Ivanhoe Mines Issues 2023 Fourth Quarter and Annual Financial Results, Overview of Construction and Exploration Activities

Ivanhoe Mines recognized profit of $303 million, record normalized profit of $388 million and record adjusted EBITDA of $604 million in 2023

Kamoa-Kakula recognized record annual revenue of $2.70 billion and record EBITDA of $1.68 billion in 2023

Kamoa-Kakula milled a record 8.54 million tonnes in 2023 at an average grade of 5.23% copper

Kamoa-Kakula produced 393,551 tonnes of copper in concentrate in 2023, achieving its production guidance range despite intermittent grid instability

Kamoa-Kakula reported cash cost (C1) of $1.45 per lb. copper in 2023, at the mid-point of guidance range

Phase 3 concentrator project 82% complete and ahead of schedule for targeted ramp-up in June 2024; smelter complex 76% complete and on schedule for commissioning in Q4 2024

Kamoa-Kakula best-in-class carbon emissions per unit of copper (Scope 1, 2 and 3) set to reduce by further 46% following completion of 500,000 tonne-per-annum, on-site smelter from Q4 2024

Refurbishment of Turbine #5 at Inga II dam 60% complete; on-schedule and on-budget to produce 178 MW of green hydroelectric power from Q4 2024

Ongoing drilling of the high-grade Kitoko Discovery in the Western Forelands expands strike length to 2 km

Kipushi concentrator approximately 85% complete and
ahead of schedule for first production in Q2 2024

Optimized Platreef development plan to bring forward Phase 2 production at 4 Mtpa by equipping Shaft 3 for hoisting

PEA underway for new Phase 3 expansion to 10 Mtpa to rank Platreef as one of the world's largest and lowest cost PGM and base metal producers

Ivanhoe Mines to host conference call for investors on February 26

Hollywood, Florida--(Newsfile Corp. - February 26, 2024) - Ivanhoe Mines' (TSX: IVN) (OTCQX: IVPAF) President Marna Cloete and Chief Financial Officer David van Heerden are pleased to present today, ahead of the 33^rd BMO Global Metals, Mining & Critical Minerals Conference in Hollywood, Florida, the company's financial results for the year ended December 31, 2023, and provide an operations and project development update.

Ivanhoe Mines is a leading Canadian mining company developing and operating its four principal mining and exploration projects in Southern Africa: expanding operations at the world-class Kamoa-Kakula Copper Complex (Kamoa-Kakula) in the Democratic Republic of Congo (DRC); building the tier-one Platreef palladium, nickel, platinum, rhodium, copper and gold development in South Africa; restarting the historic, ultra-high-grade Kipushi zinc-copper-lead-germanium mine in the DRC; as well as exploring the expansive exploration licences of Ivanhoe's Western Forelands for copper discoveries adjacent to Kamoa-Kakula. All figures are in U.S. dollars unless otherwise stated.

Watch a February 2024 video highlighting Ivanhoe Mines' construction and exploration activities:
https://vimeo.com/916425207/bc28308e24

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Ivanhoe Founder and Executive Co-Chairman Robert Friedland commented ahead of delivering his keynote speech at the 33rd BMO Global Metals, Mining & Critical Minerals Conference in Hollywood, Florida, on February 26 at 12:30pm ET:

"Kamoa-Kakula continues to exceed expectations in terms of overall performance, with Phase 1 and 2 mill throughput, copper recoveries and underground mining operations registering strong results in 2023 - and in many cases outperforming nameplate capacity. Delivering a project of this calibre and scale on budget and ahead of schedule is a true anomaly in the mining industry, which is often plagued by cost overruns and delays. This track record of success will continue as we ramp-up the Phase 3 concentrator and underground mines significantly ahead of schedule late in the second quarter of 2024 … which will position Kamoa-Kakula as the world's third-largest copper mining complex just eight years after Ivanhoe geologists reported the initial discovery hole at the Kakula deposit."

"We are working proactively to address power intermittency and expect this to be a short-term issue. Kamoa-Kakula will have full back-up generator redundancy for the Phase 1 and Phase 2 operations in July, and we are well advanced in discussions with our partners in the Democratic Republic of Congo, as well as the government of Zambia, to address the situation permanently, as we bring Phase 3 operations and the smelter complex online. Kamoa-Kakula will be fully powered by green hydroelectricity over its generationally long life, and we are excited to work with the Congolese government to develop all the infrastructure that will support the world's newest major copper mining district, which extends onto Ivanhoe's majority-owned Western Forelands licenses."

"We are looking forward to another transformative, industry-leading year at Ivanhoe Mines. Seven drill rigs, and counting, are currently turning across the Western Forelands, including expanding the high-grade Kitoko discovery. Discovering and developing new world-scale copper resources on the Western Forelands represents the highest possible return on capital that Ivanhoe Mines can drive for our shareholders. Our geology team just drilled a wedge from hole DD008 that re-confirms the extremely significant discovery of sedimentary bonanza-grade copper over 11% grade directly on the Kibaran basement."

"We are also just a few months away from first production at Kipushi, bringing this legendary mine back to life a century on from when it first produced as the world's highest-grade open pit copper mine. At Platreef, we will complete the construction of the proof-of-concept, 'baby' Phase 1 mine this year; however, we now have even greater focus on quickly unlocking the Phase 2 expansion of this remarkable resource endowment. Our team is razor focused on delivering these major milestones for our stakeholders and shareholders, as we take the next vital steps on our journey to emerge as the world's most dynamic, new major diversified mining company."

FINANCIAL HIGHLIGHTS

• Ivanhoe Mines recorded a profit of $303 million in 2023, equivalent to $0.26 per share, and normalized profit of $388 million, equivalent to $0.33 per share. The normalized profit excludes an $85 million loss on fair value on the convertible notes following the 20% appreciation in the share price from C$10.70 to C$12.85 during the year.

• Ivanhoe's profit for the year includes Ivanhoe Mines' share of profit and finance income from the Kamoa-Kakula joint venture of $482 million for 2023, up from $405 million in 2022.

• Ivanhoe Mines' Adjusted EBITDA was $604 million in 2023, up from $491 million in 2022, which includes an attributable share of EBITDA from Kamoa-Kakula of $664 million.

• Kamoa-Kakula recognized record revenue of $2.70 billion, operating profit of $1.45 billion and EBITDA of $1.68 billion for 2023.

• Cash cost (C1) per lb. of payable copper produced in 2023 totaled $1.45/lb., compared to $1.39/lb. in 2022. This achieved the mid-point of the guidance range of $1.40/lb. to $1.50/lb.

• Kamoa-Kakula sold 375,779 tonnes of copper (net of payability) in 2023 at a cost of sales per pound (lb.) of payable copper of $1.33/lb., compared with $1.09/lb. in 2022. At year-end, approximately 9,100 tonnes of finished copper in concentrate remained in the warehouse or was in the process of being tolled at a nearby smelter, with a carrying value at cost, for accounting purposes, of $22 million. These 9,100 tonnes of copper have a significantly higher net realizable value based on current copper prices of approximately $8,580 per tonne.

• Since entering Phase 1 commercial production on July 1, 2021, the Kamoa-Kakula joint venture has generated $3.6 billion of EBITDA.

• Ivanhoe Mines completed a private placement offering of 47,917,050 Class A common shares for aggregate gross proceeds of C$575 million (approximately $430 million) in December 2023. Ivanhoe has a strong balance sheet with cash and cash equivalents of $574 million on hand as at December 31, 2023.

• Ivanhoe Mines announces Kamoa-Kakula's full-year cash cost (C1) guidance for 2024 of $1.50/lb. to $1.70/lb of payable copper produced.
  
  
• Increased cash cost guidance in 2024, relative to 2023, reflects in part the favorable early commissioning of the Phase 3 concentrator late in the second quarter of 2024. The early commissioning of the Phase 3 concentrator will require additional backup power generation for the remainder of 2024, until the Inga II dam hydroelectric dam refurbishment is complete at year-end. Phase 3 and associated backup power generation will temporarily increase cash costs by up to $0.20/lb. for the remainder of this year. Kamoa-Kakula is on a path to full hydroelectric power generation and anticipates lower cash costs after 2024, following the commissioning of the direct-to-blister smelter.

• Ivanhoe Mines continued its excellent record of project execution in 2023, with capital expenditure of $1.52 billion at Kamoa-Kakula on the Phase 2 and 3 expansions, $234 million at Platreef and $226 million at Kipushi. Projects remain on or ahead of schedule and on budget, with any underspending in 2023 expected to be caught up in 2024.

• Ivanhoe Mines executed a $150 million senior debt facility for Platreef Phase 1 mine with its mandated lead arrangers, Société Générale and Nedbank.

• Kamoa-Kakula secured and drew down on unsecured financing facilities of $400 million from DRC financial institutions at an attractive cost of capital to augment cash generated from operations for its continued expansion and working capital.

OPERATIONAL HIGHLIGHTS

• The Kamoa-Kakula Copper Complex produced 393,551 tonnes of copper in concentrate in 2023, inside the 2023 production guidance range of 390,000 to 430,000 tonnes. Kamoa-Kakula's 2023 production achievement represents a year-over-year increase of 18%.

• Production at Kamoa-Kakula for the fourth quarter of 2023 was 92,215 tonnes of copper in concentrate, compared to 103,947 tonnes in Q3 2023 and 92,761 tonnes in Q4 2022. Quarterly production was impacted by ongoing intermittent grid instability, most acutely in November, with disruptions ongoing in 2024 year-to-date. The phased roll-out of over 200MW of on-site, backup generation capacity, as well as concurrent grid infrastructure improvements are advancing well.
  
  
• During 2023, Kamoa-Kakula Phase 1 and 2 concentrators milled a record of approximately 8.54 million tonnes of ore at an average feed grade of 5.23% copper, producing 824,382 dry metric tonnes of copper concentrate.

• Kamoa-Kakula's Phase 3 concentrator is now 82% complete and ahead of schedule for first production in late Q2 2024. The Phase 3 smelter complex is now 76% complete and remains on schedule for commissioning in Q4 2024. The refurbishment of Turbine #5 of the Inga II hydropower dam is 60% complete and on schedule for commissioning in Q4 2024. Concentrate production from the early commissioning of Phase 3 will be partially stockpiled in anticipation of smelter commissioning.

• With the anticipated early commissioning of Phase 3, full-year production guidance for Kamoa-Kakula was announced on January 8, 2024, at 440,000 to 490,000 tonnes of copper in concentrate.

• Ivanhoe announces "Project 95" at Kamoa-Kakula - an initiative targeting an increase of copper recoveries to 95% by liberating copper from the tailings stream at the concentrator, as well as re-treatment of tailings deposited to date. Basic engineering for Project 95 is underway and is expected to be complete in early Q2 2024.

• Kamoa-Kakula commenced trial exports of concentrate along the Lobito Atlantic Railway Corridor in late 2023. More recently, Kamoa-Kakula has signed a term sheet outlining the key terms for a Reserved Capacity Agreement for the transportation of up to 240,000 tonnes of copper products along the Lobito Corridor from 2025. As such, Kamoa-Kakula will be the first industrial customer of the Lobito Corridor in the modern era.

