Ivanhoe Mines Ltd

TSX:IVN

Earnings Call Transcript 2024-Q1

[Operator]

Good day, and thank you for standing by, and welcome to the Ivanhoe Mines First Quarter 2024 Financial Results Conference. [Operator Instructions]. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions], please be advised that today's conference is being recorded.I would now like to hand the conference over to your speaker, Matthew Keevil, Director of Investor Relations and Corporate Communications. Please go ahead.

[Matthew Keevil, executive]

Thank you, operator, and hello, everyone, and good day from Vancouver. And it's my pleasure to welcome you to Ivanhoe Mines First Quarter 2024 Financial Results Conference Call. My name is Matthew Keevil. I'm the Director of IR and Corporate Communications at Ivan Mines. On the line today from the company, we have Founder and Executive Co-Chairman, Robert Friedland; President, Marna Cloete; Chief Financial Officer, David Van Heerden; Chief Operating Officer, Mark Farren; Executive Vice President, Corporate Development and Investor Relations, Alex Pickard; and Executive Vice President, Project Steve Amos. We will finish today's event with a question-and-answer session. You can submit a question using the Q&A box on the webcast page as well as to the conference operator being your phone line. Please contact our Investor Relations directly for follow-up questions that are not addressed during the call. Before we begin, I'd like to remind everyone that today's event will contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Details of the forward-looking statements are contained in our April 30 news release as well as on CARs www.iaai.com. It is now my pleasure to introduce Ivanhoe Mines founder and Executive Co-Chairman, Robert Friedland for some opening remarks. Robert, please go ahead.

[Robert Martin Friedland, executive]

Yes. Thank you. Welcome to our quarterly conference call. A few general remarks. We are extremely happy with progress in the Congo. For those of you that are unfamiliar with our copper business, we can find more copper faster than we can build new production. We are only limited by electrical energy, and we've solved that problem. We're going to explain why that problem is behind us. We've taken the opportunity to convert our convertible notes as our shares have traded near an all-time high, which will leave us essentially debt-free. We see nothing but clear sale towards growing our production in the third and fourth phase at our joint venture at Kamoa-Kakula, and we see nothing but upside in the Western Foreland finding more model.Somebody has to go out and find the model that the world needs. It's going to be over our minds. I think we have a lot of new information to give to the market today, and you'll see what we've taken the position to do what we're doing. If you could show the next slide, please. We've been sending this Batman picture around about the absolute centrality of copper to the energy transition. There will be no energy transition without it and we also see enormous amounts of offtake demand in the remilitarization of the world economy, pensions and the ballast, the world economy are causing copper to be a definitive national security issue for each nation state. So Ivanhoe Mines is unique in its ESG characteristics. We'd like to refer all of our shareholders to the progress and the culture that the women and men that lead our company have created. And with that, I'm going to turn this over to the specifics and tell you why I think it's a fantastic opportunity now to get involved with Ivanhoe mines. Marna it's over to you here in Johannesburg, please give them some specifics.

[Marna Cloete, executive]

Thank you, Robert. And it is indeed the season for copper. But higher picture be thousand worse. And what you see here in my introduction slide is Page 3, the 5 million tonne per annum concentrate there, that's basically being commissioned as we speak, and we will be starting our production there in may, which starts tomorrow. So it's really exciting time at Kamoa-Kakula. If we go on to the next slide, the first quarter of 2024 was slightly below our expectations. And as Robert alluded to, that was mainly due to more than expected power interruptions and grip instability in the DRC. Our team subsequently implemented several mitigating measures, and we have already started to see the results of these in April. Thirdly, we secured an additional 15 megawatts of solar through the Zambian grid and secondly, we are involved on an expensive grid upgrade and maintenance plan with our project inspiration in inter working a long start to site and power utility to prioritize and implement critical initiatives. These initiatives have already had a positive impact on production in April with our production expected to be in excess of 32,000 tonnes for the month. In addition to this, we have also secured an additional 40 megawatts from Mozambique, also to be transmitted through the interregional grid, and this will commence tomorrow on the 1st of May and total an additional 55 megawatts of power. Pre-commissioning of our Phase II concentrator, as I said earlier, is ahead of schedule with our first ore expected in May, and the Phase 3 smelter is also on schedule for the fourth quarter of this year. As we enter the dry season in April, our drilling activities are ramping up in the Western Foreland and we have 17,000 meters of drilling for this year. May will be a busy month overall as we all have start with pre-commissioning of the concentrate acquisition, which is cable for first ore in June.Next slide, on a group wide base, our total recordable injury frequency rate comes well below the industry standard. But regrettably, after quarter end, we had a fatality at the Kamoa Mine. Marcopper is undertaking a comprehensive internal investigation into this accident. One being that the gating is complete, our management will review and implement any additional safety measures recommended to prevent certain accident from recurring. Next slide. On the 17th of April, we also launched our 7th annual sustainability report, and we invite all of you to go and read the incredible story of how we continue on our journey to mine with a greater purpose. A few highlights for 2023 include Kamoa-Kakula contributed 6% of the DRC GDP. That is an outstanding achievement. $2.7 billion we spent on local supplies, group wide we provided 849 scholarships and per group wide illustrating our commitment to education and local empowerment, 845 local suppliers were supported group wise representing a 150% increase year-on-year, and we spent $39 million on social economic activities across the group. Next slide. For 2024, we will focus on the following strategic initiatives that will be incorporated into our scorecard. Our decarbonization strategy to let we arose. Our trailing management and conformance with the global industry funded from filing management, embedding human rights into our business practices, best practices in responsible sourcing as well as stringent diversity and inclusion markets. With that introduction, I will now hand over to David Van Heerden to take you through the quarterly results.

