Ivanhoe Mines Q2 2026 Earnings Call Transcript

Ivanhoe Mines (TSX:IVN) held its second-quarter earnings conference call on Thursday. Below is the complete transcript from the call.

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Access the full call at https://meetings.lumiconnect.com/400-215-425-413

Summary

Ivanhoe Mines Limited reported a strong second quarter with Kamoa-Kakula producing over 64,000 tonnes of copper and maintaining a low C1 cash cost of $2.70 per pound.

The company is progressing on strategic initiatives such as its solar power plant, which is expected to significantly reduce diesel usage upon completion, and is expanding its exploration and development activities at Western Forelands and Platreef.

Ivanhoe Mines has tightened its 2026 production guidance to 290,000-310,000 tonnes of copper and anticipates increased production and reduced working capital due to destocking plans.

Operational highlights include a new 60-megawatt solar facility with battery backup, strong performance at Kipushi with 70,000 tonnes of zinc produced, and ongoing feasibility studies at Kamoa-Kakula and Western Forelands.

Management expressed confidence in future growth, emphasizing strong partnerships in the DRC and plans to increase local ownership in compliance with regulatory requirements.

Full Transcript

OPERATOR

Good morning, ladies and gentlemen. Welcome to the Ivanhoe Mines Limited second quarter earnings call. At this time you are in a listen-only mode. Following the presentation, we will conduct a question and answer period. This call is being recorded on Thursday, July 30, 2026. I would now like to turn the call over to Tommy Horton, Vice President, Investor Relations and Corporate Development. Please go ahead.

Tommy Horton, Vice President, Investor Relations and Corporate Development

Thank you, operator. Hello everyone. My name is Tommy Horton and I am Vice President of Investor Relations and Corporate Development for Ivanhoe Mines. It is my pleasure to welcome you to our second quarter 2026 conference call. This call is being recorded today, Thursday, July 30, 2026. On the line today from Ivanhoe Mines we have Ivanhoe Mines Founder and Co‑Chairman Robert Friedland, President and Chief Executive Officer Marna Kloeter, Chief Operating Officer Tom van den Berg, Executive Vice President of Technical Services Simon Bottoms, and Executive Vice President of Projects Steve Amos.

We will finish today's event with a question and answer session. You can submit questions using the Q&A box on our webcast page as well as through the conference operator via the phone line. Given our time constraints, we will be unlikely to finish every question, but we will endeavour to follow up after the call via our investor relations team. Before we begin, I'd like to remind everyone that today's event will contain forward‑looking statements that will involve risks and uncertainties that could differ from actual results materially.

Details for our forward‑looking statements are contained in our news release on July 29, as well as on SEDAR+ and on our website www.ivanhoemines.com. It's now my pleasure to hand over to Ivanhoe Mines Founder and Co‑Chairman Robert Friedland for his opening remarks. Robert, please go ahead.

Robert Friedland, Founder and Co‑Chairman

Thank you to all of our shareholders and stakeholders. I'm speaking to you from a cloudy and relatively cool day in New York City. And I'd like to draw your attention to the slide on page three. As you see our phase one solar power plant generating 60 megawatts of power when it's fully running at the end of this quarter in a few weeks. And you see those little white dots in the middle? Those are the battery storage systems. So this is not 60 megawatts only when the sun is shining.

This is 60 megawatts 24 hours a day. And in time it will be twice as big as this vast field of solar arrays and then it will be triple this size. So this is a very good paradigm for our issue, for our sort of vision for Ivanhoe Mines for the future. A company at the bottom of the world cost curve, sustainably producing copper metal in a green and sustainable way in the heart of Africa and in the heart of the richest copper mining region in the world.

So I've been in this game for about 45 years and I rarely give investment advice. I've seen shares overvalued and undervalued, but if you pay close attention to this conference call, you'll see why. It's obvious that it's intelligent to approach our shares from the long side. They're now oversold. There's nothing but upside going forward. There's an incredible series of opportunities as we develop the largest precious metals mine in the world, the richest zinc mine in the world, and yes, in the near future, about the Western Forelands.

So with that, I'm going to turn this over to a woman I love a lot. She's our Chief Executive Officer. She just celebrated her 20th anniversary with Ivanhoe Mines. I've watched her grow enormously as a manager, as a human being, as a visionary, as a politician. She's great. And if you want blunt advice about what to do with your wallet, I'm happy to talk about it later at the end of this call. But now over to Marna, our President and CEO.

