Ivanhoe cuts Kamoa-Kakula copper outlook again as costs climb

Ivanhoe Mines (TSX: IVN; US-OTC: IVPAF) has lowered next year's copper production forecast for its Kamoa-Kakula complex in the Democratic Republic of Congo to 300,000 to 350,000 tonnes, from 380,000 to 420,000 tonnes, and raised its cost guidance.

It is the second cut to the 2027 target this year, after Ivanhoe lowered its 2026 and 2027 forecasts in late March, The Northern Miner reported. Cash costs (C1) for 2027 are now expected at $2.50 to $3.00 a pound, up from $2.10 to $2.50, which the company attributes to prolonged high diesel prices, lower grades and lower output. Output this year is expected at about 290,000 tonnes, the bottom of the previous 290,000-to-310,000-tonne range.

TD Cowen analyst Craig Hutchison downgraded the stock to hold from buy and cut his price target to C$9 from C$14, saying the path back to about 500,000 tonnes a year has become longer, more capital intensive and more dependent on execution, The Northern Miner reported.

Ivanhoe released the results after the close on Tuesday. Its shares fell 7.4% to C$8.22 in Toronto at 12:59 p.m. ET on Wednesday, after dropping as low as C$7.64 earlier in the session. The Northern Miner reported that the intraday low was the stock's weakest level since July 2022.

Slower ramp-up

The company blamed the slower 2027 ramp-up mainly on a delay to stoping on the eastern side of the Kakula mine, now expected in late first-quarter 2028 rather than the fourth quarter of next year, and a lower estimate of Kakula's maximum mining rate. The complex has been recovering from seismic activity and flooding in May 2025.

The longer-term ceiling also came down. Ivanhoe now expects the existing Phase 1, 2 and 3 concentrators to reach 400,000 to 450,000 tonnes a year at full capacity, against a previous outlook of more than 500,000 tonnes, according to The Northern Miner. Returning to about 500,000 tonnes will require a Phase 4 concentrator, with detailed engineering to start in the first quarter of 2027 and construction expected to take 18 to 24 months from approval.

"The revised production and cost guidance over the short term reflects a disciplined approach to the ongoing turnaround at Kamoa-Kakula, prioritizing operational stability, mining flexibility and the sustainable recovery of annualized copper production to approximately 500,000 tonnes," founder and co-chairman Robert Friedland said in the company's statement.

To keep the mills full while Kakula recovers, Ivanhoe plans to start pre-stripping two shallow open pits at Kamoa in the first quarter of 2027, with first ore in the third quarter. Lower-grade pit feed means more processing capacity is needed for the same copper output, the company said.

About $200 million of this year's capital budget has been deferred, lifting 2027 Kamoa-Kakula spending guidance to $950 million to $1.15 billion, before $100 million to $200 million of open-pit stripping.

The third quarter itself improved. Kamoa-Kakula produced 76,401 tonnes of copper, up from 64,328 tonnes in the second quarter, and booked record revenue of $1.03 billion, though C1 costs rose to $3.00 a pound from $2.84. Ivanhoe and Zijin Mining (HKG: 2899; SHA: 601899) each hold 39.6% of the complex, with the DRC government holding 20%.

An updated life-of-mine plan for Kamoa-Kakula is due in March.