DarioHealth Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 3, 2023

There are 9 speakers on the call.

Operator

Welcome to the Ivanhoe Mines Second Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Matthew Kevel, Director of Investor Relations and Corporate Communications.

Operator

Please go ahead.

Speaker 1

Thank you, operator. Hello, everyone, and good morning and good afternoon. It's my pleasure to welcome you to the Ivanhoe Mines' 2nd 2023 financial results conference call. This is Matthew Kiebelin. I'm the Director of IR and Corporate Comms with Ivanhoe Mines.

Speaker 1

On the line today from IBM, we have Founder and Executive Co Chair, Robert Friedland President, Marna Clotay Chief Financial Officer, David Van Hilden Chief Operating Officer, Mark Farrin and Senior Vice President, Corporate Development and Investor Relations, Alex Pickert. We will finish today's event with a question and answer session. And 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 August 3rd news release as well as on SEDAR Plus and at www.ivenhomines.com. It is now my pleasure to introduce Ivanhoe Mines' Founder and Executive Co Chair, Robert Friedland for some opening remarks.

Speaker 1

Go ahead, Robert.

Speaker 2

Yes. Thank you very much to all of you who are taking the time and trouble to attend this call. I'm addressing you from London to England, having flown from Washington, D. C. And New York to get here.

Speaker 2

I'm happy to report in the last few days that the United States Department of Energy has Place a number of the metals that we have under development and are already producing on the critical materials list. And with the support of the United States government, it's now for the first time I can address you with copper being on the Critical materials list, as well as many other metals that we have in Ivanowind like nickel and platinum And gallium and germanium, so we had a very good quarter, not only at Kamo Kukula, which has continued to break A number of records and is running at least on schedule and on budget, but also that our other two projects at Kupushi and our new plans for the Platte Reef. And I appreciate that there's an enormous amount of new information in our MD and A, But I can say that our teams are executing perfectly. We've never been as strong a position as we are today and our corporate affairs. And our dreams are expanding, and we deeply appreciate the support we've had from the Congolese government, The South African government and our incredibly dedicated workforce.

Speaker 2

So I'll be back to you later to talk about exploration. I want to turn this over to Marna, our remarkable President, and she'll tell you about how things have been going. Marna?

Speaker 3

Thank you, Robert, for those kind words. Good afternoon and good morning, everyone. We are very pleased to announce another quarter operational and project execution excellence. A few key highlights this quarter and beyond include, we achieved record production in the 2nd quarter With close to 104,000 tonnes of copper produced at Kaumau Ka Kula, our cash cost trended towards the lower end of our cash cost guidance at $1.41 per pound of copper produced and since entering Phase 1 commercial production on the 1st July of 2021, The Kamoah Kakula joint venture has generated in excess of €1,800,000,000 of net cash from operating activities. This has funded both the Phase II and Phase III expansions to date.

Speaker 3

That is truly remarkable. With the completion of Phase 3, which includes additional mining areas and additional 5,000,000 tonne per annum concentrator, A power project and a smelter, copper production capacity at Chemowa is earmarked to expand to 600 50,000 tonnes of copper per annum from the end of 2024. Our Phase 1 construction activities at Platreff is Advancing well and we are on schedule for production in the Q3 of next year. And similarly, production will commence at Kapushi in the Q3 of next year. With key highlights this quarter, the conclusion of our $80,000,000 DRC finance facility for Cabushy and our negotiations with Jacobins and Glencore for the larger $250,000,000 offtake link facility remaining on track.

Speaker 3

What we are probably proudest of is our health and safety statistics. We had a 40% reduction in our total recordable injury frequency rate across all sites during 2022. This was operating, expanding and building new projects. We have continued this With a marked reduction in our total recordable injury frequency rate across all our sites and our overall performance is well below the industry standard of 2.66. What you will see on your Future leaders of the copper belt in mining related disciplines and then to provide practical experience at our world class mine.

Speaker 3

Our first students will start in September and will be funded through bursaries by TOMORA and an inaugural ceremony is currently planned for November of this year. With that as a brief introduction, I will now hand over to David Van Jerten, our Chief Financial Officer, to take you through our financials for the quarter. Thank you, David.