Marna Kloeter, President and Chief Executive Officer

Thank you, Robert, and thank you for the kind words. And just because he loves you doesn't mean he goes easy on you. But it's been a great, great 20 years working for you and learning from you. The picture in the background on this slide is quite close to my heart. Our crews, our mining crews at Kamoa actually constructed this box cut themselves. So we didn't get in a construction company to do this box cut development. We did it ourselves and they did it under budget and ahead of schedule.

So definitely well performed and well executed box cut. I also would just like to introduce David van Heerden, who's also on the call with us today. Tommy accidentally omitted him. I was a bit nervous because I thought maybe I was going to have to take you through our financials. But David is also with us on the call today and I'll introduce him shortly. We can go into the highlights, Tommy. In the second quarter, Kamoa produced in excess of 64,000 tonnes of copper.

And our C1 cash cost in the first half of 2026 averaged $2.70 per pound. That was towards the lower end of guidance. Our margins were significantly supported by a $0.42 per pound smelter benefit. Kamoa‑Kakula sold 120,000 tonnes of sulfuric acid at an average price of $465 per tonne. And in July our contracts are up to $840 per ton. So if you look at the sulfuric acid prices, it more than doubled from the beginning of the year to the contracts we are now concluding in July.

The production rates at Kamoa‑Kakula are set to progressively increase towards the second half of the year. So we're really looking at an outstanding back half of the year after we've started implementing the turnaround strategy at Kamoa‑Kakula. We have also tightened our guidance for 2026 to between 290,000 and 310,000 tonnes of copper produced. And during the quarter the first power of our 60‑megawatt solar facility with battery backup, as Robert alluded to, was delivered.

And currently the ramp up is underway. Kipushi, the star of the show nowadays, had another great quarter producing in excess of 70,000 tonnes at a cash cost of $0.90 per pound. And at Western Forelands, where the Makoko discovery continues to grow, we plan to announce an upgraded mineral resource towards September of this year. Our adjusted EBITDA for Ivanhoe Mines amounted to 179 million for the quarter. We can move to the next slide. It is with great sadness that I have to report the loss of life of Mr. Muhammad Wambai on the 6th of July at the Kakula underground mine. Mr. Wambai was conducting scaling activities when a fall of ground occurred. The root cause of the incident has been identified and a large‑scale training program for scaling, operation and hazard identification has been implemented for all our operators and supervisors. Our operating procedures have been updated based on learnings from this incident. Our thoughts are with his family in these terribly tragic times as well as with his colleagues.

In the second quarter, a large part of our sustainability initiatives focused on training and in particular also on underground safety. On the next slide it would be amiss of me not to focus on, and I quote a wise voice from earlier in the call, the richest copper mining district in the world. It would be amiss for us not to highlight some of the significant achievements of the DRC over the past couple of years. The DRC is now the second largest global copper exporter.

Forty percent of the DRC's GDP is directly derived from mining. Copper production in the DRC has increased by more than 300% in the past 10 years and that cemented its position as the second largest copper producer. There's been a 7% year‑on‑year increase in copper production to 3.2 million tonnes in 2025, producing 14% of the world's copper. And then the DRC also made history by issuing its first inaugural sovereign Eurobond in April of this year to the tune of $1.25 billion.

And then Ivanhoe has been a long‑standing citizen in the DRC and we've cemented very successful strategic partnerships with the DRC government as well as with Gécamines and we continue to foster those relationships and expand these projects that we are delivering in the DRC. With that as an introduction, I would now like to hand over to David van Heerden, our CFO, to take you through our quarterly financial results. Over to you, David.

David van Heerden, Chief Financial Officer

Thanks very much, Madha. We can move to the next slide. So Kamoa-Kakula sold just over 61,000 tonnes of payable copper in the form of anodes and blister in the second quarter. The copper in concentrate produced through the mills was pretty close to the tonnes sold, leading to copper in inventory on hand remaining flat at around 40,000 tonnes. Although there was no destocking in the second quarter, we do expect that payable copper inventory to reduce to 20,000 by the end of the year at the current copper price.

