With large-scale deposits hard to find, much has been made of the size of Kamoa-Kakula, Ivanhoe Mines’ (TSX: IVN; US-OTC: IVPAF) project on the central Africa copper belt straddling the Democratic Republic of Congo (DRC) and Zambia.
A recent note by BMO Capital Markets compares Kamoa-Kakula to the world’s ten largest copper mines based on 2019 production numbers to offer perspective on mining financier Robert Friedland’s latest project.
Phase one of three, Kakula, could be up and running in less than a year and, according to the definitive feasibility study (DFS), will average 284,000 tonnes copper per year for the first ten years, processing 6.2% copper ore at a pedestrian pace of only six million tonnes per annum.
The expanded Kamoa-Kakula will have a run rate of just over half a million tonnes copper in the first decade at 5.1% copper grade and at peak production returns 805,000 tonnes copper per year, processing 19 million tonnes of ore per year at a 7% copper grade.
BMO points out that the Kamoa-Kakula preliminary economic assessment (PEA) only processes 5–35% of annual tonnage and at a grade 4-5% higher than the other large producers: “The unique scale and grade of the Kamoa-Kakula complex will, in our opinion, drive premium valuations for Ivanhoe as the company enters production.”
BMO admits it’s not a fair comparison as none of the other operations are at peak grade or production but “still offers an interesting scale comparison showing the upside potential of the Kamoa-Kakula complex.”
BMO has an outperform rating on Ivanhoe Mines and upped its price target to $10 following the DFS. Ivanhoe is also advancing the Platreef PGM-polymetallic development project in South Africa and the Kipushi zinc-copper mine in the DRC.
Ivanhoe was last trading at $5.96 a share in Toronto with a market value of $7.2 billion, up 42% year to date. Copper was last trading at US$3.06 per lb., or US$6,750 per tonne, up more than 50% from its March lows and near a more than two-year high.
MINING.COM adapted BMO’s table to calculate the value of the copper in every tonne milled based on Tuesday’s price, but does not include byproducts, which are often present at large-scale deposits.
Freeport-McMoRan’s (NYSE: FCX) Grasberg mine is notably absent from the 2019 Top 10 ranking as the company transitions to an underground operation. By 2022, Grasberg will likely re-enter the ranking at number two, in terms of annual production, and, thanks to 1.6 million oz. gold every year, the mine essentially produces copper for free.