Ivanhoe Mines Ltd. Class A · TSX:IVN
Ivanhoe Mines Ltd. Class A — Investor Presentation (July 2017)
67 slides from Ivanhoe Mines Ltd. Class A's investor presentation, Jul 24, 2017
Slide 1: Ivanhoe Mines: New Horizons
IWANHOEMINES@ N E W HORIZONS _ Over ay years i in » Africa — Wes am \ A i
Slide 2: Forward-looking statements & Qualified Person
Forward-looking statements & Qualified Person Certain statements in presentation constitute “forward-looking statements” or “forward-looking information” within the meaning of applicable securities laws, including, without limitation, the timing and results of: (i) statements regarding the ongoing d
Slide 3: Building futures for our stakeholders, today
Building futures for our stakeholders, today, KAMOA-KAKULA in Southern Africa’s Copper 39.6%-owned storied mineral fields Democratic Republic of Congo’s Central African Copperbelt KIPUSHI PLATREEF Zinc-copper Platinum-group elements 68%-owned & gold-nickel-copper D.R. Congo’s 64%-owned Copperbelt So
Slide 4: Kamoa Mine Development & Kakula Discovery
Kamoa Mine Development & Kakula Discovery Democratic Republic of Congo
Slide 5: Kakula & Kakula West − re-writing the Kamoa Story
Kakula & Kakula West − re-writing the Kamoa Story Kakula is substantially richer, thicker and more consistent than other mineralization found elsewhere on the Kamoa Project. Kakula West is a new high-grade extension of Kakula. 15 rigs drilling at Kakula, Kakula West and other targets on mining
Slide 6: Kakula West discovery hole locations
View to west, showing locations of discovery hole DD1124 at Kakula West and the two 400-metre step-out holes, DD1138 and DD1144
Slide 7: Kakula mineralized system more than 12 km long and still open
The Kakula mineralized system is more than 12 kilometres long and is still open in both directions
Slide 8: Extent of Kakula / Kakula West Discovery
Extent of Kakula / Kakula West Discovery 2017 drilling at Kakula West Kakula West discovery extends known mineralization to more than 12 km, and remains open.
Slide 9: Discovery holes at Kakula West
Discovery holes at Kakula West, more than 3 kms away from the May 2017 Kakula Resource boundary
Slide 10: Drilling at the Kakula West Copper Discovery
Drilling at the Kakula West Copper Discovery – Excellent visual drill intercepts continue to be returned at Kakula West
Slide 11: Massive chalcocite in a recent drill hole from Kakula West
Massive chalcocite in a recent drill hole from Kakula West Results show a rapidly growing area of shallow copper mineralization characterized by finely disseminated chalcocite in siltstone and maroon diamictite. The style and overall geometry of mineralization are typical of the high-grade Kakula tr
Slide 12: +12% copper in hole DD1041
+12% copper in hole DD1041 Massive chalcocite Disseminated massive chalcocite
Slide 13: Kakula – bottom-loaded, high-grade copper
Kakula – bottom-loaded, high-grade copper is consistent at higher cutoffs
Slide 14: Kakula – bottom-loaded, high-grade copper
Kakula – bottom-loaded, high-grade copper is consistent at higher cutoffs
Slide 15: May 2017: Updated Mineral Resource estimate for Kakula
May 17, 2017: Updated Mineral Resource estimate for the high-grade Kakula Discovery • Kakula’s Indicated Resources total 349 million tonnes at a grade of 3.23% copper, containing 24.9 billion pounds of copper at a 1% copper cut-off. At a 3% copper cut-off, Indicated Resources total 116 million tonne
Slide 16: Consolidated Mineral Resource Statement, Kamoa-Kakula Project
Consolidated Mineral Resource Statement, Kamoa-Kakula Project – May 16, 2017, 1% copper cut-off over an approximate minimum thickness of 3 metres True Contained Contained Tonnes Area Copper Deposit Category Thickness Copper Copper (millions) (Sq. km) Grade (metres-m) (kTonnes) (billion lbs) Indicate
Slide 17: 2016 Kakula PEA – alternate development scenarios