Speaker 4

Thank you, and good day to everyone joining the call today. Kamaukakula sold Close to 102,000 tons of payable copper in the Q2 of 2023, a 17% increase Approximately 87,000 tons in Q1, resulting from the completion of the debottlenecking in the Q1 of 2023 and the inventory levels normalizing. Because of this increase, Filau Kaputa achieved record revenue of $702,000,000 Despite the lower quarter on quarter price, the realized copper price for Q2 was $3.79 per pound in the 2nd quarter, down 6% from Q1. Kamala Kokula's Cash costs. Molecular's cash costs have continued to be managed exceptionally well Over the past year, with the quarter coming in at $1.41 per pound of payable crop produced.

Speaker 4

This is right at the lower end of our guidance range of $1.40 to $1.50 per pound. As a result, the EBITDA of $457,000,000 is almost the same as the high watermark we achieved in Q1, and we have maintained our strong margins at On this slide, we have presented the main drivers For the quarter on quarter change in EBITDA, as mentioned before, we had a significant increase in tons sold, which drove a 70,000,000 dollar increase in EBITDA. However, this was offset by the 5% decrease In the average copper price quarter on quarter as well as the decrease in the price at which provision price sales We realized in Q2, which was $3.79 per pound, down from $4.04 per pound in the Q1. What is very pleasing about this slide is that the items within our control, being the tons sold, logistics cost to some extent And also cost of sales showed positive movements in terms of EBITDA. You can see on this slide a graphical representation of where our C1 cost came in at, The bottom of the range on the global cost growth.

Speaker 4

It's worth highlighting again that the transformational impact on cash costs we expect from the 500,000 ton And an on-site smelter, which is being constructed as part of Phase 3. Once the smelter is operational, we expect It could drive us to the lowest cost quartile and to the lower $1.20 per pound. We are especially proud of our cash cost record in the context of significant inflation seen elsewhere in the On this slide, we have presented the change in Kamalakapula's cash cost in comparison to our peers, including large copper miners and segmented Copper division reporting from the majors. The top chart shows we were the only company in this group to meet our 2022 guidance range. The second chart shows the performance year on year.

Speaker 4

Despite the ongoing inflationary pressures, our cash cost is only 5% higher year on year compared to the others in the range being in the range of 17% to 30% higher. The bottom chart is looking at H1 2023 in comparison to reported guidance from the start of the year. We are the only company below the midpoint of our guidance Based on half year reported results with many companies really significantly over guidance, All this means that Kumakukula is delivering extra margin to shareholders as the copper price increases. Argonaut's group level adjusted EBITDA for Q2 was $172,000,000 And what's consistent with Q1, our share of profit from the Kamaukakula joint venture was down by $10,000,000 in the quarter Due to unrealized foreign exchange with regards on indirect taxes receivables with the weakening of the Congolese franc against the dollar

Speaker 1

in Q2.

Speaker 4

On the right hand side, we have presented our reported net profit alongside normalized net profit, which excludes the fair value adjustments on the convertible notes for each period and CapEx's deferred tax income recognized in the Q2 of 2022. We have recorded a steady increase in profit through the commissioning and ramp up of Phase 2 with a profit of $87,000,000 in Q2 CapEx guidance and spending plans remain unchanged at each of Kamal Gokula, Flat Reef and Thank you, Rupeshi. And importantly, as Alex and Marla will take you through, development is tracking well. The expenditure rate is set to increase at each of the projects in the 2nd part of 2023 as we enter the most intensive cycle of the world. However, we are likely to come in at the lower end of our guidance range this year, which isn't related to project timing, Simply timing of cash flow spreads, which we expect to spill into 2024.

Speaker 4

Ibero Mines has a healthy cash balance of $393,000,000 and plenty of cash with plenty of balance sheet flexibility. Kamala Kokula also has a healthy cash balance of $333,000,000 at quarter end and uses its unsecured overdraft facility of $150,000,000 in order to keep the majority of Kumar's cash resources Offshore. Battery's $150,000,000 senior debt facility is progressing well as is the $250,000,000 off debt finance facility. We also secured an $80,000,000 working capital facility for Kukmushi with local DRC Bank World Bank during the quarter, of which $40,000,000 was drawn in Q2. The development of the domestic DRC Banking market and lending has been very positive, and we are also very pleased to report that The facility bears a very competitive interest rate of only 8%.

