Ivanhoe Mines Ltd. Class A · TSX:IVN
Ivanhoe Mines Ltd. Class A — Q1 2023 Earnings Presentation
38 slides from Ivanhoe Mines Ltd. Class A's earnings presentation, May 3, 2023
Slide 1: 2023 Q1 Financial Results
www.ivanhoemines.com | TSX: IVN; OTCQX: IVPAF 2023 Q1 FINANCIAL RESULTS May 3, 2023
Slide 2: Disclaimer and Forward-Looking Statements
DISCLAIMER AND FORWARD-LOOKING STATEMENTS The information contained in this presentation and other information furnished by or on behalf of Ivanhoe Mines Ltd. (“Ivanhoe”) has been prepared to assist the reader in understanding the business and financial results of Ivanhoe for the periods indicated a
Slide 3: Opening Remarks
OPENING REMARKS Robert Friedland, Founder & Executive Co-Chairman 3
Slide 4: Q1 2023 Highlights
Female members of staff in front of Kamoa- Kakula’s Phase 2 concentrator, DRC Q1 2023 HIGHLIGHTS Marna Cloete, President 4
Slide 5: Q1 2023: Kamoa-Kakula Operational Excellence
Q1 2023: KAMOA-KAKULA OPERATIONAL EXCELLENCE 93,603 tonnes De-bottlenecking program increasing copper Copper Produced production capacity to 450 ktpa completed ahead of schedule in Q1 2023 86,777 tonnes Payable Copper Sold Phase 3 expansion on schedule to increase copper production to ~650 ktpa from
Slide 6: Health & Safety: Constant Improvement
HEALTH & SAFETY: CONSTANT IMPROVEMENT 40% reduction in the total injury frequency rate across all sites during 2022 A safe start to 2023 at all sites; further reduction in TRIFR during Q1 2023 Ivanhoe Mines’ Total Recordable Injury Frequency Rate (TRIFR) by Project 6.82 5.15 4.23 2.90 Industry Avera
Slide 7: Highlights from our 2022 Sustainability Report
HIGHLIGHTS FROM OUR 2022 SUSTAINABILITY REPORT 76% of group-wide energy consumed was from renewable sources, including state- owned hydroelectric facilities rehabilitated and funded by Kamoa-Kakula Ivanhoe joined the Extractive Industries Transparency Initiative and United Nations Global Compact 10%
Slide 8: Highlights from our 2022 Sustainability Report
HIGHLIGHTS FROM OUR 2022 SUSTAINABILITY REPORT Kamoa-Kakula contributed approximately 4% to DRC GDP, and set to increase significantly in 2023 $311 million paid in government taxes and royalties Over $95 million contributed in group-wide payroll to employees, plus over $70 million in local payroll t
Slide 9: Highlights from our 2022 Sustainability Report
HIGHLIGHTS FROM OUR 2022 SUSTAINABILITY REPORT $20 million spent on the socio-economic development across Ivanhoe’s host communities, an increase of over 100% from 2021 332 formal and informal local enterprises supported group-wide, up from 66 in 2021; 644 scholarships distributed group-wide 9
Slide 10: Q1 2023 Financial Overview
Q1 2023 FINANCIAL OVERVIEW David van Heerden, Chief Financial Officer 10
Slide 11: Kamoa-Kakula: Another Record Quarterly Performance
KAMOA-KAKULA: ANOTHER RECORD QUARTERLY PERFORMANCE (Figures shown on 100% basis for Kamoa-Kakula) Record quarterly revenue and EBITDA achieved in Q1 2023 Copper Sold (kt) 86.8 kt payable copper sold in the quarter, lower than copper produced, resulting in higher inventories at quarter-end 85.8 93.8
Slide 12: Kamoa-Kakula: High Margins Continue in Q1 2023
KAMOA-KAKULA: HIGH MARGINS CONTINUE IN Q1 2023 (Figures shown on 100% basis for Kamoa-Kakula) Quarterly Revenue (US$ million) Quarterly EBITDA (US$ million) / Realized Copper Price (US$/lb.) / EBITDA Margin (%) $4.34/lb. $4.04/lb. 67% 66% $3.50/lb. $3.54/lb. 673 451 452 689 58% 55% 494 460 286 254 Q
Slide 13: Kamoa-Kakula: Quarterly Operating Profit
KAMOA-KAKULA: QUARTERLY OPERATING PROFIT Q1 2023 Attributable Profit to Ivanhoe Mines from Kamoa-Kakula (US$ million) 87kt of copper sales $452 million EBITDA Mostly interest on shareholder loan Ivanhoe’s to JV partners share of ($240) profit Income tax of (49.5%) $76 million $83 million ($33) ($88)
Slide 14: Kamoa-Kakula: C1 Cash Costs Remain Stable
