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Ivanhoe Electric completes IA for Santa Cruz Copper Project

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Global Mining Review,

Ivanhoe Electric’s Executive Chairman, Robert Friedland, and President and CEO, Taylor Melvin, have announced the results from the initial assessment (IA) for the Santa Cruz Copper Project, located west of Casa Grande, Arizona.

The IA is a preliminary technical and economic study for the Santa Cruz Copper Project and associated high-grade mineral resources included in the Santa Cruz and East Ridge deposits. The study analyses the potential for a high-grade underground copper mining operation supported by modern technologies to reduce environmental impact and powered predominantly by renewable energy.

Mr. Friedland commented:

“Completing the IA for our Santa Cruz Copper Project is an important achievement for Ivanhoe Electric as we work to advance a new source of responsibly produced ‘green’ copper in the US. Our goal is to develop a modern copper mine that produces copper with among the lowest levels of carbon dioxide output in the industry; a product we think has the potential to attract a premium price in the future. Using primarily onsite renewable electricity generation, and with the potential to increase that to meet the project’s entire future needs, the IA shows us that we are on the right track to achieving our goal at Santa Cruz and our larger goal of enhancing US supply chain independence for critical metals. We are excited about the future for our Santa Cruz Project in Arizona.”

Mr. Melvin said:

“The IA for the Santa Cruz Copper Project is the result of a tremendous effort by our team and an important milestone for the project. The study provides a first look at our plans for a technologically advanced, underground copper mine in Arizona with attractive economics at today’s copper prices. We are designing the project to minimise environmental impact through the use of modern technologies and renewable power. We believe the Santa Cruz Copper Project will become an industry-leading example of responsibly produced copper in the US, and a source of high-quality jobs in Arizona during development and throughout its anticipated long mine life.”

Highlights of the IA

The Santa Cruz IA outlines a potential 5.9 million tpy underground mining operation, supported by 105.2 million t of modelled mill feed, with an average grade of 1.58% copper from the Santa Cruz and East Ridge Deposits, resulting in an estimated 20-year mine life.

The IA focuses exclusively on the high-grade exotic, oxide and enriched domains of the Santa Cruz and East Ridge Deposits. The oxide and enriched domains of the Texaco Deposit are not included in the current study (2.7 million t indicated grading 1.42% total copper and 27.3 million t inferred grading 1.39% total copper, using a 0.80% cut-off grade). Future studies could evaluate the potential addition of the large primary sulfide domains at Santa Cruz (76.2 million t indicated grading 0.88% total copper and 8.0 million t inferred grading 0.92% total copper, using a 0.70% cut-off grade) and at the Texaco Deposit (0.9 million t indicated grading 1.05% total copper and 35.0 million t inferred grading 1.06% total copper, using a 0.80% cut-off grade), subject to market conditions.

Copper recoveries of 95.4% are expected to be achieved through a combination of solvent extraction and electrowinning (SX/EW) and conventional froth flotation. The IA includes LOM production for the project of 1.0 million t of copper in the form of 99.99% pure copper cathode and 0.6 million t of copper contained in a 48% copper concentrate with very low deleterious elements, such as arsenic or lead. LOM average C1 cash costs are expected to be US$1.36 per payable pound of copper, with C3 total costs expected to average US$2.84 per payable pound of copper.

The IA contemplates initial project capital expenditures of US$1.15 billion, and LOM sustaining capital expenditures totalling US$0.98 billion. A three-year construction period is envisioned to develop the underground workings and build the surface processing facilities.

The IA estimates that the project has a pre-tax net present value (NPV) of US$1.6 billion at an 8% discount rate and a pre-tax internal rate of return (IRR) of 25.1%, using a flat LOM copper price assumption of US$3.80 per pound. After-tax NPV is estimated at US$1.3 billion with an after-tax IRR of 23.0%, using the same discount rate and copper price assumptions.

The IA is designed to minimise environmental impact and minimise surface land disruption. As a result of the small surface footprint required for underground copper mining activities included in the IA, the total land area expected to be required for the mine, plant, tailings storage facilities, and potential on-site generation of renewable solar power covers approximately one-third of the total land package.

The IA base case assumes 70% of the total electric power requirements for the project will be generated by onsite renewable infrastructure, enabling copper production with very low carbon dioxide equivalent (CO2e) emissions of 0.49 t of CO2e/t of copper for Scope 1 and 2 emissions. In comparison, the global mining industry average is approximately 3.9 t of CO2e/t of copper equivalent. The subsequent preliminary feasibility study (PFS) for the project will evaluate the potential use of combined solar power, battery storage, and a geothermal-driven microgrid as renewable power sources to provide up to 100% of the electricity requirements for the project.

An all-electric underground heavy mining fleet is assumed in the IA, in combination with railveyor technology for material movement, which would significantly reduce carbon dioxide emissions and improve energy efficiency. The use of an all-electric underground heavy equipment fleet alone represents an estimated 70 – 80% reduction in Scope 1 emissions, when compared to a traditional high-efficiency diesel-powered heavy equipment fleet.

The IA also contemplates placing 50% of the mine tailings back underground as cemented paste fill. The remaining 50% will be stored on the surface as thickened tailings at 65% solid content. Surface tailings will be contained within a ring dyke dam with a capacity to store 56.7 million t. Water management associated with tailings storage is minimised as a result of thickened tailings and high evaporation rates in the Sonoran Desert.

Ivanhoe Electric controls the private surface land and patented mineral rights encompassing the entire Santa Cruz Project. The entirety of the facilities referenced in the IA – including mining, processing, tailings storage, and onsite renewable power generation facilities – can be developed on private land under private mineral title. Ivanhoe Electric also controls water rights associated with its Santa Cruz land package.

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