It would be a significant boost to our cash flow, revenue, and EBITDA in coming quarters. Revenue was again buoyant in the higher copper price environment, with a copper price realized of $5.99 per pound, total revenue of $880 million, $56 million relating to the sale of sulfuric acid, and a $33 million positive impact from mark-to-market of provisionally priced sales. With high production on its way and the current copper price environment, we definitely expect to exceed the $1 billion of revenue mark on a quarterly basis pretty soon.

Moving to the next slide, cash cost for the second quarter of 2026 was $2.84 per pound of payable copper in saleable product produced. The copper grade of ore processed was fairly similar to the previous two quarters, so the quarter-on-quarter decrease was primarily higher costs, most notably the direct impact of higher diesel prices, which was responsible for 18 or 70% of the quarter-on-quarter increase, but I'll provide more details on that on a following slide.

Power costs increased to 20% of total cash cost if illustrated as a percentage of C1 cash cost, and the jump from Q4 last year was due to the smelter power usage as well as the impact of higher fuel prices. The cash cost for the year to date of $2.70 is still at the lower end of our guidance range, which we maintain despite the higher pricing environment. Kamoa-Kakula's EBITDA for Q2 was $385 million and only 3% lower than Q1 notwithstanding the lower tonnes sold and the higher cost environment.

Higher copper prices of course played a role, and we continue to realize smelter benefits. Just looking at those smelter benefits again a little bit closer on the next slide, here we again show a waterfall to better illustrate the movement in our cash cost and highlight the benefits we get from our smelter. On the left-hand side, we start with the average C1 cash cost of the second half of last year, and then we set out our movements to end on our cash cost for the first six months of 2026 of $2.70 per pound.

The smelter operating cost of $0.33 is easily offset by the reduction in logistics cost, the sulfuric acid credit, and then the savings on treatment charges. In total, the smelter caused a roughly $0.50 saving on a per-pound basis if the saving of road and export taxes are included, and that would be even more in a normalized diesel environment. Then mining and processing, more to the right-hand side, is a little higher in the last six months due to the slightly higher power cost, the lower absorption of fixed costs due to the relatively lower production this year, and then of course the higher diesel price since the closure of the Strait of Hormuz.

And that's exactly where I will focus on the next slide. Here we look at the C1 cash cost for Q1 and Q2 with the direct diesel cost shown separately. So at the bottom left of the screen you can see that Kamoa-Kakula spent $0.44 per pound of payable copper in final product on diesel in Q1 compared to $0.62 in the second quarter. That is an $0.18 increase and represents 70% of our quarter-on-quarter cash cost increase. So just to be clear here, this is the direct diesel impact.

So it doesn't include the secondary impact of higher diesel prices like increased logistics charges, as an example. It's noteworthy that the current diesel price is a little bit higher than the average diesel price we achieved in the second quarter, but also that once the 60 megawatt of solar is operational later this quarter, our diesel consumption would go down by 25% to 30%. And an even bigger mover in Q3 will therefore be the expected increase in the sulfuric acid byproduct credit.

So far this quarter we have been selling sulfuric acid at around $840 per tonne, which is much higher than the average selling price of $465 per tonne recognized in Q2. So if the current price holds for the remainder of the quarter, then the sulfuric byproduct credit will be close to $0.60 per pound of payable copper produced in the third quarter. That's much higher than the already nice credit of $0.38 recognized in Q2. Then on the right-hand side of the screen is just a reminder of where we forecast our C1 cash cost to be in the future as development rates and stoping tonnes and grades improve.

On the next slide here we show the quarter-on-quarter EBITDA waterfall for Kamoa-Kakula. Here you can see that $76 million of the quarter-on-quarter EBITDA increase was due to higher copper price for the second quarter when compared to Q1. $43 million of that $76 million was the impact of the remeasurement of contract receivables, which represents the mark-to-market of provisionally priced sales at the higher price in the second quarter. Revenue from acid sales was $7 million higher in Q2 than it was in Q1 and is expected to increase further, of course, as I've mentioned on the previous slide.

Logistics and treatment charges did not move much, but this was also because we are now transporting significantly lower volumes due to the smelter. And cost was up quarter-on-quarter mainly due to the higher diesel prices, as I've already explained. Lastly, you can see the impact of selling 5,000 tonnes less of payable copper in the second quarter compared to Q1, and we definitely expect that block to be green and sizable in the coming quarters as we increase production and as we destock on the current stock on hand.

