An initial resource estimate for Ivanhoe Mines’ (TSX: IVN) Kakula copper deposit at its Kamoa project in the Democratic Republic of the Congo (DRC) makes the Kakula-Kamoa project the largest copper discovery made in the history of mining on the African continent, the mining company says, citing industry research and consulting firm Wood Mackenzie.
The Kamoa-Kakula project, a joint-venture between Ivanhoe, China’s Zijin Mining and the DRC government, already ranks among the world’s 10 largest copper deposits, the Vancouver-based miner says.
“This is a really big one. This is a really, really important one,” Robert Friedland, Ivanhoe’s executive chairman and founder, declared at the Mines and Money conference in Toronto last month.
“We’re hoping that Kakula becomes a household name all over the planet.”
Friedland noted that Turquoise Hill Resources’ (TSX: TRQ; NYSE: TRQ) Oyu Tolgoi mine in Mongolia contains 31 million tonnes of copper, while Kakula today has over 30 million tonnes of copper.
“The amount of copper contained is the same, these are the two most disruptive copper discoveries in the world,” the mining executive proclaimed, “but Kakula is just a puppy. Kakula is still growing.”
According to the resource estimate released on Oct. 12, Kakula contains indicated resources of 192 million tonnes grading 3.5% copper for 14.6 billion contained lb. copper at a 1% copper cut-off grade, and inferred resources at the same cut-off grade add 101 million tonnes averaging 2.7% copper for 6.1 billion lb. copper. (The average true thickness of the selective mineralized zone at a 1% cut off is 14.3 metres in the indicated resource area and 10.3 metres in the inferred resource area.)
At a 2% copper cut-off, indicated resources total 115 million tonnes at a 4.8% copper grade, containing 12.1 billion lb. copper, and at a 3% cut-off, the indicated resource totals 66 million tonnes at a 6.6% copper grade, containing 9.6 billion lb. copper.
At a 2% copper cut-off grade, the inferred resource totals 51 million tonnes at a 3.9% copper grade, containing 4.4 billion lb. copper, while at a 3% cut-off, the inferred resource totals 27 million tonnes at 5.3% copper, containing 3.2 billion lb. copper.
“When you really take a look at these cut-off grades,” Friedland said during his presentation in Toronto, “at a 1% cut-off, the mineralization is 21 metres thick, and remember it’s flat. So 21 metres is 63 feet — we’re as thick as a six-storey building … if you want to mine it at a 2% cut-off, it’s still as thick as a five-storey building, and at a 3% cut-off. Who has got a copper mine even at 3%? The cut-off grade at 3% is what we’re throwing away.”
“I’m highly confident, when we announce our studies, that we can deliver 8–12% copper to the mill every day,” he said.
“This is good news for the Congolese people.” he continued. “They need good news in the Congo. And it’s very good news for Zijin, our Chinese partners, who have put their foot on a big piece of the best copper discovery in the world. And it’s even better news for all the people in the world that want to stop buying our Arab friends’ oil and want to stop burning coal because we need a huge amount of copper to electrify the automobile industry. We need a huge amount of copper to clean the air.”
In a press release announcing the resource estimate, the company noted that the significantly higher copper grades at Kakula make the management team highly confident that fast-tracking Kakula’s development will have a profound and positive impact on the economics of the overall Kamoa-Kakula project.
The initial resource at Kakula boosts the Kamoa project’s overall indicated mineral resource (at a 1% cut-off grade and a minimum 3 metres thick) to 944 million tonnes grading 2.8% copper for 58.9 billion contained lb. copper, plus inferred resources (at the same cut-off grade and 3-metre minimum thickness) of 286 million tonnes of 2.3% copper for 14.6 billion contained lb. copper ounces.
“We are evaluating technical and infrastructure options to rapidly advance the development of the near-surface, highest-grade copper resources at Kakula,” the company said in the press release. “Our mine planning will focus on how to expeditiously develop the zones of thick, bottom-loaded chalcocite — grading in excess of 6% copper — near the centre of Kakula’s high-grade area.”
A preliminary economic assessment is already underway for a 4-million-tonne-per-year mine and mill at Kakula, and the company expects to complete the study before year-end. The PEA will establish economic parameters of a potential mining operation at Kakula, including capital and operating costs, for an underground mine.
The Kakula resource and Kamoa’s earlier Kansoko Sud discovery, remain open for expansion in numerous directions, leaving potential upside. At Kakula, mineralization is open along trend northwest and southeast, while the rest of the Kakula exploration area remains untested.
Indeed, the maiden resource at Kakula was based on drill results from 24,000 metres in 65 holes, while Ivanhoe and Zijin have drilled more than 31,000 metres since April 2016, and have also expanded the program by 60,000 metres, and extended it into 2017.
While the Kakula exploration area measures 60 sq. km, the indicated resource was 4.6 sq. km and the inferred resource was 3.3 sq. km.
After the news was released, shares of Ivanhoe on the Toronto Stock Exchange closed 8%, or 17¢ higher, at $2.35 apiece, on a trading volume of 5.75 million shares.
Raymond James boosted its target price after releasing the resource estimate to $3 per share from its previous $2.25-per-share target, and called the maiden resource for Kakula “a game changer for Kamoa.”
In addition to its 48%-owned Kamoa project, Ivanhoe owns 68% of the Kipushi zinc-copper project — also in the DRC — and 64% of Platreef, a platinum group metals and gold-nickel-copper project in South Africa.
“Everything we’ve ever done in geology is driven by hungry geologists who are put in a corporate culture, where there is no sin in failure,” Friedland said at the outset of his presentation at Mines and Money. “You have to take risk, you have to go through a lot of program rotations, you have to drill, drill, drill — and you have to believe in what you are trying to do.”