December 20, 2016

#Uranium: Technical Analysis of Uranium Sector: Seeing Signs of Bullish Shift in Trend


Uranium Participation Corp: Signs of a Potential Shift in Trend

 

 

 

Cameco Corp.: Attempting Downtrend Breakout

 

 

 

NexGen Energy Ltd.: Consolidating Breakout

 

 

 

Denison Mines Corp.: Carving Out Basing Pattern  

 



Chart 1 – Uranium Participation Corp is starting to show signs of a potential shift in trend as price action breaks out from a yearlong downtrend. The breakout confirms the bullish divergence in momentum indicators and is backed by a breakout in RSI. It is important to note, however, that price remains below a falling 40-week moving average. We need to see the weekly moving averages start to flatten out and turn higher along with a break above the 40-wma in order to confirm the start of a major shift in trend.

 

Chart 2 – Cameco Corp. is positioning for a major breakout from a ten quarter downtrend as weekly RSI breaks out to 32 month highs on a new MACD buy signal. A weekly close above $10.75 will confirm the major trend reversal and position CCJ for a rally to $14.00.

 

Chart 3 - NexGen Energy Ltd is leading Uranium stocks as price action breaks out from a 6 month downtrend, 200-day moving average and reclaims the neckline of the April to September topping pattern. The breakout confirms the bullish divergence in momentum indicators and positions NXE for a rally to new highs. In the near-term, however, momentum indicators are overbought suggesting a period of consolidation is needed to workoff overbought pressure. We would look to add on weakness and a reset in momentum indicators.

 

Chart 4 – Denison Mines has broken out from a nearly 3 year downtrend as price action continues to carve out a 6 quarter double bottom with the neckline at $0.85.  Weekly momentum indicators continue to show signs of strength suggesting we should see an upside resolution to the current basing pattern. A breakout above $0.85 will confirm a bullish shift in trend that measures to a technical target of $1.30.


December 15, 2016

#Gold - Heavy selling in precious metals futures contracts over the last 24 hours

The attached chart shows the massive seller (s)  used the FED interest rate hike to do further damage in the precious metals market.

 

Through the futures market, in the last 24 hours, the value of US$ 10 Bio. in precious metals futures contracts were dumped into the market.

 


 

 

#Gold & #Silver #ETF holders continue to liquidate holdings - EURO/US$ ratio close to breakout on the downside

Total Global Gold ETFs were DOWN 35kozs Nov 13 to 58.856MozsThey are down 5.4Mozs since the US Election.  They are still up 11.866Mozs so far in 2016 …. Global Silver ETFs were DOWN 1.8Mozs Nov 13 to 654.8Mozs.  They are up 48.6 Mozs YTD.   

 

Source: Bloomberg

December 7, 2016

#Zinc Breaking Out from 7.5 Year Range


 

Zinc Breaking Out from 7.5 Year Range

Ø  Zinc is breaking out from a key inflection level dating back to 2009.

Ø  The breakout is  backed by a momentum thrust with RSI and MACD breaking out to nearly 10 year highs.

Ø  Depth of the 7.5 year range measures conservatively to a technical target of $3,850/t ($1.75/lb).

Ø  Trevali Resources remains our favourite way to play the zinc space. Nevsun Resources also looks poised for further upside.


From Paradigm Capital 

 

Saving #DRC’s #mining law reform

Saving DRC's mining law reform - This is Africa

At current prices, the average effective tax rate of a typical copper mine in DRC would be 58 percent, falling between those in Zambia and Chile. At higher copper prices, the same indicator would be 46 percent, below that of Indonesia, Chile and Western Australia. There is therefore room for DRC to capture a larger share of mining companies' revenue in the event of a new cycle of high prices.

Average effective tax rate for a copper mine, with copper prices set at 5,000 USD/t, in net present value terms with a discount rate of 10%

Average effective tax rate for a copper mine, with copper prices set at 5,000 USD:t, in net present value terms with a discount rate of 10%

Average effective tax rate for a copper mine, with copper prices set at 8,000 USD/t, in net present value terms with a discount rate of 10%.



Saving DRC's mining law reform

National elections in the Democratic Republic of the Congo are slated for  December 19 – at least on paper.

The government's failure to organise them has led to popular outrage, as have the security forces' violent suppression of the resulting protests over the last couple of months. Different political parties have agreed to a new coalition government, headed up by opposition leader Samy Badibanga, to lead the country towards general elections.

But President Joseph Kabila, who has ruled since 2001, will remain in power until then – in effect extending his second and last legal term. This was the goal of the delaying organizing the polls, part of a tactic known as glissement – or slippage – among the Congolese.

In addition to the electoral issue, the new government should address recurring discontent among the Congo's citizens around unsatisfying returns from the country's booming mining sector. Dissatisfaction with the political leadership is closely linked to frustrations with how poorly the central government has managed the mining sector.

The DRC is now the largest global producer of cobalt and the fifth-largest producer of copper. Lower metal prices since 2014 have slowed growth. International and local mining entrepreneurs have made fortunes off of the country's minerals. However allegations of political corruption around mining deals are all over the news.For all this wealth, the general population has little to show for it.

After several years of high mineral prices, in 2012 the government initiated a mining code review in response to citizen pressure. Though participatory in nature, the process was a dead end.

The version submitted to parliament in March 2015 did not represent a compromise between industry and civil society organisation positions. Active lobbying from the country's chamber of mines focused on the draft law's fiscal provisions. These pressures led the government to abandon the reform project.

The drop in copper prices, as well as the growing economic and political crisis in Congo, have chilled attempts by other actors to resume the process. For almost two years, the status of the reform has been unclear.

This is bad for business and frustrates the population, the majority of whom live on less than a dollar a day.

Benchmarking reform

The Natural Resource Governance Institute (NRGI) recently identified potential solutions to the deadlock. We analysed the current mining code (dating from 2002) along with the proposed revisions submitted to parliament.

