Ivanhoe Electric has refreshed the blueprint for its Arizona copper project, and the numbers tell a familiar mining story: it costs more to build than last year's plan, but the project looks slightly bigger and slightly more valuable. On September 23, the company released an updated preliminary feasibility study (PFS) for its 100 percent owned Santa Cruz Copper Project near Casa Grande, about 77 kilometres south of Phoenix.
- The 2026 study outlines a 24-year underground mine at Santa Cruz and East Ridge using longhole stoping and paste backfill, with heap leach and SX/EW processing producing 99.99 percent pure copper cathode, no smelter required.
- Probable mineral reserves of 140.1 million tonnes grading 1.08% copper support average cathode production of about 75,000 tonnes a year for the first 15 years, and 58,000 tonnes a year over the mine life.
- Initial capital is now $1.43 billion, up 15 percent from $1.24 billion in the 2025 study, driven by a redesigned tunnel-boring-machine access decline plus construction materials and labour inflation.
- At a $4.75 per pound copper base case, the project shows a $1.5 billion after-tax NPV (8% discount), 19 percent after-tax IRR, and 4.8-year payback; at spot prices near $6.79 per pound, the NPV jumps to $3.5 billion with a 30 percent IRR. Ivanhoe Electric shares fell about 4 percent on the news.
What changed in the 2026 study?
The headline change is underground access. The 2025 study planned twin decline drifts built with roadheader technology; the new study replaces that with a purpose-built Robbins Crossover XRE tunnel boring machine, manufactured in Solon, Ohio, designed to handle hard-rock, wet, mixed-face ground while controlling groundwater inflow. That redesign, plus updated cost estimates based on current market conditions, pushed pre-production capital up by $190 million.
The mine plan otherwise grew modestly. The mine life stretched from 23 to 24 years, average first-15-year production rose to about 74,700 tonnes from 72,000 tonnes, and the reserve now totals 140.1 million probable tonnes at 1.08 percent copper for 1.52 million tonnes of contained metal. The study was prepared under the SEC's S-K 1300 rules with independently prepared resource and reserve estimates, and the NI 43-101 technical report will be co-filed in Canada within 45 days.
What do the numbers say?
A prefeasibility study is still an estimate, not a construction budget, and it is worth reading both sides of the ledger:
- Costs: $1.43 billion initial capital (capital intensity of $19,100 per tonne of copper produced in the first 15 years), $2.85 billion life-of-mine capital, C1 cash costs of $1.47 per pound and all-in sustaining costs of $2.28 per pound.
- Economics: at $4.75 per pound copper plus a $0.14 per pound domestic cathode premium, after-tax NPV of $1.5 billion at an 8 percent discount rate, 19 percent IRR, 4.8-year payback. The base-case copper price is below current spot prices, and the study's accuracy range runs from minus 20 to plus 25 percent.
- Expansion room: beyond reserves, indicated resources exclusive of reserves hold another 1.44 million tonnes of contained copper (about 1 million tonnes amenable to heap leaching), plus 3.33 million tonnes of inferred copper across Santa Cruz, East Ridge, and Texaco.
National Bank Financial mining analyst Andrew Dusome called the PFS "a key de-risking step," noting that although the refreshed capital figure came in above estimates and may weigh on the stock near term, it is largely offset by higher life-of-mine production and greater confidence in the development plan.
What happens next?
Ivanhoe Electric is targeting first copper cathode production in 2029, a year later than originally planned. Necessary permits to begin surface construction have been obtained and early development work has begun. The project sits on about 24 square kilometres of private land with surface, mineral, and water rights, which streamlines permitting, and it has nearby rail, highway, power, and natural gas infrastructure.
Financing is the next gate. The 2026 study provides the engineering base for project financing, and Ivanhoe Electric says it is in advanced discussions on multiple alternatives, including the U.S. Export-Import Bank's Make More in America program. The company received a preliminary project letter from US EXIM in August for up to $1.1 billion in potential debt financing, and that application has now advanced to a second phase of due diligence.
Why does Santa Cruz matter for American copper?
Copper sits on the federal critical minerals list, and the U.S. mines far less of it than it uses. Santa Cruz is designed as a fully domestic operation producing LME-grade cathode straight from the mine gate, the kind of project Washington has been courting with financing programs. The economics still hinge on copper prices staying strong and on the company securing its financing, but with private land, construction permits in hand, and federal interest, Santa Cruz remains one of the most advanced new copper developments in the United States.