• Industry peer data compiled by Skarn Associates ranks the Kamoa-Kakula Copper Complex comfortably within the bottom decile of the greenhouse gas (GHG) emissions intensities on a Scope 1, 2 and 3 (partial) basis. Following the completion of the Phase 3 expansion and the smelter, the emissions intensity of Kamoa-Kakula on a Scope 1, 2 and 3 basis is estimated to almost halve to 1.31 tonnes of carbon dioxide equivalent per tonne (t CO₂-e / t Cu) of copper produced.

• In the Western Forelands, Ivanhoe announced on November 28, 2023, the geologically significant, high-grade Kitoko copper discovery on a new joint venture licence, as well as the maiden Mineral Resource estimates for the Makoko and Kiala high-grade copper discoveries, as announced on November 13, 2023.

• Ivanhoe's exploration budget for 2024 has quadrupled to approximately $90 million, with exploration activities primarily focused on the 2,654-square-kilometre Western Forelands Exploration Project, including the expansion of the Kitoko discovery. Seven drill rigs are currently active, with two more arriving by quarter-end.

• At Kipushi, construction of the 800,000 tonnes-per-annum concentrator is approximately 85% complete and ahead of schedule for commissioning in Q2 2024. Mining of the ultra-high-grade Big Zinc orebody has commenced ahead of schedule. Approximately, 220,000 tonnes of lower-grade ore from development is stockpiled on surface at an average grade of 22% zinc, including approximately 30,000 tonnes of "medium-grade" at 30% zinc.
  
  
• Ivanhoe Mines and Gécamines signed a revised joint venture to restart the ultra-high-grade Kipushi mine. Terms are unchanged from when initially announced on February 14, 2022.

• At Platreef, an updated independent feasibility study (FS) is planned for the second half of 2024 on an optimized development plan for Phase 2. The optimized development plan accelerates the development of Phase 2 at a total processing capacity of 4 million-tonnes-per-annum (Mtpa) by equipping Shaft #3 for hoisting.

• Construction activities for the Platreef Phase 1 concentrator are on track for completion in Q3 2024. Hot commissioning and ramp-up of production are now planned to be deferred until early 2025. This decision was taken to prioritize the increased underground development, including critical-path Shaft #3 and Shaft #2 raise-boring, while hoisting capacity is constrained to Shaft #1 only.

• An independent preliminary economic assessment (PEA) is planned concurrently with the FS on a significantly larger Phase 3 expansion, once the major 8 Mtpa Shaft #2 is available for hoisting. A Phase 3 expansion to 10 Mtpa processing capacity is expected to rank Platreef as one of the world's largest platinum-group metal, nickel, copper and gold producers.

• Ivanplats has signed a Purchase of Concentrate Agreement with Sibanye-Stillwater for Phase 2 concentrate. The agreement is for 8 years from first production and is for an initial annual volume of 60,000 tonnes of concentrate, approximately one-third of anticipated Phase 2 volume.

Construction of the Phase 3 concentrator plant remains on budget and is approx. 82% complete and ahead of schedule for first production as early as June 2024. Once complete the production capacity of the Kamoa-Kakula Copper Complex will increase to over 600,000 tonnes of copper per annum.

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Conference call for investors on Monday, February 26

Ivanhoe Mines will hold an investor conference call to discuss its fourth quarter and full year 2023 financial results at 3:30 p.m. London time / 10:30 a.m. Eastern time / 7:30 a.m. Pacific time on Monday, February 26. The conference call will conclude with a question-and-answer (Q&A) session. Media are invited to attend on a listen-only basis.

To view the webcast use the link: https://edge.media-server.com/mmc/p/w8oyz543

Analysts are invited to join by phone for the Q&A using the following link: https://register.vevent.com/register/BI1f49e4c5613b4c77916b60d88ac612f9

An audio webcast recording of the conference call, together with supporting presentation slides, will be available on Ivanhoe Mines' website at www.ivanhoemines.com.

After issuance, the consolidated financial statements and Management's Discussion and Analysis will be available at www.ivanhoemines.com and under the company’s SEDAR+ profile at www.sedarplus.ca:
Follow Robert Friedland (@robert_ivanhoe) and Ivanhoe Mines (@IvanhoeMines_) on X.

SUSTAINABILITY, HEALTH & SAFETY

For 2023, the group achieved an industry-leading combined Lost Time Injury Frequency Rate (LTIFR) of 0.23 per 1,000,000 hours worked and a Total Recordable Injury Frequency Rate (TRIFR) of 0.94 per 1,000,000 hours worked. For 2022, the LTIFR was 0.38 and the TRIFR 1.72. Regrettably, there were two fatalities in the group during the year, both occurred at Kamoa-Kakula.

For a detailed breakdown of the health and safety performance achieved by each project, as well as more information on the various sustainability initiatives underway across the group, read Ivanhoe's Q4 2023 Sustainability Update: https://www.ivanhoemines.com/investors/document-library/#sustainability.

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Aerial view of Kamoa-Kakula's Phase 1 and Phase 2 concentrators in the foreground, with the construction site of the 500,000-tonnes-per-annum direct-to-blister copper smelter in the background, right of picture. The state-of-the-art smelter will be the largest copper smelter on the African continent.

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Principal projects and review of activities

1. Kamoa-Kakula Copper Complex
    39.6%-owned by Ivanhoe Mines
    Democratic Republic of Congo

Kamoa-Kakula summary of operating and financial data

All figures in the above tables are on a 100%-project basis. Metal reported in concentrate is before refining losses or deductions associated with smelter terms. This news release includes "EBITDA", "Adjusted EBITDA", "EBITDA margin", normalized profit and "Cash cost (C1)" which are non-GAAP financial performance measures. For a detailed description of each of the non-GAAP financial performance measures used herein and a detailed reconciliation to the most directly comparable measure under IFRS, please refer to the non-GAAP Financial Performance Measures section of the company's MD&A for the financial year ended December 31, 2023.

Cash cost (C1) per pound of payable copper produced can be further broken down as follows:

Cash cost (C1) is prepared on a basis consistent with the industry standard definitions by Wood Mackenzie cost guidelines but are not measures recognized under IFRS. In calculating the C1 cash cost, the costs are measured on the same basis as the company's share of profit from the Kamoa Holding joint venture that is contained in the financial statements. C1 cash cost is used by management to evaluate operating performance and include all direct mining, processing, and general and administrative costs. Smelter charges and freight deductions on sales to the final port of destination, which are recognized as a component of sales revenues, are added to C1 cash cost to arrive at an approximate cost of delivered, finished metal. C1 cash cost excludes royalties, production taxes and non-routine charges as they are not direct production costs.

All figures are on a 100% project basis and metal reported in concentrate is before refining losses or deductions associated with smelter terms.

The Kamoa-Kakula Copper Complex is approximately 25 kilometres southwest of the town of Kolwezi and about 270 kilometres west of Lubumbashi in the DRC Copperbelt. Kamoa-Kakula's Phase 1 concentrator began producing copper in May 2021 and achieved commercial production on July 1, 2021. The Phase 2 concentrator, which doubled nameplate production capacity, was commissioned in April 2022. Kamoa-Kakula is independently ranked by international mining consultant Wood Mackenzie to become the world's third-largest copper mining operation in 2027, following the completion of the ongoing Phase 3 expansion. Kamoa-Kakula's employee workforce is currently 97% Congolese.

The Kamoa-Kakula Copper Complex is operated as the Kamoa Holding joint venture between Ivanhoe Mines and Zijin Mining. Ivanhoe sold a 49.5% share interest in Kamoa Holding Limited (Kamoa Holding) to Zijin Mining and a 1% share interest in Kamoa Holding to privately-owned Crystal River in December 2015. Kamoa Holding holds an 80% interest in the project. Ivanhoe and Zijin Mining each hold an indirect 39.6% interest in Kamoa-Kakula, Crystal River holds an indirect 0.8% interest, and the DRC government holds a direct 20% interest.

Construction of Kamoa-Kakula's Phase 3 concentrator project is 82% complete, including installation of the flotation cells (front) and tailings thickener (rear).

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Kamoa-Kakula produced 393,551 tonnes of copper concentrate in 2023, within guidance range

Kamoa-Kakula's Phase 1 and 2 concentrators have consistently operated at a steady-state throughput rate of 9.2 million tonnes per annum (Mtpa) following the ahead-of-schedule completion of the debottlenecking program during the first quarter of 2023. The $50-million Phase 1 and 2 concentrator debottlenecking program was completed on budget and ahead of schedule in late February 2023, increasing production capacity up to 450,000 tonnes of copper in concentrate per annum.

Kamoa-Kakula produced 393,551 tonnes of copper in concentrate in 2023, achieving its 2023 production guidance range of 390,000 to 430,000 tonnes. This production achievement represents a year-over-year increase of 18%.

During 2023, Kamoa-Kakula Phase 1 and 2 concentrators milled approximately 8.54 million tonnes of ore at an average feed grade of 5.23% copper, producing 824,382 dry metric tonnes of copper concentrate. Copper flotation recoveries for the year averaged 87.4%, above the Phase 1 and 2 concentrator design recovery rate of 86.0%.

The Kamoa-Kakula Phase 1 and Phase 2 concentrators continued to perform strongly in the fourth quarter. Kamoa-Kakula's Phase 1 and 2 concentrators milled 2.1 million tonnes of ore during the fourth quarter at an average feed grade of 4.9% copper.

Production at the Kamoa-Kakula Copper Complex for the fourth quarter of 2023 was 92,215 tonnes of copper in concentrate, compared to 103,947 tonnes in Q3 2023 and 92,761 tonnes in Q4 2022. Quarterly production and head grade were impacted by intermittent grid instability, particularly in November, where underground and plant utilization was significantly hampered by unplanned outages. Ore was drawn down as required from surface stockpiles to maximize copper production. Cash costs in the fourth quarter were impacted by lower production.

Kamoa Copper has been working alongside DRC's state-owned power company, La Société Nationale d'Electricité (SNEL), to identify the causes of instability across the southern DRC's grid infrastructure and assist with delivering long-lasting solutions. Kamoa Copper subsequently identified a series of upgrades and is executing a series of projects with SNEL to deliver the improvements.

In December 2023, SNEL and Ivanhoe Mines Energy DRC, a subsidiary of Kamoa Holding, signed an amendment to the existing financing agreement to fund the identified infrastructure upgrades. The amendment to the financing agreement expands the loan to SNEL up to a total of $450 million.

The original financing agreement, signed in 2014 and subsequently updated in 2021, consisted of a loan of up to $250 million to fund the refurbishment of 78 megawatts (MW) of generation capacity at the Mwadingusha dam and 178 MW of generation capacity from Turbine #5 at the Inga II dam. The refurbishment of the Mwadingusha facility was completed in September 2021, and the refurbishment of Turbine #5 at Inga II is on schedule to be completed in the fourth quarter of 2024.

