THE MINING EXECUTIVE MAGAZINE JANUARY/FEBRUARY 2020 EDITION

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TheMINING EXECUTIVEMagazine FEBRUARY 2020Location of the Kamoa-Kukula Project (PICTURE: Ivanhoe Mines)So huge is the Kamoa-Kakula Project that the deposit is independentlyranked by Wood Mackenzie to be the world's 4th largest copper depositwhich will throw the operation into the league of Escondida, Grasberg,Collahuasi, Las Bambas and Antamina. Spanning over a size nearly thesame size of Manhattan City, the mine will stretch more than 13 km.An independent preliminary economic assessment (PEA) issued inFebruary 2019 indicates that Kamoa-Kakula Project has a potentialproduction rate of 18 Mtpa. Once this expanded rate is achieved,Kamoa-Kakula is projected to become the world's second largestcopper mine, with peak annual production of more than 700,000 tonnesof copper.Panoramic view of the Kukula Deposit (picture: Ivanhoe Mines)To one new CEO, an exciting adventure awaits in guiding this massiveproject to fruition albeit under demanding circumstances, a feat thatwill probably make the project more interesting. On October 8, 2019,Ivanhoe and Zijin announced the employment of a stand-aloneexecutive team to take Kamoa-Kakula to commercial production.Ivanhoe's Executive Vice President, Operations, was in this last quarterappointed as the Chief Executive Officer of the Kamoa-Kakula CopperJoint Venture.infrastructure development.MINING GLOBAL DECISIONS IN YOUR PALMSwww.theminingexecutive.comIn two concurrent moves to further enhance Ivanhoe's development andoperating capabilities, Louis Watum, Ivanhoe's DRC country manager,was appointed President of the Board of Directors of Kamoa CopperSA, the DRC operating company of the joint venture between IvanhoeMines, Zijin Mining Group, Crystal River and the Government of theDemocratic Republic of Congo that is developing the Kamoa-KakulaProject. Mr. Watum's expanded role includes assisting withinfrastructure development.40
TheMINING EXECUTIVEMagazine FEBRUARY 2020South African mining veteran WarwickMorley-Jepson has been appointed asIvanhoe's new Chief Operating Officer,assuming the duties formerly held by Mr.Farren.“Louis, Mark and Warwick all have extensiveexperience in the development, constructionand operation of underground mines in theregion, and we have the utmost confidence intheir abilities to assemble and lead the jointventureteam that will construct and operatethe stage-one, six million-tonne-per-annumKakula Copper Mine, while also advancingdevelopment efforts at our Kipushi andPlatreef projects and fast-tracking explorationdrilling on our 100%-owned WesternForeland licences,” said Mr. Friedland.Joining Mr. Farren on Kamoa-Kakula's newexecutive management team will be Dr. YongChen of Zijin Mining, as Chief OperatingOfficer. Dr. Chen has more than 25 years'management experience in mining operations,including his most recent role as Director andGeneral Manager of Xinjiang Ashele CopperLtd., a large-scale underground mining andprocessing complex majority owned by ZijinMining.“The executive management team will workclosely with Mr. Watum and senior Congolesemanagement, our government partners andour host communities to help ensure that theKakula Mine is built on time and budget, andto the best international standards,” added Mr.Friedland. “The structure of the team reflectsthe strong degree of cooperation between thejoint-venture parties, and we are confidentthat the individual expertise and leadershipqualities of each member of this executiveteam will help ensure a successful start-up ofoperations at Kakula.”“This is an important stage of growth forIvanhoe Mines, and I am honoured to lead thedevelopment of the tier-one Kamoa-KakulaProject at such an exciting time,” said Mr.Farren.