We benchmarked the results against other mining jurisdictions, from Peru to Australia. We found that the existing fiscal regime for mining companies in the DRC is relatively generous to companies, but not out of line with international practice given the country's strengths and weaknesses.

At current prices, the average effective tax rate of a typical copper mine in DRC would be 58 percent, falling between those in Zambia and Chile. At higher copper prices, the same indicator would be 46 percent, below that of Indonesia, Chile and Western Australia. There is therefore room for DRC to capture a larger share of mining companies' revenue in the event of a new cycle of high prices.

Average effective tax rate for a copper mine, with copper prices set at 5,000 USD/t, in net present value terms with a discount rate of 10%

Average effective tax rate for a copper mine, with copper prices set at 5,000 USD:t, in net present value terms with a discount rate of 10%

Average effective tax rate for a copper mine, with copper prices set at 8,000 USD/t, in net present value terms with a discount rate of 10%.

Average effective tax rate for a copper mine, with copper prices set at 8,000 USD:t, in net present value terms with a discount rate of 10%

However  a balance must be struck. The DRC has rich geology but a difficult political and regulatory environment. Companies' operating costs are relatively high. Some allowances must be made to make operating in this environment palatable to investors.

Read the rest of the article here: 

http://www.thisisafricaonline.com/News/Saving-DRC-s-mining-law-reform?ct=true?utm_campaign=enews+nov+3rd+issue+standard+version&utm_source=emailCampaign&utm_medium=email&utm_content=



December 3, 2016

Dominion #Diamond (DDC) Production and cash flow on the rise - Dividend 4.2%

With US$ 180 Mio. in cash, no significant debt and an annual dividend is US$ 0.40 for a yield of 4.2%, DDC is a great way to diversify away from precious metals producers 

#GOLD ETF's - Continued liquidation

 

Source: Bloomberg

 

Gold ETF holders continue to liquidate their holdings.

 

As of Monday gold holdings in the world's largest ETF totaled 885.04 tonnes, the lowest level since June. November has been one of the worst months in terms of outflows in the last 3 years as GLD gold reserves have dropped by 57.55 tonnes. The outflows total more than US$ 2.3 Bio.

 

Total Global Gold ETFs were DOWN 202kozs Nov 28 to 60.670MozsThey are down 3.2Mozs in November.  They are up 13.680Mozs so far in 2016 …. Global Silver ETFs were UP 162kozs Nov 28 to 660.4Mozs.  They are up 54.2Mozs YTD.   


December 1, 2016

#Gold companies: Where is the breakeven point to create Free #CashFlow

"In 2017e the average Mid-Tier/Intermediate and Junior gold producers will need US$1,124/oz and US$1,199/oz (Alacer outlier removed) respectively to cover all of their costs, including development capex."

 

Source: Scotiabank GBM Precious Metals Research

 

After a euphoric few months, analysts are back where the market has been a year ago, figuring  out free cash flow (FCF) breakeven points for gold companies. As the Table for Scotiabank outlines, intermediate gold companies need on average US$ 1,124 per ounce and junior gold companies (excluding Alacer Gold) US$ 1,199 per ounce to break even in 2017.

 

In 2017e the average Mid-Tier/Intermediate and Junior gold producers will need US$1,124/oz and US$1,199/oz (Alacer outlier removed) respectively to cover all of their costs, including development capex.  

 

A key item that will be carefully watched by Scotiabank's entire precious metals research team will be looking for with companies' 2017 guidance is the potential of a rising sustaining capex outlook.  The key question is how many companies cut sustaining capital over the past few years and will now have to "catch-up" on this front? 

 

November 23, 2016

#Copper and copper #MiningStocks


Attached is the weekly copper chart

(attachment 1). The copper price had

an excellent run from US$ 2.10 per pound

to around US$ 2.70 per pound. The price

looks stretched at the moment. The PPO

(upper chart) is very high. PPO stands for

Percentage Price Oscillator and is a

momentum oscillator that measures the

difference between two moving averages

as a percentage of the larger moving

average. The 1-year copper chart (attachment 2)

indicates that copper prices haven't been as high

for 2016.

 

Copper stocks had a great day yesterday:

 

Copper Mountain (CUM)                            CAD  0.81            +11.0%

HudBay Minerals (HBM)                           CAD  8.83            +  9.3%

Lundin Mining (LUN)                                CAD  6.79            +  7.3%

Taseko Mines (TKO)                                  CAD  0.76            +  7.0%

First Quantum Minerals (FM)                     CAD 15.73           +  6.3%

Nevsun Resources (NSU)                           CAD   4.35           +  5.8%

 


 

November 22, 2016

#Platinum Quarterly covering Q3 & FY’16 & initial 2017 forecast: Released today







Today we publish our ninth Platinum Quarterly data set, which examines activity in the third quarter of 2016. In the analysis from our research partners SFA (Oxford), we revise the forecast of supply and demand for the full year 2016, highlighting that the deficit for the full year 2016 will be lower than previously forecast, as a result of softening of Chinese jewellery demand. 

The Foreword to the report includes an insight on platinum demand fundamentals and a brief overview of our market development activities.

Key data from the study, which can be downloaded here, includes:


SFA's revised supply and demand forecast has recast the full-year 2016 deficit, scaling it back by 350 koz, to a predicted deficit of 170 koz:

  • Global demand in 2016 is forecast to decrease by 3 per cent year-on-year to 8,040 koz, while total platinum supply is expected to be marginally lower year-on-year at 7,870 koz.
  • Total supply is set to be 35 koz lower year-on-year, as lower refined production in South Africa (-230 koz) outweighs an increase in jewellery recycling (+110 koz) related to weaker consumer offtake in China.
  • Jewellery demand is projected to fall by 300 koz this year – down 10 per cent year-on-year – with growth in India, North America and Western Europe unable to offset lower manufacturer buying in China and Japan.
  • Industrial demand in 2016 is expected to rise by 2 per cent year-on-year following stronger demand for use in chemical catalysis, petroleum refining and other industrial end-uses.
  • Total investment demand for the year is forecast at 350 koz due to robust bar and coin demand and a modest decline in ETF holdings.
  • The forecast market deficit of 170 koz in 2016 is expected to reduce estimated above ground stocks to 2,145 koz at the end of the year.