[David Van Heerden, executive]

Thank you, Marna, and good day to everyone joining the call today. Marna already mentioned the instability of the DRC and Southern Power Grid, which impacted on the financial results of the quarter. The quarterly revenue of $618 million was stable compared to the previous quarter. The payable funds of copper sold for Q1 of 85,000 at a realized copper price of GBP 382 per pound, with the average price of $4.50 put down in April to date, we expect a nice uptick in revenue in the second quarter. We expect a sizable remeasurement adjustment in the second quarter as the 30,000 tonnes of payable copper provisioning price is realized and the higher price will, of course, also benefit the revenue for the tons sold in the second quarter. If we move to the next slide. The cash cost to down of total copper reduced for the quarter was $1.57 bound. This was towards the bottom end of our 2024 guidance of $1.50 to $1.70 per pound, which we reiterate. The increase in Kamoa-Kakula cash cost in the first quarter is principally due to the decrease in copper and concentrate that reduced during the quarter, but also as a result of the lower grade of copper processed in Q1.The grid instability during the quarter not only impacted on the all tonnes mold, but also impacted on the copper ore grade process due to the reduced underground access to high-grade areas due to the water increase gearing power interruptions. Marna highlighted how these challenges are being overcome and Mark will give more color later on the presentation. The completion of our on-site smelter on -- commissioning late this year is still expected to drive a decrease in average C1 tax cost over the first 5 years, both completion from 2025 by proximately 20%. Kamoa-Kakula’s EBITDA was up quarter-on-quarter to $365 million with EBITDA margin also up to 59% in Q1. On the next slide, Kamoa-Kakula’s EBITDA waterfall illustrated on this slide highlights that the EBITDA increased from the last quarter was driven by the higher copper price during the quarter, which had an accumulated impact of $35 million. This was partially offset by the impact of the reduction in unsold while we benefited from lower logistics charges, season are in the quarter, while other costs increased on the margin. The next slide shows a snapshot of Ivanhoe's consolidated results. I now recognize a normalized profit of $7 million in Q1, slightly up from the previous quarter. This excludes the $139 million noncash loss on the revaluation of the $525 million convertible notes, which is as a result of the 16% increase in our share price. The increase in our share price is obviously a great problem to have, but the impact of the revaluation of our results is some of the stores. This is one of the reasons that we announced the redemption of the notes earlier today. So we will no longer have a struggling from Q3 on it. If we look at our strong balance sheet on the next graph. Okay. So with the redemption of the convertible notes, we will be in a net cash position with our cash on hand exceeding the consolidated debt on the balance sheet. Our continued investment in growth during the quarter remained materially on budget, and we'll start providing additional returns imminently with the completion of the Phase 3 will concentrate at to Kamoa-Kakula and the commencement of production of February at set. Not only are our projects significantly derisked. The capital intensity is much lower than the massive numbers that have recently gotten a lot of media attention. We have been able to arrange in enclave facilities with great teams at Kamoa-Kakula with the working capital overdraft facilities attracting intrest of a near 6.5%. The arrangement of additional facilities of Kipushi is also progressing well with finalization expected in the second quarter. We really have a bright future of growth ahead with almost no debt, making us more nimble than any of our peers. Mark Farren, our COO, will take the presentation further to highlight our recent operations and project progress. And we're just going to turn the call over to our CEO, Mark Farren in a moment to see connects to the line. Mark?