And then you end up with the quarterly EBITDA for Kamoa-Kakula, which is very close to what it was in the previous quarter. Moving to Kipushi on the next slide, it was another great quarter for Kipushi with another record of tonnes produced. The realized zinc price was also higher at $1.58 per pound of payable zinc. Kipushi did however not sell all the zinc produced, with roughly 14,000 tonnes increase in finished goods due to the inability to secure sufficient trucks to transport the concentrate to port.

The closure of the Strait of Hormuz significantly decreased the number of trucks entering into the DRC with sulphur from Dar es Salaam and, with fewer trucks entering the DRC, fewer were available for backhaul with Kipushi concentrate. To add to that, the quotas assigned to the DRC cobalt producers also impacted negatively on truck availability, but the team has since been able to make very good progress in securing the required volume of trucks, and inventory on site has halved since the end of June even with production running extremely well, so we will take advantage of these great current zinc prices.

Still, Kipushi recognized revenue of $148 million in the second quarter and an EBITDA of $51 million at a margin of 35%. Cash cost was well controlled at $0.90 per pound of payable zinc even with the inflationary pressures, and was $0.88 for the year to date, still below the midpoint of our 2026 guidance, which we maintain. Also noteworthy is that Kipushi generated cash from operations of $94 million in the first half of this year even with the buildup of inventory.

So moving to Ivanhoe Mines consolidated results on the next slide: Ivanhoe Mines recorded a profit of $46 million in Q2 and an adjusted EBITDA of $179 million. Both our EBITDA and our profit are expected to continue to grow with the increase of expected production at Kamoa-Kakula and Kipushi, and with Platreef's contribution coming very soon. Something I would just like to point out is people often forget that our profit and EBITDA are reduced by our continued investment in exploration, particularly on the Western Forelands, expensing exploration expenditure as an accounting policy decision.

So it's not necessarily treated the same way by our peers, but important to take into account when looking at our results. It might not be reflected in our profit or our EBITDA, but we do continue to see great results on exploration, and Simon will touch on that and the latest news a little bit later on in the presentation. We continue to maintain strong liquidity levels, and that can be seen on the next slide. So Ivanhoe had $635 million of cash and cash equivalents on hand at the end of June, still a very strong liquidity position.

Our pro rata net debt increased slightly, but more due to the reduction in cash over the quarter as opposed to an increase in debt. The pro rata net debt ratio for the trailing twelve months remains stable but still includes the impact of the lower EBITDA Q3 last year. It is back to below 2 if you recalculate it using an annualized EBITDA for the last six months. As an example, S&P downgraded Ivanhoe's corporate rating to B- during the quarter. Our view is of course that it is not a fair reflection of the credit.

Even though S&P notes in their report that there is no material liquidity risk and that our credit metrics look very positive in 2028, their metrics unfortunately focus on just 2026 and 2027 and ignore the very good 2028. But having said that, we were very encouraged with how our bond continued to trade even after the event. So if we turn to the next slide, just to show where we are planning to spend the cash that we've got on hand. The capital expenditure on each of our projects remains in line with expectation, and the guidance for each of them is reconfirmed.

During the quarter, Ivanhoe Mines contributed $76 million to Kamoa-Kakula for its ongoing capital and operational requirements. With production and sales set to increase over the next few quarters, it is expected that no further contributions will be required and that Kamoa-Kakula will generate sufficient cash from operations and joint venture level facilities to support its own operational and capital cash requirements. At Platreef, the Japanese consortium contributed $65 million towards Phase 2 development expenditure during the quarter, highlighting its ongoing confidence in the project's long-term potential and our team's execution capabilities.

The Platreef project's Phase 2 finance was also closed during the quarter and $87 million was drawn and received by Platreef in July, so our cash balance at the moment is actually higher than it was at the end of the quarter. That financing is structured such that two-thirds of the remaining Phase 2 capital expenditure will be funded by this facility and we will do quarterly drawdowns going forward, and with that I will hand over to Tom Vonneberg, our Chief Operating Officer, to start the operations and project update portion of today's presentation.

Tom van den Berg, Senior Executive Operations

Thank you, David, and thank you for the introduction. Project 95, as you can see in the slide in front of you—just go back there—you can see those are the thickeners and the high-grade regrinds in the background there. So that was commissioned in June 2026. So that's up and running at this stage at Phase 2. Thanks. Let's go to the next slide. If you look at the numbers here, you can obviously see the combined copper ore grade processed has been climbing from the last quarter to this current quarter as we access higher grade in the areas of Kakula.

