Ivanhoe Mines Announces Financial Results and Review of Operations for the First Quarter of 2016

May 12, 2016

IVANHOE MINES ANNOUNCES FINANCIAL RESULTS AND REVIEW OF OPERATIONS FOR THE FIRST QUARTER OF 2016

TORONTO, CANADA ‒ Ivanhoe Mines (TSX: IVN) today announced its financial results for the first quarter ended March 31, 2016. All figures are in US dollars unless otherwise stated.

HIGHLIGHTS

• On May 11, 2016, Ivanhoe Mines announced a 58% increase in Indicated Mineral Resources

tonnage and a 21% increase in Inferred Mineral Resources tonnage at its Platreef platinum-group metals, nickel, copper and gold project in South Africa.

• Platreef’s Indicated Resources now contain an estimated 42.0 million ounces of PGMs plus gold,

with an additional 52.8 million ounces in Inferred Resources, at the base case cut-off grade of 2.0 grams/tonne (g/t) 3PE+gold.

• At a lower cut-off grade of 1.0 g/t 3PE+gold, Platreef’s Indicated Resources now contain an

estimated 58.8 million ounces of PGMs plus gold, with an additional 94.3 million ounces in Inferred Resources.

• Main sinking at Platreef’s Shaft 1 is expected to begin in early June 2016. Aveng Mining, the shaft-

sinking contractor, expects to sink at a daily average rate of approximately 2.5 metres. Shaft 1 is expected to reach the Flatreef Deposit at a depth of 777 metres below surface during the third quarter of 2017. Shaft 1 will provide early development access into the deposit and will be utilized to fast track production during the first phase of the project.

• On April 6, 2016, Ivanhoe announced that it was going to accelerate its drilling at the Kamoa

Copper Project’s Kakula Discovery in the Democratic Republic of the Congo (DRC). Drilling will focus on the area surrounding the thick, high-grade intercepts reported in holes DD996 and DD997 announced in January 2016. Drilling initially will focus on a 12-square-kilometre area along the projected trend of mineralization intersected in holes DD996 and DD997. The drill program also includes follow-up infill drilling aimed at defining Indicated Resources in areas where the continuity of materially higher grade is confirmed.

• On February 23, 2016, Ivanhoe Mines reported the positive findings of an independent pre-

feasibility study (PFS) for the first phase of development of the Kamoa Copper Project. The first phase envisages an annual production rate of three million tonnes of ore at an average grade of 3.86% copper over a 24-year mine life, resulting in annual copper production of approximately 100,000 tonnes. Initial capital costs, including contingency, are estimated at $1.2 billion, approximately $200 million lower than estimated in the Kamoa 2013 preliminary economic assessment.

• Construction work on the twin declines at Kamoa began in March 2016. The declines are designed

to intersect the high-grade copper mineralization in the initial mining area at Kansoko Sud, approximately 150 metres below surface. Ivanhoe's drilling program in this area defined a thick, near-surface zone of high-grade copper mineralization, where a drill hole intercepted 15.7 metres (true width) of 7.04% copper. Byrnecut Underground Congo is the contractor for the permanent support of the box-cut walls and the initial 1.2 kilometres of development for each of the two declines.

• Also in the DRC, on May 2, 2016, Ivanhoe Mines announced a positive preliminary economic

assessment (PEA) for the redevelopment of the Kipushi zinc-copper-germanium-lead-silver mine. The PEA plan covers the redevelopment of Kipushi as an underground mine, producing an average of 530,000 tonnes of zinc concentrate annually over a 10-year mine life at a total cash cost, including copper by-product credits, of approximately $0.54 per pound of zinc. Successful planned restoration of production would make Kipushi the world’s highest grade, major zinc mine.

• On January 27, 2016, Ivanhoe Mines announced receipt of a new, independent, Mineral Resource

estimate for Kipushi. Kipushi’s Big Zinc Zone is estimated to contain Measured and Indicated Mineral Resources of 10.2 million tonnes at 34.9% zinc, containing 7.8 billion pounds of zinc. This grade is more than twice as high as the Measured and Indicated Mineral Resources of the world’s next-highest-grade zinc project, according to Wood Mackenzie, a leading, international industry research and consulting group. Adjacent zones of copper-rich mineralization contain estimated Measured and Indicated Mineral Resources of 1.6 million tonnes at 4.01% copper, containing 144 million pounds of copper.

