Good morning, ladies and gentlemen, and welcome to the Ivanhoe Mines Ltd. Q2 earnings call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you need assistance, please press star zero for the operator. This call is being recorded on Thursday, July 31, 2025. I would now like to turn the conference over to Matthew Keevil [Director of Investor Relations and Corporate Communications] (Ivanhoe Mines). Please go ahead.
Thanks very much, Operator. Good morning and afternoon, everyone. It's my pleasure to welcome you to Ivanhoe Mines’ second quarter 2025 financial results conference call. As the Operator mentioned, my name is Matthew Keevil. I am the Director of Investor Relations and Corporate Communications with Ivanhoe Mines. On the line today with the company, we have Founder and Executive Co-Chairman Robert Friedland, President and Chief Executive Officer Marna Cloete, Chief Financial Officer David van Heerden, Chief Operating Officer Mark Farren, and Executive Vice President of Corporate Development and Investor Relations Alex Pickard. We will be finishing today's event with a Q&A session. You can submit a question using the Q&A box on the webcast, as well as through the conference operator via your phone line. Please contact our Investor Relations team directly if your question is not addressed during the call.
We'd be more than happy to follow up with any unanswered questions. Before we begin, I'd 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 these forward-looking statements are contained in our July 30 news release, as well as on SEDAR Plus and at www.ivanhoemines.com. It is now my pleasure to introduce Ivanhoe Mines’ Founder and Executive Co-Chairman Robert Friedland for opening remarks. Robert, please go ahead.
Thank you, and best of wishes to everybody from Switzerland. It's a beautiful day here, and I want to start by thanking everybody on the operating team at Kamoa-Kakula for having experienced a bump in the road, immediately getting to work on restoring Ivanhoe Mines as the fastest-growing and best-known major mining company in the world. I also want to thank very much the people in our Chinese office and our partners at Zijin and CITIC, who expedited a major effort to get world-class pumping systems in place on the site already in record time. We're going to be telling you more about that pumping and our plans for the future imminently, but never have I seen such a great effort by such a diverse group of people responding to a challenge and working rapidly to overcome it.
With that, and without further ado, let's go on to the management team. Thank you.
Thank you, Robert. This is Marna. Maybe just flick back to that previous photo where Robert was talking. There you can see the team. That's the first submersible pump that arrived on site. It was flown there on a Boeing. We are all flying in four of these pumps, and we're also bringing in a spare pump on a ship. Quite a magnificent effort by our team. If we can then go over to my highlights, I think this picture tells a big story. We've been in operation for five years now, and the haul truck you see there in the back was one of the first fleet that we used underground at Kamoa-Kakula. We have now successfully rebuilt this fleet, and you can see the maintenance team standing in front of it that's very proud of its first rebuild.
We use this exercise as a skills transfer exercise, and it also shows how the mine is slowly maturing to become one of the biggest, best copper mines in the world. With that as an intro, I will quickly talk you through the highlights of the quarter. Despite our operational challenges, and it feels like I've been engaging with most of you and surely our team out of London and Vancouver as well, continuously and Robert, over the past two or three months, we have returned a positive net cash flow of about $169 million for the second quarter. We've spoken about the dewatering activities. All our dewatering activities are on track, and we should be dewatered by the end of this year. Our phase one and two concentrators are operating at between 80%-85% capacity, and phase three is operating at above 30% capacity.
Really just one of the success stories. We are planning to start the smelter in September still. What's quite exciting for us is, you know, as we get closer to production at Platreef, if you're in South Africa, we see a turn in sentiment around PGMs, with platinum and palladium prices at a high, bringing online Platreef just at the right time. We're also in the final stages of completing the Kipushi de-bottlenecking project, and that should enable us to increase our production capacity by about 20%. You can see the statistics there on the left-hand side of the slides. I'm not going to delve into that because David van Heerden, our CFO, will talk you through the financials. If we then go to the next slide, I think it would be amiss not to just discuss our safety achievements that we've had during the quarter.
I think when a company experiences the type of event that we did in May and gets through it without any lost-time injuries, it's a significant accomplishment. I would like to commend the team at Kamoa-Kakula for handling the situation with absolute maturity and professionalism and for looking after all our people. It's a team effort. It's not just one person that makes a mine safe. It's a culture of safety, and it's everybody working together to ensure that we look after each other. Also, another significant achievement that should not go unnoticed is that the Kipushi project engineering team has not recorded a single lost-time injury since the construction of the Kipushi concentrator and throughout the de-bottlenecking project. That's also a significant milestone and something that we are very proud of.
