Canada’s Ivanhoe Mines (TSX:IVN) and Congo’s state mining company Gécamines have begun construction activities at the historic Kipushi underground zinc-copper mine, which they plan returning to production by late 2024. The two companies reached a key milestone this week with the commencement of development work on the project, located in the Democratic Republic of Congo (DRC).
Ivanhoe has also concluded an agreement (MOU) with the provincial government of Haut-Katanga to investigate possibilities for extending border trade at the DRC-Zambia crossing in Kipushi, which will allow commercial goods and people to flow freely.
The company’s plan is to construct a commercial border outpost specifically for the Kipushi mine and update the existing one in Kipushi. As of now, it only serves people travelling between DRC and Zambia.
The companies formed a joint venture called Kipushi Corporation which had a breaking-ground ceremony for the project. The company noted pre-production capital costs estimated at $382 million which include contingency. At the moment, they will use existing rehabilitated surface and underground infrastructure to keep costs low. This plan is aimed at reducing the time to production to two years. The project includes a feasibility study which should include a 800,000 tonne-per-annum concentrator and an underground mine. Production for the mine is expected to be an average fo 240,000 tonnes of zinc per year, with a mine life of 14 years.
Both companies have noted that once the mine is in production, it has the potential to be the world’s highest-grade major zinc mine. Kipushi would have an average head grade of 36.4% for the first five years of production, head and shoulders above the nearest competing mine. The after-tax NPV of a zinc price at $1.40 per pound, with an 8% real discount rate, is $1.4 billion. The after-tax real internal rate of return (IRR) wold be 54% at those levels.
The mine is world-renowned for its production of copper and zinc. Union Minière operated the site for 42 years. In 1924, they started mining an 18% copper deposit from a surface open pit—which was the richest copper deposit at the time.
Kipushi then evolved into Africa’s biggest underground copper, zinc, and germanium mine. Gécamines took control of the facility in 1967 and ran it until 1993, when it was put on care and maintenance due to a variety of economic and political reasons.