SummaryThis is my research on ivanhoe mines and the copper play. report did get a bit longer then i expected. english is my second language and i do have dyslexia so there are probably a lot of spellings errors.i do hold a stake before i wrote this up so there might be biased and you should do your own research.Basicsevery market has a few special ways to value the industry these are some basic for mining companys.a big mistake is to value the pure reserves. not all mining companys do explore the entire region they own and leave the mine so called open ended. this means that on 1 or all sides the reserves keep going and that there is at least a bit more resoureces there. a company that holds an open ended mine would therefore come out a lot lower then a company that has their full landpackage in check. this could be done to safe money. they have the data to build the mine and dont want to spend a lot of money and time on something they can do after the mine is build.mine life is an imporant metric it tells you how long the mine will operate a mine company that has less then 10 years has a problem. less then 20 years (before operatiing ) isnt a real investable mine. building a new mine from scratch could take up to a decade if you are lucky. 20 years+ at least before you make an investment ensures that you dont have to worry about short term price swings. the resell value of the mine is also high.mine grade is a % of how much is copper and how much is waste. the higher the grade the lower the cost of operating (most times) and the cleaner the mine is. a 1%+ is seen as high grade for copper but it is different for every metal. lower then 0,5 you dont want to put any money on higher then 2% is realy good.Roi or IRR is the preferd metric to value investments. since mining can require high investments the amouth of assets dont matter. a 10 billion mine could produce less copper then a 5 billion one and the 5 billion one could also make more profit.npv matters a lot too but a company can present many NPV the most recent one will apply the best but if a mine ends open ended like some you should take in account that it could be upgraded.Copper Marketivanhoe mines mostly operate in the copper industry which is a market set for growth. for EV’s they need 4x the amouth of copper and most electrifications needs a lot more copper.the market needs to grow from 24.000ktpa to 40.000ktpa in 2040 to make the EV revolution happen and hit net zero. the chance of hitting 40.000ktpa is low since a mine development can take a long time. there needs to be around 16.000kpta of new production.For the world to reach net zero a lot of new copper production is needed to come online and except africa i dont believe any continent has the potential to do what it takes.per continent based productionSouth americaSout america is the largest producer of copper with chile en peru alone producing 35%+ of world supply.south america runs in to massive issues with the production they have already. as the biggest producer they are going to have a hard time maintaing these numbers.south america has an a lot of socialist leadership comming up which isnt bad but it those regimes mostly focus on getting in the most taxes for the goverment insted of growing production.it is a lot harder to attract new investmenst with higher profit taxes and other new forms of taxations.The new issues that do seem to be forming in the continent like droughts, protest and environmental issues. (copper mines do have a massive impact on the local enviroment)The underdeveloped places in south america are mostly the amazon rainforrest and some other places with rare animales or protected area’s.los andes is a mining area with a large resources body with almost 30 years of mine life which cannot be developed since a endangerd animal lifes there. (the company owning this mine does want to develop it but it is noted at an high discount for it stage in development)Africaafrica holds the answer to a major part of the new supply but it has a major issuethe biggest recently build mine Kamoa kakula needed 25 years to get from exploration to production and it is still partly under development for another 7 years. just building these huge mines takes a decade by it self.since africa is large and underdeveloped it takes a longer time to build a mine. these mines are build in the middle of no where and the most basic resources like energy and workers lack. companys often need to educate lokals build their own energy companys and sometimes build towns.The african envirment makes either discovery or production hard. since heavy rainfall makes it hard to do drill work and other exploration work and since the dry parts of africa lack water infrastructure they would need to find a safe supply since mining costs a lot of water.Africa can solve the issue but it requires a lot of time and within 18 years i dont see the continent make up the entire shortfall but a good amouth of it is possible if companys would invest a lot.it is kind of logical that most countries in africa are going to try and get most of the revenue possible from these mines insted of worrying about the production numbers