Kamoa is also producing good grade at the moment, and the tonnes milled also increased. Phase 3 did well in their tonnage. Phase 1 and Phase 2 were batching ore as the stockpiles came to an end, so that's picking up at this stage, and it'll go up further in the next two quarters. The combined copper recovery, as you can see—David spoke to it already—we're also looking at good recovery rates there, so that's improving. The Phase 3 concentrator continued to mill at greater than 25% above its design capacity—really doing well and achieving what we expected to achieve, and overachieving at this stage—equivalent to milling at a rate of 6.3 million tonnes per annum. Phase 1 and Phase 2, as I said, were doing batching in the last portion, so they're running at about 60% of the capacity at 10.5 million tonnes per annum. Due to the ongoing turnaround at Kakula Mine, we expect that to increase, and we are moving tons at this stage across from Kansoko Mine to Phase 1 and Phase 2. As the Kamoa Mine builds up and fills Phase 3, we are able to move tonnage across to Phase 1 and Phase 2 from Kansoko Mine.

Project 95 is boosting recoveries, as you can see, and that is up and running and has been commissioned at this stage. Phase 1 and Phase 2 concentrators—the feed grade and the recoveries improved in Q2, and that was following the depletion of the surface stockpiles, because obviously as we got to the bottom of the stockpiles we had reduced grade. But that was then picked up by fresh ore from underground, and that is what you see with the change in the grade.

So the mining rates are set to improve further in the second half of 2026, and we are seeing that through a combination of productivity initiatives, opening up more ends, and getting into more areas on Kakula. Currently, we can go to the next slide. Thank you. So the 500,000-ton-per-annum smelter is running at about 60% capacity. We started it up at end of 2025. It's really been doing well. It's been performing very well at 60% of its capacity, and it is stable, and we haven't had any issues with respect to the smelter and no major concern.

So as you can see, lots of copper anodes that have been generated in the picture. It generated 64,000 tons of blister and anodes in Q2 2026. There's a further ramp-up of the smelting line with Kamoa-Kakula mining rates increasing, and we will do that as we go ahead. Ten thousand tonnes of unsold copper is to be destocked, as David spoke about, in H2 2026, and then targeting the year-end inventory to be 25,000 to 30,000 tonnes of copper. Thank you.

If you look at the ramp-up for the copper production to the 500,000: what you're seeing there is Q1 to Q2. The 9 was effectively the destocking that we were expecting to do. The two pink bars on Q3 and Q4 are the new destocking that we do in the H2 portion. We did do the 64, as you have seen, and then we're targeting to do further increases in Q3 and Q4. So our production guidance has been tightened, but it sits at 290 to 310, and then 2027 our production guidance goes from 380 to 420, and the increases are basically the new Kakula box cut.

The picture that you see behind this picture is the Kansoko Sud 1 that also then allows us to access the area of Kansoko Sud midway in the ore body, reduces our tramming rates, and then effectively gives us better mining rates inside the process. And then the mining rates at Kakula will start increasing as the stoping commences, and that will be at the back end of 2027. What we are doing at Kamoa and Kansoko at this stage is we're up and running with the stoping—so we're getting our stoping back to what it should be—and we have effectively got the mines established to the new layouts, and they are performing well.

So at Kakula at this stage, we've just got to get the development—which we've done well on the front of the northeast and the southeast—and then we'll be around the front of the mine on the eastern side in 2020. So thanks, we can go to the next slide. The sulfuric acid—David's spoken to most of it already, so I'm just going to highlight a few issues there. The sulfuric acid realized price was $465 per ton. We did very well in terms of our sales and our cash costs in terms of the guidance from the acid.

The sulfuric acid market remains tight in the DRC, and this is due to reduced supply of sulphur passing through the Strait of Hormuz coupled with import constraints inside and through the DRC. So Q3 2026 contracts are priced at 80% higher than Q2 at approximately $840 per ton—so a really good story. The orebody is generating good acid from the smelter, and we're able to sell it into the market and make money from it. Thank you. Next slide. Over to you, Simon.

