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Ivanhoe Mines realizes $95.7m loss in Q2; EPS lower than estimates

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Ivanhoe Mines (TSX: IVN) on Wednesday reported its financial results for the second quarter of 2021, during which the posted a sizeable loss after recording income in both the comparable quarter last year and the quarter prior.

Ivanhoe is currently advancing three mining projects in Southern Africa, notably the Kamoa-Kakula copper mining complex in the Democratic Republic of Congo. After entering production in late May, the mine is expected to produce between 80,000 and 95,000 tonnes of copper this year.

In Q2 2021, the Vancouver-based mining company recorded a comprehensive loss of $95.7 million, compared to income of $300,000 for the same period in 2020 and $16.2 million the previous quarter. This was largely due to a loss on fair valuation in embedded derivative financial liability of $85.7 million for the period.

As a result, basic and diluted loss came to $0.09 per share, compared to zero in the comparable 2020 quarter and earnings of $0.02 per share in Q1 2021. The EPS fell short of the lower end of analyst estimates of minus $0.02.

Finance income for Q2 2021 improved to $25.1 million, which was $6.4 million more than for the same period in 2020 ($18.7 million). Included in finance income is the interest earned on loans to the Kamoa Holding joint venture to fund its copper operations.

Exploration and project evaluation expenditure amounted to $12 million in Q2 2021, compared to $9 million for the same period in 2020. The higher expenditure was related to Ivanhoe’s Western Foreland exploration licences and amounts spent on the Kipushi project, which was on reduced activities.

For the first half of 2021, Ivanhoe had a total comprehensive loss of $79.5 million, slightly higher than the $76.3 million loss recorded in the same period last year. The company, however, did boost its cash balances for the six-month period by $381.6 million thanks to receipt of convertible note proceeds.

In H1 2021, Ivanhoe’s investment in the Kamoa JV increased by $157.7 million, from $1.29 billion million as at December 31, 2020, to about $1.45 billion million as at June 30, 2021.

Shares of Ivanhoe Mines stayed relatively flat on Wednesday, down 0.3% as of 1:40 p.m. EDT. The company’s market value last stood at C$11.9 billion.

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