KAMOA-KAKULA: C1 CASH COSTS REMAIN STABLE (All values in US$ per pound of payable copper) Q1 2023 cash costs (C1) at the lower end Quarterly Breakdown of C1 Cash Cost (US$ per lb.) of 2023 guidance range of $1.40/lb. to $1.50/lb. $0.56 Logistics charges easing. Higher $0.51 $0.50 processing costs du
Slide 15: Smelter Drives Future Cash Cost to Lowest Quartile
SMELTER DRIVES FUTURE CASH COST TO LOWEST QUARTILE $4.50 $4.00 C1 Cash Cost (US$/lb.) $3.50 $3.00 $2.50 Q1 2023 C1 $2.00 < $1.20/lb. target Cash Cost: (Phase 3 and $1.42/lb. copper $1.50 smelter) $1.00 2023 Guidance $0.50 $1.40-$1.50 -- 0% 20% 40% 60% 80% 100% Cumulative Paid Copper Production (%) N
Slide 16: Ivanhoe: Record Quarterly Income from Kamoa-Kakula
IVANHOE: RECORD QUARTERLY INCOME FROM KAMOA-KAKULA (All values in US$ million) Group profit of $82 million driven by record income from the Kamoa-Kakula joint venture of $130 million Share price increased from $10.70 to $12.21 during the quarter(2) $130 million ($3) ($9) $2 Income from ($8) $1 joint
Slide 17: Ivanhoe Mines Adjusted EBITDA (Group-Level)
IVANHOE MINES ADJUSTED EBITDA (GROUP-LEVEL) US$ millions Quarterly Group-Level Adjusted EBITDA Ivanhoe ~39.6% share of Kamoa-Kakula $179 EBITDA Exploration and project evaluation ($3) expenditure General administrative expenditure ($9) $162 $168 Loss on fair valuation of listed shares ($2) Other inc
Slide 18: Strong Balance Sheet Supports Ivanhoe's Growth
STRONG BALANCE SHEET SUPPORTS IVANHOE’S GROWTH (100% Basis, US$ millions) Q1 2023 Remaining 2023 FY Funding Ivanhoe Mines cash and cash equivalents Capital Expenditure Capex Spent Capex Guidance Arrangements of $497 million Kamoa-Kakula Kamoa-Kakula joint venture boasts a Phase 2, 3 & Joint-venture
Slide 19: Significant Cash Flow Attributable to Ivanhoe
SIGNIFICANT CASH FLOW ATTRIBUTABLE TO IVANHOE As at Shareholder Loan Balances March 31, 2023 ($ million) Kamoa-Kakula (39.6% equity interest) Ivanhoe will receive distributions Total shareholder loans payable by Kamoa Holding $3,199 (once payable) in excess of its Portion of shareholder loan receiva
Slide 20: Operations & Project Update
Aerial footage of the Phase 1 and 2 concentrator, overlaid with a 3D rendering of the smelter complex OPERATIONS & PROJECT UPDATE Alex Pickard, Senior VP, Corporate Development & IR Robert Friedland, Founder & Executive Co-Chairman Marna Cloete, President 20
Slide 21: Kamoa-Kakula: Improving Throughput & Recoveries
KAMOA-KAKULA: IMPROVING THROUGHPUT & RECOVERIES De-bottlenecking program complete Ore tonnes milled (000’s tonnes) Copper ore grade processed (%) ahead of schedule in Q1 2023. Phase 1 5.44% 5.60% and 2 production capacity increased to 5.40% 5.42% ~450kt per annum 2,082 1,950 2,006 1,930 Record month
Slide 22: Kamoa-Kakula: Increasing Back-up Generation Capacity
KAMOA-KAKULA: INCREASING BACK-UP GENERATION CAPACITY Phased roll-out plan for over 200 MW of backup generation capacity to meet total power requirement of Kamoa-Kakula Increasing from 32 MW installed to 43 MW by Q2 2023, and 92 MW by Q4 2023 Discussions advanced to secure up to 100 MW from Zambian g
Slide 23: Kamoa-Kakula: Work Underway to Improve Grid Stability
KAMOA-KAKULA: WORK UNDERWAY TO IMPROVE GRID STABILITY DRC grid stability study completed in collaboration with SNEL; identified key initiatives to improve grid stability across the network Up to 1,000 MW capacity high-voltage direct current line connecting the Inga dam complex to Kolwezi (1,700 km)
Slide 24: Kamoa-Kakula Phase 3: Concentrator Progress
KAMOA-KAKULA PHASE 3: CONCENTRATOR PROGRESS Phase 3 expansion, copper smelter and refurbishment of turbine #5 on schedule for Q4 2024 completion All major equipment for Phase 3 concentrator ordered; 50% of total concrete poured, ahead of schedule; first steel erection expected in June 2023 Foundatio
Slide 25: Kamoa-Kakula Phase 3: Opening Up Kamoa Mines
KAMOA-KAKULA PHASE 3: OPENING UP KAMOA MINES Excavation of the decline for the Phase 3 boxcut advancing rapidly; 2.3 kilometres of underground development at Kamoa 1 & Kamoa 2 mines completed to date 25