For the third quarter of 2016, today's report shows a fall in both supply and demand.

  • Total global supply of platinum was down 9 per cent from Q2 2016 to 2,000 koz, with total mining supply estimated at 1,490 koz.
  • Total global demand for platinum was 1,940 koz during the third quarter, down by 5 per cent from Q2 2016 and by 17 per cent year-on-year.
  • Total mining supply in Q3 declined 235 koz quarter-on-quarter due to lower production from South Africa. This was driven by safety stoppages and producers replenishing inventories used during outages earlier in the year.
  • Total recycling in Q3 increased 30 koz quarter-on-quarter to 510 koz, as higher jewellery recycling (+55 koz) from retailer destocking in China more than offset a decline in autocatalyst secondary supply (-25 koz).
  • The main contributing factor to the decline in Q3 demand was seasonally lower autocatalyst demand, down 90 koz quarter-on-quarter. This was partly offset by the 45 koz increase in jewellery demand, which included a 20 per cent increase in India, following heavy promotion of men's platinum jewellery.
  • Third quarter industrial demand decreased by 10 koz and investment demand was 50 koz lower this quarter as Japanese investors eased back on their platinum bar and coin purchases.

Today's report also includes a complete forecast for 2017, which estimates that the platinum market deficit will continue next year, marking the sixth consecutive year of market deficits.

  • Total platinum supply in 2017 is forecast to fall 2% to 7,745 koz, with mining supply expected to be flat year-on-year in 2017 at 6,000 koz, and platinum recycling expected to decline to 1,745 koz (down 6 per cent year-on-year). Recycled platinum from autocatalysts is expected to stay relatively flat, while global jewellery recycling is projected to drop by 120 koz, as recycling in China returns to a more typical level.
  • Total platinum demand in 2017 is also forecast to fall 2 per cent year-on-year to 7,845 koz with projected growth in jewellery demand unable to offset expected declines in automotive, industrial and investment demand.
  • Automotive demand for platinum is expected to dip by 1 per cent to 3,360 koz in 2017, due to a slight decline in autocatalyst demand.
  • Jewellery sales are expected to grow in 2017 by 2 per cent, supported by strong demand in India.
  • Lower requirements for use in petroleum refining, chemical catalysis and glass fabrication are estimated to reduce industrial demand 6 per cent to 1,610 koz next year.
  • Total investment demand is projected to be 250 koz next year due to healthy demand for bars and coins and a modest increase in ETF holdings.

We hope you find this quarter's report supportive to your efforts to assess and better understand the platinum market, and ultimately make better informed investment decisions. As always, we welcome your thoughts regarding additional insights and research that the WPIC can instigate in the coming months.

Kind regards

Paul Wilson
Chief Executive Officer
 
World Platinum Investment Council
64 St. James' Street
London SW1A 1NF
 
www.platinuminvestment.com
 
World Platinum Investment Council Ltd is registered in England and Wales. Registration Number 9301487. Registered Address, 64 St. James' Street, London SW1A 1NF
 
The WPIC does not offer investment advice and the material contained herein is provided for general information only. Any information contained in this email is subject to the terms and conditions as found on our website www.platinuminvestment.com

 

 


 


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November 21, 2016

#Gold & #Silver - Technically still weak


The net short gold position of

commercial dealers dropped to

a 35 week low as of November 15,

2016, but are still large. The large speculators

(hedge funds and managed money)

took their losses and the position is

the lowest since the middle of March.

However, historically these positions

are still large.

 

The KITCO Gold Survey (attachment 2)

shows a neutral short term picture (1 week).

 

The Gold Barometers show no oversold

position (attachment 3).

 

In silver, net commercial dealers only

reduced marginally the positions as did

the large speculators. The positions are

historically still very large.

 

The 30-minutes gold chart (attachment 5)

indicates that gold closed on Friday, at

4 pm New York time, at 1,208 per ounce

for a loss of $ 19 per ounce.

 

The gold continuous futures contract shows

that gold  held the 1,210 per ounce level for

already 3 times (attachment 6). The overall

picture is really not promising but gold might

try to rally again from the US$ 1,210 level in

the short term.

 

The Point&Figure chart of the Gold Bugs

Index (HUI) (attachment 7) shows that

chart completed a Head&Shoulder Formation

and broke through on the downside at 196.

Also the uptrend is broken (blue line)

Currently a triangle formation is in the

making. There is strong resistance on the

upside at 196 (currently 182) or about 7-8%

higher.

 

 

 

 

November 11, 2016

#Gold #MiningStocks Vulnerable to Further Downside


This comment from Paradigm Capital 

Subject: Gold Stocks Vulnerable to Further Downside

Chart 1 - Gold stocks are resuming their downtrend after failing at a retest of the 50-day moving average and downtrend from the August highs.  

Chart 2 – Gold stocks are underperforming the commodity with the GDX vs GLD breaking support along the 200-day moving average.

Chart 3 – Barrick Gold Corp is still above the October lows but vulnerable to further downside.

Chart 4 – Newmont Mining failed at a retest of the August downtrend and 50-day moving average signalling the resumption of the current downtrend.

Chart 5 – Anglogold Ashanti has cracked below the October lows on a new MACD sell signal below the 0 line signalling further downside risk.

