Ivanhoe Mines Ltd

TSX:IVN

Good morning, ladies and gentlemen, and welcome to the Ivanhoe Mines Q1 Earnings Conference Call. [Operator Instructions] This call is being recorded on Thursday, May 1, 2025.

I would now like to turn the conference over to Matthew Keevil, Director, Investor Relations and Corporate Communications. Please go ahead.

Thank you, operator, and hello, everyone, and good morning. Thanks for joining us. It's my pleasure to welcome you to the Ivanhoe Mines First Quarter Financial Results Conference Call. I'm sitting here in sunny Vancouver.

As the operator mentioned, my name is Matthew Keevil, and I'm the Director of Investor Relations and Corporate Communications with Ivanhoe Mines. On the line today with the company, we have Founder and Executive Co-Chairman, Robert Friedland; president and Chief Executive Officer, Marna Cloete; Chief Financial Officer, David Van Heerden; Chief Operating Officer, Mark Farren; and Executive Vice President, Corporate Development and Investor Relations, Alex Pickard.

We will finish today's event with a question-and-answer session. You can submit a question using the Q&A box on the webcast page as well as through the conference operator via your phone line. Please do contact our Investor Relations team directly if your question is not addressed during the call.

Before we begin, I'd like to remind everyone that today's event will contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Details of the forward-looking statements are contained in our April 30 news release, as well as on SEDAR+ and at www.ivanhoemines.com.

It is now my pleasure to introduce Ivanhoe Mines' Founder and Executive Co-Chairman, Robert Friedland. Robert, please go ahead.

Thank you very much to all the participants on this call. I'm greeting you from Positano, Italy. Very happy, of course, to introduce our team with this record-breaking quarter in virtually every respect.

Our Kamoa-Kakula copper complex is now amongst the top 3 producing -- copper-producing complexes in the world. We had record-breaking production in April. We are essentially tied with Grasberg in the second place for copper production, but we have the big momentum. And as you'll see, we have plans to make the complex even greater.

So this has been an amazing quarter despite the macroeconomic situation in our share price. Can we have the next slide, please? I want to show you this good news through the good offices of the United States Department of State and the government of Qatar, a peace agreement has been signed under a Declaration of Principles settling down the tribal difficulties in Northeastern Congo.

This area has absolutely no impact on our operations, which are well over 1,000 kilometers to the south with no road connections. But we're very happy to see that the Congo is stable, has the supported interest of the United States government, as well as the Qatari government. And the principles have been put together, they have a peace agreement that will last in that area. And we're hoping that this is very good for the country of which we are the largest mining company.

With that, I'd like to introduce Marna -- or will you do that for us? Marna?

Thank you. Thank you, Robert. This is Marna, and welcome, everybody, to our quarterly call. It's been quite an exciting quarter for us. I think we've really broken the back of some of the issues we faced towards the end of last year and still at the beginning of this year, particularly around power.

We are very excited that in April, we've broken the 50,000 tonnes of copper produced per month record. So it's a new record for us. And if you project that on an annual basis, that would put us well over 600 tonnes of copper. So really exciting times for us.

I think the other thing that really surprised us this quarter -- sorry, you can flip to the next slide. That really surprised us this quarter was the milling capacity at Phase 3, at the -- milling rate was 6.1 million tonnes. It was more than 20% higher than design capacity. So you can see our teams are really pushing the envelope in terms of letting all our infrastructure work for us.

Just back to power, we went from 50 megawatts of imported power to about 100 megawatts of imported power during the quarter, and we expect that to further increase for the remainder of the year. And that will really assist with the exciting start-up of our smelter during the second quarter that we are about to embark on.

From a numbers perspective, I don't want to steal David's thunder, he's going to take you through our quarterly results. It's been a record quarter on EBITDA as well as on revenue. And I think from a cost perspective, it's also been a very good quarter for us because we were trending towards the bottom of the -- of our cash cost guidance, and David will give you further color on that.

If we flip to the next slide, just around health and safety. We do strive for excellence when it comes to health and safety and one can never become complacent. We performed well compared to the industry average, and we just had our Board meetings where we've set our safety targets for this coming year, where we strive for a further reduction in our total recordable injury frequency rates.

So something that we are working on, something that we are very proud of, especially if you take that we came through a period of intense construction, and we're also moving into a period of intense construction at Platreef.

And then if we move to the next slide. Very excited to release our eighth annual sustainability report, and I do urge you to go and have a look at this report, it really is an outstanding piece of work to see what our teams are doing across all our projects. And I think the statistic that really stands out is the first one on this page, where Kamoa-Kakula and Kipushi combined contributes about 8% to the GDP of the DRC, and we've paid $1.1 billion in taxes and royalties to the government. It just shows you what a greenfield discovery do for a country, and we believe that there are many more discoveries to be made in the DRC. So having companies embarking on exploration really changes the destiny of a mineral-rich country.

You can look at the statistics here, but we've grown 38% year-on-year in our workforce And I think it's important to note that most of our workforce are local and from the areas in which we operate. That's something we pride ourselves on. We've built new educational facilities. We support local enterprises. And all these initiatives that we embark on really ensures that we do have a social license to operate in the areas where we work.

