Ivanhoe resets copper output plan as open pits expand

$241 million in adjusted EBITDA marked Ivanhoe Mines’ record quarterly result, up from nearly $180 million in the second quarter. Profit after tax was $45 million, slightly below the prior quarter’s $46 million.

What changes in Ivanhoe’s copper plan?

Ivanhoe now expects Kamoa-Kakula to produce 300,000 to 350,000 tons of copper in 2027, compared with approximately 290,000 tons expected for 2026, near the bottom of guidance. Executive Vice President of Corporate Development Alex Pickard said the revised 2027 range “carries a higher level of confidence.”

The company will start pre-stripping two shallow open pits in the first quarter of 2027, with first ore due in August. Across four starter pits, Ivanhoe expects to mine about 3.5 million tons of ore at a 2.5% copper grade during 2027 and 2028.

The shift follows slower-than-planned development at Kakula. Executive Vice President of Technical Services Simon Bottoms said access to higher-grade eastern stopes will be delayed until 2028, while a full year of higher Kakula production rates will not arrive until 2029. The pits reduce the plan’s reliance on Kakula recovery.

Ivanhoe’s 2027 guidance reflects mine production and assumes no inventory drawdown. It targets 400,000 to 450,000 tons before a potential phase IV expansion in 2028, with the open pits providing more support than Kakula.

Longer term, larger pits could underpin a phase IV concentrator and a return to 500,000 tons of steady-state production. Ivanhoe is assessing 5 million to 6.5 million tons of added annual processing capacity but has not chosen a final size. It estimates a concentrator could cost $400 million to $450 million before subsequent recovery upgrades.

Existing permits cover the initial pits, but mining in a northern district beyond 2030 would require amendments. Initial open-pit capital spending is estimated at $100 million to $200 million, although Ivanhoe has not yet tendered the work.

Takeaway: The near-term copper plan now leans on open-pit ore, not on an earlier underground recovery schedule.

What drove revenue and costs?

Kamoa-Kakula produced more than 67,000 tons of copper in the third quarter and sold just over 67,000 tons of payable copper. 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, plus stronger sulfuric acid revenue. Acid revenue topped $100 million, 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 Ivanhoe processed lower-grade development material to use available concentrator capacity.

Year-to-date cash costs were $2.80 per pound, and the company maintained its existing 2026 cost guidance. A newly operational 60-megawatt solar facility should reduce energy costs by $0.10 to $0.20 per pound from the fourth quarter.

For 2027, Ivanhoe forecasts cash costs of $2.50 to $3.00 per pound and sees a path below $2.50 beyond the near-term recovery period.

Takeaway: Higher metal prices drove earnings, while solar power and a recovery in grades underpin the next cost step-down.

How are Kipushi and Platreef progressing?

Kipushi’s third-quarter revenue rose to $255 million from $146 million in the second quarter, and EBITDA more than doubled to $108 million. Ivanhoe narrowed full-year zinc production guidance to 270,000 to 290,000 tons, toward the upper end of its prior range.

Easing logistics constraints helped Kipushi cut on-site concentrate stock by more than 60% from the prior quarter. The operation generated about $155 million in operating cash flow year to date, and Ivanhoe plans to transfer excess cash from its Democratic Republic of Congo subsidiary to the Canadian parent in the fourth quarter.

Platreef’s phase I concentrator is expected to reach commercial production in late 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.

Takeaway: Kipushi is converting better logistics into cash, while Platreef advances on a two-stage concentrator timetable.

What does the cash position mean?

Ivanhoe ended September with $643 million in cash and cash equivalents. Van Heerden said Kamoa-Kakula should generate enough operating cash flow to meet its own requirements, so the company does not currently need additional debt, although future funding needs will depend partly 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.”

Takeaway: Ivanhoe has cash to fund its revised production plan without currently relying on additional debt.

What is Ivanhoe Mines?

Ivanhoe Mines is a Canadian mining company with three principal operations in Southern Africa: the Kamoa-Kakula copper complex and the ultra-high-grade Kipushi zinc-copper-germanium-silver mine in the Democratic Republic of Congo, and the tier-one Platreef platinum-palladium-nickel-rhodium-gold-copper mine in South Africa.

The company also holds 54%-to-100%-owned, highly prospective copper exploration licences in the Western Forelands. They cover an area more than six times the size of Kamoa-Kakula and include the high-grade discoveries in the Makoko District.

Ivanhoe combines record quarterly adjusted earnings with improving zinc cash flow and no current need for added debt as it resets copper output.