which is what the west needs.in africa there is a uprising in a new way of doing business where countrys dont export any raw materials anymore and want the refinery’s to come to africa. it is a good way for africa to get a lot of jobs to come over and it does make africa a lot more intressting for investments.North america-Europanorth america isnt yet a large producer but does have the potential to bethere have been some major discovery’s in america but america seem to have an issue with the not in my backjard mentality. a major discovery and mine project on sacred lands of the natives is in a regulatory limbo right now. the mine should have produced 400ktpa but it might or might not go through. it is approved but the natives are protesting it heavly.america holds major potenial for developemnt and will probably grow to become a larger player but to fill in the demand gap is unlikley since every mine is going to get a decent amouth of drawback.arizona and utah especialy have had some big discovery’s but not yet a large enough to make a dent in the issue.canada does hold a lot of potential to get a rich mining industry in copper but it doenst yet excist. most canadian company’s discover copper else where. there are some very rich mines in canada with high grades.to fill the gap of copper demand north america would be the best place to look for since it already has most of the needed infrastructure but we havent yet seen the push for it.Europa does have the not in my backjard mentality except for spain who has a rich and long histroy but it doenst have the capacity or the abilty to make it a massive impact on the supply side of copper.AsiaAsia has a very complicated copper market.china does have some production of copper but the mines are hard to verify a lot of demand comes from china and chinees company are aggressively investing oversees in africa especialy.russia has the potential for an large industry but sanctions make it hard to develop discovery’s or develop mines or even continue to run them. a company that focusses on the russian copper and gold industry has a hard time with export and insted want to go for kazachistaniran runs in to the same issue with sanctions and there largest mine has to be run with a lot of miltary force and there is a lot of potenial yet no company is willing to take these risks. a mine there recently claimed to have twice the amouth of ores for example.the middel east has the potential for great copper discovery’s but there hasnt been a lot of exploration yet. so unsure when or if we see large development. saudi arabia has started to do some license sales for litium seeminly wanting to build an non oil industry with resources and they do have the money to start this up.indonesia does have a rich mining complex with 2 large mines but those are in hard to excess places and took decades to just develop but they have the abilty to operated for decades.india and kazachistan also have some decent production but there arent any intressting discovery’s or development underway.asia could see a decrease in production or an increase but i dont believe the abilty to take up a large portion of the supply gap is there.oceania.austrialia is doing pretty good with an active mining industry being ready to grow. most of the miners do have the exploration packages and capital to grow (goverment support is also avalable).australia doesnt realy have an large mine in its country and most of the mining industry are smaller and low mine life mines which doesnt make it a resiliant industry if prices get realy low.australia doesnt realy have a lot of the luxury’s that other continents have. reserves are a lot lower then in mines in other country’s and the grades are low. they do have a great federal policy to help new mining companys start up and give large mining permits.the resources base of australia isnt good enough to help the world out.PricingWe have seen a price spike in litium. litium is also an ev metal but has 2 huge negatives that copper doesnt and why a price spike in copper would be more sustainble.litium isnt rare at all and there is more then enough of itlitium can be replaced by other metals.even with these 2 huge flaws litium is standing at record prices and almost every project can get a 100% return if it can be brought online.some mines are already running at a loss or close to a loss so the financial incentive to get online a bunch of copper is still abcent which makes a future high price highly likely.Goldman sachs did send out a target for 7,5$ copper price spike which would make ever copper miner an amzing investment but a specific target cant be made for certain.A 5$ copper price would make the market highly profitble and i do believe we are going to so see that price before the end of the decade.ConclusionTo hit 16.000ktpa there would need to be a lot of development in africa and america which arent likley to build a lot of mines fast for both their own reasons.it is unlikley that within a short time frame we are able to hit these target without a extreem incentive to do so which would be a very likley chance to get a copper bull run.Ivanhoe minesIvanhoe mines is a mining