[Mark Farren, executive]

Thank you. I'm going to talk through -- I'm leading my phone to basically drive through the -- my portion of the presentation as the casino stream. So there's the first picture of that no smelter in the background. If I can move to the next one, which is basically our copper production or to copper production side. And it's been mentioned by David and Marna that we produced only 6,000 tonnes of copper in the first quarter, which is not exactly our normalized number. And if you have a look, you'll see that the December quarter and this quarter were impacted depower a pending stability for some of the reasons mentioned. I'll extent about what we're doing about it, and that's the next slide. So we’ve got a team after working with the state utility sell on projects across the grid, not just the turbine that installing at -- but also to stabilize the grid. They've got 2 DC power lines that we buyer with. There's a whole lot of reactive power projects and synchronous converter stations that have been upgraded as we speak. It's about a $200 million-odd investment, which is pain our loan agreement with snow, which gets paid back. We've discussed this before by reduction in power tariffs in the longer term for us. So that's on the one domes to make the smell grid stable with the team. The second one is importing power. And in the month of April, we managed to get 15 megawatts from Zambia through that Zambian grid. It's stable, secure power. It's consistent and it's working. And then tomorrow in the 1st of May, we've signed an agreement to secure an additional 40 megawatts of power, which will take our imported down to 55 megawatts, which is a major breakthrough for us because it's stable power and this source is actually from Mozambique. So if you opt together, the 55 megawatts. And we've actually done projects which are stabilizing the grid in at now. So at the moment, it's a lot more stable. April is looking pretty good. We will be more of 33,000 tonnes, which is more or less where the 2 concentrate should be made a little bit more and we get almost no interruptions in the month of April. In addition to this, we have also spoken about this. We are installing backup diesel-generator power for basically the whole mine to be able to run under any conditions. And a big chunk of that will be commissioned in July this year. So we have about 130 megawatts running by July this year. And by December, 220 megawatts of diesel power installed, which will give you 100% redundancy in terms of what's required to provide power. And then just to summarize where we are on power. The imported power will probably increase by the end of this year to 100 megawatts with the signing of long-term contracts we secure the power supply for that. And then the bulk of the work at SNEL will be completed in quarter 2 next year and quarter 3, quarter 4, it will be stable. In that case, we'll probably have 100% redundancy on what's required in our builder. So we have enough power for Phase I, Phase II, Phase III and Phase IV and future expansions. So I think it has been a problem for the last 2 quarters. We've done a lot of work to derisk power. And I think it's going ahead of a lot set and very forward. I believe there'll be enough redundancy in the system to be able to expand as we need to. So I’m quite comfortable that beginning there now. Thank you.We can move on to the next slide. So discuss the best of backup power, imported power. Just some comments then on the Phase II concentrator. Again, we have about 2 quarters ahead of plan in terms of commissioning that concentrator. I'm quite excited about that. That thing is going to run in May, at the end of the back end of this month of May, it's going to run. And I know Steve has dialled in on this conference call that we expected to ramp up very quickly. The time we get on phase 1 and 2. I think Phase 2 ramped up that concentrate in something like 6 weeks. So I think that this one will also kick in quite quickly. And hopefully, the fact that we commissioned a bit earlier should help us to get the back end of our talents and particularly the upside of our guidance for this year. The smelter itself is not the mix side on the slot construction. The smelter will run its first feel be in December this year. It's on track, there's no major issues on that smelter. We're very placebo that smelter running because it's going to drop our operating cost by something low 20% through the year of 2025 and rodent complexion as we go forward. The new slide is on India, which is just as I spoke about earlier, I go a big turbo that we're installing is 178-megawatt turbine a massive turbine. It's something like 20 meters in -- 100 tonnes of kilo tonnes of copper inside of boats a big explanation. Its cool commission is slightly late. So about January, February next year, where we had aimed for December this year, and that was mainly a logistics issue. But all of the major componentry on site, the teams Mogil's an excellent team and is moving lastly. So that's on the smelter. And I think that's where we are, anything else. I’m looking from my side, I’ve covered everything.

[Marna Cloete, executive]

Multi set slide on growth Project 95.