So with that as a brief introduction, please go and look at this report. There's a number of nice videos to watch so that you can see this is not just a talk show, but what we are doing is real and it's impacting on people's lives.

I'm going to hand over to David now, so you can go to the next slide, and David will take you through our quarterly results. Thank you.

Thank you, Marna, and good morning, good day to everyone joining the call today.

And maybe I'll just start by pointing to the nice picture of the smelter furnace on this slide. With the commissioning nearly complete, the smelter will be one of the few initiatives that will really transform our financial results over the next few quarters.

If we move to the next slide, Kamoa-Kakula achieved its highest-ever quarterly revenue of $973 million in the first quarter of 2025, that at a realized copper price of $4.19 per pound of payable copper. Quarter-on-quarter revenue was up 15% from the $843 million achieved in the last quarter of 2024.

We started stockpiling concentrate in preparation for the smelter start-up expected in May to 48,000 tonnes of copper and concentrate in inventory at the end of the quarter, and therefore, payable copper sold was less than produced.

As the 22,000 tonnes of copper in inventory at the Lualaba copper smelter are realized in the upcoming quarters, and with us almost having enough inventory on hand for our own smelter, copper sales is expected to be close to or exceed copper produced; in the remaining quarters for the year. We, therefore, expect, easily, to exceed this latest revenue record in the coming quarters if the copper price stays close to the current levels or it moves higher.

Moving to the next slide. Yes, Kamoa-Kakula's record EBITDA of $585 million was delivered at a very healthy margin of 60%, with cash costs down quarter-on-quarter to $1.69 per pound of payable copper and towards the lower end of our guidance -- cash cost guidance range. Mine site cash costs were close to the same levels seen in the fourth quarter of last year, but we did benefit from the lower treatment and refining charges linked to updated benchmarks, which resulted in a $0.08 quarter-on-quarter saving in cash costs.

Considering that the power cost is up by $0.10 from where it was in the first quarter of 2024, the team has really done well to contain the costs.

We have Kamoa-Kakula's EBITDA waterfall illustrated on -- the EBITDA waterfall highlights that the 35% quarter-on-quarter EBITDA growth was driven by principally the higher copper price throughout the quarter. In our Q4 call, I mentioned that the quarterly EBITDA for the fourth quarter was artificially low due to the remeasurement of contract receivables, and that corrected as predicted in Q1, with the mark-to-market of provisionally priced sales being a $51 million gain in Q1 compared to a $52 million loss in the fourth quarter of last year.

We sold 3,000 tonnes less than we did in Q4, while EBITDA benefited from the lower treatment and refining charges. The slight quarter-on-quarter increase in cost of sales, when removing the impact of volume, was due to the higher power cost in Q1. But Mark Farren, our COO, will talk you through the recent increase in imported hydropower, which is leading to a decrease in the use of the more expensive backup-generated power since mid-March 2025.

It would be removed -- but if it wasn't for the increase in inventory, EBITDA for the quarter would have been quite a bit higher. But we sold the 18,000 tonnes by which inventory increased, net revenue will be an estimated $110 million higher and EBITDA would have been roughly $65 million higher. And if we had sold the entire 48,000 tonnes of contained copper and inventory during the quarter, EBITDA would have been roughly $170 million higher. So quite a bit of dry powder that will benefit us in the future.

We turn to Kipushi on the next slide. Kipushi is now starting to contribute positively to our EBITDA, even though it's not yet operating at optimal levels. Unsurprisingly, logistics are by far the biggest contributor to the cash cost of Kipushi, and that has been controlled pretty nicely with total cash costs close to the bottom of our guidance range. Mining, support services and processing costs are expected to come down as production increases.

Looking at Ivanhoe's consolidated results on the next slide. Net profit was up by almost 40% quarter-on-quarter because of the increase in our share of Kamoa-Kakula's profit, which was up by 45%. Exploration expenditure in Q1 was a little less than we will see in upcoming quarters, with exploration progress being dampened by the rainy season.

On the next slide, with record EBITDA contributions from both Kamoa and Kipushi, it's not a surprise that we had record EBITDA for Ivanhoe Mines, but with numerous near-term initiatives that will drive further growth in coming quarters. They say that now is a really good time to own our stock.

I would not be surprised if every quarter that follows over the next 12 months is a record. And we have seen production increase at Kamoa-Kakula over the last month, and we expect sales to be closely aligned to production. And results will look better and better at the smelter ramp-up as Kipushi moves to steady state, as Platreef Phase 1 commences production and as we see the benefits of Kamoa-Kakula's Project 95 from next year.

Moving to the next slide. We have kept spending on our growth plans on track during Q1 and keep our guidance unchanged. We have been very successful in securing project level facilities as required and were deemed beneficial. But there's less of a need to do so now with the CapEx profile they being off and the increase in our operating cash flow.

As we continue with the Phase 2 development for Platreef, a larger project finance facility to fund Phase 2 CapEx is being considered.