Speaker 4

I now hand over to Alex Picard, Our Senior Vice President, Corporate Development and Investor Relations to commence our operations and project sector.

Speaker 5

Thank you, David, and good day to everybody on the line. As David mentioned, we will take you through A brief update on our fantastic operations projects as well as our exploration initiatives that Robert will take you through. I'll start on the outset by saying that we will be stealing the thunder of our COO, Mark Farren, who is on the line from Comoah currently, but he will be available for Q and A at the end of the call. So starting as usual with Kaumoa Kukula, This slide in many ways has become quite predictable, but really that speaks volumes for how incredibly well the operation has been performing. So as David mentioned with the sales, it was also a record quarter both from a throughput and a production point of view.

Speaker 5

Kukula milled 2,200,000 tonnes at 5.2 percent copper grade for production of close to 104,000 tonnes. Included in that quarter was a record month of 35,856 tonnes in May and we also got very close to that record last month in July. So these are outstanding production numbers, which are in excess of 420,000 tonnes on an annualized basis. During the quarter and afterwards, we also achieved daily records in terms of mill throughput, which was close 30,000 tonnes in a single day and that's equivalent to approximately 10,000,000 tonnes annualized after accounting for availability. So that's much higher than the new nameplate capacity of 9,200,000 tonnes following the debottlenecking.

Speaker 5

Recovery as usual have continued strongly at 87% for the quarter. We also achieved 88% in July. I'll talk about that in a bit more detail on the next slide. And perhaps just a word on the power situation. We had much less downtime in the 2nd quarter Due to DRC Grid Instability than the Q1, I would say the situation is not perfect today, but we're still working very hard with Snell, which is the DRC power utility on grid scale improvements that we've described previously and are laid out in the press release.

Speaker 5

But in the meantime, we have been steadily increasing our backup power generation capacity, which now stands at close to 50 megawatts and we have another 30 megawatts arriving later this year, which is equivalent to the full power load of both Phase 1 and Phase 2 concentrators. Finally, just to note with over 197,000 tonnes produced year to date of copper and concentrate, I think we are confidently restating our guidance of 390,000 to 430,000 tonnes of copper that we set at the start of

Speaker 2

the year.

Speaker 5

So I mentioned the copper recoveries before and we recently put out some very promising test work that was conducted by Komoe Kukula. So obviously, Kaimo Okokula is among the very highest grade copper operations globally with a head grade of 5.5% or so. And we're very pleased today that the concentrator is performing in excess of its design recovery rate of 86%. However, when you look at the remaining 14% Based on the very high feed grade, this does mean that the tailings stream is still running at approximately 0.8% copper. What you can see from the chart at the bottom of the page Is that this grade is effectively significantly higher than the average feed grade of copper mines globally today.

Speaker 5

There are good reasons for this and the main reason is that the remaining copper is hosted in a very fine grain copper sulfide, which requires extra fine grinding to liberate that copper unit. So in order to address this, we've been doing a lot of test work at Comeoa. The promising test work that we announced is based on quite conventional technology. So that's ultrafine grinding followed by flotation and concentration. And the early results indicate that we can recover up to 65% of the copper from the tailings stream at a grade of just under 1%.

Speaker 5

So this would make it possible if you look at it in totality to increase our overall recovery from the 87 We reported in the last quarter towards the mid-90s, which could be an extra 50,000 tonnes of copper or so production based on the current run rate. We've run internal numbers and this takes into account the extra capital cost and the operating cost of doing this The economics are very positive. So the plan now is that we will conclude this work over the coming months to bring it to an investment decision. But we're also evaluating this test work alongside other non conventional technologies that may potentially yield even better results. Moving into a Quick construction update on Phase 3 and starting with the concentrator.

Speaker 5

Overall, the expansion of the mine and the concentrator As well as the Inger 2 turbine upgrade and the smelter project are on time for the Q4 of next year and on budget as David mentioned. You can see in the photo here that the Phase 3 concentrator is now really taking shape. It's 38% complete overall, but within that we have 85% of the steel and plate work already shipped, 90% of the concrete poured. And we remind the listeners that this is the same team who delivered Phase 1 and Phase 2 concentrators so successfully. So I think we're very excited about what's to come in the next year.

