said Monday June 11 that it has signed a long-term strategic co-operation and investment agreement with CITIC Metal Ltd., a subsidiary of the Chinese state-owned CITIC Group.
Under the agreement, Ivanhoe will issue 196.6 million common shares to CITIC Metal through a private placement priced at $2.68 per share, yielding proceeds of $723 million (US$560 million).
As a result, CITIC will emerge as Ivanhoe’s largest single shareholder with a 19.9% stake in the company, ahead of Ivanhoe Chairman Robert Friedland’s 17% interest.
Proceeds of the private placement are earmarked for Ivanhoe’s three principal projects in Southern Africa, including:
- Mine development at the Platreef platinum-palladium-gold-nickel copper discovery on the Northern Limb of South Africa’s Bushveld Complex.
- Mine development and exploration at the Tier One Kamoa-Kakula copper discovery on the Central African Copperbelt in the DRC.
- Advancement towards a new era of production at the high-grade Kipushi zinc-copper-silver-germanium mine, which is also located on the DRC’s Copperbelt.
China’s Zijin Mining Group, which acquired a 9.9% stake in Ivanhoe in 2015, through a wholly-owned subsidiary, will be entitled to exercise its existing anti-dilution rights through a concurrent private placement, which could net additional proceeds of $78 million (US$60 million) if exercised in fully. Zijin and Ivanhoe are each 39.6% joint venture partners in the continuing development of Ivanhoe’s Kamoa-Kakula project.
Ivanhoe shares advanced on the news, rising 3.10% or $0.10 to $3.33 in early afternoon trading on Monday. The shares trade in a 52-week range of $5.05 and $2.50.
A prefeasibility study for Kipushi, announced in December 2017, is forecasting life-of-mine average annual planned zinc concentrate production of 381,000 tonnes per annum, with a concentrate grade of 59% zinc. Total zinc production is expected to be 8.6 million tonnes of ore at 32.14% zinc over a period of 11 years to produce 2.5 million tonnes of zinc metal in concentrate.
The Kipushi prefeasibility study anticipates annual production of an average of 381,000 tonnes of zinc in concentrate over an 11-year initial mine life at a total cost of approximately $0.48 per pound of zinc.
Back in October, 2017, Ivanhoe said it had agreed to rebuild 34 km of track to connect the Kipushi Mine with the DRC national railway at Munama, south of the mining capital of Lubumbashi. The Kipushi-Munama spur line, which has been inactive since 2011, will be rebuilt under the terms of a memorandum of understanding signed by Ivanhoe Mines and the DRC’s state-owned railway company.
A February, 2018 mineral resource estimated has boosted the combined Kamoa-Kakula indicated mineral resource to 1.03 billion tonnes at 3.17% copper, containing 72 billion pounds of copper, plus an additional 182 million tonnes of inferred mineral resources at 2.31% copper at a 1.5% cut-off.
The new mineral resource estimate establishes the Kamoa-Kakula Project as the world’s fourth largest copper discovery. Kamoa-Kakula’s copper grades are the highest, by a wide margin, of the world’s top 10 copper deposits.