If we move to the next slide, yes, our leverage ratio remains nice and low, even with well-timed completion of the $750 million notes for [ 7 and 7.8% ] closed in January. We've set ourselves a targeted net leverage ratio of 1x through the cycle. And although it's a little bit higher than that on a backward-looking basis, it's as low as 1.2x based on an annualized Q1 EBITDA, and will come down pretty quickly as we deliver on the expected EBITDA growth.

We were in a very healthy prorata cash position at the end of March of $763 million, with $717 million of that sitting at an Ivanhoe Mines level.

And with that, I'll hand to Alex Pickard, our Head of Corporate Development and Investor Relations, to cover the exciting operations and project updates together with Mark Farren.

Thanks a lot, David. As David mentioned, it's Alex Pickard here coming in from also a very sunny London. I'll be dovetailing this section jury with our COO, Mark Farren but I'll kick off with an operational review of Kamoa-Kakula in the first quarter on the next slide.

So just to set the scene, I think we've stated several times that the first quarter was very much a hampered quarter in terms of the power challenges that we were facing, certainly up until mid-March. And we're very pleased to say that those are challenges that we've now largely overcome, and Mark will be commenting on that in much more detail.

But despite all of the challenges, I think we can say that Kamoa-Kakula still delivered very strongly operationally during the quarter. We milled 3.7 million tonnes, which is comfortably a record. That's close to 15 million tonnes annualized. We still think there's plenty of upside to get that up towards 17 million tonnes, with 100% stable power.

Phase 3 really has been a star performer since its commissioning last year. We've been milling at well over 20% above its design capacity of 6 million tonnes per annum, and there is potential to push that throughput further as well with some optimization.

Looking at the grade, you can see the blended grade on the left-hand side is 4.1%, which is coming roughly 2/3 coming from the Kakula mine and roughly 1/3 coming from the Kamoa mine. The grades at Kakula were very solid again, so above 5%; and grades from Kamoa around 2.75%. Those are expected to trend upwards towards 3% over the coming year as the mine moves from development into more of its steady-state stoping operations.

And then also very pleasing on the recoveries at Kakula specifically, we saw record recoveries well above 88%, which is very good to see in advance of our Project 95 initiatives coming in early next year. And then at Kamoa, we had recoveries around 85%, which also reflects plenty of room for upside even before the optimization efforts come in.

So with that, we've maintained our guidance for this year at 520,000 to 580,000 tonnes of copper. I'll come on to the recent results on the next slide, which are far in excess of that kind of production rate. But in the medium term, we are certainly targeting 600,000 tonnes of copper, potentially higher from next year onwards annualized.

So coming back to the recent operating performance, we announced earlier in April that the whole team at Kamoa-Kakula has done an exceptional job in securing additional imported hydropower coming in from a number of sources, but a lot of that is coming in from Mozambique.

We've effectively doubled our imported power from 50 megawatts to 100 megawatts, which is in addition to the 50 megawatts that's coming from the generation on the DRC grid. And what you can see on the right-hand side is really a step change in terms of performance since that power has been coming in. Kamoa-Kakula has really been delivering quite incredible numbers, and we are quite excited about what this means for the rest of the year.

So what you can see on that chart is the weekly copper and concentrate production in the bars, but also we put the annualized rate above, which you can see has been well over 600,000 tonnes. And actually a small correction, the bar for the 28th of April was a provisional number, we now have the month-end numbers in, that is about 12,000 tonnes for the month, which is equivalent to 624,000 tonnes annualized. So it really is delivering massive production.

And then also the record in April, that's a major milestone to get about 50,000 tonnes. I think we have to congratulate the efforts of the team at Kamoa-Kakula. And just to announce, for the first time that final number was 50,246 tonnes. So we comfortably beat the 50,000 tonne mark despite it being a shorter 30-day month.

I'll now pass over to Mark on the next slide to talk in more detail about the power.

Thanks, Alex. So maybe just looking back a quarter, we were really battling with the power. We lent heavily on our diesel gen sets. We installed the 220 megawatts of diesel, as everybody knows, and we used about 100, 150 megawatts continuously.

We started this quarter in January with imported power and SNEL power just under 100 megawatts. And at the end of March, just to put it in perspective, we're sitting at 150. And we are going into the month of May, we should have 220 megawatts of a balance between SNEL so basically in-country hydropower and imported power. And until we start the smelter, that means that we will not use any gen sets or diesel power.

The total demand when we do run this smelter flat is about 250-odd, 270 megawatts where they basically target at the end of this year, and we have plans in place to cover that with imported power and local generated hydropower.

So I think all in all, we did speak about it. I'm not going to go through all the initiatives in detail, but we are making progress inside the country with different initiatives. We will turn the turbine in quarter -- I think, the end of quarter 2, early quarter 3, that the big 188-megawatt turbine will be turning for Inga II. That will create additional generating power.

And also, there's work that we're doing inside the grid to stabilize it, the work that I spoke about and I speak about every time, to stabilize the grid and make sure that we get consistent, stable power running through that network.

All those projects are going. And I think we're getting support -- and thank goodness for that, we're getting support to do longer -- to import projects as well as in-country projects to be able to increase our capacity in the country. This allows us to grow the business. And without this power, we won't be able to do the things that we want to do.