company in africa. The company holds 1 operating mine 2 in development and 2 intressting exploration plays. all the assets of the company are world class mines. strong management and a strong long term vision.The assets.Ivanhoe’s 2 biggest mines are kamoa kakula and platreef they are the main value drivers of the company. they hold to exploration patches next to these mines. the third mine is kipushi which is more a redevelopment and will be mostly past over to the congolese govement.Kamoa kakula.The mine is operating right now but it is still in development. it produces 400ktpa but after development it should produce around 800ktpa. there are already developemnts to increase production further. for example a debottle necking progamme would increase production from 400ktpa to 450ktpa. the roi of the mine is around 50%.the mine operates at 5% grade which is an extreem high grade for a mine. with escondida (the largest copper mine in the world) producing around 0,6-0,7%. this comes with the advantage that even when cost have gone up they still produce for around 1,45 per pound (copper price around 3,80). it also makes them able to produce with almost no emmisions. the mine can also run until the end of the 2050’s and the plan ends with the company still producing 3% which makes it likely that production can be prolonged. since there is a significant amouth of undiscoverd land right next to the north part of kamoa and also around half of the land remained untested. also on many parts of the mine the ore body ends open so they havent found the end of the complex.https://ivanhoemines.com/site/assets/files/5080/kakula-2.jpgThe low break even prices will make sure that the mine will preform well when the price is low. they do have a progamme to lower cost even further. in a few ways.The biggest of them is their own refinery. most of their cost is shipping and smelting. shipping cost would be cut in half and the refinery would reduce other company profit margins since congo has lower labour and energy prices. the refinery is also high qualty refinery and is going to be one of the biggest in congo.the refinery can save the company around 18-28 cents since shipping cost realy came down it could be a lot less. but at the peak the investment would save 308.000.000 (120 mil for ivanhoe) in shipping cost alone. refinery’s profit margins also peaked recently so it would save a bit there 2 but shipping would save the most.the company is also busy with building bigger roads since the mine is so big it created a miles long traffic stop and test the infrastructure of hte congo. which isnt bad if congo forced to build more roads it will be good for the entire country.the kamoa- kakula mining complex is worth around 14 billion after tax on 3,5 copper price. excluding further exploration of the land and the 2023 production increase. (8% discounted).ivanhoe mines owns 40% of the complex. 5,6 billion would be the value for ivanhoe.Platreefthe platreef complex is still in development and should start production in 2024. the complex holds many different metals like platium palladium, copper, gold, nickel and rhodium. the mine is located in south africa.the plans gives the mine a lifetime of 20 years but there is enough ore to make the mine being operated for around a century with a large portion of the land not yet being discoverd makes further development possible.https://ivanhoemines.com/site/assets/files/1906/image008-20160511070520.638×0-is-pid1510.pngthe mine still has a lot of land to test and there is a good chance that there are better ores in the south as you can see why on later pictures.the roi is around 20% which is a lot lower then kamoa-kakula but still above average for other mines. (the prices taken to get the 20% are lower then prices are right now so roi could be a bit higher depending on how much inflation takes a number on costs)there arent yet plans to develop the open area but after 2024 there will be a lot of cashflow left over since the biggest investments have been and every assets is producing.the best part of the mining complex is south of the mine i will later share an image that would explain why. this part is excluded from the NPV.the value of platreef mining project change a lot based on prices but the spot prices of today would make the mine worth 4,1 billion dollarivanhoe mines owns 64% of this mine or 2,6 billion. that doenst look like a lot but the a large portion of the complex is excluded from this so high chance that it would look a lot better in the future.Kipishukipishu is an old mining complex in the congo. the mine will get redeveloped and then ivanhoe mines will pass over stakes in the mine to the congolese goverment untill the they hold a stake of 20%. it is still one of the highest grade mines in the world especialy in zinc.the transfer of stakes is partly based on time and then the amouth of ores mined.Production should start in 2024 q1.https://ivanhoemines.com/site/assets/files/3593/worlds_top_20_zinc_projects-_by_contained_zinc.602×0-is-pid1514.pngthe mine is a very high grade mine and the resources got an upgrade recently making the project a lot more intresting. the mine will