Ivanhoe Mines Stock Falls Amidst Low Production and High Capital Expenditure Outlook

Investing.com -- Ivanhoe Mines Ltd. (IVN:TO) shares fell by 5% after the mining company announced its full-year operating results and a 2025 forecast that fell short of market expectations. The forecast estimates copper production to be between 520-580 kilotons, which is approximately 4-6% lower than consensus. Additionally, Ivanhoe raised its capital expenditure estimate for 2025 from the previously stated $1.3 billion in September to approximately $1.9 billion.

The revision in the forecast includes a significant $500 million increase in the projected capital expenditure for the Kamoa-Kakula project from an earlier estimate of $1 billion to $1.5 billion. This adjustment follows a fire that damaged generators found on site on January 2, delaying the start-up of a smelting facility by three months.

The company also cited power constraints for a more cautious production outlook, linking these limitations to droughts affecting the availability of imported energy, ongoing grid instability in the Democratic Republic of the Congo (DRC), and the recent fire.

Although Ivanhoe did not provide a cost forecast in this announcement, it is anticipated that cost estimates, currently around $1.40 per pound according to RBC Capital Markets and consensus figures, may exceed present expectations. This situation is attributed to disruptions at the smelting facility and lower volume forecasts. Ivanhoe Mines is expected to announce its financial results, including the 2025 cash cost forecast and 2026 capital expenditure outlook, after market close on February 19.

Morgan Stanley analysts commented: "We expect the stock to underperform today due to the lower-than-expected 2025 copper forecast, the increase in the capital expenditure budget, and the potential delay in the commissioning of the smelting facility."