So first of all, we had to get it stable. We've increased the facilities, import and local, and I think it's moving in the right direction. At the end of the day, the best thing possibly would be to have 220 megawatts of redundant diesel power and maybe get criticized for overcapitalizing on that. I'll be very happy when that happens. So that's where we are on the power and initiatives inside that grid.

Next slide. So these projects that we're going to talk about now are really very quick to implement. Project 95 is committed, it's 30% complete. We will finish Project 95 in quarter 1 next year, and it will give us about -- maybe a little bit more 30,000 tonnes of copper production from quarter 1.

What's nice about this copper production, it doesn't come with any mining cost or massive capital cost. So you're going to see it's going to have a big influence on our C1 cash cost because it's absolutely just recovery based. So we will be increasing the recoveries of mining and production and processing that we've already created and done. So the bottom line -- the impact is straight to the bottom line, which I think is going to be very good.

Phase 3, Alex spoke about Phase 3 running at around 6 million tonnes. There will be some tweaking on Phase 3, some debottleneck work that we did on Phase 1 and 2, so quite a similar approach to that. Not an expensive project, but we want to stabilize that throughput from the 5% to about a 6.5% number, which will take our total production to about 17 million tonnes a year with what we have currently installed. So Phase 1, Phase 2, Phase 3, a little bit more capital, probably a 50 number -- and then we should be able to process -- sorry, 17 million tonnes consistently.

That project has been identified and we will finalize what needs to be done in this year and execute it as fast as we can. Because it's not expensive, and it's going to give us about 20% extra production.

And then the big work we've been doing is really to look at what does Kamoa-Kakula look like in the long term, how many more phases do we put in? Is there another phase, and how does it look like and how do we time it? That work is going to close, and I'm happy to say is there's definitely a Phase 4 that will come in.

It's probably going to be stepped, I did speak about it the last time, with some early works probably on the plant side. And then we're going to target a massive of amount of tailings that we've deposited in our first cell, with a grade of about 0.7%, 0.8% copper. And we'll start up the back end of that concentrator and deliver about 50,000-odd, 40,000 to 50,000 tonnes of copper through that facility, again, without a mining cost and a reasonably efficient capital structure that goes with it, while we build up ore reserves for a full Phase 4.

And if you know what Phase 3 looks like, and you do because we've told you, Phase 4 will probably end up being a replica Phase 3. We will build up ore reserves through the current infrastructure that we have created. So basically, the mines that we've created for Phase 3. I think it will be a very efficient total process in terms of capital.

And then the number we're going to target, I think, for a steady-state because it's always a question, it is for a long term, I think, north of 700,000 tonnes of copper and some of the years breaking north of 800,000 tonnes of copper. So it's a big mine that we're creating. There's more big step along the way. We need to secure some more power, obviously, for these projects, but you can have a look at our track record.

We've done all these 3 phases. They're -- they have been on time, they've been on track. We've managed to find enough power to service them, and we're going to start up the smelter in this next month. So the smelter will be heated up in the next month, and we should start feeding in July. Hopefully, we can have enough stable power to be able to make sure that, that thing runs perfectly.

As it looks, I think we're forecasting to get stable power and to increase it over time, and that will just carry on into Phase 4.

Okay. The next slide, Alex. This is what you're talking about. Let's talk about this, Alex.

Yes. Thanks, Mark. I'll just set the scene in terms of the smelter, and you can see in the image, what a fantastic facility it is. That's another incredible capital project that's been delivered by the team at a cost of about $1.1 billion. But it is the largest copper smelter in Africa of 500,000 tonnes of capacity, producing a 99.7% anode product. And in fact, it's the largest smelter of its kind anywhere in the world.

We have had some questions from people about the economics of the smelter in the context of the copper treatment charges. So for those who don't know, copper treatment charges are trading at all-time lows, which really reflects the incredible tightness that we currently see and the level of demand for copper concentrates.

But I think focusing on the treatment charges basically misses the point entirely in terms of why we have built this smelter facility. There are many more benefits to the smelter than simply the saving on the treatment charge. And the biggest is that the smelter will save more than 50% on the logistics costs, which are currently around 1/3 of our cash costs, going from shipping concentrate to shipping anodes. And that saving alone is to the tune of hundreds of millions of dollars per year.

The other benefit that we mentioned on this page is the production of sulfuric acid, so we will be producing up to 700,000 tonnes of acid. That sells at a price of typically over $200 per tonne in the DRC copper belt, where it's consumed by most of the other operations that are producing copper from oxides. And the offtake discussions for that acid are very well advanced.

And then aside from simply the financial benefit, although there is also a tax benefit that I didn't mention, but also in terms of our emissions and our CO2 credentials, the smelter will be one of the most efficient smelters in the world running on hydropower, but it will also create a significant reduction in our Scope 3 emissions which are largely arising from the logistics of moving copper concentrates on trucks.

So that is why we are incredibly started -- incredibly excited to start up the smelter over the course of this year. And I'll just let Mark on the next slide, I think, comment on what we're expecting in terms of the operations and the ramp-up.