2016 Kakula PEA – alternate development scenarios Mine Kakula Kakula + Kansoko Annual mining rate 4 million tonnes 4 + 4 million tonnes(1) Average head grade; first 10 years 6.90% copper 5.81% copper Annual copper production first 10 years 216,000 tonnes 292,0000 tonnes Mine-site cash cost first 10
Slide 18: Planned Kakula 2016 PEA development and infrastructure
Planned Kakula 2016 PEA development and infrastructure for Kakula and Kansoko mines
Slide 19: 2017 PEA – two six-million-tonne-per-year mines
2017 PEA – two six-million-tonne-per-year mines • A new PEA is being worked on based on the May 2017 Kakula Mineral Resource estimate. • Kakula − mine capacity of approximately 6 Mtpa. • Kansoko Mine − mine capacity of approximately 6 Mtpa. • Kamoa-Kakula development plans will be reassessed and ame
Slide 20: First blast at the Kakula box cut
First blast at the Kakula box cut
Slide 21: Box cut construction underway at Kakula
Box cut construction underway at Kakula to provide access to the bonanza-grade deposit
Slide 22: Kansoko Mine box cut and surface facilities
Kansoko Mine box cut and surface facilities
Slide 23: Kansoko Sud section line looking north
Kansoko Sud section line looking north, showing 1.5% copper cut-off composites
Slide 24: Jumbo drill in operation in the Kansoko Mine declines
Jumbo drill in operation in the Kansoko Mine declines
Slide 25: Kamoa-Kakula among world's largest copper deposits, highest grades
Among the world’s largest copper deposits by contained copper, Kamoa-Kakula has the highest copper grades by a wide margin Measured & Indicated Resource and Grade Inferred Resource and Grade 150.0 3.0% Kamoa-Kakula now ranks Contained Copper (Mt) among the five largest Copper Grade (%) 125.0 2.5% co
Slide 26: World's largest high-grade copper deposits
World’s largest high-grade (above 2.5% copper) copper deposits Measured & Indicated Resource Inferred Resource Kamoa-Kakula is the largest high-grade Contained Copper (Mt) 5.2 copper deposit in the world* 11.7 31.4 6.4 16.9 10.1 0.1 0.4 0.0 9.8 4.6 1.3 0.7 0.6 0.5 2.2 0.3 Source: Wood Mackenzie *Not
Slide 27: World's largest undeveloped copper deposits
World’s largest undeveloped copper deposits Measured & Indicated Resource and Grade Inferred Resource and Grade 40.0 3.5% Kamoa-Kakula is the largest undeveloped Contained Copper (Mt) 35.0 3.0% copper deposit in the world* Copper Grade (%) 30.0 2.5% 25.0 2.0% 20.0 1.5% 15.0 1.0% 10.0 5.0 0.5% - - *S
Slide 28: Kakula Phase 1 & Kansoko concentrate and metal production
Kakula Phase 1 Mine & Kansoko Mine concentrate and metal production for the first 20 years 28
Slide 29: Zijin Mining acquired 49.5% stake in Kamoa Project
December 8, 2015: Zijin Mining acquired 49.5% stake in Kamoa Project for US$412 million Zijin has committed to use its best efforts to arrange or procure project financing for 65% of the capital required to develop the first phase of the Kamoa Project, to be detailed in the ongoing feasibility stu
Slide 30: Mwadingusha hydroelectric power station
Mwadingusha hydroelectric power station Mwadingusha is the first of three hydroelectric power plants in the DRC that Ivanhoe plans to upgrade to secure a supply of clean, sustainable electricity for the development of Kamoa. The supply of the initial 11 MW of electricity to the grid commenced in
Slide 31: 120kV power line at the Kamoa Project
120kV power line at the Kamoa Project
Slide 32: Future power to feed Kamoa and Kipushi
Future power to feed Kamoa and Kipushi The future Inga III dam is projected to produce 4,800 megawatts of power, most of which will be routed via Kolwezi to supply mines in the DRC and South Africa (2,500 megawatts).
Slide 33: Kipushi Mine Exploration and Upgrading
Kipushi Mine Exploration and Upgrading Democratic Republic of Congo
Slide 34: Kipushi Fault Zone and Big Zinc history
Kipushi Fault Zone was mined 1924-1993 to approx. 1,150-metre level. Big Zinc discovered prior to 1993 closure; never mined.