[Mark Farren, executive]

Okay sorry, on growth in 3 areas, yes. And I guess slightly forward-looking. So the one area is taking the infrastructure that we've already installed. So Phase 1, Phase 2 and Phase 3, we believe that we can move ration the 14 million tonnes per annum that we've been talking about to about 17 with those 3 plants. There is some work that we've done on Phase I and Phase II. Phase I and Phase II, we believe to 10 million tonnes easily. And Phase 3, we believe we'll be able to get to between 6 and 7 million tonnes. So instead of the tonnes that we've looked at 14 million tonnes, it's probably more likely 17 million tonnes. Then it's a partial Project -- and that's also very exciting. It's a flow that will take us from our current 88%, 89% recoveries to 95% recovery. That work is done, and we'll have engineering done with a budget estimate for that work in May. So basically, in the next couple of weeks, we'll have that engineering budget really. What's not about that, there's 2 things here. The first one is all your new lasers. Obviously, you get to increase 7% recovery. And the second thing is that all the training that we have accumulated over the last couple of years, it's about 50 million odd tonnes. That can be reprocessed and that will be reprocessed and we'll get the benefit of that extra tonnage. If you add the 2 together, to tonnes per annum with very effective capital cost and obviously, an above improvement in operating costs because we're getting another 7% recovery without any additional operating costs. So that's exciting. And then Phase 4 I believe it will be accelerated. We haven't got a silent yet, but it's not going to take too long to place forward. And there's some synergy between what we want to do on Phase 4 and Project 95. So basically, if I can talk about it is we would probably start summer phase early production by utilizing the tailings that are lying on the tailings dam at 50 million tonnes that I spoke about, that would be something that we could do to initiate the first production of Phase I. So all very, very exciting projects. I believe power, we've derisked significantly over this last quarter. We have a plan to be able to install enough power within the country and importing power as well as backup generation to derisk this operation completely and to be able to grow. The important thing for us was always to be able to grow at the rate that we need to grow. And I believe we have to use that significantly. So I think that's it on power and on what we're doing in the future. Thank you.

[Alex Pickard, executive]

Thanks, Mark. It's Alex Pickard speaking. We're going to just take you through a couple of slides on the Western Foreland. So I think Mark gave a really good overview there of our plan at Kamoa-Kakula to accelerate production, take our throughput rate to potentially 20 million tonnes and beyond. And what we're really looking to do at Commerce is chase down the world's #2 and world #1 copper producers over time. What we have next door at the Western Poland is the opportunity to really start to produce over 1 million tonnes per annum from this new great copper district on the whole. And we have some very exciting work that's going on there today. So during the third quarter, we drilled 17,000 meters. -- bearing in mind that January through March is very much in the middle of the rainy season. So 17,000 meters is an excellent achievement, and it shows that now we are into the dry season towards the end of April, we are clearly on track to meet or even possibly exceed our target of 70,000 meters drilled this year, which was a 4x increase in the drilling budget from last year.Most of the drilling we are doing at least currently is focusing on expanding the high-grade Kitoko discovery that was made in the fourth quarter of 2023. We have a slide coming to preview some of the work we're doing at Kitoko. But also as well as Kitoko, I think it's worth reminding the audience that we've already discovered and delineated 5 million tonnes of resources at Kitoko in Kamoa, which is a major achievement, I think, in the context of the copper industry, the third largest discovery basically since Kakula. And put another way, 5 million tonnes of resources is roughly the same as a 200,000 tonne copper mine over a 25-year life. So you can see that we already have a critical mass to start a new mining operation in the West in Holland, but what we're drilling now at Kitoko and elsewhere is really looking to improve and augment what we already have at the Kitoko. Next slide, please. So this is showing the map and the Western Foreland license, which you can see is adjoining to the western side of the Kamoa-Kakula mining license where it stays to call the West. And really, the key thing to take away here is, first of all, we're putting a lot of drill holes on a daily basis into Kitoko. You can see all of the red stars there that are indicating holes that are currently being drilled. We have, I think, 8 rigs on site currently, which will soon be 10 rigs, including 2 rigs with specialization for deeper drilling.But the exciting thing for now, the Kitoko deposit is very much open in all directions. And so really, what we're looking to do is understand the extent of the mineralization that we have and also the structure, and we're starting to explore the connectivity between you can see Kitoko and Kakula, which are roughly 5 kilometers apart, they could potentially be developed as part of the same mining operation. And then ultimately, there may be a connection also between the Kamoa and the western edge of Kakula which you can see as indicated, is roughly 10 kilometers in terms of distance. So Foreland Western Poland, it really is an exciting year ahead. We are getting into the dry season and the bulk of our drilling activities. And I'm sure over the course of this disease, we will be providing the market with further updates in terms of our activities. I'm going to hand back to Mark Farren, who is actually sitting at the moment. So he's about person to give you a quick update on what we're doing there.