• Leveraging existing surface and underground infrastructure at Kipushi is expected to

significantly lower the redevelopment capital compared to a greenfield development project and also reduce the time required to reinstate production. The after-tax project payback period is 2.2 years and the after-tax internal rate of return is 30.9%.

• Ivanhoe Mine’s three projects achieved a combined 10 million hours of lost-time-injury-free (LTIF)

work by the end of the first quarter of 2016. Ivanhoe had recorded 0.9 million LTIF hours at Platreef, 4.8 million hours at Kamoa and 4.3 million hours at Kipushi to the end of Q1 2016.

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’ broad-based, black economic empowerment partners, which include 20 local host communities with a total of approximately 150,000 people, historically-disadvantaged project employees and local entrepreneurs. Ivanplats reconfirmed its Level 3 status in its second verification assessment on a B-BBEE scorecard. A Japanese consortium of ITOCHU Corporation and its affiliate, ITC Platinum, plus Japan Oil, Gas and Metals National Corporation and JGC 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 in the Northern Limb of the Bushveld Igneous Complex, approximately 280 kilometres northeast of Johannesburg and eight kilometres from the town of Mokopane in Limpopo Province. Since 2007, Ivanhoe has focused its exploration activities on defining and advancing the down-dip extension of its original Platreef discovery, 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.

South Africa’s new draft Mining Charter

On April 15, 2016, the South African Government’s Department of Mineral Resources published a draft revision of the Mining Charter for public comment. The draft is likely to be amended following negotiations between the Government and various stakeholders, including the mining industry.

It would be inappropriate to speculate at this stage about the extent to which the draft Mining Charter will be changed. However, if the draft Mining Charter were to be enforced in its current form, Ivanhoe is confident that it either would be compliant already, in relation to the majority of the revised compliance targets, and/or be able to achieve the revised compliance targets within the transitional period of three years postulated in the draft.

Updated Mineral Resource Estimate results in substantial increase in Indicated and Inferred Mineral Resources at Platreef

On May 11, 2016, Ivanhoe Mines issued a news release announcing a substantial increase in Indicated and Inferred Mineral Resources at the company’s Platreef Project. The updated Mineral Resource estimate was prepared by Ivanhoe Mines under the direction of Dr. Harry Parker, RM SME of Amec Foster Wheeler E&C Services Inc (Amec Foster Wheeler). Dr. Parker and Mr. Timothy Kuhl RM SME, also of Amec Foster Wheeler, have independently confirmed the Mineral Resource estimate and are the Qualified Persons for the estimate, which has an effective date of April 22, 2016.

Highlights of the updated Platreef Project Mineral Resource estimate, reported on a project basis in which Ivanhoe has an attributable 64% interest, include:

• An increase of 58% in the Indicated Mineral Resources tonnage to 346 million tonnes, at a grade of 3.77 grams per tonne (g/t) platinum, palladium, rhodium plus gold (3PE+Au), 0.32% nickel and 0.16% copper, at a cut-off grade of 2.0 grams/tonne (g/t) 3PE+Au.
• An increase of 21% in the Inferred Mineral Resources tonnage to 506 million tonnes, at a grade of 3.24 g/t 3PE+Au, 0.31% nickel and 0.16% copper, at a cut-off grade of 2.0 g/t 3PE+Au.
• An increase of 45% in the contained metal in Indicated Mineral Resources, at a cut-off grade of 2.0 g/t 3PE+Au, totalling 41.95 million ounces of 3PE+Au, plus a 47% increase in nickel to 2.44 billion pounds and a 50% increase in copper to 1.23 billion pounds.
• Contained metal in Inferred Mineral Resources, at a cut-off grade of 2.0 g/t 3PE+Au, has increased by 11% to total 52.77 million ounces of 3PE+Au, nickel has increased by 13% to total 3.44 billion pounds and copper has increased by 18% to 1.78 billion pounds.
• An average thickness of 19 metres in the area of the TCU-T2 mineralized zone where Indicated Mineral Resources are estimated and an average thickness of 12.7 metres for the area where Inferred Mineral Resources are estimated, using the 2.0 g/t 3PE+Au cut-off.