Slide 35: Independent Mineral Resource Estimate, January 2016
Independent Mineral Resource Estimate, 23 January 2016 Kipushi Zinc-Rich Mineral Resource at 7% Zinc Cut-Off Grade Co Ge Tonnes Zn % Cu% Pb% Ag g/t Zone Category ppm g/t (Millions) Measured 3.59 38.39 0.67 0.36 18 17 54 Big Zinc Indicated 6.60 32.99 0.63 1.29 20 14 50 Inferred 0.98 36.96 0.79 0.14 7
Slide 36: Top zinc projects by contained zinc
Top 20 zinc projects by contained zinc Source: Wood Mackenzie. Note: All tonnes and metal grades of individual metals used in the equivalency calculation of the above mentioned projects (except for Kipushi) are based on public disclosure and have been compiled by Wood Mackenzie. All metal grades hav
Slide 37: World's major zinc mines by production and head grade
World’s major zinc mines, showing estimated annual zinc production and zinc head grades Annual Zinc Production (kt) 600 35% Zinc Head Grade (%) 500 30% 25% 400 20% 300 15% 200 10% 100 5% -- -- Source: Wood Mackenzie. World’s major zinc mines defined as the world’s 10 largest zinc mines ranked by for
Slide 38: 2016 Kipushi PEA
2016 Kipushi PEA Steady-state mining rate 1.1 million tonnes/year Average head grades 32.2% zinc and 5.4% copper Zinc concentrate production 530,000 tonnes/year @ 53% zinc Total cash costs (after credits) $0.54/lb zinc Initial capex $409 million After-tax NPV8 @ $1.01/lb zinc $533 million (1) After-
Slide 39: Zinc mine pro-rata C1 cash cost
Zinc mine pro-rata c1 cash cost Zinc Mine Pro-Rata C1 Cash Cost (USc / lb 180 160 140 120 100 80 60 40 Kipushi Project: In the bottom quartile 20 of the global cash cost curve -- 0% 25% 50% 75% 100% Global Zinc Production (%) Figure based on data from Wood Mackenzie, April 2016. Note: Represents C1
Slide 40: Capital intensity for zinc projects
Capital intensity for zinc projects Capital Intensity (US$ / Zn production) $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 -- Figure based on data from Wood Mackenzie, April 2016. Note: All greenfield development projects classified as “probable” and “base case” by Wood Mackenzie. Sour
Slide 41: Kipushi Mine to Market Overview
Kipushi Mine to Market Overview 1 Resource 2 Mining 3 Processing 4 Transport 5 China Sulphide DMS plant, replacement including Rail from orebodies Sublevel crushing, Zinc Kipushi Mine with zones Open screening, concentrate site to Durban of zinc-rich Stoping, HLS and exported to (via Ndola), mineral
Slide 42: Upgraded supports for Shaft 5 pump columns
Upgraded supports for Shaft 5 pump columns at the 1,200-metre-level pump station
Slide 43: Upgraded pump at Shaft 5 pumping station
A Grifo pump that has been upgraded and recommissioned at the Kipushi Zinc-Copper Mine’s Shaft 5 pumping station
Slide 44: Shaft 5 main pumping station
Shaft 5 main pumping station at the 1,200-metre level
Slide 45: New rollers on 1,150-metre-level ore conveyor belt
New rollers being installed on the 1,150-metre-level ore conveyor belt as part of the upgrading at the historic, high-grade Kipushi zinc-copper-lead-germanium mine
Slide 46: Shaft 5 hoisting winder
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Slide 47: World's best drill hole?
World’s best drill hole? Our geology team holding hands and showing Big Zinc intersection of 44.8% zinc over 340 metres.
Slide 48: Fionet malaria diagnostics program
The Fionet program to improve malaria diagnostics and treatment expanded to 300 Deki Readers installed in 252 medical service providers in Haut-Katanga and Lualaba provinces in Southern DRC, which host Ivanhoe’s Kipushi and Kamoa-Kakula projects.
Slide 49: Platreef Discovery & Mine Development
Platreef Discovery & Mine Development South Africa
Slide 50: Platreef's Shaft 1 head gear
Platreef's Shaft 1 head gear IVANHOE
Slide 51: Platreef debt financing site visit
July 2017 – A site visit by members of the five institutions appointed to arrange debt financing for Platreef. Expressions of interest received for approximately US$900 million.
Slide 52: Start of surface construction for Shaft 2
April 2017: Ivanhoe announces start of surface construction for Shaft 2, which will be Platreef's main production shaft with a hoisting capacity of six million tonnes a year. Illustration shows two perspectives of Shaft 2’s 103-metre-tall concrete headgear and internal permanent hoisting facilities.