Going to the next slide, just on our sustainability efforts, there's a little deck we produce with our quarterly news releases where you can see what we are up to. This quarter, we decided to showcase Kipushi. I think we rarely show the photos of what we achieve at Kipushi, but what we've done over the years is we've replicated what we've done at Kamoa-Kakula at Kipushi on a slightly smaller scale. We've started aquaculture and agricultural community projects. There are about 53 fish ponds at Kipushi and 21 hectares of agricultural farming, as well as poultry farming, similar to what we have at Kamoa-Kakula. These projects really influence the whole town. They provide food security and business opportunities for the local community members who are not employed at the mine.
With that as an intro, I will now hand over to David van Heerden to take you through our quarterly financials. Thank you, David.
Thank you, Marna. Good morning and good day to everyone joining the call today. We can move straight into the next slide. Notwithstanding the impact of the seismic activity in May, Kamoa-Kakula sold almost 102,000 tons of copper in the second quarter, just 8% down from the 110,000 tons sold in Q1. Contained copper in concentrate inventory on hand increased to 53,600 tons, up from the 48,000 tons on hand at the end of Q1. Approximately 31,500 of those tons are located at Kamoa-Kakula's on-site copper smelter for a buffer during the ramp-up, and 18,500 tons of the remaining unsold copper were stored at the nearby Lualaba Copper Smelter, awaiting toll treatment. We expect that to decrease gradually over the next few months, which would mean that sales tons would exceed tons produced in the coming quarters.
Kamoa-Kakula recorded revenue of $875 million in the second quarter of 2025 at a realized copper price of $4.34 per pound of payable copper. Revenue included a gain of $6 million on the mark-to-market of provisional price sales, while the Q1 results included a gain of $51 million. Moving to the next slide, Kamoa-Kakula recorded EBITDA of $325 million for Q2, which was impacted by the lower tons sold, lower grade processed, and abnormal costs as a result of the seismic activity. More on that on a later slide. Cash cost for the second quarter was $1.89 per pound of payable copper, with cash cost for the year to date sitting at $1.78 per pound of payable copper. The increase in cash cost in Q2 2025 was driven primarily by the lower grade of ore processed, which included stockpiled ore since May.
The quarter's results really show how well-diversified and resilient Kamoa-Kakula is as a mining complex with its various mines, concentrators, and ample infrastructure. Moving to the next slide where we illustrate Kamoa-Kakula's EBITDA waterfall. The EBITDA waterfall highlights the drivers of the quarter-on-quarter EBITDA change. The decrease in tons sold contributed $49 million to the quarter-on-quarter EBITDA decrease, and that can be seen in red there on the left-hand side of your screen. There were favorable changes on the copper price and logistics and treatment and refining charges. In Q1, as I'd mentioned previously, we recognized a $51 million gain on the mark-to-market of provisional price sales, which was only $6 million in Q2, resulting in a $45 million delta when comparing the two quarters. Realization costs were slightly up from Q1, and then there was the big standout abnormal cost due to seismic activity.
For Q2, the costs that did not contribute to production from May onwards were identified, ring-fenced, and classified as abnormal costs. As per the accounting standards, these costs are not included in inventory and are expensed straight into the cost of sales. In simple terms, the abnormal cost strips out the cost in the quarter related to the downtime at Kakula. As an example—and I'll go into a bit more detail because I've seen there are some analyst questions around the abnormal costs—all the costs at Kakula as a business unit were classified as abnormal since mining ceased until it recommenced. Abnormal costs therefore include the dewatering response costs, both permanent and temporary underground pumps, and infrastructure to regain the lost pumping capacity, stabilize water levels, and resume the limited mining in the west, and would, of course, include the electricity for the dewatering effort.
It also includes the cost of idle crews until we were able to utilize them at Kakula West or at Kamoa, as well as similar costs that did not contribute to production. The abnormal cost treatment was applied to the Kakula mine operations, both east and west, until operations recommenced on the west, and thereafter it was applied to the east and dewatering only. With the mining crews now no longer idle, we expect that the abnormal cost for the third and fourth quarters will only be the costs linked to dewatering and likely only the electricity costs, because the pumps are already procured, still new, and limited maintenance is required. Not a recurring item, essentially.
Of course, the seismic activity resulted in additional inefficiencies over and above the abnormal costs, and that led to a further quarter-on-quarter impact on the cost of sales, which also affected Q1, where I’ll go into a little bit more detail on a following slide. Kamoa-Kakula recorded an impairment of $59 million in the second quarter of 2025, where specific assets—including fleet pumps and other assets impacted by the seismic activity and resulting water inflow—were identified as potentially lost or irrecoverable. This included a full assessment of assets that the team believes are completely unrecoverable, as well as an impairment charge on the assets that are potentially recoverable using a probability assessment. Ultimately, a fairly small number given the scale of the incident, I think. Moving on to the next slide .
We have revised our 2025 cash cost guidance range to between $1.90 and $2.20 per pound of payable copper. The increase from our previous guidance is driven by the impact of the lower expected feed grade of ore into the concentrators for the remainder of 2025. Grade mined at Kakula was roughly 5% before the seismic activity, and we now expect the average feed grades into the phase one and phase two concentrators to be approximately 3% copper until the end of the year. It will be sourced from both surface stockpiles and from the western side of the Kakula mine.