The substantial increase in the Platreef Project’s Indicated and Inferred Mineral Resources in the updated 2016 estimate results primarily from the additional 97,737 metres of detailed infill and exploration drilling that was completed between August 2012 and February 2015. A plan view of the additional drilling is shown in Figure 1.

The increase also is driven by a revised and improved geological interpretation by Ivanhoe’s geologists, with additional Mineral Resources now estimated in areas that were drilled before 2013. Since the February 2013 Mineral Resource estimate, Ivanhoe’s geologists have completed relogging of cores and an updated geological interpretation of the entire portion of the Platreef Project amenable to underground mining. The result is estimation of Mineral Resources amenable to selective mining in areas previously categorized as being amenable only to bulk-mining methods.

The consolidated Mineral Resources for the Platreef Project now include Bikkuri Mineral Resources (UMT-BIK) and additional mineralized zones in the footwall of the key mineralized zone, the TCU, referred to collectively as the UMT-FW Mineral Resources. The consolidated Mineral Resources for the Platreef Project are shown in Table 1 (2.0 g/t 3PE+Au base case highlighted). The UMT-FW consists of two zones, the FWcpx and FWpnz. The location of the various mineralized zones (Resource Areas) in a plan view is shown in Figure 2.

The Mineral Resource is presented on a 100% project basis, with the company having an attributable interest of 64%.

Table 1: Platreef Mineral Resource - all mineralized zones (2.0 g/t 3PE+Au is the base case).

	Indicated Mineral Resources - Tonnage and Grades
Cut-off Grade (3PE+Au)		Mt		Pt (g/t)		Pd (g/t)		Au (g/t)		Rh (g/t)		3PE+Au (g/t)		Cu (%)			Ni (%)
3.0 g/t		204		2.11		2.11		0.34		0.14		4.7		0.18			0.35
	2.0 g/t		346		1.68		1.70		0.28		0.11		3.77		0.16			0.32
1.0 g/t		716		1.11		1.16		0.19		0.08		2.55		0.13			0.26
	Indicated Mineral Resources - Contained Metal
Cut-off Grade (3PE+Au)				Pt (Moz)		Pd (Moz)		Au (Moz)		Rh (Moz)		3PE+Au (Moz)		Cu (Mlbs)			Ni (Mlbs)
3.0 g/t				13.86		13.86		2.23		0.92		30.86		800			1,597
	2.0 g/t				18.66		18.94		3.12		1.23		41.95		1,226			2,438
1.0 g/t				25.63		26.81		4.49		1.82		58.75		2,076			4,108
	Inferred Mineral Resources - Tonnage and Grades
Cut-off Grade (3PE+Au)		Mt		Pt (g/t)		Pd (g/t)		Au (g/t)		Rh (g/t)		3PE+Au (g/t)			Cu (%)		Ni (%)
3.0 g/t		225		1.91		1.93		0.32		0.13		4.29			0.17		0.35
	2.0 g/t		506		1.42		1.46		0.26		0.10		3.24			0.16		0.31
1.0 g/t		1431		0.88		0.94		0.17		0.07		2.05			0.13		0.25
	Inferred Mineral Resources - Contained Metal
Cut-off Grade (3PE+Au)				Pt (Moz)		Pd (Moz)		Au (Moz)		Rh (Moz)		3PE+Au (Moz)		Cu (Mlbs)			Ni (Mlbs)
3.0 g/t				13.78		13.96		2.33		0.94		31.01		865			1,736
	2.0 g/t				23.17		23.78		4.26		1.56		52.77		1,775			3,440
1.0 g/t				40.38		43.01		7.81		3.06		94.27		4,129			7,759