Thanks, Alex. Yes. So I mean, as we discussed, we sort of were waiting for enough stable power to get into the country. We will start heat up in May. That's where we are at the moment. And we will feed -- first feed, it looks like in July. So -- and then there's a ramp-up after that, I think, 8 to 9 months to get to 80% capacity, and we take it on to 100%.

We've trained a very large workforce there, it's a mixture of expats and local people. Expatriates from all over the world. It's a unique smelter with very advanced technology in it. And I would welcome you guys to come and have a look anytime you want. Fantastic installation. So we're very excited to actually get the smelter running. But as Alex said, the main reason for this is to offset that huge transport cost that we're having to increase that 60% margin that David was referring to.

So this smelter is going to have huge financial benefits to the company. So we're very excited to get it moving. It will do 500,000 tonnes of blister anode, that's what it's designed for, which is the biggest of its kind in the world. And let's see, let's see how we go from heating up in May and then first feed in July.

There's been a huge amount of work to go in here. It's a massive footprint. We've done a lot of risk assessment around fire after our generator fires. But also it's a crucial area of focus on any smelter. So it's an area of focus and it's received our full attention. So we think it's going to be a fantastic part of our plan here, taking it forward and getting it running smoothly.

Thank you. Next slide. Okay, Kipushi. Kipushi, we sort of got it moving last year. It was commissioned. It's still -- it's running, but it needs to be optimized. There's work that we identified last year that's being executed. And I think the end of the debottlenecking work ends in about October this year, and then we should go beyond the nameplate. We are sort of hitting nameplate achievements at the moment, but we will go beyond nameplate by about October this year.

And my number really is to get us north of 250,000 tonnes. So between 250,000 and 300,000 tonnes of zinc, which will make it -- I think it's top 3, top 3 or so zinc producers in the world. So it's a tiny little footprint. It's not a big mine, but it's very high grade. The feed grade, you can see on the slide, is 32.2% feed. And I think over the next quarter -- the next 2 quarters, we'll get Kipushi running smoothly.

Its operating cost wasn't bad. We're aiming to keep it below $1 per pound. So it makes a margin and contributes to our EBITDA. It's never going to be a massive mine, but it's a very well-run operation in terms of mining. And with the improvements we're making to the processing, I think it's going to be a really, really lovely business that we have and that we run. Thank you. Next slide.

Yes. I spoke about debottlenecking. It's going nicely. There's also -- we had some issues with power. We still have a few issues with power at Kipushi. We have a similar approach to power in terms of derisking it and making sure that we get it stable. It's not a big ask. The total project or the total site runs on 18 megawatts. So not that difficult to manage. But still, we are focusing there.

And like I said, as soon as you get it to steady-state, which to me will be quarter 3, quarter 4, we'll run north of 250,000 tonnes of zinc. We're still on guidance. We should end the year just over 200,000, I think -- somewhere in and around 200,000 tonnes of zinc. We're leaning quite heavily on what we do in the second -- sorry, the third and fourth quarter, yes. But it's looking good. Thank you. Next slide.

Do you want to start with this, Alex?

Yes, sure. Thanks, Mark. Well, shifting gears now to Platreef in South Africa and recapping on the study results that we published for Platreef back in mid-February. I would just note that the technical report for that study is now published on our website, so I recommend reading that for the full details.

So these studies really create the pathway to take Platreef from being the world's largest precious metals deposit to one of the world's largest and lowest cost producers of this suite of metals, which is platinum, germanium, rhodium and gold on the precious side, but also a very significant contribution from nickel and copper production.

The study is split into 2 parts. There is a feasibility study which is looking at the Phase 1 production, which is coming later on this year. Together with the Phase 2 expansion, which we're busy with and is on track for 2027. That's around 40,000 ounces of production.

And then there is a much larger expansion study, which basically triples the hoisting and the milling capacity by 2030. And that's where we take Platreef to over 1 million ounces of PGM before metal -- before precious metal production, and that's reflective in the PEA of scoping study. Next slide, please.

And this slide is really just outlining that graphically. So you can see where we are in 2025. We're expecting to start the Phase 1 concentrator towards the back end of this year. That has a milling capacity of 800,000 tonnes per annum, and so we will be producing some cash flow through 2026 and 2027. But really, our main focus is on getting this mine to scale, which represents the Phase 2 expansion.

And the critical thing here is the shaft infrastructure and the hoisting infrastructure. So the key date that we are looking at, and that Mark will cover in the next slide, is when we have Shaft #3 hoisting, which takes our overall hoisting rate to 4 million tonnes. And that basically allows you to really open up the underground footprint of Platreef.

In terms of the scale of this ore body, the sky really is the limit in terms of how big you can go. We are continuing with the work on Shaft 2, which basically is a shaft that can hoist 8 million tonnes of oral waste per annum. So one of the shafts in the world, and that will really be the thing that unlocks the long-term potential and long-term footprint of Platreef towards the back end of this decade.

But I'll pass over to Mark now to speak more specifically about the operations and projects there.

