Ivanhoe, Zijin in spat over quake impact on Kakula

Ivanhoe Mines (TSX: IVN) on Friday disputed a statement by its Chinese partner, Zijin Mining, regarding operational issues at their jointly owned Kakula copper mine in the Democratic Republic of Congo following recent seismic activity.

On Tuesday, Ivanhoe announced a temporary suspension of activities at the copper complex but said the western section of the mine had been declared safe and that mining operations there would resume imminently.

“The press release by Zijin Mining refers to ‘..multiple roof-falling and rib-spalling in the eastern section of the [Kakula] mine,’” Ivanhoe said. “Ivanhoe Mines does not agree with this statement.”

Zijin also warned that the mine might miss its annual production guidance. Ivanhoe refuted this claim as well, emphasizing that a full investigation was still underway.

The company said its senior management, along with geotechnical specialists, is conducting a comprehensive inspection of the Kakula underground mine.

“Results so far show that there is no evidence of collapsing stopes or structural pillars,” Ivanhoe noted.

In a report published Tuesday, BMO Capital Markets said that current information does not indicate a “material impact,” as milling operations continue at reduced capacity using stockpiled ore. The firm added that the described underground damage does not appear to be extensive.

Once the investigation has concluded, Ivanhoe will determine whether the temporary suspension will affect the annual production guidance for the Kamoa-Kakula Mining Complex.

A more detailed update is expected by next Tuesday.

Ivanhoe recently reaffirmed its annual copper production guidance of 520,000 to 580,000 tonnes of concentrate. In April, it produced a record 50,176 tonnes at the Kamoa-Kakula complex.

The joint venture ownership is split between Ivanhoe (39.6%), Zijin Mining (39.6%), Crystal River Global (0.8%), and the DRC government (20%).

Ivanhoe shares fell 1.5% to $12.84 in late afternoon trading Friday in Toronto. That gave the company a market capitalization of about C$17.4 billion ($12.6 billion).