 

 

Equal Weight Gold Index: Resuming Downtrend

After reaching our technical target, gold stocks rolled over with the equal weight gold index now breaking below the month long uptrend. The breakdown is mirrored in momentum indicators as RSI fails at 50 and MACD triggers a new sell signal in bearish territory. Furthermore, gold stocks remain in a relative downtrend versus the broader market and as such we remain cautious on the space. We expect ZGD to make another lower low suggesting there is still another 10% downside risk for the space.

 

October 13, 2016

#Kamoa-#Kakula Project said to be largest #copper discovery ever in #Africa $IVN #DRC



www.ivanhoemines.com

October 12, 2016


Kamoa-Kakula Project now demonstrated to be the largest copper
discovery ever made on the African continent
Kamoa-Kakula ranks among the world's 10 largest copper
deposits – and stands as the world's largest, high-grade copper
deposit – following a new Mineral Resource estimate
Kakula – the second major discovery at Kamoa – contains
Indicated Mineral Resources estimated at 66 million tonnes
at 6.59% copper plus Inferred Resources of 27 million tonnes
at 5.26% copper, at a 3% cut-off
Kakula also contains Indicated Mineral Resources estimated
at 192 million tonnes at 3.45% copper plus Inferred Resources
of 101 million tonnes at 2.74% copper, at a 1% cut-off
Kakula's addition boosts the combined Kamoa-Kakula
Indicated Mineral Resources to 944 million tonnes
at 2.83% copper plus Inferred Resources of 286 million tonnes
at 2.31% copper, at a 1% cut-off


KOLWEZI, DEMOCRATIC REPUBLIC OF CONGO – Robert Friedland, Executive Chairman of Ivanhoe Mines (TSX: IVN), and Lars-Eric Johansson, Chief Executive Officer, announced today that the company has completed an independently verified, initial Mineral Resource estimate for the extremely-high-grade Kakula Discovery on the Tier One Kamoa Copper Project, near the mining centre of Kolwezi in the Democratic Republic of Congo (DRC). The Kamoa-Kakula Project is a joint venture between Ivanhoe Mines, Zijin Mining and the Government of the Democratic Republic of Congo.

Kakula is the second major discovery on the Kamoa mining licence in the past eight years. Now, with the addition of Kakula's Mineral Resources, research by Wood Mackenzie – a prominent, international industry research and consulting group, based in the U.K. – has independently demonstrated that the Kamoa-Kakula Project is the largest copper discovery in Zambia and the DRC, making it the largest copper discovery ever made in the history of mining on the African continent. In addition, research by Wood Mackenzie also shows that Kamoa-Kakula already ranks among the 10 largest copper deposits in the world.
"With the initial resource now established, we are evaluating technical and infrastructure options to rapidly advance the development of the near-surface, highest-grade copper resources at Kakula," said Mr. Friedland. "Our mine planning will focus on how to expeditiously develop the zones of thick, bottom-loaded chalcocite, grading in excess of 6% copper, near the centre of Kakula's high-grade area.
"Given that the copper grades at Kakula are significantly higher than the average grades found elsewhere at Kamoa, we are highly confident that fast-tracking the development of Kakula will have a profound and positive impact on the economics of the overall Kamoa-Kakula Project."
The 60-square-kilometre Kakula Exploration Area is approximately 10 kilometres southwest of Kamoa's initial mine development presently underway at the Kansoko Sud Discovery (see Figure 1). Ivanhoe and Zijin have been conducting an aggressive drilling program at the Kakula exploration target since April 2016. More than 31,000 metres of drilling already have been completed. Given the outstanding success to date in delineating high-grade copper resources, the Kakula drilling program has been expanded by 60,000 metres and will continue unabated into 2017.
Highlights of the initial Kakula Mineral Resource estimate, prepared by Ivanhoe Mines under the direction of Amec Foster Wheeler E&C Services Inc. (Amec Foster Wheeler), of Reno, Nevada, in accordance with the 2014 CIM Definition Standards for Mineral Resources and Mineral Reserves:
  • Indicated Resources total 192 million tonnes at a grade of 3.45% copper, containing 14.6 billion pounds of copper at a 1% copper cut-off. At a 2% copper cut-off, Indicated Resources total 115 million tonnes at a 4.80% copper grade, containing 12.1 billion pounds of copper. At a higher cut-off of 3% copper, Indicated Resources total 66 million tonnes at a grade of 6.59% copper, containing 9.6 billion pounds of copper.
  • Inferred Resources total 101 million tonnes at a grade of 2.74% copper, containing 6.1 billion pounds of copper at a 1% copper cut-off. At a 2% copper cut-off, Inferred Resources total 51 million tonnes at a 3.92% copper grade, containing 4.4 billion pounds of copper. At a higher cut-off of 3% copper, Inferred Resources total 27 million tonnes at a grade of 5.26% copper, containing 3.2 billion pounds of copper.
  • The average true thickness of the selective mineralized zone (SMZ) at a 1% cut-off is 14.27 metres in the Indicated Resources area and 10.33 metres in the Inferred Resources area. At a higher 3% cut-off, the average true thickness of the SMZ is 5.91 metres in the Indicated Resources area and 5.15 metres in the Inferred Resources area.
This Kakula Mineral Resource has been defined by drilling covering a total area of 8.7 square kilometres within the larger 60-square-kilometre Kakula Exploration Area. The total areal extent of Indicated Resource is 4.6 square kilometres at a 1% cut-off and the areal extent of the Inferred Resource is 3.3 square kilometres at a 1% cut-off. The average dip of the mineralized zone in the Indicated Resource area is 13 degrees, while the average dip is 16 degrees in the Inferred Resource area.
Mineralization is open along trend to the northwest and the southeast, while the remainder of the Kakula exploration area remains untested (see Figure 2). The Mineral Resource estimate is based on the results from approximately 24,000 metres of drilling in 65 holes. An additional 13 holes totalling more than 7,000 metres have been completed and assay results are pending.
Indicated Resources are defined when the drill-hole spacing approximates a 400-metre grid, while Inferred Resources are defined when the drill-hole spacing approximates an 800-metre grid.
The Kakula Mineral Resource estimate was prepared by Ivanhoe Mines under the direction of Dr. Harry Parker and Gordon Seibel, both RM SME, of Amec Foster Wheeler. Dr. Parker and Mr. Seibel are the Qualified Persons for the estimate, which has an effective date of October 9, 2016. A technical report will be filed on SEDAR at www.sedar.com and on the Ivanhoe Mines website at www.ivanhoemines.com within 45 days of the issuance of this news release.
The Kakula Mineral Resources, along with sensitivities at various cut-offs, are shown in tables 1, 2 and 3.