[Mark Farren, executive]

Thanks, I’ll carry on. Okay, just in broad strokes, Kipushi underground mine has fantastic. It's a fantastic ore body running at 25% link by areas grade in the world. The development footprint is open. We've opened up 7 levels already. We've started with the sublevel open stoping of the long haul stoping. That's working perfectly. We've got about 300,000 tonnes of stock so more than 3 months of ore on surface already ahead of that concentrator. And that concentrate will run in May. Also at the end of May, we don't believe there's anything complex in that concentrate. That's a simple concentrator. It's quite a small one, actually. But it's a fantastic mine. It's looking very, very good. I mean, if people that have been there when it was flooded recognized what we've done. It's a modern line, it's underground, development is very good. The ground conditions are fantastic and everything there is ever schedule. So I cannot think of any major risks there and maybe just to mention what is quite encouraging is that the zinc product has been moving in the right direction. And just at the right time, too, I think that would be my opinion. And I don't believe there's any major technical risk on that mine. We're very excited to get that first seat moving. And then do exactly the same as we have at the other mines and made us to improve their productivity and then obviously, the throughput may be over time to lift them a little bit more because it's such a good ore body that we just to get it up a little bit more. So I'm confident that Kipushi moving and is ahead of schedule like the other 2 and is looking really good. Thank you.

[Alex Pickard, executive]

Thanks a lot. And I will just close out with an update last certainly don't mean lease on plate. So with slightly, we announced during the previous annual results that we've made a change in strategy to accelerate the expansion of Platreef. So what this means in reality is that we will finish the Phase 1 concentrator project on time in the third quarter, but we've deferred the ramp-up of this concentrator until the middle of next year. The reason that we've done this deferral is that we can focus on the underground development that we need to do for shaft 3 and for the Phase II expansion. So just to remind people, underlying what we decided is Shack, which was originally supposed to be a ventilation shaft. We changed approach, and we decided to equip that shaft for hosting, which will be ready by the end of 2025. And so this will boost the total hosting capacity to around 5 million tonnes, including shaft 1 and shaft 3. So with that 5 million tonnes of pushing capacity, the plan is to ramp up the Phase 1 and Phase 2 concentrators adiposity is around 4 million tonnes. That's just leaving a little bit of extra capacities for development for our Phase III expansion. And just to give you an idea around the numbers, at 4 million tonnes of capacity will be producing somewhere between 400,000 and 500,000 ounces over the 4 e-methods so that's platinum/palladium rhodium in gold, plus up to 10,000 tonnes of nickel and copper. And then longer term, the strategy is very much to keep shaft #2 going. That's one of the largest pricing tracks in the world. That will enable that Phase III expansion to 10 million tonne pricing capacity, at which point we will produce around 1 million ounces of the precious metals plus around 20,000 tonnes of nickel and copper. So our major producer of all of those methods. And all of this will be published in updated studies, a feasibility study and a scoping study that will be out in the fourth quarter.And that I think we're at the end of the presentation slides. But perhaps just before I hand back to Matt, I will point out that we are a little bit perplexed looking at the trading activity on the screen this morning. I think we very much see this as an overreaction caused by convertible redemption. But then I would point out that this redemption is going to cause a lot of short positions in ligand how mines to be closed out over the coming weeks as these bonds are redeemed. I think fundamentally, we believe this has been a very strong set of results and especially into the month of April in terms of the production we're showing at Kamoa-Kakula, much more to come on the West in Pallas and we only perceive this to be an opportunity for our investors. But I'll hand over to Matt to chair the Q&A.

[Matthew Keevil, executive]

Thanks, Alex. And operator, I think we'll move to the phone line first and foremost and clear all the phone questions. And then I think we have time in, we'll hop over to the web and see if there's any other questions we'd like to do. Thank you very much.

[Operator]

Certainly. [Operator Instructions]. And our first question will be coming from Lawson Winder of Bank of America Securities.

[Lawson Winder, analyst]

Thank you for the presentation. I just wanted to ask about this potential updated mine life plan for Kamoa-Kakula. Is that intended to be published at some point this year? And then if so, what are you expecting in terms of the range of possible plans that are consideration for that?

[Robert Martin Friedland, executive]

Alex and Mark, do you want to talk about our plans to keep expanding and protect the position of #1 to #2 in the world -- just to give you.

[Alex Pickard, executive]