Thanks, Alex. Yes, so Platreef, heat reef today on 850. That's exciting for everybody. So we intersected the refinery. We'll start ramping up the long-haul stoping sections. And we're on reef and opening up the footprint. Very exciting for everybody.

Going back to sort of the history, and very quickly because it's been a long history, a sleeping giant sort of history. The giant is awakening up, I can promise you that. You can believe it or not, but Platreef is going to start moving now.

Shaft 2, is the shaft that we need to unlock Platreef's capacity in terms of wasting. That shaft, we very flat out to basically hold it from underground and now we're working flat out to equip it, and we will have it running in quarter 1, 2026. Once it runs in quarter 1 '26, it not only derisks that first phase of production, that 800,000 tonnes, but it creates the opportunity for us to ramp up very quickly into what we call the Phase 2, the 450,000-odd ounces profile.

And while we're drilling all of that -- I know I'm talking a lot. But while we're doing that, we are also working flat out on Phase 3. So basically, these phases are interlinked. Shaft #2 unlocks what Alex was referring to 8 million tonnes per year of hoisting. That shaft is not being delayed. We actually did the reaming of it, the raise bore, and now next year, we will start sloping it and equipping it. So it will be ready for Phase 3 wasting as we move along.

So I think in terms of where we are with Platreef, we're finally starting to get there. We've got the Shaft 1, which we've used to access the ore body and to give us the ability to get into Shaft 2 and Shaft 3, to install ventilation shaft, which we've done. And I'm very excited about Platreef. We're now in an ore body officially. We will start opening up the footprint. We will hoist out of Shaft 3 from quarter 1, 2026.

And from that month onwards, we will see a very fast ramp-up into a Phase 2 and a Phase 3, with a very good operating margin. And we're confident about the work that we published in this latest FS and PEA study. I think it's a very solid footprint that we have. It's a massive ore body. It has a huge competitive advantage over its peers because of the different ore body that we have compared to anything else in that Bushveld Complex. And I'm very excited about what we're doing there.

Thank you. Next slide. Yes, we spoke about this. We're on reef on 850. We're developing towards it on 750 as well. The rest of this year will be opening up the footprint, developing some of the ore, creating a longwall stopes. And really getting ready for the hoisting shaft, which will then come in quarter 1 next year, and then we can open up the mining and feed the first concentrator and the next one at the end of -- well, within 2027. So we'll start moving quickly from now. Next slide. Alex?

Thanks, Mark. So we're saving the best until last as usual, talking about Western Forelands and our exploration efforts. It is going to be another monumental year of exploration and drilling in the Western Forelands. So we have a budget of $50 million, that's a 35% increase from what we did in 2024, and an ambitious drilling program of 102,000 meters, which is 20% higher than what we did in 2024.

So we currently have 5 rigs drilling -- we're right at the back end of the wet season now, so that is very soon going to more than double to 11 rigs as the dry season is incoming. And a lot of that drilling is going to be focused on the 300 square kilometers of new licenses that we acquired in late 2024. That's an area that we are quite excited about.

And as previously mentioned, we are planning on an interim mineral resource update that will be published within the next few weeks. I think that will really take people by surprise in terms of what we basically managed to achieve through 2024, and the first quarter of 2025 will be the cutoff. But for a spend of about $30 million or $35 million on exploration during that time, we've managed it very, very significantly, drill out and expand our resource base in Makoko, Makoko West and Kitoko.

The reason I say that we call that an interim resource is that we fully expect to be able to update that resource again this time next year, which will really be the sort of platform to move much more into kind of studies and engineering.

And then the final slide is just talking about our exploration more broadly. We did announce some very exciting news in early April, which is the entry of Ivanhoe Mines in a big way into Zambia. So we have recently stated a license package of around 7,750 square kilometers. So that's well north of 3x larger than the entire Western Forelands license package that we have today.

And what you can see on the map is that we're basically chasing quite a similar geological thesis, which is the continuation of Western Forelands style sedimentary geology through that northwestern corner of Zambia, and ultimately into Angola, where we have a license holding of about 22,000 square kilometers. So roughly 3x bigger again than what we have in Zambia.

In Angola, specifically, we've now sort of laid the foundations in terms of building up an exploration camp. We're planning over 6,000 meters of drilling during the dry season this year. And in Zambia, we will be coming back with more news in terms of what our plans are -- what we will say is the Zambian government have done fantastic work in completing high resolution airborne geophysics over the entire license area. So that really does give us a great head start, and we can hopefully commence drilling and targeted drilling much more quickly.

And then the last thing -- last but not least, and not showing on this slide, we do expect to have more news coming over the course of this year about our initial exploration program in Kazakhstan. We plan to be drilling some of those projects by around the middle of this year.

So with that, I think we'll conclude the presentation and pass back to Matt to chair the Q&A.

Thanks, Alex. As per usual, we'll kick back to the operator, first and foremost, to clear any analyst questions on the phone line. And then pending time remaining, we'll address some of the web questions as they come in. So operator, please proceed with the phone line questions and we'll go from there. Thank you.

Your first question comes from Orest Wowkodaw at Scotiabank.