Up to $200 million of new funding will be assigned to the identified grid infrastructure upgrades, such as an increase in grid capacity between Inga and Kolwezi, a new harmonic filter at the Inga Converter Station, as well as a new static compensator at the Kolwezi Converter Station. As with the existing financing agreement, the $200 million in additional funding by Ivanhoe Mines Energy to SNEL bears interest at the Secured Overnight Financing Rate (SOFR) plus 3% and will be repaid via a 40% discount on the tariff of grid energy consumed by Kamoa-Kakula. Mobilization of resources is underway, with the upgrades expected to be complete during H1 2025.

Installation of on-site backup-power generation capacity to support Kamoa-Kakula operations as a temporary solution until grid infrastructure improvements are complete

Grid instability continues to be experienced into Q1 2024. As a short-term solution while the grid infrastructure upgrades are completed, Kamoa Copper's engineering team is currently expanding its on-site backup generation capacity to ensure there is on-site redundancy to power 100% of its current and future operations.

On-site backup-power generator capacity is set to increase, via a phased roll-out, from the current 58 MW to a total of over 200 MW in time for the completion of the direct-to-blister copper smelter at the end of Q4 2024. The generator farm sites are being built adjacent to the Phase 1 and 2 concentrators, and smelter at Kakula, as well as adjacent to the Phase 3 concentrator at Kamoa.

By the end of April 2024, 20 MW of additional generator capacity will be installed. 62 MW of additional generator capacity is expected to installed by end of July 2024, which will be sufficient to power both Phase 1 & 2 on a stand-alone basis if required. By year-end, total on-site backup power generation capacity will have reached over 200 MW, sufficient to run both the mines and the concentrators - including Phase 3 (excluding the smelter).

In addition, negotiations to source additional power from the Zambian grid interconnector are now complete, with the delivery of power expected to commence imminently. Power supplied via the Zambian interconnector is expected to increase up to 100 MW by year end.

Yannick Banza, Control Room Supervisor, at work in the Phase 1 and Phase 2 Kakula concentrator control room. Kamoa-Kakula milled a record 8.54 million tonnes in 2023 at an average grade of 5.23% copper.

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Construction of the Phase 3 concentrator plant and associated infrastructure is 82% complete and ahead of schedule for first production from late Q2 2024

Kamoa-Kakula's ongoing Phase 3 concentrator is expected to be complete in late Q2 2024, significantly ahead of the original schedule. The new 5 Mtpa Phase 3 concentrator is located adjacent to the Kamoa underground mines, approximately 10 kilometres north of the Phase 1 and 2 concentrators located above the Kakula underground mine.

The process design of the Phase 3 concentrator is very similar to that of the Phase 1 and 2 concentrators, however 30% larger in capacity. The bulk of the equipment is the same or similar to that installed in the Phase 1 and 2 concentrators, resulting in a commonality of spare parts, while also leveraging prior operational and maintenance experience.

Following the commissioning of Phase 3, Kamoa-Kakula will have a total design processing capacity of 14.2 Mtpa. The completion of Phase 3 is expected to increase annualized copper production to over 600,000 tonnes per year over the next ten years, positioning Kamoa-Kakula as the world's third-largest copper mining complex, and the largest copper mine on the African continent. See Figure 1.

Figure 1: World's projected top 10 copper mines in 2027, by key metrics.

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Note: Kamoa-Kakula production and grade are based on the Kamoa-Kakula 2023 PFS. The 'Cu Head Grade' for the projects benchmarked by Wood Mackenzie reflects the average reserve grade. Source: Wood Mackenzie, 2023 (based on public disclosure, the Kamoa-Kakula 2023 PFS has not been reviewed by Wood Mackenzie).

Kamoa-Kakula's Phase 3 expansion consists of two new underground mines called Kamoa 1 and Kamoa 2, as well as the existing Kansoko mine. The Kamoa 1 and Kamoa 2 mines share a single box cut with a twin service-and-conveyor decline. Construction of the twin declines to the Kamoa 1 and Kamoa 2 underground mines and excavation to access the Phase 3 mining areas is advancing well for third-quarter production.

Copper concentrate produced from Phase 3 concentrator will be partially sold to generate cash flow, and partially stockpiled in anticipation of the smelter commissioning scheduled for the end of 2024.

Aerial view of the box cut for the Kamoa 1 and Kamoa 2 mines, which share a twin service-and-conveyor decline.

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The direct-to-blister copper smelter project is 76% complete and on target for commissioning end of 2024

The Phase 3 expansion also includes the integration of Africa's largest direct-to-blister flash smelter, which will have a capacity of 500,000 tonnes of 99+%-pure blister copper anodes per annum. The onsite smelter is being built adjacent to the existing Phase 1 and Phase 2 concentrator plants. The smelter will incorporate leading-edge technology supplied by Metso Outotec of Espoo, Finland and will meet the world-leading International Finance Corporation's (IFC) emissions standards.

The smelter construction project is now 76% complete and on schedule for commissioning at the end of Q4 2024. Detailed engineering and procurement activities for the smelter are essentially complete. More than 15,000 tonnes of the total approximately 24,000 tonnes of structural steel has been delivered to site, with over 8,500 tonnes already installed. Of a total of approximately 73,200 tonnes of equipment packages, 35,400 tonnes has been delivered to site with an additional 22,500 tonnes on route. The remaining equipment will be delivered over the course of the year. Civil construction is nearing completion with structural steel erection and mechanical equipment installation well underway.

The smelter will have a processing capacity of approximately 1.2 Mtpa of dry concentrate feed and is designed to run on a blend of concentrate produced from the Kakula (Phase 1 and 2) and Kamoa (Phase 3 and planned Phase 4) concentrators. Under the Kamoa-Kakula 2023 Integrated Development Plan, the smelter is projected to accommodate approximately 80% of Kamoa-Kakula's total concentrate production. Kamoa-Kakula will also continue to toll-treat concentrates under a 10-year agreement with the Lualaba Copper Smelter (LCS), located approximately 50 kilometres from Kamoa-Kakula, near the town of Kolwezi. Deliveries to LCS currently account for approximately 150,000 tonnes of copper concentrate annually.

The Phase 2 smelter construction site with the Phase 1 and Phase 2 concentrators in the background. The smelter complex remains on schedule for commissioning in Q4 2024.

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As a by-product, the smelter will also produce in the region of 650,000 to 800,000 tonnes per year of high-strength sulphuric acid. There is a strong demand for sulphuric acid in the DRC, as it is used to leach copper from oxide ores through the SX-EW (solvent extraction and electrowinning) process. In 2023, approximately 6 million tonnes of acid were consumed by mining operations in the DRC. Domestic acid demand is expected to increase to over 7 million tonnes in the short to medium term. The market price for acid in the DRC is comparatively expensive, as most of the high-strength sulphuric acid consumed is imported first as sulphur, with high associated transportation costs, and burned in domestic acid plants to create liquid high-strength sulphuric acid. Offtake contracts for the high-strength sulphuric acid produced by the smelter are well advanced with local purchasers.

The on-site smelter will offer transformative financial benefits for the Kamoa-Kakula Copper Complex, most significantly a material reduction in logistics costs, and to a lesser extent reduced concentrate treatment charges and local taxes, as well as revenue from acid sales. Logistics costs accounted for 33% of Kamoa-Kakula's total cash cost (C1) during Q4 2023, and the volume of shipments is expected to more than halve following the smelter start-up as trucks will transport 99+%-pure blister copper anodes instead of concentrate with approximately 50% contained copper. Smelting on-site is expected to drive a decrease in average cash cost (C1) of approximately 20%.

Construction of the main smelter building for the Phase 3 direct-to-blister flash furnace and electric slag cleaning furnace is well advanced.

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Smelter investment will reduce Kamoa-Kakula carbon emissions per unit of refined copper (Scope 1, 2 and 3) by an additional 46%

Based on Scope 1, 2 and 3 (partial) emissions, including downstream emissions beyond the mine gate to produce LME-grade refined metal, Skarn Associates and WSP Group estimate that Kamoa-Kakula's GHG emissions-intensity in 2022 was 2.42 t CO₂-e / t Cu, already the lowest carbon emitting major copper mine.

Following the completion of the Phase 3 expansion and the smelter, the emissions intensity of Kamoa-Kakula on a Scope 1, 2 and 3 basis is estimated to almost halve to 1.31 t CO₂-e / t Cu. Industry peer data compiled by Skarn Associates ranks Kamoa-Kakula Copper Complex comfortably within the bottom decile of the GHG emissions intensities on a Scope 1, 2 and 3 basis as shown in Figure 2.

The significant reduction in GHG emissions is due to the improvement in Scope 3 emissions from the on-site smelter. This is partially due to the smelter being inherently lower in GHG emissions-intensity compared with typical smelters due to clean hydropower from the DRC grid and compliance with world-class IFC emissions standards. The most significant impact is in terms of the transportation of a higher-grade copper anode (99.7% contained copper), instead of shipping copper concentrate (50% contained copper).

Figure 2: 2022 Scope 1, 2 & 3 copper GHG emissions intensity curve, highlighting Kamoa-Kakula and the World's largest copper mining operations. Following the completion of the on-site smelter, as part of the Phase 3 expansion, the GHG emissions intensity is expected to almost halve.

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Source: Skarn Associates and WSP Group. For full footnotes reference original news release dated November 3, 2023.

Basic engineering for "Project 95" is underway. Project 95 launched to increase Kamoa-Kakula's copper recoveries to 95% by liberating copper from the tailings stream

Ivanhoe announces Project 95 at Kamoa-Kakula, an initiative targeting to increase overall metallurgical copper recoveries to 95% by liberating copper from the tailings stream at the concentrators, as well as re-treatment of tailings deposited to date.

Ivanhoe previously announced highly promising preliminary test work on liberating additional copper from the tailings stream of the Phase 1 and 2 concentrators. The grade of Kamoa-Kakula's tailings in 2023 averaged approximately 0.8% copper, which is higher than the average head grade of the copper mines globally.

Using conventional fine grinding, the test work results indicated that with a feed grade of less than 1% copper, approximately 65% of the remaining contained copper can be recovered from the tailings stream. Project 95 is intended to boost the overall copper recovery rate of the concentrators to approximately 95%. Basic engineering on the tailings-stream recovery plant is underway and is expected to be completed early in Q2 2024.

For context, in 2023 the Kamoa-Kakula Copper Complex milled approximately 8.54 million tonnes of ore, producing 393,551 tonnes of copper in concentrate at an 87.3% metallurgical recovery rate, in line with design parameters. Over 50,000 tonnes of contained copper were not recovered into concentrate and diverted to the tailings storage facility, or used underground as backfill in 2023.

Refurbishment of hydropower at Inga II approximately 60% complete and on-schedule for Q4 2024 completion

The refurbishment of Turbine #5 at the Inga II hydroelectric facility is approximately 60% complete and advancing on-schedule, and well within budget, to generate 178 MW of hydroelectric power for the DRC grid in Q4 2024.