1. Mineral Resources have an effective date of April 22, 2016. The Qualified Persons for the estimate are Dr. Harry Parker, RM SME, and Timothy Kuhl, RM SME, who are employees of Amec Foster Wheeler E&C Services Inc. and independent of Ivanhoe. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

2. The 2 g/t 3PE+Au cut-off is considered the base case estimate and is highlighted. The rows are not additive.

3. Mineral Resources are reported on a 100% basis. Mineral Resources are stated from approximately -200 m to 650 m elevation (from 500 m to 1,350 m depth). Indicated Mineral Resources are drilled on approximately 100 x 100 m spacing (locally 150 m spacing); Inferred Mineral Resources are drilled on 400 x 400 m (locally to 400 x 200 m and 200 x 200 m) spacing.

4. Mineral Resources have been estimated on an externally undiluted basis and without consideration for mining recovery. Dilution and mining recoveries will vary with the geometry (dip, thickness, faulting and or irregularities in contacts) of the mineralization and the eventual mining method used.

5. Reasonable prospects for eventual economic extraction were determined using the following assumptions. Assumed commodity prices are Pt: $1,600/oz, Pd: $815/oz, Au: $1,300/oz, Rh: $1,500/oz, Cu: $3.00/lb and Ni: $8.90/lb. It has been assumed that payable metals would be 82% from smelter/refinery and that mining costs (average $34.27/t) and process, G&A, and concentrate transport costs (average $15.83/t of mill feed for a 4 Mtpa operation) would be covered. The processing recoveries vary with block grade but typically would be 80%–90% for Pt, Pd and Rh; 70-90% for Au, 60-90% for Cu, and 65-75% for Ni.

6. 3PE+Au = Pt + Pd + Rh + Au.

7. Totals may not sum due to rounding.

The Flatreef Mineral Resource, with a strike length of 6.5 kilometres, lies predominantly within a flat-to-gentlydipping portion of the Platreef mineralized belt at relatively shallow depths of approximately 500 metres to 1,350 metres below the surface.

The Flatreef Deposit is characterized by its very large vertical thicknesses of high-grade mineralization and a platinum-to-palladium ratio of approximately 1:1, which is significantly higher than other recent PGM discoveries on the Bushveld’s Northern Limb.

Figure 1: Platreef’s Indicated Resources shown in green; Inferred Resources in blue; areas of resource expansion indicated with diagonal lines; exploration target areas in beige.

Figure 2: Plan view showing the location of the new resource areas relative to Shaft 1. Bikkuri Mineral Resources (UMT-BIK) is shown in green; the two separate domains of Footwall Mineral Resources (UMT-FW) are shown in orange (UMT-FWcpx) and purple (UMT-FWpnz).

Potential for additional UMT-TCU mineralization within targets for further exploration

Exploration potential exists immediately outside the area of Inferred Mineral Resources that has not been explored by Ivanhoe. Amec Foster Wheeler has defined four targets for further exploration (exploration targets) in areas that are contiguous with the current Mineral Resource areas that are shown in Figure 3.

Target 1 could contain 150 to 250 million tonnes grading 1.2 to 1.9 g/t Pt, 1.2 to 1.9 g/t Pd, 0.19 to 0.32 g/t Au, 0.08 to 0.14 g/t Rh, (2.6 to 4.3 g/t 3PE+Au), 0.11 to 0.19% Cu and 0.23 to 0.38% Ni over an area of 4.1 km2. The tonnage and grades are based on intersections of 2.0 g/t 3PE+Au mineralization in drill holes located adjacent to the target.

Target 2 could contain 50 to 90 million tonnes grading 1.3 to 2.1 g/t Pt, 1.4 to 2.3 g/t Pd, 0.19 to 0.31 g/t Au, 0.11 to 0.18 g/t Rh, (2.9 to 4.9 g/t 3PE+Au), 0.11 to 0.19% Cu and 0.23 to 0.39% Ni over an area of 3.9 km2. The tonnage and grades are based on intersections of 2.0 g/t 3PE+Au mineralization in drill holes located adjacent to the target.