I would like to stress that this elevated cash cost level is only temporary while the Kakula mine is undergoing the turnaround, and we will get back to the higher portions of Kakula later this year. Then cash costs will obviously drop again. It is also noteworthy that we will, of course, get the cash cost reduction benefits of the smelter from very early next year. As we've explained in the past, this will at the very least halve the logistics cost, which was $0.49 in Q2, as shown on the breakdown on the right. This decrease is due to the smelter halving the volumes that will be transported, as the anodes are more than double the grade of the copper concentrate currently being produced and transported.
As we turn to Kipushi on the next slide, Kipushi has again contributed positively to our EBITDA while the ramp-up to optimal levels continues. Mark will talk you through the production results, which have been positive since the completion of the first de-bottlenecking step. We look forward to seeing improved financial results once step two is completed later this year. The cash cost of Kipushi has been controlled nicely and is sitting right in the middle of our 2025 guidance range, and we expect that mining support services and processing costs will come down as production increases in the remainder of the year. Turning to Ivanhoe Mines' consolidated profit and EBITDA on the next slide, Ivanhoe recorded a quarterly adjusted EBITDA of $123 million in the second quarter of this year, and that's lower than the—
Q1 EBITDA was higher due to the lower attributable EBITDA from Kamoa-Kakula for the reasons I've already explained. Adjusted EBITDA for the first six months of the year was $353 million. Even with the seismic activity experienced at Kamoa-Kakula during the quarter, Ivanhoe Mines still recorded a profit of $35 million in Q2 and a profit of $158 million for the first six months of the year. Turning to the liquidity snapshot on the next slide, this slide shows that Ivanhoe Mines had $672 million of cash and cash equivalents on hand at the end of June, while Kamoa had cash on hand of $246 million. We are very well placed to weather this short period of recovery. We’ll look at Kamoa's CapEx guidance revision on the next slide.
After careful review of the capital expenditure requirements for the recovery and optimization efforts at Kamoa, we lowered the top end of our 2025 guidance range. The change includes deferring certain non-essential capital projects, while the costs required for the phase one and phase two pumping, as well as a new box cut, an additional decline at Kansoko, and a decline at Kamoa 2, have been incorporated. We have also updated our 2026 guidance to account for the latest mine plans and to include the portions of this recovery capital that will be spent next year. This range has been made wide enough to provide ample contingency for additional work as the plans are firmed up, but the top end might very well decrease as these plans are finalized. Now, turning to our CapEx plans for Platreef and Kipushi on the next slide.
We have kept spending on our growth plans on track during the second quarter and kept our guidance unchanged. Expenditure at Platreef is tracking at the lower end of our 2025 guidance, and with phase one almost complete, we drew an additional $30 million on Platreef's senior debt facility during the quarter. We also continue to advance phase two development and negotiations for a $700 million phase two senior project finance facility, which is expected to close in the first quarter of 2026 and is progressing well. The first phase of Kipushi's de-bottlenecking program was completed in June, with the second phase on schedule to be completed in August, and Mark will talk more about that later in the presentation.
Looking at our pro rata financial ratios on the next slide, our leverage ratio has increased slightly from where it was at the end of Q1, but it remains relatively low, even with the well-timed completion of our $750 million notes that were closed in January. Our target net leverage ratio remains one times through the cycle, and although it’s higher than the self-imposed target on a backward-looking basis at the moment, it will come down quickly once the Kakula recovery plan is complete. As I already mentioned, we’re in a very healthy pro rata cash position, and at the end of June, our pro rata cash on hand was $774 million. With that, I’ll hand over to Alex Pickard [Executive Vice President, Corporate Development and Investor Relations] (Ivanhoe Mines) to cover the exciting operations and project updates together with Mark Farren [Chief Operating Officer] (Ivanhoe Mines).
Thank you, David, and good day to everyone on the line. It's Alex Pickard here first, and then I'll share the honors on this section with our Chief Operating Officer, Mark Farren. You can see in the photo here two of our mine superintendents recently underground at Kakula, so we can certainly prove to you that the mine hasn’t gone anywhere. For the avoidance of doubt, that is not myself and Mark pictured in the photo. We can move to the next slide, please. This slide is the usual recap of production at Kamoa-Kakula during the second quarter of 2025. As David alluded to, overall, the drop in production quarter on quarter was not actually that dramatic, but we did have the benefit of a record month in April, which was our first month operating at over 50,000 tons of copper production, equivalent to more than 600,000 tons of copper annualized.