Table 1. Indicated and Inferred Mineral Resources at a 1% cut-off grade, Kakula Discovery.

Category Tonnage(Mt) Area(km2) Copper(%) True Thickness(metres) Contained Copper(kTonnes) Contained Copper(billion lbs)
Indicated 192 4.6 3.45 14.3 6,630 14.6
Inferred 101 3.3 2.74 10.3 2,763 6.1

Notes:

  1. Ivanhoe's Mineral Resources Manager George Gilchrist, a Member of the Geology Society of South Africa and Professional Natural Scientist (Pr. Sci. Nat) with the South African Council for Natural Scientific Professions (SACNASP), estimated the Mineral Resources under the supervision of Dr. Harry Parker and Gordon Seibel, both RM SME, who are the Qualified Persons for the Mineral Resources. The effective date of the estimate is October 9, 2016. Mineral Resources are estimated using the CIM Definition Standards for Mineral Resources and Reserves (2014).
  2. For the Kakula Discovery, Mineral Resources are reported using a total copper (TCu) cut-off grade of 1% TCu and an approximate minimum thickness of 3 metres. A 1% TCu cut-off is a natural cut-off grade on the Central African Copperbelt. There are reasonable prospects for eventual economic extraction under assumptions of a copper price of US$3.00/lb, employment of underground, mechanized, room-and-pillar and drift-and-fill mining methods, and that copper concentrates will be produced and sold to a smelter. Mining costs are assumed to be $38/t. Concentrator and General and Administrative (G&A) costs are assumed to be $19/t. Metallurgical recovery is assumed to be 77% at the 1% TCu cut-off and 88% at the average grade of the Mineral Resource.. Ivanhoe is studying (Preliminary Economic Assessment in progress) reducing mining costs using a convergence backfill method
  3. Reported Mineral Resources contain no allowances for hanging wall or footwall contact boundary loss and dilution. No mining recovery has been applied.
  4. Rounding as required by reporting guidelines may result in apparent differences between tonnes, grade and contained metal content.


Table 2. Kakula Discovery Indicated Mineral Resources, Sensitivity Cases.

Category Cut-off Grade
(Cu%)
Tonnes
(millions)
Area
(Sq. km)
Copper Grade True Thickness
(metres-m)
Contained Copper
(kTonnes)
Contained Copper
(billion lbs)
Indicated 7.0 27 1.4 8.25% 6.3 (m) 2,242 4.9
Indicated 6.0 42 2.1 7.69% 6.6 (m) 3,220 7.1
Indicated 5.0 51 2.7 7.29% 6.5 (m) 3,711 8.2
Indicated 4.0 62 3.4 6.78% 6.1 (m) 4,211 9.3
Indicated 3.0 66 3.8 6.59% 5.9 (m) 4,351 9.6
Indicated 2.5 75 4.0 6.13% 6.3 (m) 4,579 10.1
Indicated 2.0 115 4.3 4.80% 9.2 (m) 5,504 12.1
Indicated 1.5 139 4.4 4.24% 10.9 (m) 5,899 13.0
Indicated 1.0 192 4.6 3.45% 14.3 (m) 6,630 14.6

Table 3. Kakula Discovery Inferred Mineral Resources, Sensitivity Cases.

Category Cut-off Grade
(Cu%)
Tonnes
(millions)
Area
(Sq. km)
Copper Grade True Thickness
(metres-m)
Contained Copper
(ktonnes)
Contained Copper
(billion lbs)
Inferred 7.0 1 0.1 7.47% 4.2 (m) 72 0.2
Inferred 6.0 8 0.4 6.50% 6.2 (m) 490 1.1
Inferred 5.0 18 0.9 5.89% 6.4 (m) 1,076 2.4
Inferred 4.0 23 1.3 5.60% 5.8 (m) 1,283 2.8
Inferred 3.0 27 1.8 5.26% 5.2 (m) 1,445 3.2
Inferred 2.5 31 2.0 4.98% 5.2 (m) 1,537 3.4
Inferred 2.0 51 2.2 3.92% 7.7 (m) 2,018 4.4
Inferred 1.5 75 2.6 3.21% 9.8 (m) 2,412 5.3
Inferred 1.0 101 3.3 2.74% 10.3 (m) 2,763 6.1

High-grade Kakula Discovery presents game-changing opportunities for Kamoa-Kakula development

Mineralization at Kakula is substantively thicker and higher grade than elsewhere on the Kamoa mining licence; it also is consistently bottom-loaded and will support the construction of selective mineralized zone (SMZ) composites at cut-offs up to at least 3% copper. The lateral consistency of mineralization at these higher cut-offs presents significant opportunities for mine planning, with large areas of the resource having average grades in excess of 6% when using the 3% SMZ.
The Kakula resource model was constructed using a series of nested grade shells at 1%, 2% and 3% cut-offs. A minimum thickness of 3.0 metres was applied to the 3% grade shell and the outer shells were nested above and below this central shell. The resultant model allows the flexibility to show distribution of grades and thicknesses across the various grade shells and highlight Kakula's outstanding, high-grade potential.
Figures 3 and 4, below, show the distribution of grades and thicknesses across the 3% copper shell, while figures 5 and 6 show the distribution of thicknesses and grades across the base-case 1% copper shell.

