Ivanhoe cut its 2025 production guidance to 370-420kt Cu below our estimate of 447kt
and consensus of 500kt. 2026 guidance of 600kt was also withdrawn (TD Cowen 574kt)
as the company works to de-water Kakula and formulate a plan to resume mining in the high
grade eastern zone.
We expect shares to come under further pressure given the magnitude of the cut and uncertainty on costs and 2026 outlook.
Impact: NEGATIVE
Preliminary findings indicate that the seismic activity was tied to mining activities that lead to regional pillars yielding as the backfill was not capable of supporting the stresses.
The geotechnical assessment has not been finalized pending further investigative work which requires de-watering to be completed. Once this work is finalized, the company will determine the best option to mine the eastern-zone impacted by the geotechnical issues.
Workaround is underway for the eastern zone, but it will not be in place until Q2/2026
Mining in a new portion of the eastern side of Kakula is expected to get underway shortly, by driving two new access drives further east of the existing mine workings through both ore and waste.
The new area will be separated from the existing mine workings by a barrier pillar designed to protect the new area from any potential spread of geotechnical instability.
Work is expected to be completed by Q2/26.
Mining in the western zone is expected to ramp-back over the second half of 2025.
Mining in the western zone, which experienced lower water inflows, resumed on June 7th and is expected to ramp up to an annualized rate of 3.6Mt through Q3 after taking into account the geotechnical findings.
Ore from the western area, which grades 3-to-4% copper combined with stockpiled material (3.8Mt at 3.2% Cu) and trucked ore from the Kamoa mines is expected to support the Phase 1 and 2 concentrators operating at a throughput of more than 80% of their combined design capacity of 9.2Mtpa.
2025 production has been cut to 370-420kt from the previously withdrawn guidance of 520-580kt. This is worse than we had forecast at 447kt, given we had assumed a resumption of mining in the eastern zone in Q4/25 combined with higher throughput.
Management expects to provide C1 cash guidance for 2025 with its Q2 results.
The smelter is now expected to start-up in early September 2025, with first anode expected in October.
Management will host a conference call today at 8:00ET. Dial in 1-888-985-7261. We hope
the call will provide some information on what the latest update could mean to reserves,
cost/capex and liquidity
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