Just curious, these near-term growth plans at Kamoa-Kakula in terms of Project 95, the throughput optimization on Phase 3, is that included in your estimate or forecast of the complex producing around 600,000 tonnes of copper starting next year? Or is that incremental to that 600,000 tonne number in say -- in '26, '27, '28 time frame?

It's Mark here. It's a good question. So Project 95 is sort of releases some pressure of holding the 600 -- or let's call it, above 600, above the 600 number. Anything else, like, for example, if we do Project 4A with some early works treating the tailings, that's another 50. So then you're sort of moving into the 650, 700 number.

And then anything -- any other project, which is the Phase 4 project, will take us to north of between 700 and 850. So Project 95 itself is to get us stable at 600 and slightly north of 600 number, and anything else is incremental, it's beyond. So we are aiming to go -- I've given you some guidance here, north of 700 for a long term, is where we're going.

Perfect. And just is the CapEx associated with Project 95 and the throughput optimization of Phase 3, is that already in the '25 and '26 CapEx budget?

Yes, Orest, I'll take that one. Project 95 is completely included in the CapEx guidance, the initial cost of the throughput optimization is included. So that might be augmented slightly.

Daniel Major at UBS.

First question, just on the profile through the remainder of the year at Kamoa-Kakula. You've built about 50,000 tonnes of copper and concentrate inventory in 2024 and the first quarter of 2025. What's the expectation for Q2? And then the release -- potential release of kind of that inventory through the balance of the year?

I'm happy to take that one. So we expect to probably for ourselves to be pretty close to our production for the -- over the next quarter. There might still be a bit of an increase for inventory and to be held for us smelter, but then also we'll see a decrease on inventory held at the Lualaba coppers smelter. So it should be pretty flat over the next quarter with possibly a small increase.

And then that inventory is at both the Lualaba copper smelter and on smelters in sort of expected to release through the third and the fourth quarter with. And as we noted, an estimated 17,000 tonnes of copper sort of -- to be retained in the smelter circuit.

Okay. So just to clarify, that 17,000 tonnes of copper in the circuit, so you should release the 48,000 minus 17,000 by the end of the year, is that right?

Yes, correct. Plus some small bit of working capital inventory -- tonnes would be a good.

Okay. I think you broke up slightly, but I think I got it. Okay. Yes, just second question on -- financial question on the net debt balance at the Kamoa-Kakula JV. I think that's about $1.7 billion on a 100% basis. If we're thinking about the cash flow inflection point for the JV in the second half of this year and into '25, '26, how much would you be looking to reduce net debt in Kamoa-Kakula over the next few years? And how, obviously, that will impact the cash upstream to the JV shareholders?

Yes, we've tried to sort of include the repayment terms of the current facilities in our MD&A. And you will note that, yes, for -- paid down pretty quickly. I mean we've got some optionality to increase at Kamoa-Kakula level because of its generating profile and the fact that leverage at a Kamoa-Kakula level is very low well. So we'll look at just optimizing that in the amount of cash we want to ultimately upstream. I think it's benefit to have a good bit of debt at both levels. So that's under consideration.

Okay. But -- so just to push on that. I mean so it would be fair to assume you would want to reduce the $1.7 billion of net debt JV to some degree. Is that fair?

Yes, but that's fair to some degree. But we will always look to keep a portion of debt, at least definitely some local facilities and probably a bit of offshore facilities as well at that level.

Yes. Dan, it's Alex here. I'd be happy to add some things as well. I mean $1.7 billion of net debt at the JV level considering that Kamoa's generating or should be generating well north of $3 billion kind of run rate going forward is very low leverage to carry. So to the extent that we think we can roll facilities and just keep those outstanding, we will make sense in terms of profit -- cost of capital to allow us to sort of unlock more cash flow.

Super clear. And if I could just squeeze one more in. Just on Western Forelands. I'm not sure it's a different messaging that you've been giving around your resource update in terms of giving an official resource update relative to the interim update you gave in January. Is that a change in messaging or just misinterpreted it?

Well, the interim update in January was just really showing you in terms of strike and the deposits that we will be including in the resource update. But we've not put any numbers out to substantiate tonnes and grade. The last numbers we put out were roughly 18 months ago now. So these numbers that are expected in the next couple of weeks are basically putting full resource estimates, tonnes and grades that will be signed off by an independent QT, which includes the Makoko West discovery. It includes the Kitoko discovery, some more drilling at Makoko itself.

And that's basically based on -- it's a cutoff up to the end of March of this year. But obviously, we're still drilling very, very heavily, which is why we call it an interim resource. We're by no means done and most of those deposits do remain open to some extent in various directions, in particular, to the south and to the west.

Lawson Winder at Bank of America Securities.

Great. Just wanted to ask about the power. You guys spoke at length about the various power initiatives. Where I would like to focus is on the solar power products that you guys have created. What is the expected cost relative to your current grid cost with the solar project?

No, that's -- sorry, I forgot to mention it, it's Mark. We've committed 2 solar projects of 30 megawatts each. And both of them will be running by mid-'26, so 60 megawatts, and we're talking to providers of the next 2 projects. So they will be sort of -- we'll be bringing in solar into the mix over time.