Kakula Exploration Area provides significant potential for resource expansion.

The Kakula Discovery remains open along a northwesterly-southeasterly strike and there is considerable potential for resource expansion within the Kakula Exploration Area. High-grade copper mineralization has been outlined along a corridor that is currently approximately one kilometre wide and at least four kilometres in length. This high-grade corridor lies within an area of 8.7 square kilometres over which resources have been delineated.
Encompassing the area of defined resources, the highly-prospective, 66-square-kilometre Kakula Exploration Area remains largely unexplored (see Figure 2). Four drill rigs are focusing on expanding the Inferred Resource, drilling step-out holes to the southeast and northwest of Kakula's currently defined high-grade core. One rig is drilling infill holes to expand the Indicated Mineral Resource, while a sixth rig is focusing on shallow drilling to define stratigraphy and the weathering profile in the area outlined for a potential box cut.

Figure 1. Kamoa-Kakula Project map shows the planned initial mining area at Kansoko Sud and the adjacent Kakula Discovery exploration area.


Figure 2. Kakula Exploration Area showing grade of Indicated and Inferred Resource blocks at a 3% selective mineralized zone cut-off.


Figure 3. Average grades of Indicated and Inferred blocks in Kakula's 3% selective mineralized zone.



The Indicated and Inferred Resource perimeters indicate a confidence classification. Cut-off criteria are applied within the perimeters to state Mineral Resources.


Figure 4. Average true thickness of Kakula's 3% selective mineralized zone Indicated and Inferred blocks.



The Indicated and Inferred Resource perimeters indicate a confidence classification. Cut-off criteria are applied within the perimeters to state Mineral Resources.

Figure 5. Average grades of Indicated and Inferred blocks in Kakula's 1% selective mineralized zone.



The Indicated and Inferred Resource perimeters indicate a confidence classification. Cut-off criteria are applied within the perimeters to state Mineral Resources.


Figure 6. Average true thickness of Kakula's 1% selective mineralized zone Indicated and Inferred blocks.



The Indicated and Inferred Resource perimeters indicate a confidence classification. Cut-off criteria are applied within the perimeters to state Mineral Resources.


Kakula's newly defined resources add to an already world-class resource base at the Kamoa-Kakula Project

Kakula's estimated resources are in addition to the Mineral Resources delineated elsewhere on the Kamoa mining licence that were disclosed by Ivanhoe Mines in a news release on February 23, 2016.
The combined Kamoa-Kakula Indicated Mineral Resources now total 944 million tonnes grading 2.83% copper, containing 58.9 billion pounds of copper at a 1.0% copper cut-off grade and a minimum thickness of three metres.
Kamoa-Kakula now also has Inferred Mineral Resources of 286 million tonnes grading 2.31% copper and containing 14.6 billion pounds of copper, also at a 1.0% copper cut-off grade and a minimum thickness of three metres.
The total consolidated Mineral Resource for the Kamoa-Kakula Project is shown in Table 4 and the sensitivity of the resource at various cut-offs is shown in Table 5.

Table 4. Consolidated Mineral Resource Statement, Kamoa-Kakula Project – October 9, 2016, 1% copper cut-off over minimum thickness of 3 metres.

Deposit Category Tonnes
(millions)
Area
(Sq. km)
Copper Grade True Thickness
(metres-m)
Contained Copper
(kTonnes)
Contained Copper
(billion lbs)
Kamoa Indicated 752 50.5 2.67% 5.2 (m) 20,110 44.3
Inferred 185 16.8 2.08% 3.8 (m) 3,840 8.5
Kakula Indicated 192 4.6 3.45% 14.3 (m) 6,630 14.6
Inferred 101 3.3 2.74% 10.3 (m) 2,763 6.1
Total
Kamoa Project
Indicated 944 55.1 2.83% 6.0 (m) 26,740 58.9
Inferred 286 20.1 2.31% 4.9 (m) 6,603 14.6

Notes to Accompany Kamoa Project Mineral Resource Table:

  1. Ivanhoe's Mineral Resources Manager, George Gilchrist, Professional Natural Scientist (Pr. Sci. Nat) with the South African Council for Natural Scientific Professions (SACNASP), estimated the Mineral Resources under the supervision of Dr. Harry Parker and Gordon Seibel, both RM of Society of Mining, Metallurgy and Exploration (SME), who are the Qualified Persons for the Mineral Resource estimate. The effective date of the estimate is 9 October 2016. Mineral Resources are estimated using the 2014 CIM Definition Standards for Mineral Resources and Mineral Reserves.
  2. Mineral Resources are estimated assuming underground mining methods, a copper price of US$3.30/lb (Kamoa) and US$3.00/lb (Kakula Discovery), a cut-off of 1% total copper, a minimum thickness of 3 m, and that concentrates will be produced and sent to a smelter.
  3. Tonnage and contained-copper tonnes are reported in metric units, contained-copper pounds are reported in imperial units and grades are reported as percentages.
  4. Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content.

Table 5. Indicated and Inferred Mineral Resources, Kamoa-Kakula Project – October 9, 2016.