The old turbine, transformers, alternators, and all associated control equipment were successfully dismantled and removed in 2023. All the new equipment packages, consisting of the transformers, the turbine and the alternator were delivered to site by December 31, 2023. All that remains to be delivered are the turbine runner and shaft, the alternator rotor poles and the water intake main gate, which have already been delivered and offloaded at the port of Luanda in Angola.

All contractors are mobilized on-site and ready to commence assembly works. Once the final equipment packages arrive on site and the ongoing refurbishment of the powerhouse gantry crane is complete, assembly works are expected to commence in the coming weeks. Wet commissioning and synchronization to the grid is on schedule for Q4 2024.

The delivery of Turbine #5's new runner recently arrived at the port of Luanda in Angola. Completion of refurbishment works remains on schedule to provide 178 MW of clean hydropower to the DRC grid in Q4 2024.

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Agreement to commence exports of copper products from Kamoa-Kakula via the Lobito Atlantic Rail Corridor

On August 16, 2023, Ivanhoe announced that Kamoa Copper had signed a memorandum of understanding (MOU) with Lobito Atlantic International SARL (LAI) for the transportation of Kamoa-Kakula's copper concentrate by rail to the Atlantic Ocean port of Lobito in Angola.

The rail line linking the DRC Copperbelt to the port of Lobito, Angola, is known as the "Lobito Atlantic Railway Corridor" or "Lobito Corridor". The rail line extends for 1,739 kilometres from Lobito to Kolwezi in the DRC, passing within five kilometres of the Kamoa-Kakula licence boundary and through the Western Forelands exploration licences.

The first shipment of approximately 1,110 tonnes of Kamoa-Kakula's copper concentrate was loaded on rail wagons in Kolwezi and departed west along the Lobito Corridor on December 23, 2023. The shipment arrived at the port of Lobito eight days later on December 31, 2023, taking roughly one third of the time of alternative trucking routes. Information from trial shipments will be gathered on greenhouse gas (GHG) savings, transit times, operating costs and other operational factors.

The first train of the trial shipment of copper concentrate, carrying over 600 tonnes across 16 wagons, arrived at the Atlantic Ocean port of Lobito, Angola on December 31, 2023.

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Once fully active, the Lobito Atlantic Railway Corridor is expected to transform regional logistics and reduce the Scope 3 carbon emissions footprint of Kamoa-Kakula's copper exports. The development of Ivanhoe's current and future copper discoveries within the Western Forelands basin will also greatly benefit from the Lobito Corridor.

On February 7, 2024, Ivanhoe announced that Kamoa-Kakula had signed a term sheet outlining the key terms for a Reserved Capacity Agreement for transporting mineral products from the Kamoa-Kakula Copper Complex along the Lobito Atlantic Railway Corridor. The agreement will allocate Kamoa-Kakula the right to transport along the Lobito Corridor a minimum of 120,000 tonnes and a maximum of 240,000 tonnes per annum of blister-anode or concentrate.

The term sheet outlines a minimum term for the agreement of five years commencing in 2025, following a ramp-up year in 2024. The costs of exporting mineral products along the Lobito Corridor are expected to be cheaper than the current market price for trucking via the existing export routes, as shown in Figure 3, and the rates are anticipated to reduce further as volumes transported along the line increase.

Figure 3: Map of export routes currently used by Kamoa-Kakula in red, as well as the Lobito Corridor route in orange. Logistics costs currently account for one third of Kamoa-Kakula's total cash cost (C1), due to the long in-land distances travelled by road for exports to reach port.

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COPPER PRODUCTION AND CASH COST GUIDANCE FOR 2024

The figures are on a 100% project basis and metal reported in concentrate is before refining losses or deductions associated with smelter terms. Kamoa-Kakula's 2024 guidance is based on several assumptions and estimates and involves estimates of known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially.

Production guidance is based on assumptions for the completion of the Phase 3 concentrator and reliability of DRC grid power supply, among other variables. The Kamoa-Kakula joint venture produced a total of 393,551 tonnes of copper in concentrate for the year ended December 31, 2023, including 92,215 tonnes of copper in concentrate in Q4 2023.

Cash cost (C1) per pound of payable copper amounted to $1.45/lb. for the year ended December 31, 2023, including $1.53/lb. in Q4 2023. Cash cost guidance is based on assumptions including copper ore grade processed, completion of the Phase 3 concentrator, reliability of DRC grid power supply and prevailing logistics rates among other variables.

Cash cost guidance includes a provision for the use of on-site, back up generator capacity during 2024 to support the Phase 1 and 2 operations during periods of intermittent power from the grid, and particularly due to the early commissioning of Phase 3. On-site backup power is approximately 3 to 4 times greater in cost than the grid-supplied power by SNEL on a cents per kilowatt hour basis. Increased reliance on backup power can result in an increase in cash cost of up to approximately $0.20/lb., which is captured in the guidance range.

Cash cost guidance is impacted by the timing of Kamoa-Kakula's Phase 3 concentrator which is well ahead of schedule for first production in late Q2 2024. Copper in concentrate produced by the Phase 3 concentrator is expected to have a higher cash cost when compared to Phase 1 and Phase 2 due to the lower average copper grade expected from the Kamoa 1 and Kamoa 2 mines feeding the Phase 3 concentrator, compared to the Kakula Mine feeding the Phase 1 and Phase 2 concentrators. Completion of the on-site smelter, on schedule for commissioning in Q4 2024, is expected to drive a decrease in average cash cost (C1) over the first five years post-completion (from 2025) by approximately 20%.

Cash cost (C1) is a non-GAAP measure used by management to evaluate operating performance and includes all direct mining, processing, stockpile rehandling charges, and general and administrative costs. Smelter charges and freight deductions on sales to the final port of destination (typically China), which are recognized as a component of sales revenues, are added to cash cost (C1) to arrive at an approximate cost of delivered finished metal.

For historical comparatives, see the non-GAAP Financial Performance Measures section of the company’s MD&A dated February 23, 2024 for the financial year ended December 31, 2023.

Sarah Kaind, Data Capture Specialist, standing in front of the Phase 2 concentrator feed conveyors.

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Junior Davis, SMPP Supervisor (left) and Tendayi Manyangedze, Supervisor E&I (right) consult at the new underground pump station at the Kakula North underground.

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2. Platreef Project
64%-owned by Ivanhoe Mines
South Africa

The Platreef Project is owned by Ivanplats (Pty) Ltd (Ivanplats), which is 64%-owned by Ivanhoe Mines. A 26% interest is held by Ivanplats' historically disadvantaged, broad-based, black economic empowerment (B-BBEE) partners, which include 20 local host communities with approximately 150,000 people, project employees and local entrepreneurs. A Japanese consortium of ITOCHU Corporation, Japan Oil, Gas and Metals National Corporation (JOGMEC), and Japan Gas Corporation, owns a 10% interest in Ivanplats, which it acquired in two tranches for a total investment of $290 million.

The Platreef Project hosts an underground deposit of thick, platinum-group metals, nickel, copper, and gold mineralization on the Northern Limb of the Bushveld Igneous Complex in Limpopo Province - approximately 280 kilometres northeast of Johannesburg and eight kilometres from the town of Mokopane in South Africa.

On the Northern Limb, platinum-group metals mineralization is primarily hosted within the Platreef, a mineralized sequence traced for more than 30 kilometres along the strike. Ivanhoe's Platreef Project, within the Platreef's southern sector, is comprised of two contiguous properties: Turfspruit and Macalacaskop. Turfspruit, the northernmost property, is contiguous with, and along strike from, Anglo Platinum's Mogalakwena group of mining operations and properties.

Since 2007, Ivanhoe has focused its exploration and development activities on defining and advancing the down-dip extension of its original discovery at Platreef, now known as the Flatreef Deposit, which is amenable to highly mechanized, underground mining methods.

Looking northeast over the Platreef site, with the Shaft #2 and Shaft #1 headgear centre and the Phase 1 concentrator on the right

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Optimized Platreef development plan to accelerate and re-scope Phase 2 to 4 Mtpa capacity by equipping Shaft #3 for hoisting

Ivanhoe's engineering team recently completed an internal optimization study of the phased expansion of the Platreef Project. Current underground development and operations are dependent on the initial 1 Mtpa Shaft #1 until the 10-metre diameter, 8 Mtpa Shaft #2 is commissioned. Our studies have concluded that accelerating the startup of Phase 2 will create significant project value.

Phase 2 expansion will be accelerated by re-purposing ventilation Shaft #3 for hoisting. Shaft #3 will generate additional hoisting capacity of approximately 3 Mtpa, bringing total hoisting capacity to approximately 4 Mtpa.

The reaming of Shaft #3 commenced in 2023 and is progressing well, with over 500 metres of a total of 950 metres completed. Reaming is the process of boring, or excavating, a vertical shaft from the bottom up and is the quickest and safest method of constructing a shaft. Reaming is expected to be completed in the second quarter of 2024. Once equipped, Shaft #3 is expected to be ready for hoisting in the fourth quarter of 2025, well ahead of the completion of the much larger Shaft #2.

The raisebore machine, in the foreground, is reaming Shaft #3 to a diameter of 5.1 metres. Adjacent to the raisebore, civil works are progressing well for the auxiliary and stage winders.

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The internal study concluded that equipping Shaft #3 for hoisting de-risks Phase 1 underground operations ahead of the completion of Shaft #2 and accelerates the underground development for Phase 2. In addition, the Phase 2 concentrator would have an increased processing capacity of 3.3 Mtpa, up from 2.2 Mtpa as per the first module of Phase 2 defined in the 2022 Platreef Feasibility Study. Therefore, the Phase 1 and Phase 2 concentrators will have total combined processing capacity of approximately 4.0 Mtpa, with ore fed from Shaft #1 and Shaft #3.

Additional underground ventilation will now be provided by a new 5.1-metre diameter shaft, named Shaft #4. The drilling of the pilot hole for Shaft #4 is expected to commence in the coming weeks. Once reaming is complete and the ventilation fans are installed, Shaft #4 is expected to be operational during the third quarter of 2025.

Following the completion of the optimization study, work is well underway on an updated independent Feasibility Study for Phase 1 and the Phase 2 expansion, which will be completed and published in the second half of 2024.

Site preparation for the reaming of ventilation Shaft #4 is progressing well. The pilot hole for the reamer is expected to commence drilling in the coming weeks. Shaft #4 is expected to be ready in the third quarter of 2025.

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Study work in progress for new Phase 3 expansion to 10 Mtpa, expected to rank Platreef as one of the world's largest PGM producers

In parallel with the release of the updated Feasibility Study, Ivanhoe has also commissioned a preliminary economic assessment (PEA) for an additional expansion, Phase 3, taking the total Platreef processing capacity up to approximately 10 Mtpa (as shown in Figure 4). The new Phase 3 expansion is expected to consist of two additional 3.3-Mtpa concentrator modules, to be located adjacent to the Phase 1 and 2 concentrators. Phase 3 is anticipated to rank Platreef as one of the world's largest and lowest cost platinum-group metal, nickel, copper and gold producers. The 10 Mtpa concentrator capacity of the Phase 3 expansion will be 12.5 times greater than that of Phase 1 and 2.5 times greater than the processing capacity of the optimized Phase 2 expansion.