Speaker 5

Just looking at the smelter briefly in isolation, the smelter is really A mega project, I think you could say in its own right, it has a capital cost of $1,000,000,000 of the total of roughly 2.5 for the whole of Phase 3. So here in the photo you have a great shot which shows the direct to blister furnace and the off gas handling Facility is really starting to take shape. In terms of overall project completion, we're up 56% and the major equipment deliveries are Starting to come in this quarter. That includes some of the largest pieces, single pieces of equipment that have ever been delivered into the DRC. So we're very much looking forward to that.

Speaker 5

And Finally, just from me at least moving to regional logistics in the DRC. So we've been talking for a while now about Exporting from the DRC via Angola along what is known as the Lobito rail corridor. The Lobito corridor would very much be Transformational for Komoakula and you can see that from this map, the distance to Lobito of 1600 kilometers is approximately half the trucking distance Durban today, Durban is where approximately half of our volumes are going today. And not only that, there would be significantly less Carbon emissions associated with shipping by rail rather than road. So not only will we expect this route to be faster, but as a result of being faster, It should be more cost efficient and will also create much needed competition between the different logistics corridors in the copper belt.

Speaker 5

It's also just worth noting that the Lobito corridor, which stands today, there is an existing rail in the DRC. It makes its journey from the DRC Angola border to the town of Colweisi, which is just to the east of Kamoakukula and it actually runs directly through the Western Fotherm Licenses and within 5 kilometers of the Kamoakapula boundary. Just looking at the bigger picture, we have seen some recent In May, the U. S. Government announced their support for the Lobito Corridor project, which includes a And with that, I will now pass back to our Executive Co Chairman for an update on exploration, starting with the Western Fallen.

Speaker 2

Well, thank you. It's my favorite subject. We're driven by exploration. We have a very large drilling program underway, both at the Makoko resource and the high grade Ciala resource. And we will be telling the market a lot more about that in the fall.

Speaker 2

And in addition, we have a major exploration program going on, which couldn't possibly have a better hunting ground To find more Tier 1 copper. So when we get past the dog days of summer, I'm sure we'll have a lot more to say about the incredible Mineral Potential in the Western Forlands. The fact that the United States government has come in to support the Western Corridor Railroad through Angola Also opens up the entire Western Foreland land holding to rail access. So this is enormously attractive For the development of future mines in the Western Forlins, which is unquestionably the best honey ground for copper that exists on this particular planet. We're also very excited about the Mokopane feeder.

Speaker 2

PhD geologists think it could be the source of the entire Bushveld complex, which is the world's richest metallogenic Province, we've been doing a lot of geophysics there. There's some very sophisticated gravity work being done there. All of this will coalesce in drilling at the Mokopane feeder, which is an opportunity for us to Find additional Tier 1 supergiant, sulfide nickel and associated precious metals Systems only about 10 kilometers away from our shafts that you see pictured here under Mokopane feeder. You can see 1 of the aircraft doing the airborne geophysics is only 6 miles away to the Mokafani feeder. A Tier 1 discovery in either the Western Portland or the Mokupane Feeder will launch I have the mines into the ranks of the Tier 1 major mining companies.

Speaker 2

With that, let's go back and talk about the Platte Reef mine. Is it Alex?

Speaker 3

Yes. Thank you, Robert. That's me. I will quickly provide a construction update on both Flatrief and Capushi and then we will open the floor for Q and A. So we're here looking at the Construction activities on-site for the plant, it's advancing well and it's on track for first production in the Q3 as we mentioned earlier.

Speaker 3

Most of our long lead equipment orders were placed and scheduled for delivery in the Q3 of 2023. 160 tonnes of the total of 1500 tonnes of steel were erected to date. And from an underground point of view, more than 2,000 meters of lateral development has been completed to date across all three levels, the 7 50 meter, 8 50 meter and 9 50 meter level. And we're advancing at a rate of approximately 200 meters per month. Once we've installed the crusher and loading feeder on the 9 50 meter level, which is expected at the end of August, The right of lateral underground development is expected to continue to increase to approximately 300 meters per month Through the remainder of the year and then from January onwards, we expect our advancement rates to increase to approximately 500 meters Per month.