Category Cut-off Grade
(Cu%)
Tonnes
(millions)
Area
(Sq. km)
Copper Grade Contained Copper
(kTonnes)
Contained Copper
(billion lbs)
Indicated 3.0 304 18.0 4.43% 13,471 29.7
Indicated 2.5 458 27.9 3.86% 17,669 39.0
Indicated 2.0 665 38.7 3.37% 22,384 49.3
Indicated 1.5 825 48.2 3.05% 25,179 55.5
Indicated 1.0 944 55.1 2.83% 26,740 58.9

Category Cut-off Grade
(Cu%)
Tonnes
(millions)
Area
(Sq. km)
Copper Grade Contained Copper
(kTonnes)
Contained Copper
(billion lbs)
Inferred 3.0 47 3.5 4.50% 2,145 4.8
Inferred 2.5 83 6.1 3.74% 3,107 6.9
Inferred 2.0 144 9.8 3.12% 4,488 9.8
Inferred 1.5 211 14.5 2.67% 5,652 12.4
Inferred 1.0 286 20.1 2.31% 6,603 14.6

Kamoa-Kakula now ranks among the world's 10 largest copper deposits

The initial Kakula estimate vaults the Kamoa-Kakula Project into the ranks of the 10 largest copper deposits ever discovered in the world – and its copper grades are the highest, by a wide margin, of the copper world's top 10 (see Figure 7). Significantly, both the Kakula Discovery and Kamoa's earlier Kansoko Discovery continue to remain open for expansion in numerous directions.
Research by Wood Mackenzie also shows that the Kamoa-Kakula Project's distinctions include the world's largest, high-grade (>2.5% copper) copper deposit and the world's largest, undeveloped copper deposit, based on contained copper in the project's Measured and Indicated Resources.

Figure 7. Among the world's largest copper deposits by contained copper, Kamoa-Kakula has the highest copper grades by a wide margin.


Figure 8. World's largest undeveloped copper deposits.


Figure 9. World's largest high-grade (above 2.5% copper) copper deposits.


Figure 10. Central African Copperbelt discoveries, ranked by resources and historical production.


Preliminary Economic Assessment underway for a four-million-tonne-per-year mine and mill at Kakula

With the initial Kakula estimate completed, Kamoa Copper has retained OreWin Pty. Ltd., of Adelaide, Australia, to prepare a Preliminary Economic Assessment (PEA) for the development of the Kakula deposit. The PEA, which is expected to be completed before the end of 2016, will concentrate on establishing the economic parameters of potential mining operations at Kakula, including capital and operating costs for an underground mine.
The PEA also will analyze process facilities, mining planning and scheduling, including capital costs and operating costs for both mining and concentrator operations. The PEA will draw on recommendations from the Kamoa 2016 pre-feasibility study, including the potential to increase production up to four million tonnes per year from the proposed initial mining area.
Kakula mineralization is characteristically bottom loaded. The resource estimate demonstrates that opportunities exist to mine Kakula at much higher lateral and vertical cut-offs than at Kamoa's Kansoko Sud. The clear zonation and grades in the central high-grade core should provide sequencing opportunities to mine at significantly elevated grades.
"The Kakula PEA will allow Kamoa's engineers and consultants to maximize opportunities for project enhancements as we move the Kamoa-Kakula Project forward," said Mr. Johansson.
To help advance the mine-planning work at Kakula, the Kamoa technical team is rapidly proceeding with the engineering and construction of a box cut at Kakula to accommodate decline ramps that will provide underground access to the deposit.

Kakula's chalcocite-dominant mineralogy expected to produce very-high-value, low-arsenic concentrate

The initial metallurgical test results received in July 2016 from a sample of drill core from the Kakula Discovery zone achieved copper recoveries of 86% and produced a copper concentrate with an extremely high grade of 53% copper. The July results also indicated that material from Kamoa's Kakula and Kansoko zones could be processed through the same concentrator plant, which could yield significant operational and economic efficiencies.
Earlier metallurgical testwork indicated that the Kamoa concentrates contain arsenic levels that are extremely low by world standards – approximately 0.02%. Given this critical competitive marketing advantage, Kamoa-Kakula concentrates are expected to attract a significant premium from copper-concentrate traders for use in blending with concentrates from other mines. The Kamoa-Kakula concentrates will help to enable high-arsenic concentrates from mines in Chile and elsewhere to meet the limit of 0.5% arsenic imposed by Chinese smelters, via blending, to meet China's new environmental restrictions.

Qualified Person and Quality Control and Assurance

The independent qualified persons for the Kakula Mineral Resource estimate are Dr. Harry Parker and Gordon Seibel, both of Amec Foster Wheeler.
Other scientific and technical information in this news release has been reviewed and approved by Stephen Torr, P.Geo., Ivanhoe Mines' Vice President, Project Geology and Evaluation, a Qualified Person under the terms of National Instrument 43-101. Mr. Torr is not independent of Ivanhoe Mines. Mr. Torr has verified the technical data disclosed in this news release not related to the current Mineral Resource estimate disclosed herein.
Ivanhoe Mines maintains a comprehensive chain of custody and QA/QC program on assays from its Kamoa-Kakula Project. Half-sawn core is processed at the Kamoa-Kakula on-site preparation laboratory and prepared samples then are shipped by secure courier to Bureau Veritas Minerals (BVM) Laboratories in Australia, an ISO17025-accredited facility. Copper assays are determined at BVM by mixed-acid digestion with ICP finish. Industry-standard certified reference materials and blanks are inserted into the sample stream prior to dispatch to BVM. For detailed information about assay methods and data verification measures used to support the scientific and technical information, please refer to the current technical report on the Kamoa Copper Project on the SEDAR profile of Ivanhoe Mines at www.sedar.com.
Ivanhoe Mines will be filing a NI 43-101 Technical Report in respect of the current Mineral Resource estimate disclosed herein, within 45 days of this news release.

Data verification

Dr. Parker and Mr. Seibel, (collectively the Amec Foster Wheeler QPs), reviewed the sample chain-of-custody, quality-assurance and quality-control (QA/QC) procedures, and the accreditations of analytical laboratories used by Ivanhoe. The Amec Foster Wheeler QPs are of the opinion that the procedures and QA/QC are acceptable to support Mineral Resource estimation. Amec Foster Wheeler also audited the assay database, core logging and geological interpretations and found no material issues with the data as a result of these audits.
In the opinion of the Amec Foster Wheeler QPs, the data verification programs undertaken on the geological and assay data collected from the Kakula Discovery support the geological interpretations and the analytical and database quality, and the data collected, can support Mineral Resource estimation.