The completion of Shaft #2 will increase the total hoisting capacity, for ore and waste development, across all three shafts to over 12 Mtpa.

Figure 4. Platreef's updated phased development strategy following optimization. An updated Feasibility Study and PEA, covering the scope of optimized Phase 2 and the new Phase 3 expansion is expected to be completed and published in the second half of 2024

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Construction of Shaft #2 headgear 50% complete

Construction activities are advancing well on the installation of 1,124 tonnes of internal structural steel inside Shaft #2's headgear. In addition, all long-lead order equipment packages for the headgear have now been placed. The installation contract for the sinking winders and related infrastructure was also recently placed, with contractor onboarding planned over the coming month. The production winder, as well as the man and material winder, are expected to be delivered to site early in the third quarter.

The Shaft #2 sinking contract is currently out for tender and planned to be placed later this year, once the reaming of the shaft to an initial diameter of 3.1 metres is complete. Reaming is on schedule to be complete in the third quarter, after which enlargement out to a diameter of 10 metres, by a process known as slashing, will commence.

Bird's eye view looking down Platreef's Shaft #2 headgear. Following the completion of the outer concrete structure, construction activities are focused on installing 1,124 tonnes of internal structural steel.

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Offtake agreement with Sibanye-Stillwater to support Phase 2 expansion of Platreef

Ivanplats has recently signed a Purchase of Concentrate Agreement with Western Platinum Proprietary Limited, a subsidiary of Sibanye-Stillwater Limited, for Phase 2 concentrate production. Sibanye-Stillwater is one of the world's largest primary PGM producers and operates the Marikana complex in Northwest province, South Africa, which includes a smelter plant with five furnaces, a base metal refinery plant, and a precious-metal refinery plant.

The offtake agreement is for 8 years from first production of Phase 2 and is for an initial volume of 60,000 tonnes of concentrate per annum, which is expected to represent between one-third and one-half of the re-scoped Phase 2 volume. Separately, Ivanplats and Sibanye-Stillwater are exploring the possibility of increasing the annual volume to 100,000 tonnes or more.

As previously disclosed, Platreef's Phase 1 concentrate production, for 10 years, will be purchased by Northam Platinum Limited (Northam). Northam is an independent, fully empowered, integrated PGM producer, with primary operations in South Africa including the wholly-owned Zondereinde Mine and metallurgical complex, and Booysendal Mine. Platreef's Phase 1 is expected to produce approximately 40,000 tonnes per year of concentrate, containing six payable metals, including palladium, nickel, platinum, rhodium, copper and gold.

Ivanhoe Mines signs term sheet with leading industrial partner to explore downstream processing of PGM-nickel-copper concentrate in South Africa

Ivanhoe Mines recently signed a term sheet with a leading industrial partner to jointly explore the viability of a new PGM-nickel-copper smelter in South Africa. The agreement outlines a technical and commercial collaboration to jointly study the construction of a facility to smelt PGM-nickel-copper concentrate produced during Phase 3, as well as third-party concentrates, into a converter matte. Converter matte is an intermediary smelter product that typically consists of approximately 40 to 50% nickel and 20 to 30% copper by content, with up to 750 grams per tonne of PGM content.

Converter matte can be further processed into refined metal in South Africa, as well as at many refineries abroad. In addition, converter matte receives significantly better terms from its purchasers compared with PGM concentrates.

Both parties have committed to undertake a pre-feasibility study on the development of the facility. The facility may be a greenfield site, or alternatively may re-purpose an existing facility in South Africa. The collaboration is designed to draw on the respective skills of both parties. The smelter would be joint-owned, with Ivanhoe owning no less than 50% and with a mechanism to increase its ownership in the future.

Construction activities for the Phase 1 concentrator are advancing on schedule for Q3 2024, with ramp-up deferred to early 2025

Construction of the Phase 1 concentrator is advancing on schedule at over 80% complete and is on track for cold commissioning in the third quarter of 2024. All engineering and procurement activities for the Phase 1 concentrator are essentially complete, with all long lead items delivered to site.

Cold commissioning activities for the Phase 1 concentrator are expected to continue as planned in Q3 2024. However, hot commissioning and ramp-up of production are now planned to be deferred until early 2025. This decision was taken to accommodate increased underground development, including critical-path Shaft #3 and Shaft #2 infrastructure while hoisting capacity is constrained to Shaft #1 only.

Looking north over the flotation cells of Platreef's 770,000 tonnes per annum Phase 1 concentrator, with the headgear of Shaft #1 (left) and Shaft #2 (right) in the background

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$150 million project financing agreement executed with Nedbank and Société Générale

A $150 million senior debt facility for Platreef Phase 1 has been executed with its mandated lead arrangers, Société Générale and Nedbank. The facility is expected to be drawn down in the coming months. Once the updated Feasibility Study is completed in the second half of 2024, Ivanhoe intends to arrange an enlarged project finance package for the subsequent phases of expansion.

Bulk water for Platreef operations is now supplied by treated local municipal wastewater

Ivanplats has an offtake agreement to receive bulk water for the phased development of the Platreef Project from the Mogalakwena Local Municipality. The 32-year agreement is for 3 million litres per day for Platreef's Phase 1 operations and up to 8 million litres per day for future expansions. The bulk water supply consists of municipal effluent from the surrounding communities, which is treated at the Masodi Wastewater Treatment Works. Ivanplats funded the completion of the Masodi Wastewater Treatment Works on behalf of Mogalakwena Local Municipality. The project was completed in the third quarter of 2023. Subsequently, the first water was received at the Platreef Project on December 1, 2023, and to date, a total of 400 cubic metres of water has been recycled from the wastewater treatment works.

Ivanplats has also signed a Memorandum of Agreement to upgrade the wastewater treatment works infrastructure within Mogalakwena Local Municipality, to increase the capacity of treated water available for offtake to support the additional future expansions of Platreef.

Aerial view of the Masodi Wastewater Treatment Works, which has been pumping recycled municipal wastewater to the Platreef Project since December 2023.

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First solar power plant construction to commence imminently

All major equipment for the solar power plant, such as the inverter and solar panels has now been delivered to site. Construction of Platreef's first 5 MW solar power facility is expected to commence within the coming weeks and be completed in the second half of 2024. The power generated by the plant will support development activities and operations, together with other renewable energy sources that are expected to be introduced over time.

(L-R) Metsobane Mokoena, Fitter, MRC Engineering and Thabo Makgoba, Foreman, MRC Engineering, conducting maintenance at the 750-metre level workshop on the Ivanplat's Epiroc battery electric 17-tonne Scooptram.

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3. Kipushi Project
68%-owned by Ivanhoe Mines
Democratic Republic of Congo

The historic Kipushi zinc-copper-germanium-silver mine in the DRC is adjacent to the town of Kipushi, approximately 30 kilometres southwest of Lubumbashi on the Central African Copperbelt. Kipushi is approximately 250 kilometres southeast of the Kamoa-Kakula Copper Complex and less than one kilometre from the Zambian border. Ivanhoe acquired its 68% interest in the Kipushi Project in November 2011, through Kipushi Holding which is 100%-owned by Ivanhoe Mines. The balance of 32% in the Kipushi Project is held by the DRC state-owned mining company, Gécamines.

For over 69 years up until 1993 when the mine was placed on care and maintenance, the Kipushi mine produced a total of 6.6 million tonnes of zinc and 4.0 million tonnes of copper from 60 million tonnes of ore grading 11% zinc and approximately 7% copper. It also produced 278 tonnes of germanium and 12,673 tonnes of lead between 1956 and 1978. There is no formal record of the production of precious metals as the concentrate was shipped to Belgium and the recovery of precious metals remained undisclosed during the colonial era; however, drilling by Ivanhoe Mines has encountered significant silver values within Kipushi's current zinc- and copper-rich deposits.

Since acquiring its interest in the Kipushi in 2011, Ivanhoe's drilling campaigns have upgraded and expanded the mine's zinc-rich Big Zinc and Southern Zinc orebodies to a Measured and Indicated Mineral Resource of 11.78 million tonnes grading 35.34% zinc, 0.80% copper, 23 grams/tonne (g/t) silver and 64 g/t germanium, at a 7% zinc cut-off, containing 9.2 billion pounds of zinc, 8.7 million ounces of silver and 24.4 million ounces of germanium. Kipushi's exceptional zinc grade is more than twice that of the world's next highest-grade zinc project, according to Wood Mackenzie, a leading, international industry research and consulting group.

Based on test work conducted for the Kipushi 2022 Feasibility Study, Kipushi's high-grade zinc concentrate assays include significant quantities of germanium and gallium. Germanium is a strategic metal used today in electronic devices, flat-panel display screens, light-emitting diodes, night vision devices, optical fibre, optical lens systems, and solar power arrays. Gallium is a strategic metal used today to manufacture compound semiconductor wafers used in integrated circuits, and optoelectronic devices such as laser diodes, light-emitting diodes, photodetectors, and solar cells.

Aeriel view over the construction site of Kipushi's 800,000-tonne-per-annum concentrator. Bottom left and top right of the picture are the two ore stockpiles containing approximately 220,000 tonnes of zinc ore, ready for commissioning the concentrator, which is ahead of schedule for Q2 2024.

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Ivanhoe Mines and Gécamines sign new joint venture to restart the ultra-high-grade Kipushi mine, a century since first opening

On January 16, 2024, the company announced the signing of the new joint venture agreement with Gécamines to restart the Kipushi mine. Under the terms of the agreement, which remained unchanged from the term sheet signed between Kipushi Holding and Gécamines in 2022, an additional 6% of the share capital and voting rights will be transferred to Gécamines upon completion of the conditions precedent.

In recent months, the company has received significant interest in relation to the financing of Kipushi and the off-take of clean zinc concentrate the mine will produce. Negotiations are advancing with numerous parties, including facilities of up to $200 million or higher, and are expected to be concluded in the second quarter of 2024.

Maxwell Twite, Control Room Foreman, at work inside the new Kipushi control room.

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Kipushi concentrator ahead of schedule for first production in Q2 2024, with the overall project approximately 85% complete

Construction of the new 800,000-tonne-per-annum concentrator facility is nearing completion. The concentrator includes dense media separation (DMS) and a milling and flotation circuit and is expected to produce more than 250,000 tonnes of zinc contained in concentrate over the first five years of production. Design recoveries are targeted at 96%, with a concentrate grade averaging 55% contained zinc.

With overall project progress to-date at approximately 85% complete, the Kipushi concentrator is ahead of schedule and is expected to be commissioned in Q2 2024. All equipment purchase orders have been placed with the last two packages placed in December 2023. To date, 77 of the total 79 equipment packages have been delivered to site.