Speaker 3

Looking at the next slide, we initiated an optimization study at Flat Reef, And this is to potentially accelerate production from Phase 2. The study will consider converting the 5.1 meter diameter Shofri is currently being reamed with approximately 3.40 meters of the 9.50 meters completed to date And it's planned for completion in the Q4 of this year. The manufacturing of the auxiliary winder for shaft 3 headgear is also well And then Shaft 2 construction at Platrieff, the Shaft 2 headgear concrete structure was completed early in the quarter to a height of approximately 79 meters. Scharf 2's overall height will be approximately 100 meters above ground and that's including the steel structure That will house the main winders. Robert always jokes that we should put a revolving restaurant at the top of the headgear.

Speaker 3

The Scharf 2 head care internal structure steel construction is also progressing very well. The kibble and stage is nearing completion with the winder deliveries planned for December of this year. The Keeble winder ropes were recently delivered And drilling of the pilot drill all for the reaming of shaft 2, which we commenced in February of this year, has Reached the shaft bottom and preparations are now underway to commence Reaming Shaft 2 to an initial diameter of 3.1 meters. And Draisboring will commence from the 9 50 meter level once we establish bottom access. And then last but not least, we move over to Capuchin.

Speaker 3

In late April, we announced The signing of a tripartite offtake and financing term sheet between Capuchin, Jacobins and Glencore. The offtake is 400% of Kapushi's zinc concentrates between 400,000 600,000 dry metric tonnes Annam, over a 5 year term. The offtake and financing term sheet is subject to the execution of final binding agreements, which we expect to conclude In conjunction with the new Capuchin joint venture agreement in the next month or 2, and then as we mentioned before, we also reached The term facility for $80,000,000 with Royal Bank is a it's the largest domestic bank in the DRC With the loan book expected to reach over €1,000,000,000 by the end of 2024, it's just indicative of the economic activity in the DRC. If we look at the underground construction at Kapushi, the development activity is ramping up. We're 20% ahead of schedule.

Speaker 3

We've completed 1526 meters of lateral development year to date And mining of the big zinc ore body with grades in excess of 35% will commence ahead of schedule in January of 2024, And this will be stockpiled pending plant commissioning. And then last but not least, This is a picture of the plant construction. The 800,000 tonne per annum concentrator is over 50% complete. Detailed design is complete and ahead of schedule and procurement activities are nearing completion with only 5 equipment packages outstanding. To date, 15 of the total 73 equipment packages have been delivered to site with a number including the ball mill currently on route.

Speaker 3

And that concludes our presentation for today. I will now hand over to Matt to handle Q and A.

Speaker 1

Thanks very much, Marna. We will now begin the question and answer session. Firstly, I'll hand it back to the operator to proceed with any questions waiting on the line. So we'll get the queue going for dial in questions. And then following clearing the line, we'll look what we have on the webcast.

Speaker 1

So please go ahead, operator. Thank

Speaker 3

Please stand by while we compile

Operator

the Q and A roster. Our first question comes from the line of Lawson Winder of Bank of America Global Research, your line is now open.

Speaker 6

Fantastic. Thank you very much, operator, and Good morning, afternoon, evening, everybody on the Ivanhoe team. Thank you for taking my question. I wanted to ask about the Western Portland. Very exciting that we're approaching the release of a first resource.

Speaker 6

So 2 questions or one question on the resource and one question generally on So on the resource, are we expecting an inferred resource or is there extensive enough drilling that there could be some level of M and I coming with that? And then secondly, what is your latest vision on how Western Portland ultimately gets developed? Do you see It being developed by Ivanhoe with a partner or potentially Ivanhoe developing it on its own? Thanks very much.

Speaker 2

Marna, do you want to take a stab at that?

Speaker 5

Well, why don't I take the first part, Robert? Sure.

Speaker 7

Which is just to say that

Speaker 5

the resource will have an indicated portion and it will have an inferred portion. So in answer to the first part.

Speaker 4

In terms of

Speaker 5

Sorry, Robert, was that you?

Speaker 2

No, it wasn't. Go ahead.

Speaker 5

So in terms of partnership, Lawson, I think, I'm giving her a message is it's far too soon to say. Makoko and Kiala is really just the beginning of what we think we have at the wellington falls. There is no reason why there can't be more Kamoah, Takula scale and grade deposits within the Western Fallen. In many ways, it seems to be looking into partnership when all of the variables are within our control today. That's We have more than enough money to go exploring.