Slide 26: Kamoa-Kakula Phase 3: Smelter Construction
KAMOA-KAKULA PHASE 3: SMELTER CONSTRUCTION Smelter concrete foundations nearing completion; all major equipment ordered and being manufactured Foundations of the Direct-to-Blister Furnace 26
Slide 27: Kamoa-Kakula Phase 3: Inga II Hydropower Refurbishment
KAMOA-KAKULA PHASE 3: INGA II HYDROPOWER REFURBISHMENT Upgrade of turbine 5 at Inga II dam (178 MW of hydropower) ongoing with site mobilization completed in October 2022; key equipment being manufactured Work underway on the rotor and the stator at turbine 5, Inga II 27
Slide 28: Western Foreland Exploration, DRC
WESTERN FORELAND EXPLORATION, DRC 70,000m targeted for 2023; 4,883m drilled during Q1 2023, during the late wet season; now entering dry season 2023 budget of US$19 million; four drill rigs on site at end of March Drilling contractor conducting diamond-core drilling on the 90-100% owned Western Fore
Slide 29: Makoko & Kiala Exploration, DRC
MAKOKO & KIALA EXPLORATION, DRC Maiden Resource estimate for Makoko & Kiala copper discoveries on track for mid-2023; to be followed by Preliminary Economic Assessment Drilling contractor conducting diamond-core drilling at Makoko in the Western Foreland 29
Slide 30: Mokopane Feeder Exploration, South Africa
MOKOPANE FEEDER EXPLORATION, SOUTH AFRICA High-resolution magnetic survey 50% complete; gravity survey commenced; diamond drilling to follow Aircraft conducting airborne magnetic survey 30 30
Slide 31: Platreef: Phase 1 Advancing Towards Production in Q3 2023
PLATREEF: PHASE 1 ADVANCING TOWARDS PRODUCTION IN Q3 2023 Phase 1 processing plant construction on schedule Concrete foundations of the Phase 1 Concentrator 31
Slide 32: Platreef: Optimization of Shaft 3 in Progress
PLATREEF: OPTIMIZATION OF SHAFT 3 IN PROGRESS Reaming of Shaft 3 commenced, with 150m of 950m complete. Completion targeted Q4 2023 Pilot hole for Shaft 2 approx. 700m out of 950m complete Optimization work underway to accelerate Phase 2 expansion by installing hoisting capacity in Shaft 3 Battery-e
Slide 33: Platreef: Shaft 2 Concrete Pour Complete
PLATREEF: SHAFT 2 CONCRETE POUR COMPLETE 79-metre high continuously-poured concrete base of Shaft 2 complete, top 20 metres of steel to follow; once complete totaling ~100-metre-high headframe Pilot-hole drilling of Shaft 2 over 680 metres complete Headframes of Platreef’s Shaft 1 (left) and Shaft 2
Slide 34: Kipushi: Strategic Partnership with Gécamines
KIPUSHI: STRATEGIC PARTNERSHIP WITH GECAMINES Off-take term sheet signed with Gécamines and Glencore for 100% of Kipushi's zinc concentrate, together with US$250 million facility Signing ceremony with representatives from Ivanhoe Mines, Kipushi Corporation, Gécamines and Glencore 34
Slide 35: Kipushi: Underground Development Ahead of Schedule
KIPUSHI: UNDERGROUND DEVELOPMENT AHEAD OF SCHEDULE Underground development ahead of schedule; 682 metres of development completed in Q1 2023, over 30% more than planned Stoping of the ultra-high-grade Big Zinc orebody to commence ahead of schedule in January 2024 Maintenance crew at the underground
Slide 36: Kipushi: Ahead of Schedule for Production in Q3 2024
KIPUSHI: AHEAD OF SCHEDULE FOR PRODUCTION IN Q3 2024 Surface civil works advancing well; over 2,400 cubic metres of foundation concrete poured; steel erection underway Concrete foundations of the DMS plant in the foreground, with the head frame of the P5 shaft in the background 36
Slide 37: Kipushi: Dedicated Border Crossing to Benefit DRC
KIPUSHI: DEDICATED BORDER CROSSING TO BENEFIT DRC Agreement advancing for a new commercial DRC-Zambia border-crossing at Kipushi New border will benefit both the Kipushi Mine and Kamoa-Kakula as an additional route for exporting products from DRC Study underway to upgrade roads on the Zambian side o
Slide 38: Q1 Financial Results: Management Q&A
www.ivanhoemines.com | TSX: IVN; OTCQX: IVPAF Q1 FINANCIAL RESULTS MANAGEMENT Q&A 38