Gold Mountains (H.K.) International Mining Company Limited provides $200 million collateralized line of credit for Phase 2 of Kamoa-Kakula Copper-Cobalt Mine Project

Gold Mountains (H.K.) International Mining Company Limited provides $200 million collateralized line of credit for Phase 2 of Kamoa-Kakula Copper-Cobalt Mine Project On May 26, 2015, Zijin Mining Group Co., Ltd. and Gold Mountains (H.K.) International Mining Company Limited — a wholly owned subsidiary of Zijin Mining Group Co., Ltd. — entered into a conditional share acquisition agreement with Ivanhoe Mines Ltd., Ivanhoe Mines US LLC, and Crystal River Global Limited (a private company that is legally incorporated in the British Virgin Islands and controlled by So Hon Chun) to purchase a 49.5% equity stake in the Kamoa-Kakula Copper-Cobalt Mine Project.

Then, in December 2015, Zijin Mining Group Co., Ltd successfully acquired a 49.5% equity stake in Kamoa Holding Limited (KHL) from Ivanhoe Mines Ltd. via Gold Mountains (H.K.) International Mining Company Limited for $412 million.

After the acquisition, Ivanhoe Mines retained a 49.5% equity stake and Crystal River Global Limited retained a 1% equity stake.

Under the terms of the acquisition, Gold Mountains (H.K.) International Mining Company Limited assumed responsibility for a $169,000,000 shareholder loan (captured via ID#103014) that Ivanhoe Mines Ltd. had previously issued to KHL (which held a 95% equity stake in Kamoa Copper SA — the actual owner of the Kamoa-Kakula Copper-Cobalt Mine Project — at the time of the acquisition).

Then, in December 2020, Gold Mountains (H.K.) International Mining Company Limited provided KHL with a $200 million limited recourse line of credit, which was secured by (i.e., collateralized against) the pre-production ore stockpiles to support the Phase 2 concentrator expansion (captured via ID#102968).

The line of credit was never drawn down by the borrower.

CITIC Metal Co., Ltd. and Zijin Mining Group Co., Ltd. also each provided an advance payment (pre-export finance) facility of up to $150 million ($300 million in total) to be drawn at the election of KHL from June 10, 2021, until May 31, 2023 (captured via ID#102735 and ID#102654). KHL elected to draw down on these Sinosure-backed facilities in June 2021.

The Kamoa-Kakula copper-cobalt mine complex comprises a very large, high-grade stratiform copper deposit with adjacent prospective exploration areas, located within the Central African Copperbelt in Lualaba Province, DRC. Kamoa-Kakula lies approximately 25 km west of the town of Kolwezi, and about 270 km west of Lubumbashi.

Kamoa Exploitation Licences (exploitation permits 12873, 13025 and 13026 which cover an area of 397.4 km2), approved on August 20, 2012, grant Kamoa Copper SA the right to explore for, develop and exploit copper and other minerals for an initial 30-year term, expiring August 19, 2042. The permits can then be extended for 15-year periods, until the end of the mine’s life.

Title to the Kamoa-Kakula copper-cobalt mine complex resides with Kamoa Copper SA, a subsidiary of KHL, which is the holder of the Kamoa Exploitation Licences. The development of the Kamoa-Kakula copper-cobalt mine complex was to be undertaken in three phases. Phase 1 involved the construction of a 3.8-Mtpa concentrator plant.

Phase 2 involved the expansion of the capacity of the concentrator plant from 3.8-Mtpa to 7.6-Mtpa. Phase 3 involves the expansion of the capacity of the concentrator plant from 7.6-Mtpa to at least 11.4-Mtpa. China Nerin Engineering Co., Ltd. was one of the contractors responsible for Phase 1 and Phase 2.

Kamoa Copper SA relied on best-in-class, mechanized underground mining equipment from Swedish companies Sandvik AB and Epiroc AB, and Finnish company Normet Oy, three of the world’s leading suppliers.

The Swedish Export Credit Agency (EKN), the Swedish Export Credit Corporation (SEK) and Standard Bank South Africa conducted environmental and social due diligence of the project based on an existing Environmental and Social Impact Assessment (ESIA).

The project also developed an Environmental and Social Action Plan (ESAP) with the purpose of managing identified risks in line with international standards. A Phase 1 groundbreaking ceremony took place on July 3, 2019.

Phase 1 reached completion in early July 2021 when the 3.8-Mtpa concentrator plant was fully operational and copper concentrate was being dispatched daily to the Lualaba Copper Smelter (LCS) and first blister copper ingots had been received.

At that time, Kamoa Copper SA was preparing for final plant performance tests, which would conclude the C4 (or “hot”) commissioning activities.

The engineering and procurement activities the Phase 2 expansion of the capacity of the concentrator plant from 3.8-Mtpa to 7.6-Mtpa were also more than 80% complete and on track for a Q3 2022 start-up.

In August 2021, Kamoa Copper SA announced that copper production exceeded 500 tons per day towards the end of July 2021, nearing the Phase 1 steady-state design capacity of approximately 550 tons per day.

Phase 1 concentrator copper recoveries averaged approximately 81% during July 2021, with operations progressively increasing toward the Phase 1 steady-state design copper recoveries of approximately 86%.

Then, in November 2021, Kamoa Copper SA announced that the Phase 1 concentrator plant met, or exceeded, all design criteria and was operating at steady-state.

There was a record 18,270 tons of copper in concentrate produced in November 2021, bringing year-to-date production to more than 87,000 tons as at November 30, 2021.

In October 2021, Kamoa Copper SA announced that construction of the Phase 2 concentrator plant was proceeding ahead of schedule and was anticipated to begin operations in Q2 2022.

Then, in December 2021, Kamoa Copper SA announced that the Phase 2 concentrator plant was approximately 70% complete and it was still on track to begin operations in Q2 2022.

In late January 2022, Kamoa Copper SA announced that the Phase 2 concentrator plant was expected to be 93% complete by January 31, 2022, with hot commissioning of the concentrator on track to begin in April 2022, several months ahead of the original schedule.

A dedicated engineering team was appointed to de-bottleneck both the Phase 1 and Phase 2 concentrators (after commissioning), with targeted improvements aimed at increasing plant throughput from the design of 7.6-Mtpa to 9.2-Mtpa, and producing up to 450,000 tons per annum of copper in concentrate from the first two plants once steady-state was achieved.

Then, on March 21, 2022, the Phase 2 concentrator plant successfully produced the first batch of copper concentrate, about 4 months ahead of the original plan.

After 17 days of the mills being in operation, the capacity exceeded the design on a consistent basis, and commercial production was officially realized on April 7, 2022.

On April 8, 2022, the single day production record was broken, of which 25,126 tons of ore was processed and 1,202 tons of copper was produced.

Then, in early June 2022, Kamoa Copper S announced that it had achieved record monthly copper production of 29,800 tons.

The Phase 2 concentrator ramped up to steady state ahead of schedule and a milling record of 660,000 tons of ore was achieved in May 2022 – a run rate of 8 million tons per year.