Slide 53: Platreef
Key Platreef Platreef licences Amplats’ Mines on Northern Limb Ivanhoe Mines Ivanhoe Mines JV City Platreef horizon dips Anglo Platinum west. Lonmin Fault Platreef PGE-Au-Ni-Cu Property mineralization Boundary has thicknesses up to hundreds of metres. Rietfontein Turfspruit JV Macalacaskop Platr
Slide 54: May 2016: PGM Indicated and Inferred Resources
May 2016: 42 million oz. of PGMs in Indicated plus 58 million oz. of PGMs in Inferred Resources Indicated Mineral Resources contain an estimated 42.0 million oz. of PGMs plus gold – a gain of 45% – with an extra 52.8 million ounces in Inferred Resources, at the base case cut-off grade of 2 g/t.
Slide 55: May 2016 resource update
May 2016 resource update Potential for safe, mechanized mining and substantial by-product credits. Significant exploration upside; open along strike for several km. Platreef 43-101-Compliant Mineral Resource, April 22, 2016 @ 2 g/t 3PE+Au cut-off 3PE+ Contained Metal Tonnage Nickel Copper Au 3PE
Slide 56: Exploration target areas of 245 – 410 million tonnes
Open to expansion to the south and west, beyond the area of the current Indicated Resources (in green) and Inferred Resources (in blue). Four target areas contain an estimated 245 – 410 million tonnes. Approximately 48km2 of unexplored ground beyond these exploration target areas.
Slide 57: Platreef near the bottom of the world's cash-cost curve
Platreef’s potential US$322 per 3PE+Au ounce (net of base-metal by-products) ranks near the bottom of the world’s cash-cost curve US$/oz 3PE+Au Quartile 1 Quartile 2 Quartile 3 Quartile 4 1,400 Northern Limb Zimbabwe Eastern Limb Western Limb Ivanhoe's Platreef Project 1,200 Ivanhoe’s Platreef Proje
Slide 58: Platreef's Shaft 1 early development access
Platreef’s Shaft 1 will provide early development access into the Flatreef Deposit and will be utilized to fast-track the production during the first phase of the project
Slide 59: Sinking platform in operation at Shaft 1
Sinking platform in operation at Shaft 1 Shaft 1 is expected to reach its projected, final depth of 980 metres below surface in 2018.
Slide 60: Flatreef: Merensky Grades at Platreef Widths
Flatreef: Merensky Grades at Platreef Widths Typical Merensky Reef, Drill hole UMT378 1091.63m Western Limb Merensky Flatreef(1) Reef 4 - 10 3.8 g/t Grade g/t 3PE 4PE True ~ 0.4 – 1.5 19 m thickness m Grade - 1117.00m thickness < 5 - 15 85.6 (m-g/t) 25-metre intercept @ 9.90 g/t 4PE, 0.45% Ni (1) In
Slide 61: Drill hole TMT006 – lithology and grade profile
Drill hole TMT006 – lithology and grade profile Shaft 1
Slide 62: Bulk power from Eskom
Bulk power from Eskom, South Africa’s state utility Medupi power station started generating power in March 2015; expected to be fully operational by 2020, providing 4,800 MW of power to national grid. Kusile started generating power in Dec 2016; expected to provide a total of 4,800 MW of power by 20
Slide 63: Flatreef mining method: long-hole stoping
Flatreef mining method: long-hole stoping Highly mechanized Safe working mining conditions Blast-hole drifts 5m 5m The Flatreef Deposit average thickness of 24 metres = 8 storeys Mucking drifts Highly skilled operators
Slide 64: Automation and smart mining
AUTOMATION, a central feature of the ‘smart mining’ trend aiming to deliver new levels of efficiency, safety and value, is part of the operational DNA being designed for Ivanhoe’s Kamoa Copper Project in the DRC and Platreef Platinum Project in South Africa.
Slide 65: Independent Consultants
Independent Consultants Leading independent consultants have, and will continue to prepare IVN’s technical reports, including the economics (such as the NPV, IRR, and peak funding figures in this presentation).
Slide 66: New production likely to provide only short-lived lift in platinum output
Even new production now under development likely to provide only short-lived lift in platinum output (’000 oz.) Southern Africa’s projected platinum production plunge (2) 2020: EXPECTED START OF INITIAL PRODUCTION FROM IVANHOE’S PLATREEF PROJECT PwC Ivanhoe’s Platreef is among new projects whose r
Slide 67: Thank you.
Thank you. IVANHOEMINES NEW HORIZONS