Simon Bottoms

Our feasibility study updates are well underway. We're currently finalizing updated mineral resource models with drill data from the last three years across all deposits in the Kamoa-Kakula complex. Alongside, we're also updating newly calibrated geohydrological models, particularly focused on Kakula. These models will provide us with the foundation for the commencement of multiple mine design trade-offs and then further optimization throughout this quarter.

Alongside these studies, we've commenced a detailed feasibility 250-kilometer drill program focused on 2027–2031 mining areas, with the first drill hole at Kakula pictured in the background of this slide. This detailed drill program will be further complemented with high-definition active seismic surveys, which together will provide the high-resolution geological and geotechnical models, updating our structural models to both optimize our geotechnical and hydrological dewatering designs across the complex.

We anticipate that this drill campaign will extend into 2027, and we will utilize the initial results of this high-resolution data set to inform our trade-off decisions and subsequent life-of-mine plan optimization that we are commencing this quarter. So with that, I'll hand back to Tom to continue through the operations.

Steve Amos, Executive Vice President - Projects

Yeah, yeah, thanks. Thanks, Tom. I'll give an update on the solar project. So we've spoken about this—nice picture there. You can see the batteries in the foreground and the panels in the background. So just to remind everyone, this is baseload power, 95% availability, more reliable than grid power, and it certainly reduces our diesel consumption quite significantly. So the way we're running Phase 1: there's two IPPs—independent power producers—each producing 30 megawatts.

The first one has completed construction. We're receiving 15 of the 30. The second 15 is under commissioning, and we expect that, I would say, in about two weeks' time, and then the final 30 megawatts from the second IPP by the end of September this year—so by the end of Q3. We've also initiated Phase 2 of this project, which is basically a copy-paste—so another two IPPs, each producing 30 megawatts. We've signed the first power purchase agreement, PPA, with the first independent power producer, and the second signing of the contract is imminent—I'm expecting that in a couple of weeks' time.

And then there'll be a Phase 3. There's no question that this is a good initiative, and we're looking at self-build for Phase 3. I think we've got enough experience now from this work to take this on ourselves. Next slide, please. Tommy, over to you.

Tom van den Berg, Senior Executive Operations

Yeah, yeah, much appreciated. So yeah, well done Team Kipushi. They really did a great job, and they continued to overperform. So thanks to Kipushi for the record 70,000 tonnes of zinc. In Q2 2026, Kipushi milled a record of 200,000 tons of ore—Q2—at an average grade of 38.7%. That's a notably higher grade amount of zinc. Multiple concentrator records were achieved in Q2 2026, including recoveries averaging nearly 92%, and then 25,634 tons of zinc produced in May.

So as you can see, the graphs on the right-hand side, they talk to what I'm talking to on the left here. Production guidance unchanged at 240—set to be the world's third-largest zinc mine in 2026. And then we're also doing the same thing as what Steve was saying. The DRC has got a very high sun belt. We've got 12 hours of sunlight a day—more sunlight in winter than we have in summer—and with that we're going to dial in 10 megawatts of constant power at Kipushi, and that will also assist them in managing their constant power supply and making sure that they can mine and produce with those megawatts.

Thanks. Next slide.

Steve Amos, Executive Vice President - Projects

I'll take over. Talk about Platreef. So this is the focus for the project team at the moment—Platreef Phase 2—and this is the next big thing for Ivanhoe. What you can see there is Shaft 3. It's a rock-hoisting shaft. We hoisted our first rock from that shaft at the end of March, and then we've spent this quarter constructing the underground ore-moving facilities, which consist of a crusher, two belts feeding the shaft, and two tractor plates. It's a thousand-meter-deep shaft. It's a rock-hoisting shaft only. We'll use Shaft 1 for man and material. This shaft initially will feed the Phase 1 plant. As the mining ramps up underground, we'll start building the stockpile for the Phase 2 plant, and when the Phase 2 plant comes online towards the end of next year, the shaft will feed off to the Phase 2 plant. Next one, please, Tommy. Maybe just talking about Platreef, and in particular Phase 2.

So we're developing the project in three phases. Phase 1 complete. Phase 2 will be complete by the end of next year, and that's about 450,000 to 500,000 ounces of 3PGE plus gold—so decent size—10,000 tonnes of nickel, and then Phase 3 will be a doubling of that. We're currently busy with the plant construction—earthworks well advanced, civil work started. We've, in fact, poured the mill base, which is on the critical path. We've awarded all the mechanical contracts—SMPP, structural, mechanical, piping, and plate work—ordered all the long-lead items and the bulk of the equipment.