Target 3 could contain 5 to 10 million tonnes grading 1.3 to 2.2 g/t Pt, 1.1 to 1.9 g/t Pd, 0.20 to 0.34 g/t Au, 0.10 to 0.17 g/t Rh, ( 2.7 to 4.6 g/t 3PE+Au), 0.11 to 0.18% Cu and 0.23 to 0.38% Ni over an area of 0.5 km2. The tonnage and grades are based on intersections of 2.0 g/t 3PE+Au mineralization in drill holes located adjacent to the target.

Target 4 could contain 40 to 60 million tonnes grading 1.3 to 2.2 g/t Pt, 1.5 to 2.5 g/t Pd, 0.18 to 0.30 g/t Au, 0.12 to 0.20 g/t Rh, (3.1 to 5.2 g/t 3PE+Au), 0.10 to 0.17% Cu and 0.22 to 0.36% Ni over an area of 1.5 km2. The tonnage and grades are based on intersections of 2.0 g/t 3PE+Au mineralization in drill holes located adjacent to the target.

The potential quantity and grade of these exploration targets is conceptual in nature. There has been insufficient exploration and/or study to define these exploration targets as Mineral Resources. It is uncertain if additional exploration will result in these exploration targets being delineated as a Mineral Resource.

In addition, there are approximately 48 km2 of unexplored ground beyond these exploration target areas on the property under which the prospective stratigraphy is projected to lie. It is not possible to estimate a range of tonnages and grades for this ground with current information. There is excellent potential for mineralization to significantly increase with further step-out drilling to the southwest.

Figure 3: Mineralization at the Platreef Project is open to expansion to the south and west, beyond the area of the current Indicated Mineral Resources shown in green, and the Inferred Mineral Resources, shown in blue.

Health and safety at Platreef

The Platreef Project reached 5,505,507 million hours worked by March 30, 2016. The project recorded 873,461 lost-time-injury-free (LTIF) hours at Platreef up until the end of Q1 2016. No lost-time injuries (LTIs) were recorded in the reporting period and the Platreef Project continues to strive toward its workplace objective of an environment that causes zero harm to employees, contractors, sub-contractors and consultants.

Shaft 1 construction

Following the changeover from the pre-sinking phase, the main sinking work at Shaft 1 is expected to begin in early June 2016. Aveng Mining, the shaft-sinking contractor, expects sinking to advance at an average daily rate of approximately 2.5 metres once the main sink has commenced. Shaft 1 is expected to reach the Flatreef Deposit at a depth of 777 metres below surface by late 2017. Sinking will continue to a planned final depth of 975 metres below surface. Development work will include three stations at depths of 450 metres, 750 metres and 850 metres below surface.

Work has been completed on the internal electricity substation, which will have a capacity of five million voltamperes (MVA). Construction is underway on the power transmission lines from Eskom, the South African public electricity utility, which will supply the electrical power to be used for the sinking of Shaft 1. Back-up generators have been installed to ensure continuous sinking operations if the power supply from Eskom is interrupted and will be utilized while construction of the powerlines is in progress.

Platreef implementing a phased approach to a large, underground, mechanized mine

Ivanhoe completed a pre-feasibility study (PFS) in January 2015 that covered the first phase of development that is expected to include construction of an underground mine, concentrator and other associated infrastructure.

In August 2015, Ivanhoe started work on a feasibility study (FS) based on the first phase of development. The FS is being managed by principal consultant, DRA Global, with other specialized sub-consultants including Stantec Consulting, Murray & Roberts Cementation, SRK, Golder Associates and Digby Wells Environmental. The FS is scheduled to be completed by Q2 2017.

There will be opportunities to refine and modify the timing and capacities of subsequent phases of production to suit market conditions during the development and commissioning of the first phase.