The ball mill, fabricated by CITIC Heavy Industries of Henan Province, China was lifted into position in December. The DMS plant, fabricated by Bond Equipment of Gauteng, South Africa and the flotation cells fabricated by FL Smidth of Copenhagen, Denmark, have been completed and installed on site. All mechanical and electrical equipment packages are in the process of completing onsite installation and testing.

All 2,139 tonnes of steel and all 254 tonnes of platework required for the concentrator structures are either on site or on route to site. Electrical installation is advancing well with some of the substations already energised.

The construction of the tailings storage facility is complete with some minor equipping still outstanding. Commissioning is scheduled for late Q1 2024, ahead of the concentrator commissioning. The tailings storage facility has been designed in accordance with Global Industry Standards on Tailings Management (GISTM).

The erection of the concentrate warehouse structural steel is well advanced with sheeting installation ongoing.

Construction of Kipushi’s concentrator plant is approximately 85% complete and ahead of schedule for first production in Q2 2024

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Underground development ahead of schedule, with over 4,000 metres completed in 2023

In line with the 2022 Kipushi Feasibility Study, mining will focus on the zinc-rich Big Zinc and Southern Zinc zones, with an estimated 11.8 million tonnes of Measured and Indicated Mineral Resources grading 35.3% zinc.

The underground mining and development are fully mechanized, highly efficient and designed to enable a quick ramp-up to a steady state of 800,000 tonnes per annum. By the end of 2023, four mining crews had been deployed underground. An additional crew will be deployed for the stoping production ramp-up later this quarter. Each mining crew is made up of five miners per shift and equipped with a primary fleet supplied by Epiroc of Stockholm, Sweden, consisting of a 282 Twin Boomer, a ST 14 Scooptram (LHD) and two MT42 dump trucks with a Simba long hole stope drill rig in addition for the stoping crew.

Crews with a remote-operated Simba longhole drill rig, drilling the stope slot holes on the 1,220-metre level in preparation for a blast of the trial mining stope.

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Underground development continues to open multiple access levels into the Big Zinc orebody, from the top down, while decline development continues to spiral down parallel to the plunging Big Zinc deposit.

As at December 31, 2023, 4,565 metres of lateral and decline development was completed for the project to date, and a total of 3,957 metres of horizontal development had been completed during 2023, approximately 20% ahead of schedule.

Following the mobilization of the remaining underground equipment fleet and the fourth mining crew, the underground development rate reached an average of 404 metres per month in the fourth quarter.

Stoping of ultra-high grade Big Zinc orebody started ahead of schedule; approximately 220,000 tonnes of development ore stockpiled on surface

The mining method of the Big Zinc orebody is transverse sublevel open stoping, with high-grade ore extracted from the stopes in a primary and secondary sequence. The void of the mined-out stopes will be filled with cemented aggregate fill (CAF) to maximize the extraction of the ultra-high-grade ore.

The height of each long-hole stope is approximately 60 metres, comprising an upper 30-metre-high stope and a lower 30-metre-high stope. Stopes will be separated by a 15-metre-high sill pillar. The long-hole stopes will be mined with a bottom-up mining sequence, with the lower stope extracted first followed by the upper stope.

Stoping of Kipushi's ultra-high-grade Big Zinc orebody commenced in December 2023, ahead of schedule. Stoping started on a trial mining basis to complete the training of the underground mining crews in preparation for the commencement of commercial operations in the coming months.

Ore from underground development and trial stoping is being stockpiled on surface ahead of the concentrator commissioning in the second quarter. To date, 220,000 tonnes of ore is stockpiled on surface near the Kipushi concentrator, at an average grade of 22% zinc. This includes 190,000 tonnes of "low-grade" ore at an average grade of 20% zinc, and 30,000 tonnes of "medium-grade" ore at an average grade of 30% zinc.

Kipushi's operations will be supplied with hydroelectric power from DRC's state-owned electricity company, SNEL. A study completed in 2020 by Wood Mackenzie ranked Kipushi at the second percentile of the Scope 1 + 2 greenhouse gas emissions curve. A study is underway to update the study to include Scope 3 emissions. See Figure 5 below.

Figure 5: Global zinc mine site scope 1+2 greenhouse gas (GHG) emissions in equivalent kilograms of carbon dioxide per tonne of equivalent zinc produced (kg CO₂-e / t Zn eq.). Scope 1 + 2 annual GHG emissions from the Kipushi mine are forecast to be 0.06 tonnes of carbon dioxide equivalent per tonne of zinc produced (t CO_2-e/ t Zn).

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4. Western Forelands Exploration Project
80%- to 100%-owned by Ivanhoe Mines, plus licences under joint-venture
Democratic Republic of Congo

Ivanhoe's DRC exploration group is targeting Kamoa-Kakula-style copper mineralization on its Western Forelands exploration licences, using exploration models that successfully led to the discoveries of Kakula, Kakula West, and the Kamoa North Bonanza Zone on the Kamoa Copper SA mining licence.

The 17 licences in the Western Forelands cover a combined area of approximately 2,407 square kilometres to the north, south and west of the Kamoa-Kakula Copper Complex. An additional 4 licences under joint venture bring the total exploration area to approximately 2,654 square kilometres. To date, Ivanhoe's exploration team in the Western Forelands has made discoveries at Makoko, Kiala and, more recently, Kitoko.

A total amount of $23 million was spent on exploration activities in the Western Forelands during 2023. As announced on December 7, 2023, Ivanhoe expects to significantly increase group exploration budget in 2024 to $90 million, with the expenditure primarily focused on the Western Forelands. The increased budget will focus on Makoko and the geologically significant, high-grade Kitoko copper discovery, as announced on November 28, 2023.

Exploration activities continued in Q4 with the target areas of focus shown in Figure 6. Diamond and air core drilling activities as well as ground geophysics continued until early December, when the rainy season commenced. The wet season starts in November and continues until early April, with field access often restricted into May.

The Ivanhoe exploration team recommenced diamond drilling in January 2024 at Makoko West and Kitoko, where all-weather roads and drill pads were prepared ahead of time to ensure drilling continues throughout the current wet season. Work will recommence on the other prospects across the Western Forelands in the dry season in Q2 2024.

During Q4 2023, seven diamond core drill rigs were deployed across various targets on the Western Forelands consisting of 6 contractor-owned rigs and 1 rig owned by Ivanhoe. A total of 37,857 metres of diamond core were drilled in 2023, with 9,307 metres drilled during Q4 across 21 holes. Two additional diamond core rigs with deeper drilling capability will be deployed for exploration in the Western Forelands later this quarter.

Three air core drill rigs were in operation during Q4 across the Western Forelands. A total of 13,460 metres of air core drilling were completed in 2023, with 4,477 metres completed in Q4 across 155 holes. The air core drill rigs are typically deployed to the more remote extents of the Western Forelands licence package where they are used to map lithology and identify geochemical anomalism under a blanket of 10- to 40-metre-thick Kalahari sand cover. Each air core rig drills between 30 to 50 metres per day and is moved daily. Air core drilling has been curtailed for the wet season due to limited off-road access, and will recommence in Q2 2024.

Additionally, a large amount of ground gravity data was collected in Q4 to improve the ongoing development of Ivanhoe's geophysical model of the Western Forelands. This data was processed in December and is being combined with other data sets to generate new exploration targets through the Company's enhanced geological understanding following the Kitoko discovery.

Figure 6: Map highlighting Ivanhoe Mines' current exploration target areas across the Western Forelands licences.

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Kitoko discovery further enhances Ivanhoe's proprietary exploration model

During Q4, Ivanhoe announced a significant high-grade copper discovery on recently acquired joint venture licences in the Western Forelands. The Kitoko discovery is approximately 25 kilometres west of the ultra-high-grade Kakula Mine, and five kilometres south and southeast of the Makoko deposit and is located inside a package of newly acquired joint venture licences in the Western Forelands. The new package of licences increases Ivanhoe's highly prospective Western Forelands land position by 10% to 2,654 square kilometres.

Under the terms of the joint venture that covers the 247 square kilometres of newly acquired licences, Ivanhoe has an initial interest of 10% with an earn-in right to increase its ownership by funding ongoing exploration activities. Ivanhoe expects to make further exploration spending commitments in 2024 to increase Ivanhoe's interest to 60%.

The Kitoko discovery confirms the presence of a significant high-grade copper mineralizing system between 1,000 metres and 1,140 metres below the surface open along strike and down dip. Kitoko fine-grained copper mineralization is hosted in two near flat-lying siltstones of the lower Grand Conglomerate, similar to that observed at the tier-one Kamoa, Kakula, Makoko and Kiala deposits. Also, like these deposits, the Kitoko mineralization is bottom-loaded with the highest copper grades occurring at the base of the mineralized zone.

As mineralization occurs at the Kakula orebody, the lower section of the mineralized zone features occurrences of high-grade chalcocite and bornite copper sulphide minerals, with chalcopyrite copper sulphide mineralization more prevalent towards the top (see Figure 7).

Figure 7: Strip logs showing the mineralization and lithological host of the Kitoko discovery. The two holes (DD008 and DD004) are on separate sections 1,400 metres apart.

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At year-end, the defined mineralized zone extended approximately 1.6km along strike and 600 metres along dip. (See Figure 8).

Figure 8. Zoomed in dip section, looking east, of the Kitoko discovery, showing grade intervals at a 1% cut-off

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After year-end, two infill holes (drilled as wedges off KTK08 and KTK10) and a step-out drill hole (KTK12) from the original Kitoko discovery holes each intersected high-grade mineralization, extending the mineralized strike length by 400 metres to approximately 2 kilometres. Over the coming months, further step-out drilling is planned along strike, up dip and down dip to identify the limits of the Kitoko mineralization system. Further infill drill holes are also planned between the two drilled sections to confirm continuity of mineralization.

Makoko emerges as the world's fourth-largest copper discovery over the past decade

A maiden Mineral Resource estimate for the Makoko and Kiala high-grade copper discoveries in the Western Forelands was announced on November 13, 2023. Makoko now ranks as the world's third-largest and highest-grade copper discovery since Kakula in 2016 (see Figure 9). Ivanhoe's geologists have discovered a total of 38.7 million tonnes of contained copper in Measured & Indicated Resources and a further 9.4 million tonnes in Inferred Resources across the Western Forelands shelf, including the Kamoa and Kakula deposits.

Highlights of the maiden Makoko Mineral Resource estimate, prepared by Ivanhoe Mines under the direction of the MSA Group (MSA), of Johannesburg, South Africa, in accordance with the 2014 CIM Definition Standards for Mineral Resources and Mineral Reserves:

• Indicated Resources total 16 million tonnes at a grade of 3.52% copper, containing 1.3 billion pounds of copper at a 1% copper cut-off. At a higher 1.5% copper cut-off, Indicated Resources total 16 million tonnes at a 3.55% copper, containing 1.3 billion pounds of copper.
  
  
• Inferred Resources total 243 million tonnes at a grade of 1.71% copper, containing 9.2 billion pounds of copper at a 1% copper cut-off. At a higher 1.5% copper cut-off, Inferred Resources total 154 million tonnes at a 1.97% copper grade, containing 6.7 billion pounds of copper.
  