That was a huge milestone prior to the unfolding of the seismic events. Those events, as mentioned, really began in mid-May, and they did have a significant impact on our mining and processing at the Kakula operation from that point onward. We lost around three weeks of operations at Kakula in total due to stoppages. Since we restarted underground mining on June 7, we have been operating at a curtailed mining rate supported by the stockpiles. Mark will comment in much more detail on our plans to resolve that in the next few slides. Looking at phase three in isolation, as Marna mentioned, it was a fantastic quarter coming from the Kamoa operations, with record throughputs of 1.6 million tons from Kamoa for phase three, which was very close to 6.5 million tons annualized, and that’s without any further spending on de-bottlenecking.
It was also a record in terms of grade at 2.92%, getting very close to 3%. The recovery of 86% was basically closing in on the design parameter before any of the Project 95 or Project 92 optimization. Over 41,000 tons of copper was produced during the quarter from phase three alone. I’ll now hand it over to Mark Farren [Chief Operating Officer] (Ivanhoe Mines) to take you through the next few slides on the dewatering progress and the mining side of things.
Thank you, Alex. Maybe just to reflect backward too, I think Robert referred to it as a bump in the road. It’s not a brick wall. It’s a bump. It’s a big bump, but it’s a bump. Since the seismic activity happened in May, we had to do two stages of dewatering. The first was to stabilize the water levels as they were flowing into the mine, because there’s a water inflow of 3,700 liters per second all the time in the mine. All the vertical pumping infrastructure remained intact, so it was really a matter of figuring out how to feed that vertical pumping infrastructure from different areas within the mine. If you have a look at the dotted lines on the eastern side—basically to the top left-hand side of your page—those dotted lines are the areas that are currently being mined. That shows you where the water levels are in a saddle between the east and the west. Stage two is really to lower that water completely down—all the red areas basically on the west and the east. Once we’ve done that, we will have dewatered the mine completely.
I’ll talk a little bit about that on the next slide. Next slide, please. If you have a look at what we’ve done, we’ve got the delivery of the first pump actually on site at the moment. We’re going to install four of these large 650-liter-per-second pumps. They’re 2,000-kilowatt pumps each, and they’ll be installed in sets of two. It’s about 150 tons of steel and pump that will be lowered down two of the raised bores that we have—one is the old multi-stage pump area and the other is a vent shaft that moves right into the center of the footprint. If you can imagine, these are submersible multi-stage pumps that will be lowered into the water, basically close to the bottom of the mine, and then switched on.
that infrastructure pumping at about 2,600 liters per second, and with the other infrastructure being lowered downward, we’ll quickly dewater the mine. The plan is to be completely dewatered by December. As we move down, we’ll gain access to the western side of the mine, which also happens to be the higher-grade areas that Alex was referring to just now. Next slide, please. If I can refer you to this slide, the one, the two, and the two—those are the areas we’re mining at the moment. That dark red in the middle is the area running east to west, where the high-grade mining zone sits. It also happens to be at the bottom of the mine. In terms of where we are, we’ve managed to establish stability.
In other words, all the water that flows into the mine is being pumped out—it’s stable. We have started mining on the west with several crews, producing between 10,000 and 15,000 tons per day, though it’s not yet the grades we want to mine in the longer term. At 10,000 to 15,000 tons per day, we need about 15,000 tons a day to run one of the two concentrators. The rest, to reach 80%-85% production or feed, is currently being supplemented from stockpiles. There’s also a plan on the eastern side to develop new mining areas beyond the zone that was impacted by the seismic activity. That development is already underway and progressing well. As mentioned, our target is to have the Kakula mine fully dewatered from August onward.
The first set of pumps—a set of two large multi-stage pumps—will be switched on toward the end of August, and the next set will be installed in September, after which we’ll be fully dewatering the mine. A complete geotechnical assessment and redesign will follow from there. We’ve done extensive work with David Beck and have engaged some of the best geotechnical experts in the world to analyze what happened and, secondly, to determine how we’ll lay out the mines going forward—not only this mine, but also the broader mining footprints at Kamoa, Kakula, and Kansoko. We’re quite excited about what we’re seeing, and I’ll touch on that when I refer to the next slide. Next slide, please. If you look at this slide, on the right-hand side is the east, where we are carrying out redevelopment.
We're planning and have already started executing the redevelopment to open up the footprint on the other side of where the seismic activity occurred. We won't have a full assessment of the damage in the mined areas until we’ve completely dewatered the workings on the eastern side, which will be by December, as I mentioned earlier. It’s very possible that we’ll get through some of those areas and reestablish mining on the other side. The backup plan is the black redevelopment area you see on the slide. That redevelopment will be completed by next year, after which we’ll be back into the footprint on the east. On the western side, it’s mainly about lowering the water levels. We are active in both the south and north, as I said earlier, and the focus is on getting back into the plus-5% copper zones.