produce high grade zinc.the mine is going to produce a bunch of metals. the complex hold zinc, copper silver and germanium. Ivanhoe doesnt hold any exploration rights next to kipishu so there wont be any growth for a new mine.the mine is expected to run for 14 years which sounds short but there hasnt been done a lot of exploration and this is also around the time ivanhoe only holds 20% stake in kipishu. The roi and irr are extreemly high since the investments that have to be made are low because there is already a mine there. I couldnt find an updated irr but based on 20% lower zinc prices and a lot lower production it is around 40%. the production cost is around 0,65.ivanhoe is aloud to mine 12 million tons of zinc (other metals excluded) before passing the mine up.the NPV is very hard to find since it is only based on zinc. but at these prices but that alone would be 2,64 billion (excluding the other metals there)ivanhoe hold 68%. which is worth around 1,8 billionThe npv’s combined makes 10 billion but like i said these are discounted. on resources, production and price already.ExplorationIvanhoe mines also has 2 large and high qualty exploration plays with the chance to out prefom one of their already developed mines being reasonably high.Platreefivanhoe recently aquired the èxploration permits next to platreefhttps://ivanhoemines.com/site/assets/files/5667/1.801×0-is.pnghttps://ivanhoemines.com/site/assets/files/5667/2.638×0-is.pnglike i said earlier this is why the soutern part of platreef mine is a lot more intresting. that area has remained untested aswell. the new part is also better then platreef mine (possibly) which makes a very intressting bet.the new area is also a lot larger then the already aquired mine section. there is a good chance that there are resources here and that they are a lot better then the mine underdevelopment.i would speculate that ivanhoe mines waited with testing the south part of the already aquired area until they would recieve the new rights. since it would draw a lot of eyes on the project and competition for this permit.since ivanhoe now holds 100% of the new area a large discovery would be a lot more benfitial to ivanhoe mines then platreef already.this is speculation and until tested nothing is sure but the potential remians great.Westernforelandaround Kamoa-kakula ivanhoe holds 2400km2 of land with already 2 discovery. which might be as good or better then kamoa. ivanhoe hold around 90-100% of these land rights. depending on the specific permit.kamoa kakula is around 400km2 which shows how large this area is i cant find a full picture of it but this would do.https://ivanhoemines.com/site/assets/files/5080/kakula-2.jpgmost of the land cant fit on the picture but it is 6x the size of the kamoa kakula. ivanhoe has decided to focus on drilling in 2020. since the kamoa mine has been online ivanhoe has done a lot of drilling and we can expect relatively soon some results. (maybe next year). a mine here would make ivanhoe mines a large player like freeport.ivanhoe is almost finished with the entire airial exploration of the land package which makes drilling a lot more attractive.we are already aware that there are small packages of copper right on the border of western foreland.1 kamoa-kakula mine on the western foreland package would Dubbel ivanhoe’s NPV and hopefully marketcap aswell.this is the most recent drillinghttps://ivanhoemines.com/site/assets/files/4165/2019-03-14-western-foreland4.jpgit shows an 4,5-1,5 km (6,75km2) copper find of high grade copper. the kamoa kakula mining is around 77km2. this is still open ended that means that at no side the end of the copper body has been found and it keeps going. right now a lot of drilling is taken place but for sure you can only say 6,75km2 is found.kamoa kakula ends in 1,73% grade of copper and makoko ends (openended they are drilling the edge’s right now ) at 4,88% the chance that this goes on is very high and a high qualty mine could be constructed hereBalance sheet.Ivanhoe hold 649million in debt and did get approved for a new loan recently for the platreef mine.Ivanhoe has 663 million of cash so the company has a net cash reserve at this point.The operting cashflow is around 364 YTD from the kamoa kakula venture. anullized the operating cashflow is 19x market cap. which isnt cheap but next year a 12,5% production growth should be reached and the company already grow production 90% this year (Q1vsQ3)so operating cashflow doesnt represent the company well at this point.Ivanhoe needs a strong balance sheet in the short term since they want to grow production and invest in the company.In the past ivanhoe had to give up stakes of their projects to get the mines underdevelopment. since they’re profitble they can develop them themselfs.Why ivanhoe mines?Since i talked about the copper play in general and the company why would you pick ivanhoe mines over other company’s.since demand for copper is going to grow over a long time and prices are not predicitble in the short term you would want a company that can wait around for prices to rise. ivanhoe has with their long mine life the best potential.congo and south africa deal