So going very well on the plant construction—definitely on target for the end of next year to start milling ore. 3.3 million tonnes per annum is the milling rate of the Phase 2 plant. Another big bit of work that we're doing is Shaft 2. So Shaft 2 is the future of Platreef. It's a rock and man-material shaft, 8 million tons per annum—so big shaft. We're busy with what we call slapping and lining, which is basically the widening of the shaft from 3.5 meters diameter to 10 meters diameter.

We will be ready to hoist men and material late in 2028, and then rock about six months later. So, as I said, 8 million tons per annum—huge shaft—and de-risks Phase 2 and gets us ready for Phase 3. Thanks. That's all, Tommy.

Simon Bottoms

So looking now to the exciting Western Forelands project. We're currently updating our mineral resource models with the data that we've gathered up until the end of the first quarter this year. And with this we are anticipating to grow our total mineral resources by more than 30% as well as increasing the overall grade in our updated mineral resource statement, which we will publish in September this year. In parallel, we're ramping up the drilling on site to undertake the largest drill program that has ever been undertaken on the project so far.

This drilling is testing the continuity of mineralization between Makoko West and Central, as well as stepping out to test both the shallow eastern extensions of Makoko Central and the southern extension around the high-grade Kotoka target. We will of course be updating you in the upcoming months with both the updated mineral resource and with the results of ongoing step-out drilling, which we believe will further grow shallow copper resources. Alongside the exploration works, we've commenced early project establishment and operational camp construction.

We'll be aiming to commence a series of technical studies later in the year, which we anticipate will include multiple shallow open pits that will enable a lower-capital, fast-execution construction to the project. So next slide, please. So now looking across our exploration portfolio, and firstly the Moxico Province in Angola. This is a frontier greenfields exploration program where we're testing our interpretation that the Katangan Basin sediments extend into Angola below cover, potentially targeting Western Foreland-style mineralization.

We've completed a range of airborne geophysics and soil geochemistry over the prospective areas and from the results of this we've targeted stratigraphic drilling to test these interpretations. The preliminary results of the first few holes through this year have been very encouraging and have been confirming our regional interpretation. Whilst it is early days in this exploration program, we plan to continue drilling into 2027 as we vector in on potential mineral system targets.

So then turning to the substantial exploration package in the Northwest Province of Zambia. This is situated adjacent to the Angolan border with similar stratigraphy to well-known neighboring mines. Here our drilling is targeting both covered Katangan stratigraphy and younger IOCG-style mineralization targets, which were identified as part of an airborne geophysical survey. Our drilling commenced in mid-June on a number of the IOCG targets, the results of which so far have identified prospective alteration and sulfide veining.

In parallel to this, we're running a regional soil geochemistry and ground geophysics program on the southern licenses within the package throughout the second half of this year. The next phase of drilling in early 2027 will be planned to test the sedimentary-hosted copper targets in the northern and western permits of the province. So then turning to our strategic exploration joint venture in Kazakhstan, where we are funding a further $20 million of investment to expand the drill program targeting sedimentary-hosted copper targets in a large sedimentary basin which hosts giant Soviet-era discoveries analogous to that of the Kupferschiefer Basin in Northern Europe. In 2025 we completed a program of field mapping, soil geochemistry and geophysics which define the key basin architecture, and we've been subsequently drill testing throughout this year. We're planning to drill approximately 35,000 meters on a number of conceptual targets. We anticipate that the results of this program will refine our basin interpretation and enable us to progressively vector in on potential mineral systems within the permits.

Tommy Horton, Vice President, Investor Relations and Corporate Development

Thank you, Simon. So we'll now start the question and answer session covering analysts. You may submit your questions to the operator via the phone line. Questions can also be submitted through the webcast. Any questions submitted via the webcast that we are unable to address during the Q&A session, our investor relations team will endeavour to follow up with. So operator, let's start by clearing the phone lines. I see there's four in the queue. Over to you.

OPERATOR

Thank you. Ladies and gentlemen, for any questions on the phone lines, please press star one. You will hear a prompt that your hand has been raised, and if you wish to decline from the polling process, please press star two. First question on the phone, Daniel Major with UBS. Please go ahead.