About Ivanhoe Mines

Ivanhoe Mines is advancing its three principal projects in Sub-Saharan Africa: Mine development at the Platreef platinum-palladium-gold-nickel-copper discovery on the Northern Limb of South Africa's Bushveld Complex; mine development and exploration at the Kamoa-Kakula Copper Project on the Central African Copperbelt in the DRC; and upgrading at the historic, high-grade Kipushi zinc-copper-lead-germanium mine, also on the DRC's Copperbelt. For details, visit www.ivanhoemines.com.
Information contacts
Investors
Bill Trenaman +1.604.331.9834
Media
North America: Bob Williamson +1.604.512.4856
South Africa: Jeremy Michaels +27.82.939.4812
Cautionary statement on forward-looking information
Certain statements in this release constitute "forward-looking statements" or "forward-looking information" within the meaning of applicable securities laws, including without limitation, the timing and results of (1) statements regarding the evaluation of technical and infrastructure options to rapidly advance the development of the near-surface, highest-grade copper resources at Kakula; (2) mine planning focusing on how to expeditiously develop the zones of thick, bottom-loaded chalcocite, grading in excess of 6% copper, near the centre of Kakula's high-grade area; (3) statements regarding Ivanhoe being highly confident that fast-tracking the development of Kakula will have a profound and positive impact on the economics of the overall Kamoa-Kakula Project; (4) statements regarding the Kakula drilling program will continue into 2017 and its expansion to 60,000m; (5) statements regarding the high-grade Kakula Discovery presents game-changing opportunities for Kamoa-Kakula development; (6) statements regarding the bottom-loaded mineralization at Kakula will support the construction of selective mineralized zone (SMZ) composites at cut-offs up to at least 3% copper; (7) statements regarding there being considerable potential for resource expansion within the Kakula Exploration Area; (8) statements regarding the bottom-loaded nature of the gently-dipping, stratabound chalcocite mineralization at Kakula offers the potential for selective, mechanized, underground mining at copper grades greater than 7% copper; (9) statements regarding the expectation that the Kakula PEA will be completed before the end of 2016; (10) statements regarding the Kakula PEA will draw on recommendations from the Kamoa 2016 pre-feasibility study, including the potential to increase production up to 4 Mtpa from the proposed initial mining area; (11) statements regarding clear zonation and grades in the central high-grade core at Kakula should provide sequencing opportunities to mine at significantly elevated grades; (12) statements regarding material from Kamoa's Kakula and Kansoko zones could be processed through the same concentrator plant, which could yield significant operational and economic efficiencies; and (13) statements regarding that Kamoa-Kakula concentrates are expected to attract a significant premium from copper-concentrate traders for use in blending with concentrates from other mines and that the Kamoa-Kakula concentrates will help to enable high-arsenic concentrates from mines in Chile and elsewhere to meet the limit of 0.5% arsenic imposed by Chinese smelters, via blending, to meet China's new environmental restrictions.
Such statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. Such statements can be identified by the use of words such as "may", "would", "could", "will", "intend", "expect", "believe", "plan", "anticipate", "estimate", "scheduled", "forecast", "predict" and other similar terminology, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. These statements reflect the company's current expectations regarding future events, performance and results and speak only as of the date of this release.
All such forward-looking information and statements are based on certain assumptions and analyses made by Ivanhoe Mines' management in light of their experience and perception of historical trends, current conditions and expected future developments, as well as other factors management believe are appropriate in the circumstances. These statements, however, are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information or statements including, but not limited to, unexpected changes in laws, rules or regulations, or their enforcement by applicable authorities; the failure of parties to contracts to perform as agreed; social or labour unrest; changes in commodity prices, including the price of copper; unexpected failure or inadequacy of infrastructure, or delays in the development of infrastructure, the failure of exploration programs or other studies to deliver anticipated results or results that would justify and support continued studies, development or operations, and the results of economic studies and evaluations. Other important factors that could cause actual results to differ from these forward-looking statements also include those described under the heading "Risk Factors" in the company's most recently filed MD&A as well as in the most recent Annual Information Form filed by Ivanhoe Mines. Readers are cautioned not to place undue reliance on forward-looking information or statements. The factors and assumptions used to develop the forward-looking information and statements, and the risks that could cause the actual results to differ materially are set forth in the "Risk Factors" section and elsewhere in the company's most recent Management's Discussion and Analysis report and Annual Information Form, available at www.sedar.com.
This news release also contains references to estimates of Mineral Resources. The estimation of Mineral Resources is inherently uncertain and involves subjective judgments about many relevant factors. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. The accuracy of any such estimates is a function of the quantity and quality of available data, and of the assumptions made and judgments used in engineering and geological interpretation, which may prove to be unreliable and depend, to a certain extent, upon the analysis of drilling results and statistical inferences that may ultimately prove to be inaccurate. Mineral Resource estimates may have to be re-estimated based on, among other things: (i) fluctuations in copper prices or other mineral prices; (ii) results of drilling; (iii) results of metallurgical testing and other studies; (iv) changes to proposed mining operations, including dilution; (v) the evaluation of mine plans subsequent to the date of any estimates; and (vi) the possible failure to receive required permits, approvals and licences, or changes to any such permits, approvals or licences..
Although the forward-looking statements contained in this news release are based upon what management of the company believes are reasonable assumptions, the company cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this news release and are expressly qualified in their entirety by this cautionary statement. Subject to applicable securities laws, the company does not assume any obligation to update or revise the forward-looking statements contained herein to reflect events or circumstances occurring after the date of this news release.


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