As we lower the water levels—which should happen this year—in the fourth quarter we should start seeing an improvement in the mine grade on the western side. All in all, it’s really about getting the water levels down, reestablishing the east as a worst-case scenario, and getting the mine fully operational again. We’re talking about this mine only. In terms of where we are, the next milestones for us will be to come back to the market and everyone listening on this call to explain what things look like for the short-term future. By September, we’ll have an update that outlines the remainder of 2025, which has already been forecast, as well as 2026 and 2027, and likely a view of what the steady state will look like. I’m personally quite upbeat that we’ll be there by 2027.
We’ll be up around the numbers that we were aiming for before. That’s where I am personally, and we’ll have to come back to you on those issues. We will complete a full life-of-mine integrated development plan by the first quarter of 2026, with the right building blocks and the right sequencing of all these mines for the next 40 years. It still remains a fantastic orebody—the best orebody in the world. We’ve identified a number of opportunities, especially around Kamoa 1 and 2, and Kansoko as well, which open up more opportunities for us both short term and long term. Obviously, we’ll have to completely reexamine geotechnically the way we’ve been mining at Kakula. All in all, the long-term prognosis to me is solid—solid as you’d like to see. Thank you. Next slide.
Do you want to talk about the processing strategy, Alex?
Yeah, thanks, Mark. I think it’s back to me on this one. This slide focuses on the concentrators, and we showed a similar one on a previous conference call. It outlines the processing strategy for the remainder of 2025. Looking at the bar charts on the right-hand side—first, the left-hand bar represents the phase one and two concentrators with a nameplate capacity of 9.2 million tons. Our goal, and where we are right now, is to keep those concentrators running at roughly 80%-85% of total capacity, or potentially higher if possible. Currently, about 50% of that capacity is being fed from the ore stockpiles we have, at grades of 2%-2.5% copper.
The remaining 50% is being fed from the successful restart of mining operations at Kakula West, albeit within a limited footprint until the dewatering advances. That’s roughly at a 3% grade, which we expect to increase to around 4% soon and then back up toward 5% by the end of the year. Through the year, you’ll start to see a gradual shift in this balance, likely in favor of more ore tons coming from the run-of-mine, both from Kakula and potentially supplemented by run-of-mine ore from the Kamoa side. Naturally, the stockpile contribution will begin to reduce. In terms of those stockpiles, we have enough material to keep running until they’re depleted in the first quarter of next year. By that time, we expect to have ramped up other mining areas to support the concentrator.
The right-hand bar shows phase three, which, as I mentioned, continues to be the star performer. Our intention is to run phase three at its 6.5 million-ton capacity, which is well above its nameplate, and really squeeze as many tons as possible out of that side of the mining operation. We are very much on track to meet the revised 2025 production guidance of 370,000 to 420,000 tons of copper in concentrate. Notably, year to date—up until the end of June—we’ve already produced 245,000 tons of copper in concentrate. Next slide, please. Moving on to the direct-to-blister smelter, this is probably the most exciting development happening in the upcoming quarter. The smelter is now essentially mechanically complete.
You can see a great photo here with the blending facility in the foreground and the smelter in the background. We’re in the final stages of commissioning, and the heat-up of the furnaces is planned for September. That will be a major milestone for Kamoa-Kakula as it transitions into a fully integrated underground mine-to-blister copper, or anode copper, operation. We look forward to updating you on that in our next results. As David mentioned, we currently have about 31,500 tons of copper in inventory at the smelter, ready to support the startup.
We’re looking forward to working down that balance to roughly 17,000 tons, which will be the normal working capital in the smelter circuit at any given time. We’ve also spoken many times about the dramatic reduction in C1 cash costs that the smelter will bring. If anything, that benefit is even more pronounced now because, as we produce ore from lower-grade sources, it results in a slightly lower-grade concentrate than what we typically get from Kakula, which carries higher associated logistics and realization charges. The smelter really cannot come soon enough from that perspective to help bring those cash costs back down again, as David mentioned earlier. The next slide focuses on power, which was the major challenge we used to discuss in previous quarters.
It really feels quite trivial in comparison to some of the operational issues we faced during the second quarter. I think one of the hallmarks of this world-class team is our ability to address key challenges over time, make a plan, and then execute that plan very successfully. In terms of power, I think you’ll soon see the results of our efforts, as the giant Inga turbine number five is now mechanically complete. That’s what you can see in this image. Pre-commissioning activities have already begun, and the wet commissioning of that turbine is on track for early next quarter, which will start supplying 178 megawatts of clean energy into the grid.
In terms of supplying that energy into Kolwezi and ultimately to Kamoa-Kakula, a major milestone will take place in the first quarter of next year with the completion of a new static compensator at the substation. That will allow for a much more stable voltage from Inga to reach Kamoa-Kakula. I think it’s very realistic to say that by early next year, we will have effectively resolved our power challenges. This also ties in nicely with the next slide—the additional power generated from Inga, close to 180 megawatts, will soon be complemented by the completion of a 60-megawatt battery solar energy project, which is now in execution. Site clearance and early earthworks are underway, and the project is being built in two modules of 30 megawatts each.