  
• The average vertical thickness of the selective mineralized zone at a 1.0% cut-off is 5.2 metres in the Indicated Resource area and 6.0 metres in the Inferred Resource area. At a higher 1.5% cut-off, the average vertical thickness of the selective mineralized zone is 5.2 metres in the Indicated Resource area and 6.6 metres in the Inferred Resource area.

Figure 9: Top copper discoveries over the past 10 years, plus Kamoa (2008). Makoko and Kiala rank as the world's third-largest copper discovery since Kamoa-Kakula, and the highest-grade.

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*The Kamoa discovery, within the larger Kamoa-Kakula Copper Complex, was made in 2008. It has been inserted for reference.
Source: Company filings, S&P Global Market Intelligence. Based on public disclosure as of August 1, 2023. The Makoko and Kiala mineral resources (1.0% cut-off grade) have not been reviewed by S&P Global. The mineral resource at La Huifa (Codelco) is stated in public disclosures as a geological resource, which is assumed to be an Inferred resource in this chart. Notes: Chart ranks the largest copper discoveries made globally in the last ten years (from January 1, 2013) based on contained copper in resources. Measured and indicated resources are inclusive of reserves and are on a 100% basis.

5. The Mokopane Feeder Exploration Project
100%-owned by Ivanhoe Mines
South Africa

Three new 100%-owned exploration rights were granted on the Northern Limb of the Bushveld complex in South Africa during Q4 2022. The three new exploration rights (Blinkwater 244KR, Moordrift 289KR and Lisbon 288KR) cover 80 square kilometres forming a continuous block situated on the southwest border of the existing Platreef Project's mining rights.

A gravity-high anomaly based on wide spaced historical Council for Geoscience data was interpreted to represent a primary feeder zone to the Rustenburg Layered Suite of the Northern Limb of the Bushveld Complex. The working hypothesis for this large gravity anomaly (the Mokopane Feeder) is that it represents a significant thickening of the Rustenburg Layered Suite, particularly of the denser Lower Zone units associated with regional scale crustal faults, with significant potential for nickel, copper and platinum-group metals mineralization.

Magnetic and gravity surveys completed in 2023, with drilling of the Mokopane Feeder exploration project to commence this quarter

Detailed high-resolution fixed-wing airborne magnetic and Falcon airborne gravity gradiometer geophysical surveys were completed during Q2 and Q3 respectively to map the subsurface petrophysical characteristics of the anomaly. Detailed inversion modeling and interpretation of the two high-resolution datasets was completed in December and has been used to refine target generation and follow-up diamond drillhole planning.

A geological project team has been established, with community engagement and environmental compliance for land access being carried out by Ivanhoe's environmental team ahead of drilling. Site mobilization of a drilling contractor will commence later in the coming months once the consultation phase has been completed and drillhole locations are finalized. The initial program consists of 4,000 metres of diamond core drilling.

Figure 10. High-resolution Bouguer Gravity results from the Falcon survey completed in Q3 2023 across the Platreef and Mokopane Feeder licence areas. The image shows one of the largest gravity-high anomalies recorded in South Africa, indicating underlying high-density rock.

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SELECTED ANNUAL FINANCIAL INFORMATION

The selected financial information is in accordance with IFRS as presented in the annual consolidated financial statements. Ivanhoe had no operating revenue in any financial reporting period. All operating revenue from commercial production at Kamoa-Kakula is recognized within the Kamoa Holding joint venture. Ivanhoe did not declare or pay any dividend or distribution in any financial reporting period.

DISCUSSION OF RESULTS OF OPERATIONS

Review of the year ended December 31, 2023 vs. December 31, 2022

The company recorded a profit for the year of $303 million and total comprehensive income of $290 million compared to a profit of $434 million and total comprehensive income of $433 million for the same period in 2022. The main contributor to the profit for 2023 was the company's share of the profit from the Kamoa Holding joint venture. The profit for the year ended December 31, 2022, included a gain on fair valuation of embedded derivative liability of $23 million, compared to a loss on fair valuation of embedded derivative liability of $85 million for the same period in 2023. The profit for the year ended December 31, 2022, also included the recognition of the deferred tax asset relating to the Kipushi Project of $113 million.

The Kamoa-Kakula Copper Complex sold 375,779 tonnes of payable copper in 2023 realizing revenue of $2,704 million for the Kamoa Holding joint venture, compared to 323,733 tonnes of payable copper sold for revenue of $2,148 million in 2022. The company recognized income in aggregate of $482 million from the joint venture in 2023, which can be summarized as follows:

The company's share of profit from the Kamoa Holding joint venture was $275 million for the year ended December 31, 2023, compared to a profit of $254 million for the same period in 2022, the breakdown of which is summarized in the following table:

The realized and provisional copper prices used for the remeasurement (mark-to-market) of contract receivables for the year ended December 31, 2023, can be summarized as follows:

⁽¹⁾ Calculated on a weighted average basis

Of the $353 million (2022: $295 million) finance costs recognized in the Kamoa Holding joint venture for the year ended December 31, 2023, $274 million (2022: $254 million) relates to interest on shareholder loans where each shareholder funded Kamoa Holding in an amount equivalent to its proportionate shareholding interest before generating sufficient operational cashflow. Of the remaining finance costs, $57 million (2022: $34 million) relates to the provisional payment facility available under Kamoa-Kakula's offtake agreements, while $10 million (2022: $7 million) relates to the equipment financing facilities, $7 million relates to bank overdrafts (2022: $nil) and $4 million relates to interest on the lease liability (2022: $nil).

Ivanhoe's exploration and project evaluation expenditure amounted to $23 million for the year ended December 31, 2023, and was $11 million less than for the same period in 2022 ($34 million). Exploration and project evaluation expenditure for 2023 related mainly to exploration at Ivanhoe's Western Forelands exploration licences while 2022 also included amounts spent at the Kipushi Project. Expenditure incurred at the Kipushi Project was capitalized in 2023 due to the recommencement of the development of the Project.

Finance income amounted to $240 million for the year ended December 31, 2023, and $175 million for the same period in 2022. Included in finance income is the interest earned on loans to the Kamoa Holding joint venture to fund operations that amounted to $208 million for the year ended December 31, 2023, and $151 million for the same period in 2022. No additional loans were advanced in 2023 with joint venture cashflow funding its operations and expansions. Interest increased due to higher interest rates and due to the higher accumulated loan balance. The company earned interest on the loan at USD 12-month LIBOR +7% until June 30, 2023. Following the cessation of publication of LIBOR rates, interest was calculated at a rate of 12-month Term SOFR plus 7.7% from July 1, 2023.

As explained in the accounting for the convertible notes section in the company's MD&A for the financial year ended December 31, 2024, the company recognized a loss on fair valuation of the embedded derivative financial liability of $85 million for the year ended December 31, 2023 (2022: gain of $23 million).

The total comprehensive income for the year ended December 31, 2023, included an exchange loss on translation of foreign operations of $12 million, compared to an exchange loss on translation of foreign operations recognized for the same period in 2022 of $1 million, resulting mainly from the weakening of the South African Rand by 8% from December 31, 2022, to December 31, 2023.

Financial position as at December 31, 2023 vs. December 31, 2022

The company's total assets increased by $1,031 million, from $3,969 million as at December 31, 2022, to $5,000 million as at December 31, 2023. The increase in total assets was mainly attributable to the increase in the company's investment in the Kamoa Holding joint venture by $471 million, the increase in property, plant and equipment of $516 million as project development continued at the Platreef and Kipushi projects, as well as the increase in deferred tax assets by $15 million, offset by the decrease in cash and cash equivalents of $23 million.

The company's investment in the Kamoa Holding joint venture increased by $471 million from $2,047 million as at December 31, 2022, to $2,518 million as at December 31, 2023. The Company's investment in the Kamoa Holding joint venture can be broken down as follows:

The company's share of net assets in the Kamoa Holding joint venture can be broken down as follows:

Before commencing commercial production in July 2021, the Kamoa Holding joint venture principally used loans from its shareholders to develop the Kamoa-Kakula Copper Complex through investing in development costs and other property, plant and equipment. No additional shareholder loans were advanced in 2022 or 2023 with joint venture cashflow funding its operations and expansions.

The Kamoa-Kakula's Phase 1 and 2 operations are anticipated to generate significant operating cash flow and are expected to, together with joint venture level financing facilities, be sufficient to fund Phase 3 capital cost requirements at current copper prices. Overdraft facilities represents drawn unsecured financing facilities from DRC financial institutions at an attractive cost of capital, utilised to augment cash generated from operations for Kamoa-Kakula’s continued expansion and working capital. Further facilities were secured after year end, bringing the total drawn unsecured financing facilities of $400 million.

The cash flows of the Kamoa Holding joint venture can be summarized as follows:

The Kamoa Holding joint venture's net increase in property, plant and equipment from December 31, 2022, to December 31, 2023, amounted to $1,462 million and can be further broken down as follows:

Ivanhoe's cash and cash equivalents decreased by $23 million, from $597 million as at December 31, 2022, to $574 million as at December 31, 2023. The company spent $473 million on project development and acquiring other property, plant and equipment and used $32 million in its operating activities.

The net increase in property, plant and equipment amounted to $516 million, with additions of $505 million to project development and other property, plant and equipment. Of this total, $241 million pertained to development costs and other acquisitions of property, plant and equipment at the Platreef Project, while $234 million pertained to development costs and other acquisitions of property, plant and equipment at the Kipushi Project as set out in the company's MD&A for the financial year ended December 31, 2023.

The main components of the additions to property, plant and equipment - including capitalized development costs - at the Platreef and Kipushi projects for the year ended December 31, 2023, and for the same period in 2022, are set out in the following table:

Costs incurred during 2023 at the Platreef and Kipushi projects are deemed necessary to bring the project to commercial production and are therefore capitalized as property, plant and equipment.

On June 30, 2023, the company entered into an exchange agreement with I-Pulse Inc. (I-Pulse), under which the company replaced the outstanding convertible loan balance owed to it by HPX Inc. (HPX) with an equity investment in I-Pulse. The company extended a $50 million convertible loan to HPX on April 25, 2019. As at June 30, 2023, the loan balance was $77 million, comprising a principal amount of $50 million and accrued interest of $27 million. Under the exchange agreement, the company transferred all convertible loan obligations from HPX to I-Pulse, in exchange for the issuance of common shares in I-Pulse to Ivanhoe. HPX is a subsidiary of I-Pulse. The equity investment in I-Pulse represents approximately 5% of the issued and outstanding common stock of I-Pulse.

The company's total liabilities increased by $291 million to $1,419 million as at December 31, 2023, from $1,128 million as at December 31, 2022, with the increase mainly due to the loss on the fair valuation of the embedded derivative liability of $85 million and the Kipushi Project loan facility of $80 million.

