Ivanhoe Mines (TSE:IVN) reported record quarterly adjusted earnings and outlined a revised plan for its Kamoa-Kakula copper complex, where delays in accessing higher-grade underground ore have prompted the company to turn to open-pit mining.
On its third-quarter earnings call, executives said they expect 2027 copper production of 300,000 to 350,000 tons, a revised range that Executive Vice President of Corporate Development Alex Pickard said carries a higher level of confidence. The company expects to reach approximately 290,000 tons in 2026, near the bottom of its guidance.
Ivanhoe’s adjusted EBITDA rose to a record $241 million in the third quarter, from nearly $180 million in the second quarter. Profit after tax was $45 million, compared with $46 million in the preceding quarter.
Open pits take larger role at Kamoa-Kakula
Executive Vice President of Technical Services Simon Bottoms said Ivanhoe plans to begin pre-stripping two shallow open pits in the first quarter of 2027, with first ore expected in August. Across four starter pits, the company expects to mine approximately 3.5 million tons of ore at a 2.5% copper grade during 2027 and 2028.
The change follows slower-than-anticipated development at Kakula. Access to higher-grade stopes on the eastern side has been delayed until 2028, Bottoms said. He added that a full year of higher production rates from Kakula would not arrive until 2029.
Bottoms said the open pits reduce the production plan’s reliance on Kakula’s recovery. The 2027 guidance is based on mine production and does not assume a drawdown of existing inventory, he said.
Pickard said Ivanhoe expects production to rise to 400,000 to 450,000 tons before a potential phase IV expansion. Bottoms said the company is targeting that range in 2028, supported more by the open pits than by Kakula.
Longer term, Ivanhoe expects larger open pits to support a phase IV concentrator expansion and a return to steady-state production of 500,000 tons. Bottoms said the company is evaluating an additional 5 million to 6.5 million tons of annual processing capacity, but has not settled on the final size. He estimated a concentrator installation could cost roughly $400 million to $450 million, before subsequent recovery upgrades.
Bottoms told analysts that existing permits allow the initial open pits, though amendments would be needed for mining in a northern district beyond 2030. The company estimates initial open-pit capital spending at $100 million to $200 million, although the work has not yet been tendered.
Higher prices lift copper earnings
Kamoa-Kakula produced more than 67,000 tons of copper in the third quarter and sold just over 67,000 tons of payable copper, according to management. Quarterly revenue exceeded $1 billion for the first time, while EBITDA rose to $478 million from $385 million in the second quarter.
Chief Financial Officer David van Heerden attributed the improvement to higher copper prices and sales, as well as stronger sulfuric acid revenue. Acid revenue exceeded $100 million in the quarter, up from $56 million in the second quarter, at an average price of $915 per ton.
Third-quarter cash costs were $3 per pound of payable copper, reflecting higher energy costs and lower processed grades. Bottoms said the company chose to process lower-grade material from development work to make use of available concentrator capacity. Year-to-date cash costs were $2.80 per pound, and Ivanhoe maintained its existing 2026 cost guidance.
Van Heerden said the newly operational 60-megawatt solar facility is expected to reduce energy costs by $0.10 to $0.20 per pound from the fourth quarter. Ivanhoe forecast 2027 cash costs of $2.50 to $3.00 per pound and said it sees a path below $2.50 beyond the near-term recovery period.
Kipushi and Platreef advance
The Kipushi zinc operation recorded third-quarter revenue of $255 million, up from $146 million in the second quarter, while EBITDA more than doubled to $108 million. Ivanhoe narrowed its full-year zinc production guidance toward the upper end of its previous range, to 270,000 to 290,000 tons.
Van Heerden said easing logistics constraints helped Kipushi reduce its on-site concentrate stock by more than 60% from the prior quarter. The operation generated approximately $155 million in operating cash flow year to date, and Ivanhoe plans to begin transferring excess cash from its Democratic Republic of Congo operating subsidiary to the Canadian parent during the fourth quarter.
At Platreef, van Heerden said the phase I concentrator is expected to reach commercial production late in 2026 or very early in 2027. Executive Vice President of Projects Steve Amos said construction of the phase II concentrator is targeted for completion in the fourth quarter of 2027.
Ivanhoe ended September with $643 million in cash and cash equivalents. Van Heerden said the company expects Kamoa-Kakula to generate enough operating cash flow to fund its own requirements and does not currently need additional debt, although future funding needs will depend in part on exploration spending.
During the call, President and CEO Marna Cloete paid tribute to Kipushi Managing Director Ivano Manini, who died at home over the preceding weekend. Cloete said Manini had made a significant impact at the operation.
About Ivanhoe Mines (TSE:IVN)
Ivanhoe Mines is a Canadian mining company focused on advancing its three principal operations in Southern Africa; the Kamoa-Kakula Copper Complex in the DRC, the ultra-high-grade Kipushi zinc-copper-germanium-silver mine, also in the DRC; and the tier-one Platreef platinum-palladium-nickel-rhodium-gold-copper mine in South Africa. Ivanhoe Mines is exploring for copper in its highly prospective, 54-100% owned exploration licences in the Western Forelands, covering an area over six times larger than the adjacent Kamoa-Kakula Copper Complex, including the high-grade discoveries in the Makoko District.