Absolutely, Rob. I'll take out Thanks, Lawson. So look, I think Mark highlighted what the separate initiatives are that we're looking at. So just to go through those again, it's the optimization of the Phase III concentrator. So we think like Phase I and Phase II, we can probably get at least 20% more capacity out of that concentrator. We have the project 95, which is the plan to increase the recoveries and basically get 30,000, 40,000, 50,000 tonnes of effectively free copper from what we have already. That will also apply to Phase 3 as well as Phase 1 and 2. The opportunity to recover those 70,000 tonnes is already locked in our tailings at a integrative of 0.7% and then also, Mark was alluding to our plan to potentially accelerate Phase 4. We'll look to see at a lot of things around our mine panning in order to keep that pay for operations. But fundamentally, we have 40 million tonnes plus copper in the ground here. There are all sorts of opportunities to expand very efficient long-haul mining. We can even look at open pit mining in different parts of the ore body. So there is no fundamental shortage of ore to feed a much expanded in circuit. Specifically, Lawson, in terms of when we will publish what Project 95, we're planning to -- will only publish a press release giving you the details on that when the engineering is completed this month. I think what our intention is to publish a kind of more fundamental overarching updated study for Kamoa-Kakula that will incorporate all of these elements. Obviously, the last one we did was a couple of years old, and that should be done by sometime around the end of the year. So we'd like to get it done and published yet before year-end.

[Robert Martin Friedland, executive]

I'd also like to add a few more comments. All of our ore sources that we've been mining are from underground. There are shallow open pittable reverses that would be the highest grade open pit copper mine in the world. And the advantage of the open pittable resources is that the mineralized horizons of 11 pyrites in the Hanging wall and that pilotage on the way down would be extremely beneficial to the smelter. So for the first time, we're looking at we have more and more milling capacity, we can potentially fill that mill capacity with very significant open pittable resources that exist on the Kamoa license. So you can do the math yourself on getting to 16 million to 17 million tonnes of milling with the existing housing traders and the fourth concentrator in the future, and we get us well over 20 million tonnes. And that's really just a question of how large that concentrator might be. So this year, we should start showing the world what Kamoa-Kakula could look like in a $4.50 per pound price environment or $5 per test environment. We bring on additional capacity with less additional capital than any mining company in the world. It is any place in the world that can expand production quickly in response to higher prices at Kamoa-Kakula, and then, of course, there's the Western Flores, where we already have 5 million tons of high grade. And as the spring and summer go on, we will update you on our drilling success in North in Portland. But clearly, the next mine, which would be Ivanhoe Mines operation will be accretive. But we do see the Kamoa-Kakula joint venture, definitely being in striking range into be the second largest copper complex in the world. And given challenges we've seen in Chile, and we're intimately familiar with those challenges. We are beginning to think we have a chance to be #1 just in the joint venture even without the Western Fores. So, we'll be running more towards as we bring this all in the focus of $4 or $4.50 copper world for us is very, very different than a $3.50 per pound per copper world. Thank you, Lawson.

[Lawson Winder, analyst]

Yes, very well. Thank you, Robert. If I could follow up with one sort of finer point. I mean, with the huge amount of throughput that you're getting just from Phases 1, 2 and 3, is there any thought to foregoing of Phase 4 and focusing that expansion on Western Foreland.

[Robert Martin Friedland, executive]

Yes. Phase 4 is for the joint venture, Phase 4 is almost of that a doubt, we're doing in Phase 4, we're looking at a Phase I. The joint venture is sitting in an ocean of copper that is immediately developable. In Western Foreland is a completely separate thing. We're not in a joint venture that graph is held by Ivanhoe Mines. And they're perfectly accretive with each other because now that the railroad capacity is opening up to Angola, that railroad goes right through the rest deployments.And as we're increasing the stability of the grid and putting our foot at more regional power, a lot of people are confused the power is reeled through Zambia, but it comes from Mozambique and the vast majority of the Mozambique power is hydropower. Combined with our backup power, that's newly our limiting factor. We're not limited by copper we have here, which is unique. We don't have a source of water. We're not fighting icon snow like you would be up in the Andes or in Canada. Our returns of electrical energy, and we're telling you today, we really think we're putting that electrical energy constraint behind us now in the current quarter. And so the joint venture has to see how far it can go, and I know with over Wager, having talked to Mark and our team, we just had our Board meeting in London. We really are moving to a Phase IV that phase store won't touch Kakula West. There's enormous resources Kakula West which could make a Phase 5 at the joint venture. And then the Western Foreland is a completely different story, which we will be telling the market about a lot more in the near future.

[Lawson Winder, analyst]

Very exciting. Thank you.

[Operator]

[Operator Instructions]. And our next question will be coming from Andrew Makitchook of BMO Capital Markets.

[Andrew Makitchhok, analyst]

Mark, maybe you could just give us a little bit more context on this power that you're securing from the various grids to the cells through the Zambian interconnector. Obviously, there is an active demand for power in the region, in the Congo to the south of the Congo. Can you just give us a sense of your level of first mover or ability to secure this power? And I think you used the words in your previous comments, long-term offtake agreements that these aren't month-to-month, but the -- are we correct to understand that this is kind of a multiyear agreement that something is on like 100 megawatts it should be available for a very long time.