They are both separate independent power providers funding that CapEx and will complete the project by mid-2026. Kamoa-Kakula will be the offtaker of that power. This supply will cover up to 25% of Kamoa-Kakula’s total energy requirements, coming from a captive and very green source. The project is also highly scalable—we plan to expand it to 120 megawatts, and there’s no reason we can’t go beyond that. We’re now actually facing a realistic possibility, which didn’t seem so feasible a few years ago, that by this time next year we may have a surplus of power. With that, this concludes the Kamoa-Kakula update, and I’ll hand it back to Mark Farren [Chief Operating Officer] (Ivanhoe Mines) to take you through the progress we’ve been making at Kipushi.
Thanks, Alex. Okay, Kipushi in a nutshell—no big surprises. We’re busy with basically two major blasts through the year, which will complete the de-bottlenecking and a small upgrade to enable the circuit to produce around 250,000 tons per annum of zinc. The overall project plan has progressed very well. In the first half, we produced about 84,000 tons of zinc, and we’re forecasting roughly 182,000 tons for the full year. We’re maintaining guidance, which means the production is somewhat back-end loaded. If we go to the next slide, it’s clearer there. There’s one more major blast scheduled for August, which will complete the de-bottlenecking and unlock an additional 20% capacity. In the first half, we had several blasts—about 11 days of production downtime—and there are around five more days planned in August.
We should soon be running at a rate of over 20,000 tons of zinc per month in the short term, and likely around 25,000 tons per month over the longer term. All in all, Kipushi has shown no surprises in feed grades or mining performance—a solid result with the work we’ve done on the concentrator. The final shutdown in August will be the last one, and I think it’s going to go exceptionally well. It’s truly becoming one of the major zinc mines in the world—hard to believe, but it’s a fact. Next slide. I think I’ve covered most of this. Oh, sorry—yes, Platreef. Platreef, if you cast your minds back, we planned the small phase one concentrator that you can see in the foreground there. That was to be fed by the Shaft 1 mine, which originally began as a bulk sample shaft.
We made a decision last year to proceed with Shaft 3, to equip it for hoisting and move quickly into phase two, scheduling the phase two concentrator to align with that. The phase one concentrator is ready. We’re currently mining in reef, and we’ll feed that first concentrator in the fourth quarter, which is very exciting for us. At present, we’re mining development ore and stockpiling it on surface, and we’ll begin commissioning the concentrator in Q4 this year. At the same time, we’re completing the construction of Shaft 3, which is truly a game changer for us. It increases hoisting capacity to 5 million tons per annum. As part of that, we are accelerating—and have committed to accelerate—phase two, which essentially unlocks Platreef. Next slide.
The shaft you’re looking at here, the one in front of you with the blue roof—Robert, the roof is now on—is Shaft 2. It’s a 10-meter diameter shaft. It can be used for some of the phase two work, but it’s actually the expansion shaft for phase three. This shaft can hoist 8 million tons. So if you add that to the 5 million tons from Shaft 3, that’s 13 million tons of total hoisting capacity once complete. As we advance with phase one and phase two, we’ll also be scheduling phase three, which is outlined in the published study we released. Thank you. Next slide. I think, for a change, we’re seeing some real tailwinds on the platinum side, especially with the significant improvement in platinum and palladium prices just this year alone.
It has a massive impact on our new net present value running through our feasibility study and our phase three PEA. If you look at the sensitivities, it takes the NPV from $1.7 billion to $3.8 billion. That’s on a long lead time to reach phase three. As we move into the fourth quarter of this year, we’ll begin producing and selling PGMs. You’ll start to see a major shift from the first quarter of next year when Shaft 3 is operational and we can accelerate the development of phase two. In my opinion, that’s when we achieve the right scale we’re aiming for. Also very important here is our $599 per ounce of 3E—it’s going to be the lowest in the industry, in my view.
I'm not sure that anyone will be able to beat this cost. Thank you. Next slide. Alex, are you going to cover this?
Yeah, thanks, Mark. I’ll close out the presentation as usual with an update on exploration, starting with the Western Forelands. During the second quarter, in mid-May—which feels like a long time ago now—we announced a very significant resource increase at the combined Makoko District, which you can see in the image on the right-hand side. What this really means is that, in just about 18 months of drilling, we’ve almost doubled the total resource and are fast closing in on 10 million tons of contained copper.
To put it in context, in terms of the efficiency of what we’re doing in the Western Forelands, that increase likely came at a cost of around $30 million to $40 million to add another 4–5 million tons of contained copper. The strike rate is exceptionally high. On the plan shown on the right-hand side, you can see the expanded dimensions of the new resource base. In red—it’s a little faint—you can see the inferred resource outline from the 2023 update. What we’ve now added to that footprint at Makoko are the new discoveries at Makoko West and Kitoko. We’ve significantly infilled the ground between Makoko West, Kitoko, and Makoko, and they’re no longer really separate discoveries—they’re forming a single, cohesive copper district that we now refer to as Makoko-Kitoko.