Speaker 5

We have the expertise in house and we have the exact same team working on this, Who discovered, Kamoa, Kukula, the Bonanza Zone, Makoko and so on, continues to evolve and improve. There are things that we're learning this year about the Westin Fulham that we certainly didn't know last year, which is very exciting. So if we were to ever go down that route to partnership, I think it would need to be Something quite spectacular to entice us, but perhaps I'll let Robert comment on anything else.

Speaker 2

Yes. We're no longer a junior mining company, Lawson. We're a major mining company. We have execution capability To engineer, design and construct mines that I think is the best in the industry. We're delivering on time, on schedule, under budget, nobody else is.

Speaker 2

So We don't need a partner in the Western Forlanes. We have been approached by most everybody you could think of to get exposure to copper In the Democratic Republic of the Congo because that's where you can produce green copper. We have hydroelectric power. The main Power line that we're stringing from the Inge Dam into the Western Forelands is designed for 900 Megawatts And carrying capacity, it's enough to build a zillion mines. So where in the world can you find 5%, 6%, 7% copper with Hydroelectricity and the Weiser Snow.

Speaker 2

We don't need a partner, but there sure is a hell of a lot of parties I would like to be our partner and it's just too early to talk about that now. But thank you for evidencing some interest in the subject.

Speaker 6

Thank you for those responses. And then maybe if I could just get your thoughts on the libido Corridor and when you think this project could actually be realized to its potential where Ivanhoe can benefit from that logistics option.

Speaker 2

We said last quarter, we reported That initial shipment over the Lovita quarter should happen this year, 2023, and then it will increase into 2024 An increase in the 205. We welcome the support of the United States government. Actually, the President's most senior Representative, President of the United States at the G7 meeting announced American government support for the quarter. So That says it all, the G7 Nations view it as critically important because where else is the copper metal going to come from For the greening of the world economy, if not from the Democratic Republic of the Congo. So in our talks with Traffic Gura, we're actually hoping that initial shipments happened before Christmas and then they just keep increasing.

Speaker 6

That's fantastic news. Thank you for taking my questions and keep up the great work.

Speaker 4

Thank you.

Operator

Thank you. Our next question comes from the line of Andrew Mikitchik with BMO Capital Markets. Your line is now open.

Speaker 7

Thank you. Congratulations on another strong and multi record quarter. Maybe if we could just get a couple of comments from Mark Lauren on the Phase 1, Phase 2 combined plant post debottlenecking on how it's operating and What the prospects are for continuing to optimize those two initial circuits, Whether there's room now or does it have to wait for kind of being in conjunction with Phase

Speaker 8

Phase 1 and Phase 2, I think, Morona mentioned that and Alex mentioned earlier that they sort of We're definitely hitting the numbers of the 9,100,000 tonnes that we had planned to do, and we're getting the recoveries of around 88%, which I think is good. It's solid. And then What Alex spoke about with the ultrafine ground, getting the extra 7 ish odd percent recovery, Mid-90s, I think it's a massive breakthrough for us. We will fast track that like we always do and apply that to Phase 3. That's our thinking.

Speaker 8

Unless we get something that's better, there's other studies, there's quite a few studies that are running in parallel. But if we could get another 7% Recovery across all property, we will take it very quickly. So I think in terms of things running, Phase III is on track nicely. It will be there and thereabout or slightly early. We expect it to be slightly early, I guess.

Speaker 8

And then we'll apply that same thinking to Phase 3 to get the extra recoveries going. So I think you're more or less steady state with Phase 1 and Phase 2, Between 9,000,000, maybe long term, a bit more, 9,500,000, 10,000,000 tons per annum, 88% recovery for now and then pushing it with these new projects to get better recoveries and then another 5,000,000 tonnes coming out of Phase 3. It's supposed to be quarter 3, quarter 4 next year, but I think maybe a bit earlier. So it's going pretty well.

Speaker 7

Thank you, Mark. Maybe just a follow-up question, I'm not sure for who, but What should be your expected timeline for this dedicated crossing at Kibushi of the border? You guys had quite a bit of disclosure in the press release today about ongoing plans for road on The Congolese side and actual improvements of road on the other side already. But when does that translate into Yes, wrapping the border there.