“We are uniquely positioned to build Kakulainto one of the world's greatest copper mines,and I am excited to be part of the team thatmoves this project forward to production.”The Kamoa-Kakula Copper seniormanagement team also includes Congolesenationals Ben Munanga – Head of Energy;Teddy Kabongo – Head of Tax; and Dr. GuyMuswil – Head of Sustainability. As well,Rochelle De Villiers of Ivanhoe Mines andDavid Li of Zijin Mining have been appointedas Kamoa-Kakula's Co-Chief FinancialOfficers.The company has appointed WarwickMorley-Jepson as its new Executive VicePresident and Chief Operating Officer. Mr.Morley-Jepson is a seasoned miningprofessional who will assume the dutiespreviously performed by Mr. Farren. He willbe responsible for overseeing the technicaland development initiatives that Ivanhoecurrently is pursuing at the Kipushi andPlatreef projects.He also will be a key member of the Ivanhoeteam working with Zijin Mining to overseethe development of the Kamoa-KakulaProject.Ivanhoe sold a 49.5% share interest in KamoaHolding to Zijin Mining in December 2015for an aggregate consideration of $412million. In addition, Ivanhoe sold a 1% shareinterest to privately-owned Crystal River for$8.32 million – which Crystal River will paythrough a non-interest-bearing, 10-yearpromissory note. Since the conclusion of theZijin transaction in December 2015, eachshareholder has been required to fundexpenditures at the Kamoa-Kakula Project inan amount equivalent to its proportionateshareholding interest in Kamoa Holding.Currently, Kamoa-Kakula Copper Projectjoint venture has the following majorityshareholding: Ivanhoe Mines (39.6%), ZijinMining Group (39.6%),Crystal River Global Limited (0.8%) and theDRC government (20%). Ivanhoe Mines andZijin Mining are co-funding development ofthe project. Initial copper concentrateproduction from the Kakula Mine, the first ofat least three mines planned at Kamoa-Kakula, currently is scheduled for the thirdquarter of 2021.Zijin's private sharepurchase and saletransaction withCITIC Metal Africaand Robert FriedlandIn a related move that follows theimplementation of Kamoa-Kakula's newexecutive management team and whichreflects the efforts and importance of ZijinMining in the ongoing development ofKamoa-Kakula as well as the spirit ofgenuine strategic cooperation among IvanhoeMines' largest shareholders, CITIC MetalAfrica and Robert Friedland have agreed tosell 35,752,011 shares (3.0%) and 12,900,271shares (1.08%) of their shareholdings,respectively, to Zijin, in a private sharepurchase and sale transaction.MINING GLOBAL DECISIONS IN YOUR PALMSwww.theminingexecutive.comAfter the closing of the transaction, CITICMetal Africa will own approximately 26.4%of Ivanhoe's issued and outstanding shares,Robert Friedland will own approximately13.2%, and Zijin will own 13.88%. The priceper share will be fixed on the day prior tocompletion of the transaction at the prevailingone-day volume weighted average price atthat time, but with a floor price of C$3.98 –the price of the recently completed secondstrategic investment by CITIC Metal inIvanhoe Mines.“This rebalancing share purchase and saleagreement once again proves the high level oftrust and strategic cooperation betweenIvanhoe Mines, CITIC Metal and ZijinMining,” said Mr. Friedland.The completion of the transaction remainssubject to receipt by Zijin of necessaryrecordals and registrations with Chinesegovernment regulatory agencies, as have beenrequired and obtained in prior transactions.These are expected to be received within twomonths, with the completion of the transfersfollowing thereafter and prior to the end of2019.At the closing of the transaction, Zijin andIvanhoe Mines will enter into an investorrights agreement that will, among otherthings, confirm Zijin's entitlement to onedirector, currently its Chairman Chen Jinghewho was elected to the board at Ivanhoe'sAGM held earlier this year. Zijin's existingstandstill agreement also will be amended toincrease Zijin's maximum allowableshareholding in Ivanhoe Mines to 13.88%from 9.9% without Ivanhoe board approval.Zijin Mining also will enter into the samereciprocal lock-up arrangements that currentlyexist between CITIC Metal and RobertFriedland under which each grants the othersreciprocal disposition and tag-along rights inthe event of certain proposed sales of sharesin the future.The existing standstill agreements for CITICMetal and Mr. Friedland are unaffected by therebalancing transaction, and each continues tobe restricted from acquiring more than 29.9%and 19.9% of the Ivanhoe Mines' commonshares, respectively, until January 8, 2023.41
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THE MINING EXECUTIVE MAGAZINE JANUARY/FEBRUARY 2020 EDITION

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