That is already comparable in scale to, for example, a Kamoa mine. It feels quite similar to that discovery story from 2008 onward. The mineralization is open in multiple directions, including to the south. You can see there’s a zone we’re planning to infill between the bottom edge of the resource shell, and there’s a step-out hole labeled KTK-48, which is well mineralized and located about two kilometers to the south. There’s significant potential to keep adding to this resource. The recent update was really a technical cut-off at a point in time to update and QP the statement, but drilling has continued since then. Moving to the next slide, this looks at the Western Forelands and what we’ve discovered alongside Kamoa-Kakula on a global scale.
I think you can already see that it’s certainly one of the largest discoveries of the past decade or more. We currently rank it as number five globally, but it’s still very much growing. The stars, as always, highlight the exceptional grade at the Western Forelands—between 2.5% and 3% copper—which is very similar to Kamoa-Kakula and truly unmatched on a global scale. To repeat the resource numbers, we now have over 500 million tons of resource tonnage. This already has the scale to become a major development and a standalone mine—or even multiple standalone mines. We are far from finished. Drilling is ongoing; we’re in the middle of the dry season now with nine rigs operating across the Western Forelands, focusing particularly on some of the new licenses we recently acquired in the region.
I would watch this space very carefully over the next quarter and beyond. The final slide in the presentation, and moving to our new exploration horizons. The logo of Ivanhoe Mines did used to say New Horizons, but we dropped it at a point in time. We are now very active in our neighboring countries, Angola and Zambia, as well as much further afield in Kazakhstan. All of this is following a similar thesis, which is chasing sedimentary copper, which we know as much as anybody in the world about from what we've done at Kamoa-Kakula and in the Western Forelands. In Angola, we are making steady progress on a massive land package. This is very greenfield exploration. We have a first drilling contract that's been awarded to drill over 6,000 meters that will commence later on this year and progress into 2026.
In Kazakhstan, you’ll recall that we announced in January that we signed a joint venture exploration partnership to stake a very large basinal position in the Chu-Sarysu Belt in Kazakhstan. The Chu-Sarysu Belt is thought to be the third-largest sedimentary copper belt in the world. Since January, we’ve moved very quickly there with our joint venture partner and have already been awarded close to 17,000 square kilometers of licenses in just six months. That’s a licensed position roughly seven times larger than the Western Forelands and quite comparable to what Ivanhoe Mines started with in the DRC back in the late 1990s.
Thanks, Alex. We will now begin the question-and-answer session. First and foremost, I’ll hand it back to the operator to proceed with any questions we have waiting on the phone line from analysts. If we have some time at the end, we’ll address any web questions as time allows. Operator, please proceed with the questions on the phone.
Thank you, ladies and gentlemen. We will now begin the question-and-answer session. Should you have any questions on the phone, please press *1. You will hear a prompt that your hand has been raised. Your first question comes from Daniel Major [Analyst] (UBS). Please go ahead.
Hi, thanks. Can you hear me okay?
Yes, you sound great, Daniel.
Alex, can you hear me all right? Okay, great. Thanks. A few questions. The first one — thinking about the timeline of information around guidance at Kamoa-Kakula. I understand you’re planning to give an update to the market in September around a site visit. Can you give us a sense of what you expect to communicate to the market then, and then in Q1 as you work through the dewatering and redesigning of the geotechnical aspects?
I can maybe help. We’ll want to guide the market for the years 2026 and 2027 — that will be the September guidance. At the end of Q1, we’ll release a full life-of-mine plan with the NI 43-101 update. So, March next year, a new full life-of-mine plan.
Okay. Just a question on the guidance for 2022, 2026, 2027. What gives you the confidence that you're going to be able to have conviction in that if you haven't actually fully dewatered the mine or redesigned the mine plan yet?
That's a good question. The assumptions you can assume would be conservative. Let's put it that way. We won't assume.
Maybe also just to jump in here, what we were planning to do is also to just isolate the section that we cannot access yet and provide certain sensitivities around that. It will show you what it looks like in terms of our future plans based on the new mining method. What will still be uncertain would be that central block, and that we will then be able to communicate once dewatered. That's the section where you will have to make certain assumptions.
For the rest of it, I think we will have a pretty high level of confidence as it will flow into our life-of-mine plans that will be published early in 2026.
Okay, thanks. The second question, if we took a step back and look at what was the cause of the kind of seismic issue and how that might impact mining method productivity and cost going forward, should we be thinking about this as smaller blocks, ultimately less productive to prevent these issues happening going forward and having a knock-on impact on the cost outlook for the operation over the life of mine?
