Ivanhoe Electric Inc. (IE) stock intrinsic value fair value estimate & owner earnings analysis

Ivanhoe Electric is a US mineral exploration and development company. Its flagship is the 100%-owned Santa Cruz copper project in Pinal County, Arizona, which has a June 2025 preliminary feasibility study for an underground mine with heap-leach processing, about 1.4 million tonnes of copper cathode over 23 years, $1.24 billion of initial capital and an after-tax value of about $1.4 billion at $4.25 per pound copper and an 8% discount rate. It also holds earlier-stage exploration projects (Tintic in Utah, Hog Heaven in Montana, Gleeson in Arizona), a 50/50 exploration joint venture with Saudi Arabia's Maaden, and a small technology unit (geophysical data processing and Typhoon survey systems) that brings in about $3 million of revenue a year. It has no mine in production. What the numbers show. The business has never produced positive owner earnings. Measured as operating cash flow, less working-capital swings, less stock compensation, less maintenance-level capital spending, owner earnings per share were about -$0.99 (2021), -$1.59 (2022), -$1.72 (2023), -$1.42 (2024) and -$0.77 (2025). The improvement in 2025 came from spending less on exploration ($63 million versus $131 million in 2024), not from earning more: revenue was $3.2 million. Because there is no earnings level to build from, we value only what is already in hand and what is contracted or already under way, and we give no credit to hoped-for outcomes. What the company owns and owes. At June 30, 2026 it held $256.9 million of cash and no borrowings. The $33.7 million bond outstanding at year-end 2025 was repaid in the first half of 2026, warrant exercises brought in $81.5 million, and the sale of the Alacran copper project in Colombia to its Chinese partner JCHX ($128 million) was agreed in 2025-26. Cordoba, the subsidiary that sold Alacran, is about 19% owned by JCHX and has said it will distribute the net proceeds to its shareholders, so we set aside roughly $25 million of the cash for outsiders' share. Net cash to Ivanhoe shareholders is therefore about $232 million, roughly $1.46 per share on 158.4 million diluted shares. A $200 million secured bridge facility for the Santa Cruz subsidiary closed in December 2025 and is undrawn; it matures in two years and would cost about 5% over the secured overnight rate rising to 6.5%. Our latest balance sheet and cash-flow data come from the second-quarter 2026 report; the underlying quarterly filing text was not available to us, so the $98.9 million investing inflow and the first-half gain on the Alacran sale are inferred from the annual report's description of that sale. What we left out and why. The Santa Cruz study is a study. There is no construction decision, the main construction permits (including the Arizona aquifer protection permit) have not yet been issued, the copper price in the study is an assumption, and the financing is not in place: the $825 million EXIM Bank document is a non-binding letter of interest, and the company itself says construction will need capital beyond what EXIM may provide. The company also says its existing cash and facility cover only about 12 months of its plans after which it expects to need more financing. It is disclosed as a risk rather than a going-concern warning, but it means cash is being consumed. We therefore give no value to the mine, the resource or the exploration projects in the base and bear cases, and no value to the Saudi joint venture, which has so far only produced equity-method losses ($5.6 million in 2025). The small technology business loses money and is valued at zero. Bear case: $0.00 per share. Business worth: nothing beyond cash; owes: nothing (undrawn facility); difference: the cash is spent. Spending continues at the first-half 2026 pace (operating cash outflow of $62 million in six months, about $125 million a year) on Santa Cruz engineering, permitting and exploration, and the project does not reach binding financing. About $232 million of net cash is gone in roughly two years. If the bridge facility were drawn and the project then stalled, the lender's first lien on the Santa Cruz subsidiary would rank ahead of shareholders. Shareholders would keep whatever the land and water rights could be sold for, but we cannot evidence a figure for that, so we assume none. Base case: $0.34 per share. Business worth: nothing beyond cash; owes: nothing; difference: what is left of the cash. Spending continues at the 2025 pace (operating cash outflow of $89 million a year) for two years while Santa Cruz permitting, engineering and financing work proceeds, using up about $178 million of the $232 million and leaving about $54 million. No credit is given for the mine, because permits, a construction decision and binding financing are all still ahead, and the same for copper prices above today's or exploration success. Bull case: $6.53 per share. Business worth: about $1,250 million for Santa Cruz plus $232 million of net cash; owes: about $448 million of the pre-construction spending and the cost of running the company through the mine's life; difference: about $1,034 million, or $6.53 per share. Here the company's own levers execute: the remaining construction permits are granted, EXIM's letter of interest turns into a binding commitment on the visible terms (up to $825 million over 15 years), which together with the $200 million bridge facility and the company's cash roughly covers the $1.24 billion build, and construction starts on the study's plan. We take the study's $1.4 billion after-tax value at face value (its 8% rate is not restated to 6%, which offsets some of the cost-overrun and price risk we cannot quantify), discount it two years for the time to a construction decision, subtract $178 million of pre-construction spending, and subtract about $270 million (after tax) for corporate overhead of roughly $30 million a year over the 23-year mine life. Debt raised for construction is already part of the project value, so it is not subtracted again; new shares issued for any shortfall would dilute this number. What would make this estimate wrong. On the downside, cash burn is running above our base assumption: the first half of 2026 was a $62 million outflow, so cash could last under two years. On the upside, the study, the copper price, and the pace of permitting are all more favorable than we allow. A specific check we made: the 10-K states that construction after a development decision will need capital beyond EXIM's potential loan, which is why the bull case is not higher and why the company's cash matters even in the good outcome. Shareholders should also note that the company has diluted heavily, from 61.5 million shares in 2021 to 158.4 million diluted shares in 2026, and that stock compensation of $11.7 million in 2025 is a real cost we deduct in owner earnings. Accounting notes. Operating cash flow had a small unexplained gap of about 7% against net income plus non-cash charges in 2025, traced to a gain on a divestiture and lease payments; working-capital movements were under $1 million so the result is not affected. This is our first analysis of the company.