Earthquake reduces Ivanhoe’s Kakula output

Ivanhoe Mines (TSX: IVN) (OTCQX: IVPAF) temporarily suspended its Kakula underground operations in the Democratic Republic of Congo due to seismic activity. There were no injuries and mills restarted at reduced capacity. 

Senior management and geotechnical specialists are currently on site to conduct a “thorough inspection of the Kakula underground mine,” Ivanhoe said in a release on Tuesday. 

Ivanhoe Mines sank nearly 9% in the morning session in Toronto on the news, at $12.57 a share with a market capitalization of $17.9 billion. The stock traded between $9.79-$21.32 over the past 52 weeks.

The information disclosed by the company doesn’t suggest a “material impact” for now, as the mills continue to operate at reduced capacity from stockpiles and “the description of damage underground does not appear to be extensive,” BMO Capital Markets said in a note on Tuesday. 

“For context, the recent performance rates for Kakula Phase 1&2 combined stood at the equivalent of 10.5 million tonnes per annum at about 5% copper grade. Kamoa Phase 3 has been running at about 7 million tonnes and 3% copper grade,” BMO mining analyst Andrew Mikitchook said.

Evacuation

Ivanhoe said all employees at Kakula — part of the larger Kamoa-Kakula copper complex — were safely brought above ground in line with protocols, and mobile equipment was removed from the mine workings.

Initially results of the inspection showed that seismic activity in the mine’s east has significantly reduced in the past 24 hours, and the western section of the Kakula mine has been declared safe for mining operations to resume imminently.

The inspection will continue into the Kakula’s east section, where underground infrastructure, including pumping, may be impacted, the company noted.

Due to the work stoppage, the Phase 1 and 2 concentrators at Kakula are now operating at a reduced capacity, processing ore from only the surface stockpiles. Ore from the western section of the Kakula mine will also be processed as soon as operations resume, Ivanhoe said.

Kamoa unaffected

As of April 30, Kamoa-Kakula’s high- and medium-grade ore surface stockpiles totalled about 3.8 million tonnes at an estimated, blended average grade of 3.2% copper.

Meanwhile, activities at the Kamoa underground mine and processing at the adjacent Phase 3 concentrator have not been impacted, it added.

The Vancouver-headquartered miner recently maintained a copper production guidance of 520,000 to 580,000 tonnes in concentrate. Last month, it produced a record 50,176 tonnes from the Kamoa-Kakula copper complex.

Kamoa-Kakula is a joint venture between Ivanhoe (39.6%), Zijin Mining (39.6%), Crystal River Global (0.8%) and the DRC government (20%).