Ivanplats advances projects in Copperbelt, Bushveld

Ivanplats’ (IVP-T) shares lost 7% after the company updated the market on its three large precious and base metal projects in Africa. 

At the Kamoa copper project in the Democratic Republic of the Congo (DRC), Ivanplats has deferred the updated preliminary economic assessment (PEA) from the second quarter to the second half of 2013.

Ivanplats is contemplating several throughput scenarios, as it continues with metallurgical test work and commercial and engineering studies to upgrade the Koni and Mwadingusha hydroelectric power stations.

The delay in the PEA may have given the company time to include the Koni and Mwadingusha study results, says Alex Terentiew, an analyst at Raymond James. The studies should be completed late this year.

Ivanplats also signed a memorandum of understanding with DRC’s state-owned power company La Société Nationale d’Electricité in April to upgrade a third power plant to secure more power for Kamoa.

All three plants could generate a combined 200 megawatts of electricity for the grid and should be enough to bring Kamoa into production, Ivanplats says.

The project, located in a previously unknown extension of the Central African Copperbelt in DRC’s Katanga province, hosts 550 million indicated tonnes grading 3.04% copper, plus another 93 million inferred tonnes of 2.64% copper, using a 2% cut-off grade.

At a base-case scenario of 5 million tonnes mined  per year, Kamoa could produce an average 143,000 tonnes of copper a year in its first decade. 

At the Platreef platinum group elements-nickel-copper-gold deposit on the northern limb of South Africa’s Bushveld igneous complex, Ivanplats anticipates receiving a bulk-sample permit in the second quarter. With this permit, it can begin building an exploration shaft at the property’s high-grade Flatreef deposit.

The Toronto-based firm is also preparing to submit a mining rights application shortly.

“Note that mining rights must be received by May 31, 2014, or else all on-site activities must cease,” Terentiew says. “We view the timing on receipt of this right as one of the key risks in moving the project forward in a timely manner, and for us to maintain our targeted 2018 production start-up forecast.”

Ivanplats aims to publish a PEA for Platreef in the third quarter, followed by a prefeasibility study in early 2014.

The past-producing Kipushi zinc-copper project is also in the DRC’s portion of the Copperbelt. Ivanplats acquired the deposit in 2011, and is dewatering and upgrading the mine to bring it back into production.

The water level was 978 metres below surface at the end of the first quarter. After pump breakdowns slowed dewatering, Ivanplats installed new pumps in April to increase the pumping rate to 2,700 cubic metres per day. Ivanplats is working on boosting the pumping rate to 3,400 cubic metres per day.

Terentiew says the mine will be dewatered to the 1,200-metre level before the company can start underground drilling to “determine the project’s true resource potential.”

He expects Ivanplats will upgrade Kipushi’s historic resource to National Instrument 43-101-compliant resource standards in the second half of 2014.

Including its unmined Big Zinc deposit, Kipushi has a historic resource estimate of 17 million tonnes averaging 16.7% zinc and 2.3% copper.

For the first-quarter, Ivanplats reported a loss per share of US7¢. It has US$297 million in cash and short-term deposits, of which US$196 million are subjected to contractual restrictions to advance Platreef to 2014.

Ivanplats closed May 15 down 7% at $2.29 per share. 

Terentiew, who initiated coverage on Ivanplats in April, has a $4.75 price target and an “outperform” rating on the stock.