Speaker 3

Andrew, maybe I can venture and answer yes. So there's multiple parts to the border. The first critical part for us for Kapushi is a bypass rate to avoid the trucks running through town. That section of the border project, we envision to embark on within the next 2 to 3 months to have it ready for when we start production next year. That will be rolled up into a bigger Border project, which will be a one stop border crossing.

Speaker 3

It is not on the critical path in terms of Getting the volumes of Capuche out, we've got Sacana as well as Casa Valleza as options to use to export the project, but obviously, it will alleviate Some of the congestion at the border. We are also looking at rail options, running rail loops into Zambia And then to track from Zambia onwards. So there's a number of alternatives on the table to ensure that we move the product Efficiently as soon as we go online at Kapushi. But border project, it's difficult to put an exact time line to it because it's Cross country discussions and approvals that we require, but hopefully, we can get that done Within a year's time.

Speaker 7

Okay. Well, thank you very much. I'll pass the microphone to the next

Operator

Thank you. I would now like to hand the call back over to you, Matthew.

Speaker 1

Thanks, operator. And now we'll turn our attention to a few questions that are coming in from the website. And we'll just group them together because there Few that are a little bit similar. But first and foremost, staying on the DRC Logistics side, Alex and Mark, I think this might be for you. Just a little bit more color on the power situation.

Speaker 1

You mentioned it being a bit more improved as well as just general Currently the DRC and how that's progressing?

Speaker 8

Do you want me to do it, Alex?

Speaker 5

Yes, please.

Speaker 8

Okay. So in terms of the power, maybe just going back a little bit. I guess, we've had We've built quite a good relationship with Snell, which is the DRC Electrical Network supplier Over years, I mean, we started engaging them from about 2014, and we started executing a project to refurbish Marangusha Power Station, all 6 turbines. We started that project, I think, in early 2015. And We basically rebuilt a power station, all of the turbines, 78 megawatts of power, which is now running Very well.

Speaker 8

We've taken on at ingot 2 G25 Unit, which is a big turbine, it's 178 megawatts. And that will be completed in quarter 4 next year. There's a quite a lot of detail that we normally release in the press releases Monthly and quarterly on that project in particular. At the end of last year, we picked up that there were quite a few Instability issues in the grid, the DRC grid. So not it was sort of problems that were in the grid, but impacting the total So total country, not just our project, so basically the total country.

Speaker 8

So we initiated a study with Stuckey, which is our EPCM contractor that's been working with us since 2014, and we studied the whole network. And we've identified work that needs to take place to restore complete stability to that network. And it's more or less it's an increase in our scope that we're now adding into Budget, but it's basically it's a loan agreement with Snell. We've identified all the issues that need to be dealt with. I guess, if I summarize them, it's more compensation issues, so synchronous compensators at 2 different Distribution points in the network, 1700 kilometers apart.

Speaker 8

There's some staff comp upgrades that need Take place here in the Khasi. There are some lines that need to be strengthened and there's capacitation that needs to be introduced in various areas to manage the reactive power in the system. And then there's also simple things like grid monitoring and the ability of Snell to be able to switch off Users that are not basically turning the line when they tell them to reduce usage and things like that. So That part of the project is kicking off now as we speak. And I believe in a year's time, we'll have a much more stable grid.

Speaker 8

So that's the one portion. The other portion is we have engaged with Zambia, CEC, the company, which is Copperbelt Energy Corporation, to supply a firm 30 megawatts of power to directly to Comeau through the same network, Through the Snell network, so the wheeling goes back through Snell. And obviously, there's a relationship that you need to have with Snell in the first place because it goes through the infrastructure. And obviously, that infrastructure needs to work properly. So that agreement is almost there.

Speaker 8

We've got heads of agreement signing off this month in August, And we should draw from that power source from September. And we're looking to increase that Power supply next year to about 100 megawatts. So those that kind of decision helps us to expand, Helped us to bring we are going to commission early our Phase III stuff, then we'll have we should have a firm supplier from Zambia In place to assist us with that as well. So the big picture to me and besides that we're putting Enough megawatts of diesel, so generated power to be able to run Phase 1, Phase 2 and Phase If there is any kind of load shedding or any kind of blackout. So I believe If we stabilize the grid, we can have a stable grid.

