Base Metals


CITIC Metal has made a major investment in Ivanhoe Mines, this time contributing C$612 million to the Canadian miner’s checkbook.

For the second time in less than a year, CITIC Metal (OTC Pink:CTPCY,HKEX:0267) has made a major investment in Ivanhoe Mines (TSX:IVN,OTCQX:IVPAF), this time contributing C$612 million to the Canadian miner’s checkbook.

Made through its subsidiary CITIC Metal Africa Investments, the funding to Ivanhoe entails a payment of C$3.98 per share, representing a 29 percent premium over the company’s last closing price. Ivanhoe will then issue over 153.8 million common shares to CITIC Metal Africa, boosting CITIC’s stake in the company to 29.9 percent upon completion of the placement.

CITIC previously paid Ivanhoe C$723 million in September 2018 for a 19.5 percent share of the company, which made it Ivanhoe’s largest shareholder; it maintains that position with the new contribution.

The fresh investment brings CITIC’s total contribution to Ivanhoe up to US$1 billion and Ivanhoe’s total cash balance to C$1.3 billion, putting the company in a comfortable position to afford its share of funding for the Kamoa-Kakula copper project.

The project, located in the Democratic Republic of Congo (DRC), has a docketed construction bill of US$1.1 billion for an initial 6 million tonne per year operation. Alongside joint venture partner Zijin Mining Group (OTC Pink:ZIJMF,HKEX:2899), Ivanhoe is to contribute US$540 million for its half of the asset’s initial capital costs.

Aside from Kamoa-Kakula, Ivanhoe is also upgrading the historic Kipushi zinc-copper mine, also located in the DRC, and developing the Platreef platinum-group metals discovery in South Africa.

“CITIC Metal has been a shareholder in Ivanhoe Mines for eight months now, and in that time, CITIC has seen what we already know — that the Kamoa-Kakula project is unquestionably the best copper development project in the world,” said Ivanhoe Founder and Executive Co-Chairman Robert Friedland.

“We now are in a position to finance our first two mines — Kakula and Kipushi — to commercial production, and significantly advance, or achieve, production at the Platreef project. Ivanhoe also is positioned to have its planned expansions at the Kamoa-Kakula project funded from internally generated cash flows,” he added.

The investment from CITIC is expected to close no later than September 7, 2019.

As of 3:11 p.m. EDT on Thursday (April 25), Ivanhoe’s share price had skyrocketed 12.66 percent on the TSX to reach C$3.47.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.


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