[Mark Farren, executive]

Exactly right. That's exactly what we do. We've entered into short-term agreements. That was then a couple of months ago, and that's when the 15 megawatts came from and the additional 40 that's coming from tomorrow. But we have been busy with setting up long-term agreements because to get that stability in the long term and the volume, the amount of megawatts that you need, you need to enter longer-term agreements because these RVPs actually to capitalize some of their investments, they need to invest in some of the long-term infrastructure. We far down the track with that. We've got the 100 megawatts agreement that we would be finalizing now, and that's a long-term agreement. It's basically a permanent agreement that will be in place. So as a minimum, we'll have that 100 megawatts in place by the end of this year, in addition to 250-odd megawatts that we've done by improvement in the DRC itself, the turbines that we've upgraded the power lines that we perceive at the infrastructure that we bring. And then in addition to that, we've got 220 megawatts of diesel that we're pulling in, which we never want to use. But if you add it all up, Phase 1, 2 and 3, we'll use about 220 megawatts, and we'll have 540 megawatts of installed power everything up, and we will not need to use the dies in the long term. So I think in terms of derisking, we've done that, taking our steps to doing that, looking for more power to build Western foreland to get this into the copper district over 1 million tonne kind of number. We belt all of those long-term strategies. And I can't on this call explain all of them, but there are other international suppliers that are waiting to supply additional power to us through different networks. So I do think like if you concentrate on the problem, for example, power that we have, we resolve these problems. So we do with everything else, I'm very confident that we've gone a long way in the last couple of quarters in securing stable grid power not only from SNEL but from the Zambian grid and from Mozambique contract as well. That's happened quite recently. But in the longer term, I think we will be able to get a lot more megawatts from other sources.

[Andrew Makitchhok, analyst]

Mark, and any comments on the competitiveness of this clearly these other people looking for power. That you guys are ahead of the curve.

[Mark Farren, executive]

We're ahead of the curve. It's not achieved this now, but it's not good diesel. So for example, we're running between $0.13 per kilowatt hour $0.18 to input this power, where power is going at about $0.11. So it's a little bit more expensive, but it's not prohibitive. And if you compare it to diesel, diesel is running at like 40 something $0.47-oddkilawatt hour. So the more we get of this tower, the better for us to grow from where we are now, Phase 1, Phase 2, Phase 3, and I'm going to say phase 4 fall we've secured enough panel. We're going to be fine with power. If we can build more phases, when we do the western quarter depending on the size, we can absolutely we can have to do more work that off. But I think we are car the next couple of years, next 5-year window, we're okay, and we are not stopping. We've got work streams running. We've got very confident people working on this. We also have removing quite quickly to look at solar solutions. We have some term builds on solar already, and I think that will be added to our added to our different sources as we go overtime. That's all good. It's actually good. We're getting the life.

[Andrew Makitchhok, analyst]

Just one non-power question. I'm not sure if there was any comments made about the local pine feeder exploration. There's a little bit of description of that in the release today. Can, we get any additional comments on what kind of target debt timing of the proposed work on that property?

[Robert Martin Friedland, executive]

Yes, I'll take a crack at that. The Mokopane receiver has been named as such by meeting PhD government, platinum, palladium, nickel experts from the government of South Africa. There existed giant gravity anomaly 10 kilometers away from our shaft. It's one of the largest, if not the largest gravity anomalies on this particular planet that went have it. We have run a much more detailed gravity survey over that ground and there's something extremely heavy in our neighborhood. It could be iron or it could be the critical zone of the part. The critical zone where we have the mineralization is very heavy rock. It grades almost 4 tons per cubic meter, a normal kind of rock will probably grades 2.7, 2.8 tonnes per cubic meter. So it's something very heavy. When you measure gravity, you don't know how deep it is. It could be something ultra-heavy very deep or it could be just only heavy but closer to the surface. So we're running a lot of other geophysics of mapping and we see world-class targets.I'm of the personal belief that the nickel in endowment, sulfide nickel endowment in the northern limb of the Boswell right where our farms are is probably the largest sulfide nickel endowment on planet earth. And in vacate that we're just going to be mining platinum and palladium. But actually, we have historical intercepts 600, 700 meters thick of 15 nickel with a gram or so of platinum plating and gold as a by-product. Now where all this metal came from is a mystery in fact where the entire Bush belt came from this mystery, the theoretical target in the multipicture with stem of the mushroom that we call the Bushel. If it creates the interesting target. We're doing a lot of work on it. We'll be taking people on pure later this year, and we'll get ready to drill it. But we have no idea whatsoever what it is, what is so heavy, and we just don't know how deep it is. But there are deep mines in the world. It could be deep, it could be shallow and time will tell. South Africa is probably the most underexplored country in the world, if the numerator is its mineral potential in the denominator is what has been actually done. There has been really no significant expiration in South Africa since we found the Platreef mine, which is itself the largest precious metals not being developed in the world. But given the well-advertised problems in South Africa to secure mineral title, the 10 years that were rather challenging during the Zima era. The world has just stayed away from South Africa for a middle exploration. But as the logs there, and you see a number of very compelling opportunities for tier 1 discoveries, the first of which is the multipicture that to be the case, that would be a negative cost base metals discovery gives us so much precious models in talent. So this is our third and fourth quarter project, and we'll be telling you more about it in the near future.