Platreef PFS highlights

• Development of a large, mechanized, underground mine with an initial four-million-tonne-per-year concentrator and associated infrastructure.
• Planned initial average annual production rate of 433,000 ounces of platinum, palladium, rhodium and gold (3PE+Au), plus 19 million pounds of nickel and 12 million pounds of copper.
• Estimated pre-production capital requirement of approximately $1.2 billion, including $114 million in contingencies, at a ZAR:USD exchange rate of 11 to 1.
• Platreef would rank at the bottom of the cash-cost curve, at an estimated $322 per ounce of 3PE+Au, net of by-products.
• The planned Platreef mine is projected to require a workforce of approximately 2,200 within four years of the start of production.
• After-Tax Net Present Value (NPV) of $972 million, at an 8% discount rate.
• After-Tax Internal Rate of Return (IRR) of 13%.

The development scenarios describe a staged approach structured to provide opportunities to expand the operation based on demand, smelting and refining capacity and capital availability.

Metallurgical testwork and processing

Metallurgical testwork has focused on maximizing the recovery of platinum-group elements (PGE) and base metals, while producing an acceptably high-grade concentrate suitable for further processing and/or sale to a third party. The three main geo-metallurgical units and composites have produced smelter-grade final concentrates of approximately 85 g/t 3PE + gold at acceptable PGE recoveries. Testwork also has shown that the material is amenable to treatment by one stage of mainstream grinding followed by conventional flotation, without the need for concentrate re-grinding. Batch open-circuit and locked-cycle flotation testwork has been performed.

A two-phased development approach was used for PFS flow-sheet design. The selected flow sheet is comprised of a four-million-tonne-per-year, three-stage crushing circuit that will feed crushed material to two parallel milling-flotation modules, each with a capacity of two million tonnes per year. Flotation is followed by a four-million-tonne-per-year tailings-handling and concentrate-thickening, filtration and storage circuit.

Planned mining methods to incorporate highly productive, mechanized methods

The selected mining areas in the current mine plan occur at depths ranging from approximately 700 metres to 1,200 metres below the surface. The main access to the Flatreef Deposit and ventilation system is expected to be comprised of four vertical shafts. Shaft 2 will host the main personnel transport cage, material and orehandling systems, while Shafts 1, 3 and 4 will be utilized for ventilation to the underground workings. Shaft 1, now under development, will be used for initial access to the deposit and early underground development.

Mining will be performed using highly productive, mechanized methods, including long-hole stoping, drift-andbench and drift-and-fill mining methods. The mined-out areas within the deposit will be backfilled with a paste mixture that utilizes tailings from the process plant and cement. The ore will be hauled from the stopes to a series of ore passes that connect to a main haulage level, which will be connected to Shaft 2, where it will be hoisted to the surface for further processing.

Shaft 1 will have an internal diameter of 7.25 metres. It is projected to intersect the Flatreef deposit at a depth of 777 metres below surface in late 2017 and reach its total depth of 975 metres in 2018.

Shaft 2 will have an internal diameter of 10.0 metres and will be capable of hoisting six million tonnes per year. The headgear design for the six-million-tonne-per-year permanent hoisting facility has been completed by South Africa-based Murray & Roberts Cementation. Ivanhoe expects to start Shaft 2 early works in 2017, including civil work for the box-cut and hitch-foundation.

Bulk water and electricity supply

The Olifants River Water Resource Development Project (ORWRDP) is designed to deliver water to the Eastern and Northern limbs of South Africa’s Bushveld Igneous Complex. The project consists of the new De Hoop Dam, the raised wall of the Flag Boshielo Dam and related pipeline infrastructure that ultimately will deliver water to Pruissen, southeast of the Northern Limb. The Pruissen Pipeline Project will be developed to deliver water onward from Pruissen to the municipalities, communities and mining projects on the Northern Limb. Ivanhoe is a member of the ORWRDP’s Joint Water Forum. The Minister of Water & Sanitation has directed that the Trans-Caledon Tunnel Authority will serve as the implementing agent for the outstanding phases of the ORWRDP scheme, which include the Phase 2B pipeline from Flag Boshielo Dam to Mokopane.

