Ivanhoe Electric’s Santa Cruz PFS Puts Initial Capital at $1.43 Billion
Drill rigs at the Santa Cruz Copper Project near Casa Grande, Arizona. Image credit: Ivanhoe Electric.
Key Points
- Ivanhoe Electric (NYSE American: IE; TSX: IE) published a 2026 preliminary feasibility study for its 100%-owned Santa Cruz Copper Project in Arizona on September 23, 2026.
- Initial capital rose to $1.43 billion from $1.24 billion in the 2025 study, and life-of-mine C1 cash costs rose to $1.47 per pound from $1.32.
- At a $4.75 per pound base-case copper price, the study gives an after-tax NPV (8%) of $1.5 billion and an after-tax IRR of 19%. At the $6.79 COMEX spot price of September 21, 2026, those figures are $3.5 billion and 30%.
- Access now runs through a single 4-kilometer decline driven by a Robbins tunnel boring machine. Average cathode output over the first 15 years is about 75,000 tonnes a year.
- Box cut development is due to start in October 2026 and first cathode is targeted for 2029. Project financing, including a US EXIM application, is not yet committed.
The 2026 Study
Ivanhoe Electric released the 2026 preliminary feasibility study (PFS) for Santa Cruz on September 23, 2026, alongside a technical report summary prepared under the SEC’s S-K 1300 rules. The study replaces the 2025 PFS. Its main change is access: the twin declines driven by roadheaders are gone, and a single decline cut by a tunnel boring machine takes their place. Engineering and input costs have also been updated to current market conditions.
Santa Cruz is an underground copper mine on about 6,000 acres of company-owned private land near Casa Grande, roughly 40 miles south of Phoenix. Ore is heap leached and processed through solvent extraction and electrowinning (SX-EW), which produces 99.99% pure copper cathode on site with no smelter. The plan mines Probable mineral reserves of 140 million tonnes at 1.08% copper, which the company puts at about 1.5 million tonnes of contained copper, over a 24-year mine life.
Throughput averages 20,030 tonnes per day over the first 15 years, producing an average of 74,722 tonnes of cathode a year. Over the full 24 years the averages fall to 15,346 tonnes per day and 58,385 tonnes a year, for 1.4 million tonnes of cathode in total. The study assumes 92.3% copper recovery.
| Metric | 2025 PFS | 2026 PFS |
|---|---|---|
| Initial capital | $1,236 million | $1,426 million |
| Life-of-mine C1 cash cost | $1.32/lb | $1.47/lb |
| Life-of-mine all-in sustaining cost | $2.02/lb | $2.28/lb |
The base case also includes a domestic cathode premium of $0.14 per pound. After-tax payback from the start of operations is 4.8 years at the base-case price and 3 years at spot. Capital intensity is $19,100 per tonne of annual copper production, measured against the first-15-year average. The company’s cost-curve chart, drawn from S&P Global data, places the $1.47 C1 figure in the first quartile of copper mines in the Americas.
Preliminary feasibility study (PFS)
A PFS is the engineering and economic study that converts mineral resources into mineral reserves. It fixes a preferred mining method and processing route and costs them to a level that supports a reserve estimate. The more detailed definitive or bankable feasibility study usually comes later. US-listed miners report PFS results under the SEC’s S-K 1300 rules, and Canadian-listed miners under NI 43-101.
Cost Changes Since the 2025 Study
The study bridges initial capital from $1,236 million to $1,426 million in three steps. Cost escalation, which the company puts at about 8% inflation on construction materials and labor, added $88 million. Mine development added $18 million, covering the engineering of the ventilation shafts and the tunnel boring machine access. Surface capital, indirect costs and contingency added $84 million, reflecting a change in the construction scope of the SX-EW plant and the related indirect cost estimates.
Operating costs moved for similar reasons. The release attributes the higher C1 cost to inflation in consumables, power and labor, and to more binder in the paste backfill after further engineering and test work. All-in sustaining cost also carries more sustaining capital for mine development, which gives access to additional reserve tonnes. Life-of-mine sustaining capital is $1,546 million.
The economics are sensitive to the copper price. On the call, CEO Taylor Melvin said each $0.25 per pound change in copper moves the project’s value by about $240 million. The release sets out the life-of-mine sensitivity below.
| Copper price ($/lb) | After-tax NPV (8%) | After-tax IRR |
|---|---|---|
| 4.00 | $0.8 billion | 14% |
| 4.75 (base case) | $1.5 billion | 19% |
| 5.00 | $1.8 billion | 20% |
| 6.00 | $2.7 billion | 26% |
| 6.79 (COMEX spot, September 21, 2026) | $3.5 billion | 30% |
| 7.00 | $3.7 billion | 31% |
The mineral reserve itself is estimated at a lower long-term copper price of $4.00 per pound, using net smelter return cutoffs of $43.95 per tonne for longhole stoping and $60.00 per tonne for longitudinal retreat and drift-and-fill mining.