The number -- the cents per kilowatt hour varies, but it is a range from about, let's call it, $0.15 to $0.18-odd per kilowatt hour. It is quite expensive. But I think after these initial projects, we'll see lower numbers coming through over time.

And just important to add to what Mark was saying there, that $0.15 to $0.18 is including the depreciation. Because we are not funding the capital cost, so the IPPs will fund the CapEx, we will just be the offtaker.

I would hesitate not to add, it's about less than half the cost of burning diesel, guys, with no capital cost. So if you're looking at a cascade of what you'd like to do, really nice to have solar with battery storage as backup. That's solar that's available 24 hours a day instantaneously. That is not solar that is only available 5 hours a day. So it's going to be the largest solar facility at any mining operation on planet Earth, available 24 hours a day and half the cost, well under half the cost of burning diesel. Thank you.

Yes. It's very exciting, Robert. And then I wanted to ask about Inga II, also very perspective and exciting source of power going forward. So the initial allocation you mentioned in the release was 71 megawatts, and that would increase to 178, a very significant amount of your power needs. Is that baseline and then the increase secured by some sort of contract? Or is there any risk that, that could be pulled back or allocated to other users?

It's Mark again. So yes, it's 178 megawatts, that turbine. So it gets released into the grid over time because there's certain other areas that we have to strengthen. We're adding capacitation into the grid at both switching stations, one at Inga and one at Kolwezi. And then there's some stability projects that we've initiated. I think I mentioned in the last time.

So the full 178 is basically more or less -- I think it's October, November next year. So it starts with an initial 50 and then it moves on to 100 that we'll get allocated. And then I think we've called for something like 150 out of the 180 that we've asked for in the long term. So there will be some of, let's call it, our work capacity that we introduced getting -- basically assisting communities in the different areas as well, but not a lot of it.

Yes. So might be just to add, there is a contractual obligation on the state owned power utility to provide the maximum allocation to people who contributed to the upgrade of generation and stability of the grid. But you do get curtailment if there is overall capacity constraints.

So I think it remains to be seen sort of, as the generation becomes available to the mine, what that constraints will be. But that's why we also have the imports and we're working on a few exciting projects for infrastructure to get additional mine directly -- power directly to the mine as well to ensure that we have some sufficient power for growth projects too.

Yes, this is Robert. I think you I think you can stop worrying about power for the long term. We have so many other plans to bring in power regionally and to improve the regional grid. Our problem was just growing pains, guys. We grew this mine so fast. Nobody ever -- nobody in the world thought we'd grow this mine this fast. It's thrown off well over $6 billion of cash since it started less than 4 years ago, which is kind of mind blowing.

So we have turned the corner on power. We have a lot of ideas regionally. And it's very important to benefit the Congolese nation. We're now responsible for about 8% of the GDP of the country, and we're heading to at least 10% of GDP. But in the future, we see a future where the Congo can produce millions of tons of copper per year that are not being produced now. The fundamental limiting factor is hydroelectricity and we're going to have it.

So it's been true to state that the Congo is the world's fastest and greenest copper production on the planet. Congo has gone from about #8 to #2 in the world in copper production, in no small part, due to the efforts our 30,000 people. And Congo is going to stay #1 or #2 for the foreseeable future. Highest-grade, greenest copper production on earth.

So we're not really going to tell you about all the others we have on power, but we will tell you we have turned the corner on power, and that's a function of the enormous efforts that Marna and Mark and the team have entered into. Thank you.

Okay. And there's no question, you guys have an incredible world-class asset, and it's nice to see that the power situation is catching up as a result of your hard work.

Thank you.

Andrew Mikitchook at BMO Capital Markets.

Just a quick question on the Western Forelands. Can you give us any sense of how the drilling since the last resource has been kind of divided, should we expect a much more material impact on Makoko, Makoko West versus Kitoko? Or just so we have an idea of when we look at the old numbers, where this should be most impact?

Thank you. Andrew, it's nice to your voice. This is Rob Friedland. I've been in the mineral exploration business for 40 years. I think you should exercise patience. We're going to 11 drill rigs, and we will reveal everything. As you know, we need independent appraisement of what we've done, and it's always a backward looking look to last March.

So in a few weeks, we can have another conference call to explain what the independent engineers are saying. But it does say something that we've increased our drilling budget. And only God knows what may ultimately be found in the Western Forelands and she may change her mind. So give us a few more weeks, and these independents numbers will be opening soon at a theater near you.

Okay. Well, mostly expected that answer. Thank you, Robert. And thank you to the team for all the detail and the power and the success you've had there. I'll sign off.

Thank you, Andrew.

There are no further questions on the line. I'll turn the call back over to Matthew Keevil.

Thanks very much, operator. And we are running up against time here with our 60 minutes. So we will conclude the call here today. I'd like to thank everyone once again for attending today's event. And we look forward to speaking with you again soon on the many more exciting milestones to come in 2025. As Robert mentioned, do pay attention to the upcoming resource update on Western Forelands and the forthcoming call on that.

So with that, thank you very much. And operator, you can wrap up the call.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.