CITIC Metal has announced that it will invest an additional $454 million in Ivanhoe Mines to develop projects in Africa.
CITIC Metal’s second major investment in less than a year and together with Ivanhoe Mines’ current cash balance of approximately $512 million, it will increase the company’s total cash on hand to approximately $1.0 billion.
Ivanhoe’s pro-forma cash balance is almost double the approximately $540 million required to construct the $1.1 billion Kamoa-Kakula project’s initial 6 Mtpa, high-grade copper mine at the Kakula deposit in the Democratic Republic of Congo (DRC).
Ivanhoe’s joint venture partner in the project, Zijin Mining Group, is required to fund its equivalent share of approximately $540 million of the mine’s initial capital costs. Ivanhoe and Zijin also are in financing discussions with international export credit agencies and equipment-finance providers, which could materially reduce the amount of funding that the two companies would have to contribute.
The CITIC Metal investment is expected to close no later than September 7, 2019, much sooner than could be expected for a typical project-finance facility. This timing will allow Ivanhoe to rapidly move forward with construction without relying on third-party project financing and being subject to the fees, interest, or hedging requirements typically associated with project financing.
This second major investment by CITIC Metal, bringing its total investment in Ivanhoe to $1 billion, will position Ivanhoe to become a leading copper and zinc producer in the DRC and a leading producer of platinum-group metals, nickel and copper in South Africa.
In addition to the Kamoa-Kakula Project, Ivanhoe is upgrading the historic Kipushi zinc-copper-germanium-silver mine in the DRC, in partnership with La Générale des Carrières et des Mines (Gécamines), and developing the Platreef palladium-platinum-nickel-copper-gold discovery in South Africa with its broad-based, black empowerment partners and a Japanese consortium led by ITOCHU Corporation.