in general with higher mine life better quality reserves and a higher ROI and ivanhoe hold the most intressting exploration permits and mines in the country which makes them an already intressting play.ivanhoe has operated in congo over 2,5 decades without any major issues . developing in an underdeveloped country like the congo and build a mine out of no where is already an amazing accomplishment. this gives a lot of trust for them do to it again.The exploration permits might not sound that good but any company that aquires permits next to an amazing mine with the same data they have already would be noted for a premium of what they payed for it. It is realy one of the best exploration assets you could get i am not realy able to word it in a way that makes it as good as it is and be realistic about the chance of there not being a mine there in the future which is possible.An amazing high qualty resources base, low cost mines, a good balance sheet, strong management, High roi/IRR and a strong exploration package. make the company set for growth and high profits for a long time.the company is slightly undervalued since NPV come at 10billion and the market cap sits at 9,6billion which is a 4% discount. (they already were discounted on reserves of kamoa kakula kipishu and platreef, kamoa kakula production, the entire part of non zinc kipishu , the price of copper and the entire exploration package). this makes the company cheap.Ivanhoe hold what is an wonderfull company for a fair price.Even though it is heavly discounted the price is still fair since other mining company are probably cheaper if you give up on quality. I rather decrease my risk as much as possible and the company offers a lot of upside for relatively no risk (excluding the geopolitcal risk).a wonderfull company means to me that the company has amazing assets, good balance sheet, good management and a clear strategy for growth. there is no other company that has the quality that ivanhoe has. so you do own one of the best mining company’s in the industry. almost no company can produce as cheap as ivanhoe can with the same long term minelife and size.The strategyThe strategy of Ivanhoe mines is different then other mines who look at short term demand or fast paybacks. focus is mostly on returing capital to shareholders.Ivanhoe’s focus is on the most intressting ore bodys and exploration permits. this could cause a geopoltical issue since the best places seem to get a lot of political issues.the mines need to have a long mine life ,high ore grade and a low break even price. ivanhoe wants to supply the long term demand and want to reinvest profits in to new mines. ESG is also an important factorThe high mine life mines dont seem like a big thing for too many investors in the copper market but if you look at the largest players. BHP rio tinto and Freeport they all hold stakes in mines with 70 year+ mine lifes. the large players all have been build of the backs of 1 or 2 long mine life mines.The journalist articel.recently there has been an articel placed on ivanhoe about corruption in the congo. The articel made the stock price take a hit.the articel has been largely debunked. it is about a corrupt goverment offical and ivanhoe mines doing a deal about an exploration package. the deal hasnt been signed by the corrupt polition and ivanhoe is i still trying to acquire that land package through the goverment without the officail gaining a stake since the permit is still a high quality landpackage.there has been a suggestion of a payment but after a year there hasnt been any evidence yet and the office already got raided last year without any results.there isnt yet a good aligation and not yet any legal trubble but share price did take a significant hit.CMMCI think that every time i look at an investment it is great to keep track of a loser of the industry a company that either failed or went bankrupt that could be used as a case to learn from.CMMC is that company.they have a operating mine in canada but the break even price went far above the copper price it even went above the ATH of copper.the company has sold their most intressting aspect their exploration.their exploration package was realy good with an discovery on it for a large mine and a still undiscoverd package right next to it. it wasnt a realy high qualty package like ivanhoe has but still decent for their market cap.the exploration and their project got sold for 230 mil if i am not mistaken. which would come down to about 1 year of profit after the first mine was build.it wanst sold realy cheap but they are an empty shell of what the company used to be and their isnt a good reason to invest in them right now since there isnt any possible short term growth or mid term growth.DisclaimerI do believe this company to be high qualty and i am very intressted in this business myself. I got the company recommended to check out by someone inside the industry and been in love with the business ever since.i would advice you to check the business out yourself and do some research or in the copper market it self. ALWAYS DYOR.If you have any spelling mistakes just mention it to me and i will recheck