[Andrew Makitchhok, analyst]

Thank you Robert, I will turn it vital to the next speaker.

[Operator]

And I would now like to turn the call back to Matthew Keevil for additional questions.

[Matthew Keevil, executive]

I have 1 or 2 questions from the web that warrant some attention. So we'll just drop them together. I think Robert, this is probably geared towards you. I have a couple of questions on premiums for low emissions and responsibly produced metals, both nickel and copper. Some people ask if you could speak to the potential for seeing premiums on responsibly produced metal and what you're hearing in the market on that movement.

[Robert Martin Friedland, executive]

The 100% certain that our minds will be rewarded with premiums for our metal because we're the lowest generator of global rummy gas per unit metal produced. In fact, it's becoming lately obvious to the mining industry in general that the giant porphyry copper have only had to compete on one parameter, cash cost per pound of making copper. But when you look at the global warming guests per unit of copper produced and less that is bit minor powered by a nuclear power plant or hydropower, they create a heron’s amount of global winning gas for using copper produce. So it makes no sense for our kids or our granted to agree the world economy if we're going to mine low-grade copper and grind it down to nothing, and at the same price as everybody else. Today covers $4.58 a pond, whether you produce clean cup or dirty copper. Now that's coming to a screaming halt. Index Technologies is about to begin trading metals in relation to their ESG characteristics on the Singapore block exchange. There's a lot of people that realize how post same market is, but iron ore used to be traded between Rio Tinto and BHP and the cream and Japanese steel mills once a year, they would agree at price and iron. Once Singapore started treating fungible iron contracts, all the iron in the world has traded there. So we're about to see all metals trading according to their ESG characteristics by a company that found a way to institutionalize trust using the block chain. It's not easy to have differential pricing on metals. You've seen this in sweet and if you create some crude oil, you will now see in different grades of copper and nickel and other metals as well as LNG and other firms of hydrocarbon, and that's because the world has failed to put a price on carbon. And that's felt silly that we are the meanest producer of copper in the world that is significant and yet we're getting the same price as everybody else that will not persist. As soon as we have markets that can reward people who make clean copper than some of the German automakers will pay a premium for that clean copper. And if you're a dirty copper producer, you will achieve a discount. And that is how it should be. And that's why the Democratic Republic of the Congo is in the best position in the world for developing green metals. The only place we're agreeing to find these green metals at scale is the African continent. That's where they have hydro power and high grades. And this is becoming increasingly obvious to everybody. We're seeing discussions that the copper industry means at least pay $15,000 a ton to screw up their courage to build a large, low tonnage copper mine. If you look at-- it came in at close to double the capital that was predicted. And so in an uncertain world in Latin America, we probably do need $15,000 a ton to bring on stream significant 0.61% porphyry copper mines. And a lot of the existing mines have grades of declining in grids that burn coal to make electrical energy. And there's not only shines here 4 hours a day in South America. And so the grid is a co-brand grid in countries like Peru and Chile. So we have a tremendous amount of interest in the production of green metal, and that's where the Congo will clearly need the worlds. And we look forward to the day where we'll be able to shore on is a premium price for our copper, about 100% for sure differential pricing in metals is opening scene as a third year e-pay Abex technologies. And these are serious people. They ran the back room at Goldman Sachs when they were involved in the Comex and the Imex, which is needing commodities traders in the world as it changes. So it took a long time to do this, but it's really going to happen. Thank you for the opportunity to pontificate on that important question.

[Matthew Keevil, executive]

Thank you, Robert. And I believe we've pretty much covered all the questions today online and on the phone. So we'll wrap up the call. Just a quick reminder, if you do have an outstanding question. It wasn't answered during the course of this call. Please do follow up with our IR team, Tommy Allison, myself, and we'd be happy to answer that question offline. But this concludes the call. I'd like to thank everyone for attending today's event, and we look forward to speaking with you soon on the many exciting milestones coming up this year. Operator, please feel free to wrap up. Thank you.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.