Speaker 8

We allow and capacitate Snell to manage the customers well. We're putting in a maintenance agreement that goes along with this. We are working with the Zambians to create another supply another firm supply of up to 100 Megawatts and we have the backup generator power to protect us in the event of major load shedding. So I think if we put all of this in place, by the end of next year, we'll sit with a very stable Kaombo copper, and that's necessary because we are a very big player now. With Phase 3 coming on, we're going to be producing a lot of tons per hour, probably around $1,000,000 per hour that we would lose if we have to I have load shedding all that sort of thing.

Speaker 8

So I think we're protecting ourselves nicely. We're working in the 2 countries. We've built up excellent relationships. We've identified the major issues and we're addressing them.

Speaker 1

That's great. Thanks, Mark. And just moving on here, I think the next one here is Probably best suited for Robert. It's sort of I've got quite a few questions on gallium and critical minerals here, Robert. Maybe talking a little bit about copper's inclusion On the DOE list, but also China's activities in relation to restricting gallium, germanium and sort of the implications of that strategically for a mine like Capuchin.

Speaker 2

Yes, I'm quite distressed about the downward spiral in American Chinese Relations. We have each other in a death grip that has to be relaxed. The United States has told China that they can't get Less than 5 nanometer chips from producers like Navidea and Cisco are and so we're saying they can't buy our Sophisticated chips. And so President Xi responded by saying, well, they need a license to buy the gallium and the germanium That they produce and refine that we need to make the chips in the first place that we're going to embargo. And you see this again where The Chinese are very nervous about our support in Taiwan and perhaps relaxing the 1 China policy.

Speaker 2

And so all of a sudden the Chinese are appearing in Cuba. So it looks like what's good for the goose is good for the gander. Now Khabushi was historically the largest producer of germanium in the world. The zinc ore body is also very, very rich in gallium. So in response to inquiries from the United States government, we have provided the statistics on the Gallium and germanium at Capuchin, we never even bothered to put in the economics.

Speaker 2

We just discounted it to 0. But since this trade war has erupted and intensified both under the Trump administration and now under the Biden Administration, we may get into a situation where you literally need a telescope to see the price of gallium and germanium. And so We are now looking at the possibility of producing zinc smelter, producing 99.999 Electrolytic zinc and recovery of both gallium and Germanium and indium and other metals that are there in the big zinc ore body, it's perfectly possible. It's just capital. And if governments want to provide us that capital, that would be in perfect alignment with Congolese government policy.

Speaker 2

Everywhere we go, we see governments wanting to see as much downstream addition of value to a country's Metal endowment, that's why we're building a copper smelter in the Congo, and a state of the art and ultra clean smelter at that. And so The zinc smelter and downstream refinery is not impossible for Capuchin because that's where the gallium and the germanium arise. But For our shareholders, that would just be an unanticipated windfall, and we'll just have to see how the situation evolves in the next 6 months. Thank you for asking the question. We love it when you point out the hidden value in the company.

Speaker 1

Thanks very much, Robert. And I think we have time for one more. And the next most popular, I think, Marna, this would be best suited for you is just a quick update on the DRC political climate. We know there's an election coming up, so just sort of what you're seeing in country, etcetera, would be great. Thanks.

Speaker 3

Thanks, Matt. So There's still some financial and logistical challenges to facilitate the elections, but Official stance of government is that we are still on track for election from the 20th December. Voter list It has been finalized and the candidates for the legislation, which is the application at the end of last month. Presidential candidates submit their formal applications at the start of September and then we expect things to really start heating up. We can see some pensions.

Speaker 3

Obviously, we are monitoring things mainly in the main urban areas. And we always keep an eye out during election season to ensure that our sites are secure, staff are safe. But it's sort of a watch and grief at this point in time.

Speaker 1

That's great. Thanks, Marna. And that sort of ends the questions we have for today. So this kind of concludes the call. So thank you again everyone attending.

Speaker 1

And we look forward to speaking with you again soon on the many exciting milestones coming forward for Ivanhoe Mines in 2023. So with that, I'll pass it back to the operator to wrap up the call. Thanks very much.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.

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Earnings Conference Call
DarioHealth Q2 2023
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