It’s too soon to say. I think from what we are seeing, as Mark alluded to earlier, we’re actually quite optimistic around production volume, but it’s too soon to say if we still need to schedule crews, we still need to schedule phases. You can only really make an assumption around cost once you’ve done that work, so you will unfortunately have to wait until we make the information available.
Okay, that’s good. Just one more question on Kamoa-Kakula. When I look at the implied C1 cost relative to the difference between revenue and EBITDA, there seems to be a much larger adjustment this quarter in terms of reconciling the costs. Are those costs additional expenses associated with the incident? Can you provide a bit more color on that?
Yeah, happy to, Daniel. Our EBITDA reconciliation is included in our MD&A. If you review that and still have questions about any of those line items, please do reach out. The impact of abnormal costs played the biggest role, as those are ultimately added back for C1 purposes.
Right, okay, that’s clear. Yeah, because I wasn’t actually talking about the reconciliation of group EBITDA — it’s the specific EBITDA, the $3 million to $5 million for Kamoa-Kakula. There are additional costs associated with the incident that aren’t captured in the C1. Would those continue in Q3 and Q4? I would expect that would be the case as well.
No, we don’t expect those additional costs to recur in Q3 and Q4, other than maybe a small amount of abnormal costs related to the dewatering. We currently estimate that to be roughly in the range of $10 million for the remainder of the year, so it won’t move the needle much.
Great, that's really helpful. Thanks a lot. I'll go back in a queue.
No problem.
Thank you. Next question comes from Andrew Mikitchook at BMO Capital Markets. Please go ahead.
Hi. I just wanted to come back to — I think it was slide 24, if I can see this correctly — where you showed the updated and long-term mine plans. I guess if we look at that in detail, and I’m sure some of this is still being refined, there’s an additional ramp there. Is that a ramp that would have gone down anyway to access the Kakula West portion — not the west part of Kakula — or is that something being done to adjust tonnages in the near to medium term?
That's mainly for logistics. Basically, I think it's a belt section. It might not be the only solution that's lying there. We're looking at raised boring as well in the central block of the west. It's logistics mainly.
Okay.
I just wanted to confirm because you guys put some pictures of what I interpret to be a dewatered portion of Kakula East and made commentary in the press release that you had modest continued dewatering of that with the existing pumping capacity. From what you've seen, has there been any surprises or any material damage dewatered so far?
At the moment, no. What we have been doing is slowly lowering the pump trains as we go, but we can’t really move fast until we put these big pumps in. That’s where we are. On the west, we’re not seeing any damage at all. On the east, we’ve been rehabilitating those top drifts as we go down. That’s where we are. It’s actually looking okay for now.
Okay. That’s good to hear. I guess we’ll all look forward to the September update where we get kind of the medium term. Under the current very near-term plan, I think, again, there’s wording in a press release similar to the last disclosures that the stockpile runs out in Q2. Is that a Q1? Is that an early Q1, mid, late? What’s the best-case scenario?
I’m not sure, Andrew, we can sort of predict that with accuracy because it’s a bit of a moving target in terms of exactly how much tonnage we can push out of the western section as we continue to dewater. Obviously, that dewatering is not a kind of binary process. It’s a linear process. As we dewater, it’s likely that we might be able to open up more areas of the mine sooner. It also depends to some extent on how quickly we can push more tonnage coming out of the Kamoa side of the mine. It’s difficult to say exactly how we will manage that stockpile within Q1.
Just one last quick question. As the dewatering does start on the west of — I’d say on the east of Kakula, this stage two — would that conceptually open up some portions of the upper mine just to restart mining, or is that really all kind of closed off until it’s completely dewatered?
The dewatering process itself, once those big pumps are running, will be quite quick. Sort of putting in the first two and then starting them up, and then putting in the next two and starting them up, and then lowering quite quickly. You’d be assessing them, I guess, on the eastern side. What we’re saying is by December, we’ll be completely dewatered, and we’ll be able to do a full geotechnical assessment of the east. Within that timeframe, there might be some mining and whatever.
We will make sure that we've done the geotechnical assessment properly before we re-enter the east.
Thank you very much. I'll step back and let others ask questions. Congratulations on navigating these difficult weeks and months successfully so far.
Thank you. We have no further questions on the line. I'll turn the call back over to Matthew Keevil.
Thanks very much, operator. We actually have no questions waiting in webcast either, and we are coming up on the hour, so we will wrap up the call here. I'd just like to reiterate, if you do have unanswered questions, please do reach out to our IR team, Alex, Tommy, Matt, myself, with any questions that require follow-up.
Thank you again for attending today's event, and we very much do look forward to speaking with everyone and updating you on the many exciting milestones management outlined here through the remainder of the year and moving forward. With that, have a great day, and we'll talk to you soon. Thanks, operator. You can wrap up.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.