Tunnel Boring Machine Access
Ivanhoe Electric said in May 2026 that it would acquire a Robbins Crossover XRE tunnel boring machine and material handling system from The Robbins Company of Solon, Ohio. The machine will cut a single decline about 4 kilometers long and 9.3 meters in diameter down to the deposit, which lies 310 to 940 meters below surface. It installs a sealed, steel-reinforced concrete segmental lining as it advances. Its earth-pressure-balance capability is designed to control the tunnel face and limit groundwater inflow. Ivanhoe Electric’s release links to a Robbins video showing the Crossover XRE machine and its material handling system.
Glen Kuntz, Senior Vice President of Mine Development, said on the call that the machine is designed to advance about 10 meters a day, around twice the rate assumed for roadheader development, and that the smaller box cut it needs cuts excavated material there by about 75%. The conveyor installed with the tunnel carries development material first and is later extended for ore handling over the life of the mine.
The machine previously worked at the Grosvenor mine in Australia. Kuntz said it has been dismantled and its main components are being shipped to Texas for refurbishment, while a larger cutterhead and other parts will come from Robbins’ facilities in Ohio. Parts are expected on site from the end of 2026, with assembly starting in early 2027. Melvin said about half of the assembled machine will be new components.
The redesign also lifts early production. Because the decline connects directly with the ventilation shafts, an upper block of the orebody can be mined sooner. Kuntz said this added about 4 million tonnes to the reserve that the earlier layout had left in sill pillars. The mine plan now runs from first production in 2029 to full design capacity in 2031, and production declines from 2045.
“We are currently transitioning into early construction. The 2026 Study confirms Santa Cruz’s status as the most advanced, highest grade copper project in the United States capable of producing pure copper metal to support American industry and our nation’s supply chain security.”
— Taylor Melvin, President and Chief Executive Officer, Ivanhoe Electric
Leach Chemistry and Acid Exposure
Santa Cruz ore is crushed, agglomerated with acid and salt, and leached on an on-off pad. COO Michelle Lammers said on the call that the ore reaches more than 92% recovery in a single leach cycle. Conventional oxide and secondary sulfide heap leach operations can take several cycles and several years to recover the same copper.
The release attributes this to the deposit’s naturally high chloride content and a chloride-assisted leach. Lammers described Santa Cruz as the largest known atacamite deposit outside Chile’s Atacama Desert. Acid consumption is about 9 kilograms per tonne of ore, and the release puts sulfuric acid at less than 5% of total cash operating costs, which limits the project’s exposure to acid prices. After leaching, about half of the spent ore is used as paste backfill underground and the rest is stockpiled.
Permits, Financing and Timetable
Because the project sits on private land, permitting runs through the State of Arizona, Pinal County and the City of Casa Grande. The company says it holds all the city, county and state permits needed to build on surface, complete the box cut and begin the tunnel decline. Melvin said the two main permits still to come are a Section 513 dewatering permit, needed once decline development reaches the aquifer, and a Phase 2 Aquifer Protection Permit covering the leach pad lining. Lammers said the company is targeting all remaining permits by mid-2027.
Box cut development is expected to start in October 2026, and tunnel boring machine decline development is targeted for summer 2027, running into 2028. Surface construction of the crushing, heap leach and SX-EW facilities follows, with first cathode targeted for 2029.
Financing is the open item. CFO Jordan Neeser said the company had more than $250 million of cash at June 30, 2026, plus an undrawn $200 million credit facility available until the end of 2027. On August 24, 2026, Ivanhoe Electric announced a Preliminary Project Letter from the Export-Import Bank of the United States (US EXIM) for potential debt funding of up to $1.1 billion under the Make More in America initiative. The letter completes US EXIM’s first phase of due diligence. It is not a lending commitment. Neeser said the company is also in talks with commercial banks and is targeting financing commitments that are advanced and in place by the end of 2026.
The PFS mine plan covers only part of the land package’s mineralization. The release reports 1.44 million tonnes of contained copper in Indicated resources exclusive of reserves, including 0.5 million tonnes in a primary sulfide domain that is not suited to heap leaching. It also reports 3.3 million tonnes in Inferred resources across the Santa Cruz, East Ridge and Texaco deposits. Texaco remains open in several directions. Planned infrastructure takes up about 30% of the land. Santa Cruz is one of the developments covered in our guide to listed companies with copper projects in the US.
References
- Ivanhoe Electric Inc., “2026 Preliminary Feasibility Study for the Santa Cruz Copper Project in Arizona Confirms High-Grade, Low-Cost Project with Strong Economics,” Press Release, September 23, 2026.
- Ivanhoe Electric Inc., “2026 Santa Cruz Copper Project Preliminary Feasibility Study,” Webcast, September 23, 2026.