On May 22, 2023, Kipushi Corporation SA (Kipushi), a subsidiary of the company and the operator of the Kipushi Project, entered into a loan agreement with Rawbank SA (Rawbank), a financial institution in the Democratic Republic of the Congo. Under the terms of the loan agreement, Rawbank provided an $80 million loan, to be drawn down in two tranches of $40 million each, to Kipushi to fund its working capital requirements. The first tranche of the loan was drawn down by Kipushi on June 27, 2023, and the second tranche was drawn down on September 11, 2023. The loan incurs interest at 8% per year plus a commission of 0.5% per quarter. The loan and accumulated interest and commission are repayable on May 31, 2024. The company has guaranteed all amounts due by Kipushi to Rawbank under this loan agreement.

On August 4, 2023, the company entered into an $18 million loan agreement with Investec Bank Limited, a South African financial institution, in respect of its acquisition of an aircraft. Interest on the loan is incurred at SOFR + a margin of 3.65% per annum and is payable monthly in arrears. The principal amount is repayable monthly in 60 equal installments. The company repaid $1.2 million of the principal amount and $0.7 million in interest during the year ended December 31, 2023.

SELECTED QUARTERLY FINANCIAL INFORMATION

The following table summarizes selected financial information for the prior eight quarters. Ivanhoe had no operating revenue in any financial reporting period and did not declare or pay any dividend or distribution in any financial reporting period.

Review of the three months ended December 31, 2023 vs. December 31, 2022

The company recorded a profit for Q4 2023 of $26 million compared to a profit of $37 million for the same period in 2022. The profit for Q4 2023 included a loss on the fair valuation of the embedded derivative financial liability of $40 million, compared to a loss on the fair valuation of the embedded derivative financial liability of $67 million in Q4 2022. The total comprehensive income for Q4 2023 was $36 million compared to $49 million for the same period in 2022.

The Kamoa-Kakula Copper Complex sold 90,967 tonnes of payable copper in Q4 2023 realizing revenue of $618 million for the Kamoa Holding joint venture, compared to 92,208 tonnes of payable copper sold for revenue of $673 million for the same period in 2022. The company recognized income in aggregate of $108 million from the joint venture in Q4 2023, which can be summarized as follows:

The company's share of profit from the Kamoa Holding joint venture was $49 million for Q4 2023 compared to a profit of $83 million for the same period in 2022, the breakdown of which is summarized in the following table:

Kamoa-Kakula’s operating data is summarized under the principal projects and review of activities section of this news release. 

Of the $88 million (Q4 2022: $93 million) finance costs recognized in the Kamoa Holding joint venture for Q4 2023, $15 million (Q4 2022: $12 million) relates to the provisional payment facility available under Kamoa-Kakula's offtake agreements, while $3 million (Q4 2022: $2 million) relates to the equipment financing facilities, $3 million relates to bank over-drafts (Q4 2022: $0.2 million) and $2 million relates to the interest on the lease liability (Q4 2022: $nil).

Ivanhoe's exploration and project evaluation expenditure amounted to $9 million in Q4 2023 and $4 million for the same period in 2022. Exploration and project evaluation expenditure for Q4 2023 related mainly to exploration and Ivanhoe's Western Forelands exploration licences.

Finance income for Q4 2023 amounted to $63 million and was $5 million more than for the same period in 2022 ($58 million). Included in finance income is the interest earned on loans to the Kamoa Holding joint venture to fund past development which amounted to $59 million for Q4 2023, and $47 million for the same period in 2022, and increased due to the higher interest rates and accumulated loan balance. The company earned interest on the loan at USD 12-month LIBOR +7% until June 30, 2023. Following the cessation of publication of LIBOR rates, interest was calculated at a rate of 12-month Term SOFR plus 7% from July 1, 2023.

The company recognized a loss on the fair valuation of the embedded derivative financial liability of $40 million for Q4 2023, compared to a loss on the fair valuation of the embedded derivative financial liability of $67 million for Q4 2022, which is further explained in the company’s MD&A dated February 23, 2024.

LIQUIDITY AND CAPITAL RESOURCES

The company had $574 million in cash and cash equivalents as at December 31, 2023. At this date, the company had consolidated working capital of approximately $417 million, compared to $595 million at December 31, 2022.

On December 18, 2023, the company completed a private placement offering of 47,917,050 Class A common shares at a price of C$12.00 per share for aggregate gross proceeds of C$575 million (approximately $430 million).

The company's capital expenditure for 2023 and 2024 can be summarized as follows:

All capital expenditure figures are presented on a 100%-project basis.

The ranges provided reflect uncertainty in the timing of Kamoa-Kakula Phase 3 expansion and Platreef Phase 2 capital between calendar years 2024 and 2025.

The Phase 3 expansion at the Kamoa-Kakula Mining Complex is ahead of schedule for production in late Q2 2024 and in line with budget, with the underspending in 2023 expected to be caught up in 2024. The Kamoa-Kakula's Phase 1 and 2 operations are anticipated to generate significant operating cash flow and are expected to, together with joint venture level financing facilities, be sufficient to fund Phase 3 capital cost requirements at current copper prices.

Construction of Platreef's Phase 1 concentrator is advancing on schedule at over 80% complete and is on track for cold commissioning in the third quarter of 2024. Hot commissioning and ramp-up of production are now planned to be deferred to early 2025. Total planned expenditure on Phase 1 remains on budget. The Phase 2 expansion is being accelerated by re-purposing ventilation Shaft #3 for hoisting, while construction of the 10-metre-diametre Shaft #2 continues. Platreef's 2025 guidance is provisional only, and will be updated on the completion of the Feasibility Study with the updated project development strategy, which will be completed in the second half of 2024.

Construction of the Kipushi Mine is progressing well, with the processing plant ahead of schedule for first production in Q2 2024. Negotiations are advancing with numerous parties for facilities of up to $200 million or higher, and are expected to be concluded in the second quarter of 2024.

On August 4, 2023, the company entered into an $18 million loan agreement with Investec Bank Limited, a South African financial institution, in respect of its aircraft. Interest on the loan is incurred at SOFR + a margin of 3.65% per annum and is payable monthly in arrears. The principal amount is repayable monthly in 60 equal installments. The company repaid $1.2 million of the principal amount and $0.7 million in interest during the year ended December 31, 2023.

Ivanhoe's exploration budget for 2024 has been set to approximately $90 million, with exploration activities primarily focused on the 2,654-square-kilometre Western Forelands Project.

On March 17, 2021, the company closed a private placement offering of $575 million of 2.50% convertible senior notes maturing in 2026. The convertible senior notes are senior unsecured obligations of the company which will accrue interest payable semi-annually in arrears at a rate of 2.50% per annum and will mature on April 15, 2026, unless earlier repurchased, redeemed or converted. The notes will be convertible at the option of holders, before the close of business on the business day immediately preceding October 15, 2025, only under certain circumstances and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, the notes may be settled, at the company's election, in cash, common shares or a combination thereof. The carrying value of the host liability was $496 million and the fair value of the embedded derivative liability was $307 million as at December 31, 2023.

The company has a mortgage bond outstanding on its offices in London, United Kingdom, of £3.2 million ($4.1 million). The bond is fully repayable on August 28, 2025, secured by the property, and incurs interest at a rate of one month Sterling Overnight Index Average (SONIA) plus 1.90% payable monthly in arrears. Only interest will be payable until maturity.

In 2013, the company became a party to a loan payable to ITC Platinum Development Limited, which had a carrying value and contractual value of $38 million as at December 31, 2023. The loan is repayable once the Platreef Project has residual cash flow, which is defined in the loan agreement as gross revenue generated by the Platreef Project, less all operating costs attributable thereto, including all mining development and operating costs. The loan incurs interest of term SOFR applicable to United States Dollars on a 3-month deposit plus 2.26%. Interest is not compounded.

The company has an implied commitment in terms of spending on work programs submitted to regulatory bodies to maintain the good standing of exploration and exploitation permits at its mineral properties. The following table sets forth the company's long-term obligations:

Debt in the above table represents the mortgage bond owing to Citibank, the loan payable to ITC Platinum Development Limited, the loan from Rawbank and the aircraft loan as described above.

NON-GAAP FINANCIAL PERFORMANCE MEASURES

Kamoa-Kakula's cash cost (C1) per pound is a non-GAAP financial measures. These are disclosed to enable investors to better understand the performance of Kamoa-Kakula in comparison to other copper producers who present results on a similar basis.

Cash cost (C1) is prepared on a basis consistent with the industry standard definitions by Wood Mackenzie cost guidelines but are not measures recognized under IFRS. In calculating the C1 cash cost, the costs are measured on the same basis as the company's share of profit from the Kamoa Holding joint venture that is contained in the financial statements. C1 cash cost is used by management to evaluate operating performance and includes all direct mining, processing, and general and administrative costs. Smelter charges and freight deductions on sales to the final port of destination, which are recognized as a component of sales revenues, are added to C1 cash cost to arrive at an approximate cost of finished metal. C1 cash cost and C1 cash cost per pound excludes royalties and production taxes and non-routine charges as they are not direct production costs.

Reconciliation of Kamoa-Kakula's cost of sales to C1 cash cost, including on a per pound basis:

Figures in the above table are for the Kamoa-Kakula joint venture on a 100% basis.

EBITDA, Adjusted EBITDA, EBITDA margin, normalized profit after tax and normalized profit per share

EBITDA and Adjusted EBITDA are non-GAAP financial measures. Ivanhoe believes that Kamoa-Kakula’s EBITDA is a valuable indicator of the mine’s ability to generate liquidity by producing operating cash flow to fund its working capital needs, service debt obligations, fund capital expenditures and distribute cash to its shareholders. EBITDA and Adjusted EBITDA are also frequently used by investors and analysts for valuation purposes. Kamoa-Kakula's EBITDA and the EBITDA and Adjusted EBITDA for the company are intended to provide additional information to investors and analysts and do not have any standardized definition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared per IFRS. EBITDA and Adjusted EBITDA exclude the impact of cash cost of financing activities and taxes, and the effects of changes in operating working capital balances, and therefore are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate EBITDA and Adjusted EBITDA differently.

The EBITDA margin is an indicator of Kamoa-Kakula's overall health and denotes its profitability, which is calculated by dividing EBITDA by revenue. The EBITDA margin is intended to provide additional information to investors and analysts, does not have any standardized definition under IFRS, and should not be considered in isolation, or as a substitute, for measures of performance prepared per IFRS.

Reconciliation of profit after tax to Kamoa-Kakula's EBITDA:

Figures in the above table are for the Kamoa-Kakula joint venture on a 100% basis.

⁽¹⁾ Unrealized foreign exchange losses (gains) have been excluded from EBITDA as the company believes that including the unrealized foreign exchange gains and losses does not give a useful indication of Kamoa-Kakula's overall health and profitability.

⁽²⁾ Derecognition losses arising from IBOR reform have been excluded from EBITDA as the company believes that including these derecognition losses do not give a useful indication of Kamoa-Kakula’s overall health and profitability.

Reconciliation of profit after tax to Ivanhoe's EBITDA and adjusted EBITDA: