Ivanhoe Mines issues 2018 full-year results and review of exploration and development activities CITIC Metal and Zijin Mining invested more than C$800 million to advance Ivanhoe’s three world-scale mine projects in Southern Africa

March 28, 2019

Ivanhoe Mines issues 2018 full-year results and review of exploration and development activities

CITIC Metal and Zijin Mining invested more than C$800 million to advance Ivanhoe’s three world-scale mine projects in Southern Africa

Fast-tracking of development at the initial Kakula Copper Mine in D.R. Congo among highlights of Ivanhoe’s 2018 achievements

New, ultra-high-grade copper discovery at Kamoa North highlights potential of making significant new discoveries at the Kamoa-Kakula Project and on Ivanhoe’s wholly-owned Western Foreland exploration area

TORONTO, CANADA ‒ Ivanhoe Mines (	TSX: IVN; OTCQX: IVPAF	) today announced its
financial results for the year ended December 31, 2018. All figures are in U.S. dollars
unless otherwise stated. Ivanhoe Mines is a Canadian mining company focused on
advancing its three mine-development projects in Southern Africa: the Platreef
palladium-platinum-nickel-copper-gold-rhodium discovery in South Africa; the Kamoa-
Kakula copper discovery in the Democratic Republic of Congo (DRC); and the extensive
upgrading of the historic Kipushi zinc-copper-lead-germanium mine, also in the DRC.

HIGHLIGHTS

• On September 19, 2018, China-based CITIC Metal completed a long-term, strategic

cooperation and investment agreement that saw its direct subsidiary, CITIC Metal Africa Investments Limited (CITIC Metal Africa), invest C$723 million ($555 million) to advance Ivanhoe’s three projects in Southern Africa. Under the terms of the investment agreement, CITIC Metal Africa acquired a 19.5% stake in Ivanhoe Mines through a private placement at a price of C$3.68 per share.

• Also on September 19, 2018, Zijin Mining Group, Ivanhoe’s joint-venture partner at

the Kamoa-Kakula Project, exercised its anti-dilution rights at a price of C$3.68 per share, generating additional proceeds for Ivanhoe of C$78 million ($60 million). This resulted in Zijin retaining a 9.7% ownership stake in Ivanhoe Mines – its level of ownership prior to the completion of CITIC Metal Africa’s strategic investment.

• Pursuant to the terms of the strategic cooperation and investment agreement with

CITIC Metal, Yufeng “Miles” Sun, President of CITIC Metal Group Limited, and Tadeu

Carneiro, former Chief Executive Officer of Brazil-based Companhia Brasileira de Metalurgia e Mineração, joined the Ivanhoe Mines Board of Directors. Mr. Sun was appointed Co-Chairman of Ivanhoe, alongside Robert Friedland.

• Underground development at the planned initial Kakula copper mine in the

Democratic Republic of Congo is making excellent progress. Construction of the twin northern declines has been completed, with ongoing underground development activities now focused on constructing lateral access drives and ventilation raises. In addition, development of a ventilation decline on the southern side of the Kakula orebody is underway.

• On February 6, 2019, Ivanhoe announced an independent pre-feasibility study (PFS)

for the Kakula Mine. The stage one, six million-tonne-per-annum (6 Mtpa) operation at Kakula, with estimated development capital of $1.1 billion, yields an after-tax NPV8% of $5.4 billion and an IRR of 47% over a 25-year mine life. Initial production is scheduled for early 2021, and the mine is expected to average 6.8% copper over the first 5 years, with mine-site cash costs of $0.43 per pound of copper.

• Discussions for financing the construction of the initial 6 Mtpa mine at Kakula are

progressing well with international and China-based financial institutions. CITIC Metal, Ivanhoe’s largest shareholder, is assisting with the discussions.

• On February 6, 2019, Ivanhoe also announced an updated independent preliminary

economic assessment (PEA) for an expanded Kakula-Kamoa production rate of 18 Mtpa, supplied initially by a 6 Mtpa mine at Kakula, followed by two 6 Mtpa mines at Kansoko and Kakula West, and a direct-to-blister smelter. The PEA envisions the staged mine expansions and smelter will be funded from internal cash flows and yields an after-tax NPV8% of $10.0 billion and an IRR of 41%. All figures in the PFS and PEA are on a 100%-project basis.

• Once the expanded PEA production rate of 18 Mtpa is achieved, Kamoa-Kakula is

projected to become the world’s second largest copper mine, with peak annual production of more than 700,000 tonnes of copper.

• On January 30, 2019, Ivanhoe reported a 22.3-metre intersection of 13.05% copper

(at a 2% cutoff) in a shallow, flat-lying discovery within 190 metres of surface at the Kamoa North exploration area on the Kamoa-Kakula mining licence. The drill hole (DD1450) is the thickest, highest-grade copper intersection drilled to date at Kamoa- Kakula, highlighting the potential for significant additional resource expansion.

• Additional drilling is underway to test the strike and width of the east-west trending

fault structure that hosts the bonanza-grade copper in hole DD1450. Nine holes now have been completed in the discovery area, and assays are pending for eight of the holes. Based on visual interpretation of massive bornite and chalcopyrite in the recent drill intersections, the new, high-grade zone of shallow, thick, flat-lying, copper mineralization has been extended over a strike length of at least 200 metres, a width of up to 80 metres, and drilled thickness of between 13 and 30 metres. The new discovery zone is approximately 170 to 200 metres below surface.

• Discovery hole DD1450 is associated with an east-west trending fault structure that

allowed copper-rich fluids to flow into the stratigraphy above the conventional, Kamoa-Kakula mineralized zone and into a pyrite-rich, siltstone zone called the Kamoa Pyritic Siltstone (KPS). The shallow depth, remarkable thickness and massive copper mineralization in the KPS discovery could prove extremely significant if targeted early from a future Kamoa North decline.

• The controlling east-west striking fault responsible for the massive copper sulphide

mineralization in the KPS is visible on airborne magnetic images and can be traced over a distance length at least 10 to 20 kilometres. It trends west of Kamoa-Kakula for a considerable distance onto the adjacent Western Foreland exploration licences that are 100%-owned by Ivanhoe Mines. Additional rigs will be added to accelerate the drill testing of this mineralizing structure. Assays for the outstanding drill holes have been expedited and Ivanhoe plans to provide an update on this important exploration program in the near future.

• Kamoa-Kakula geologists also are exploring another zone of shallow, high-grade

copper mineralization in the far northern region of the Kamoa-Kakula mining licence. This mineralized corridor trends north and south for more than nine kilometres before swinging to the northwest and is projected to continue onto the adjacent Western Foreland exploration licences.

• Ivanhoe’s DRC exploration team is continuing with its regional drilling program

targeting Kamoa-Kakula-style copper mineralization in the Western Foreland region, just to the west of the Kamoa-Kakula mining-licence area.

• On October 1, 2018, Ivanhoe announced the Makoko Copper Discovery at Western

Foreland. Makoko, Ivanhoe’s third major copper discovery in the DRC, shows similar geological characteristics to the tier-one Kamoa-Kakula discoveries.

• On July 30, 2018, Ivanhoe announced a new Mineral Resource estimate for the

Kipushi Mine in the DRC that increased zinc-rich Measured and Indicated Mineral Resources by 16%, from 10.2 million tonnes to 11.8 million tonnes. The new estimate also increased Kipushi’s zinc grade from 34.89% to 35.34%. In addition, the mine’s copper-rich Measured and Indicated Resources increased by 40% from 1.6 million tonnes to 2.3 million tonnes, with a slight increase in the copper grade from 4.01% to 4.03%.

• The updated Mineral Resource will be used in the preparation of the Kipushi

definitive feasibility study (DFS), which is expected in the first half of this year. The DFS will update and refine the findings of the PFS issued in December 2017. Similar to the PFS, the DFS will focus on the initial mining of Kipushi’s Big Zinc Zone.

• The December 2017 PFS analyzed the plan to bring Kipushi’s Big Zinc Zone into

production in less than two years, with a life-of-mine, average annual production rate of 225,000 tonnes of zinc and cash costs of $0.48 per pound of zinc. The planned return to production would establish Kipushi as the world’s highest-grade, major zinc mine.

• Discussions are continuing with potential strategic partners and lenders to support

Ivanhoe’s continuing advance toward a new era of production at Kipushi. Ivanhoe has made significant progress in upgrading the mine’s underground infrastructure and the company now has a much clearer path to a resumption of production from the high-grade Big Zinc orebody.

• On October 8, 2018, Ivanhoe announced that the sinking of Shaft 1 at the Platreef

palladium-platinum-nickel-copper-gold-rhodium discovery in South Africa reached the top of the Flatreef orebody, at a depth of approximately 780 metres. The orebody is 29 metres thick where Shaft 1 intersected it. Sinking now has reached a depth of

855 metres and will continue to its planned final depth of 982 metres. The Platreef mining team delivered the first ore from the underground mine development to surface stockpiles for metallurgical sampling.

• Surface construction for Platreef’s Shaft 2 is progressing. Construction now is

focused on the concrete hitch for the headframe, which is expected to be completed by mid-2019. Shaft 2 will have an internal diameter of 10 metres and will be equipped with two 40-tonne rock-hoisting skips with a capacity to hoist a total of six million tonnes of ore per year – the single largest hoisting capacity at any mine in Africa.

• On December 18, 2018, Ivanhoe announced that Ivanplats has finalized a long-term

agreement with the Mogalakwena Local Municipality for the supply of local, treated waste water to supply most of the bulk water needed for the first phase of production at the Platreef Mine.

• Based on the findings of an independent DFS issued in July 2017, the Platreef Mine

is projected to be Africa’s lowest-cost producer of platinum-group metals, with a cash cost of $351 per ounce of platinum, palladium, rhodium and gold, net of by- products, including sustaining capital costs.

• On February 18, 2019, Ivanhoe announced that the weighted price of the ‘basket’ of

metals contained in the ore at the Platreef Project had risen to a new, three-year high.

• Ivanhoe continues to advance the arrangement of project financing for the

development of the Platreef Project. Negotiation of a term sheet is progressing well with the Initial Mandated Lead Arrangers (IMLAs).

• At the end of 2018, Kamoa-Kakula had recorded 12.31 million work hours free of

lost-time injuries, Kipushi 165,576 work hours, and Platreef 887,097 work hours.

Ivanhoe Mines’ Executive Co-Chairman Robert Friedland and CITIC Metal Group President Yufeng “Miles” Sun signed the landmark agreement to complete CITIC’s C$723 million equity investment in Ivanhoe during a ceremony in Beijing on September 19, 2018.

Principal projects and review of activities

1. Platreef Project

64%-owned by Ivanhoe Mines South Africa

The Platreef Project is owned by Ivanplats (Pty) Ltd, which is 64%-owned by Ivanhoe Mines. A 26% interest is held by Ivanplats’ historically-disadvantaged, broad-based, black economic empowerment (B-BBEE) partners, which include 20 local host communities with approximately 150,000 people, project employees and local entrepreneurs. A Japanese consortium of ITOCHU Corporation; Japan Oil, Gas and Metals National Corporation and Japan Gas Corporation, owns a 10% interest in Ivanplats, which it acquired in two tranches for a total investment of $290 million.

The Platreef Project hosts an underground deposit of thick, platinum-group metals, nickel, copper and gold mineralization on the Northern Limb of the Bushveld Igneous Complex in Limpopo Province, approximately 280 kilometres northeast of Johannesburg and eight kilometres from the town of Mokopane.

On the Northern Limb, platinum-group metals mineralization is hosted primarily within the Platreef, a mineralized sequence that is traced more than 30 kilometres along strike. Ivanhoe’s Platreef Project, within the Platreef’s southern sector, is comprised of two contiguous properties: Turfspruit and Macalacaskop. Turfspruit, the northernmost property, is contiguous with, and along strike from, Anglo Platinum’s Mogalakwena group of mining operations and properties.

Since 2007, Ivanhoe has focused its exploration and development activities on defining and advancing the down-dip extension of its original discovery at Platreef, now known as the Flatreef Deposit, which is amenable to highly mechanized, underground mining methods. The Flatreef area lies entirely on the Turfspruit and Macalacaskop properties, which form part of the company’s mining right.

Health and safety at Platreef

As at the end of 2018, the Platreef Project had reached a total of 887,097 lost-time, injury-free hours worked in terms of South Africa’s Mine Health and Safety Act and Occupational Health and Safety Act. At the end of 2018, it had been nine months since the last lost-time injury occurred at the Platreef Project, which continues to strive toward its workplace objective of an environment that causes zero harm to employees, contractors, sub-contractors and consultants.

Positive independent, definitive feasibility study for Platreef’s first-phase development; Platreef projected to be Africa’s lowest-cost producer of platinum- group metals

On July 31, 2017, Ivanhoe Mines announced the positive results of an independent, definitive feasibility study (DFS) for the planned first phase of the Platreef Project’s palladium-platinumnickel-copper-gold-rhodium mine in South Africa.

The Platreef DFS covers the first phase of development that would include construction of a state-of-the-art underground mine, concentrator and other associated infrastructure to support initial production of concentrate. As Phase 1 is being developed and commissioned, there would be opportunities to refine the timing and scope of subsequent phases of expanded production.

The 2017 DFS highlights include:

• Indicated Mineral Resources containing an estimated 41.9 million ounces of platinum, palladium, rhodium and gold, with an additional 52.8 million ounces of platinum, palladium, rhodium and gold in Inferred Resources.
• Increased Mineral Reserves containing 17.6 million ounces of platinum, palladium, rhodium and gold following stope optimization and mine sequencing work.
• Development of a large, safe, mechanized, underground mine, with an initial four-Mtpa concentrator and associated infrastructure.
• Planned initial average annual production rate of 476,000 ounces of platinum, palladium, rhodium and gold (3PE+Au), plus 21 million pounds of nickel and 13 million pounds of copper.
• Estimated pre-production capital requirement of approximately $1.5 billion, at a ZAR:USD exchange rate of 13 to 1.
• Platreef would rank at the bottom of the cash-cost curve, at an estimated $351 per ounce of 3PE+Au produced, net of by-products and including sustaining capital costs, and $326 per ounce before sustaining capital costs.
• After-tax net present value (NPV) of $916 million, at an 8% discount rate.
• After-tax internal rate of return (IRR) of 14.2%.

All figures are on a 100%-project basis unless otherwise stated. The DFS was prepared for Ivanhoe Mines by principal consultant DRA Global, with economic analysis led by OreWin, and specialized sub-consultants including Amec Foster Wheeler E&C Services (Amec Foster Wheeler), Stantec Consulting, Murray & Roberts Cementation, SRK Consulting, Golder Associates and Digby Wells Environmental.

The northern excavation at Shaft 1’s 750-metre station, showing the large scale of the underground workings − ideal for safe, mechanized mining.

Shaft 1 now extends to a depth of 850 metres below surface

Shaft 1 reached the top of the high-grade Flatreef Deposit (T1 mineralized zone) at a depth of 780.2 metres below surface in Q3 2018 and has since been extended to the 850-metre level with the 850-metre-level station development underway.

The thickness of the mineralized reef (T1 & T2 mineralized zones) at Shaft 1 is 29 metres, with grades of platinum-group metals ranging up to 11 grams per tonne (g/t) 3PE (platinum, palladium and rhodium) plus gold, as well as significant quantities of nickel and copper. The 29-metre intersection yielded approximately 3,000 tonnes of ore, estimated to contain more than 400 ounces of platinum-group metals. The ore is stockpiled on surface for metallurgical sampling.

The 750-metre-level station, including the steelwork and concrete construction, was successfully completed in Q4 2018. The 750-metre-level and 850-metre-level stations will provide initial, underground access to the high-grade orebody, enabling mine development to proceed during the construction of Shaft 2.

As sinking of Shaft 1 advances, one more station will be developed at a mine-working depth of 950 metres. Shaft 1 is expected to reach its projected, final depth of 982 metres below surface in early 2020. Shaft 1 ultimately will become the primary ventilation shaft during the project’s initial four-Mtpa production case.

Ongoing development work at Shaft 1’s 850-metre-level mine access station, showing the northern top-cut excavation.

Spraying shotcrete over 6.5-metre anchor bolts and wire mesh to reinforce the brow at Shaft 1’s 850-metre-level mine access station.

Shaft 2 early-works construction progressing

Shaft 2, to be located approximately 100 metres northeast of Shaft 1, will have an internal diameter of 10 metres. It will be lined with concrete and sunk to a planned, final depth of more than 1,104 metres below surface. It will be equipped with two 40-tonne rock-hoisting skips capable of hoisting a total of six million tonnes of ore a year – the single largest hoisting capacity at any mine in Africa.

The headgear for the permanent hoisting facility was designed by South Africa-based Murray & Roberts Cementation. Nine blasts were successfully completed in 2018 enabling the excavation of Shaft 2’s box cut to a depth of approximately 29 metres below surface and the construction of the concrete hitch (shaft collar foundation) for the 103-metre-tall concrete headgear that will house the shaft’s permanent hoisting facilities and support the shaft collar. Excavation of the box cut and construction of the hitch foundation is expected to be completed in Q2 2019, enabling the beginning of the pre-sink, that will extend 84 metres below surface.

Ongoing construction of the foundation that will support Shaft 2’s 103-metre-tall concrete headframe.

Figure 1: Schematic section of the Platreef Mine, showing Flatreef’s T1 and T2 thick, high-grade mineralized zones (red and dark orange), underground development work completed to date in shafts 1 and 2 (white) and planned development work (gray).

Underground mining to incorporate highly productive, mechanized methods

Ivanhoe plans to develop the Platreef Mine in phases. The initial annual production rate of four million tonnes a year is designed to establish an operating platform to support future expansions. This is expected to be followed by a potential doubling of production to eight Mtpa, and then a third expansion phase to a steady-state 12 Mtpa, which would establish Platreef among the largest platinum-group-metals mines in the world.

The mining zones in the current Platreef mine plan occur at depths ranging from approximately 700 metres to 1,200 metres below surface. Shaft 2 will provide primary access to the mining zones; secondary access will be via Shaft 1. During mine production, both shafts also will serve as ventilation intakes. Three additional ventilation exhaust raises are planned to achieve steady-state production.

Planned mining methods will use highly productive, mechanized methods, including long-hole stoping and drift-and-fill mining. Each method will utilize cemented backfill for maximum ore extraction. The ore will be hauled from the stopes to a series of internal ore passes and fed to the bottom of Shaft 2, where it will be crushed and hoisted to surface.

Platreef project financing continuing to advance

Ivanhoe continues to advance the arrangement of project financing for the development of the Platreef Project. Negotiation of a term sheet is progressing well with the Initial Mandated Lead Arrangers (IMLAs).

In addition, preliminary discussions are underway with leading South African financial institutions regarding the financing of the black economic empowerment partners’ contribution to the development capital which would thereby reduce the amount that would otherwise have to be contributed by Ivanhoe on their behalf.

Long-term supply of bulk water secured for the Platreef Mine

On May 7, 2018, Ivanhoe announced the signing of a new agreement to receive local, treated water to supply most of the bulk water needed for the first phase of production at Platreef. The Mogalakwena Local Municipality has agreed to supply a minimum of five million litres of treated water a day for 32 years, beginning in 2022, from the town of Mokopane’s new Masodi Treatment Works. Initial supply will be used in Platreef’s ongoing underground mine development and surface infrastructure construction.

Under terms of the agreement, which is subject to certain suspensive conditions, Ivanplats will provide financial assistance to the municipality for certified costs of up to a maximum of R248 million (approximately $19.6 million) to complete the Masodi treatment plant. Ivanplats will purchase the treated wastewater at a reduced rate of R5 per thousand litres for the first 10 million litres per day to offset a portion of the initial capital contributed.

Ivanplats received its Integrated Water Use Licence in January 2019, which is valid for 30 years and enables the Platreef Project to make use of water as planned in the 2017 DFS.

Development of human resources and job skills

Work progressed on the implementation of Ivanhoe’s Social and Labour Plan (SLP). The company has pledged a total of R160 million ($11 million) during the first five years, culminating in November 2019, of which R98 million ($7 million) already had been spent by December 2018. The approved plan includes R67 million ($5 million) for the development of job skills among local residents and R88 million ($6 million) for local economic development projects.

A digital trainer from Ivanplats (right) demonstrates the use of the free Wi-Fi system to a local resident. The Ivanplats Maru a Mokopane initiative – a digital communication system – is designed for people living in Mokopane, Limpopo to learn more about the Platreef Project, and provides complimentary access to wireless internet.

2. Kipushi Project

68%-owned by Ivanhoe Mines Democratic Republic of Congo

The Kipushi copper-zinc-germanium-lead mine, in the Democratic Republic of Congo, is adjacent to the town of Kipushi and approximately 30 kilometres southwest of Lubumbashi. It is located on the Central African Copperbelt, approximately 250 kilometres southeast of the Kamoa-Kakula Project and less than one kilometre from the Zambian border. Ivanhoe acquired its 68% interest in the Kipushi Project in November 2011; the balance of 32% is held by the state-owned mining company, La Générale des Carrières et des Mines (Gécamines).