Participants in the water development scheme are required to indicate their water requirements so that the total water demand may be calculated relative to the scheme’s capacity. The Platreef Project’s water requirement for the first phase of development is projected to peak at approximately 10 million litres per day. Ivanhoe also is continuing to investigate various alternative bulk water sources, including bulk grey water allocations from local municipalities.

The Platreef Project’s electricity requirement for a four-million-tonne-per-year underground mine, concentrator and associated infrastructure has been estimated at approximately 100 million volt-amperes (MVA). As power is required for the initial mine development work, including shaft sinking, before the main power supply becomes available, an agreement with Eskom has been reached for the supply of 5MVA of temporary construction power. Ivanhoe opted for a self-build option for the permanent power, which enables Ivanhoe to manage the construction of the distribution lines from the Eskom Borutho sub-station to the Platreef Mine.

Development of human resource and job skills

Work is progressing well on the further implementation of Ivanhoe’s Social and Labour Plan (SLP), to which the company has pledged a total of R160 million ($11 million) during the first five years, until November 2019. The approved plan includes R67 million ($4 million) for the development of job skills among local residents and R88 million ($6 million) for local economic development projects. Additional internal training is planned to provide members of the current workforce with opportunities to expand their skills.

Adult basic education and training for the communities is progressing well in four community centres run by the Department of Higher Education and Training, further forging a partnership between Ivanhoe and the Department.

The first 80 students to participate in Platreef’s non-core training program started their training at the beginning of March 2016. Additional related training programs are planned later in the year.

Ivanhoe awarded five fully-paid bursaries to local university students in 2015. To date in 2016, Ivanhoe has awarded fully-paid bursaries to seven local university students in diverse disciplines. In addition, Ivanhoe also is developing local artisans with the establishment of fully paid engineering scholarships.

Ivanhoe’s R24 million ($2 million) partnership between South Africa’s University of Limpopo and Canada’s Laurentian University to develop and equip Limpopo University's geology department is well underway. A principal goal of the five-year partnership, which is renewable for a further five years, is to help establish the University of Limpopo’s geology department as a centre of excellence in geosciences. Combined with a scholarship awarded to Laurentian by the International Development Research Centre, these funds will create educational opportunities for 35 University of Limpopo students to study in Canada. Ivanhoe also will provide in-service training opportunities for students from both universities and assist them in conducting research on the Northern Limb of the Bushveld Complex.

As part of Ivanhoe’s commitment to provide expanded work opportunities, 2016 will see the launch of the first Youth Development Program. Young people from the local communities, aged between 21 and 32, will be enrolled in a development course that will work toward a final product of a bankable business plan to be submitted for funding.

2. Kipushi Project

68%-owned by Ivanhoe Mines Democratic Republic of Congo (DRC)

The Kipushi copper-zinc-germanium-lead mine, in the Democratic Republic of Congo (DRC), is adjacent to the town of Kipushi and approximately 30 kilometres southwest of Lubumbashi. It also is located on the Central African Copperbelt, approximately 250 kilometres southeast of Ivanhoe’s Kamoa 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).

Health, safety and community development at Kipushi

The Kipushi Project achieved a total of 4,260,651 lost-time-injury-free hours (1,333 days) to the end of Q1 2016. Malaria remains the most frequent health concern at Kipushi; in Q1 2016, there was an average of 17 cases each month among employees, which is the seasonal peak at the end of the rainy season.

In an effort to reduce the incidence of malaria in the Kipushi community, a Water Sanitation and Health (WASH) program has been initiated in cooperation with the Territorial Administrator and the local community. The main emphasis in the program’s first phase is cleaning storm drains in the municipality to prevent the accumulation of ponded water, where malarial mosquitos breed.

Following DRC government approval of the Fionet program, training of medical staff at medical service providers in the Kipushi Health Zone on the use of the Deki™ rapid malaria test reader started in December 2015 and will continue on an ongoing basis. The objective is to establish the Fionet program in 37 medical centres in the Kipushi Health Zone. The program eventually will be rolled out to 300 clinics in the Haut-Katanga province. To date, 37 Deki readers have been installed, and local medical staff trained, in the Kipushi Health Zone.

As part of the Kipushi municipality development program, Ivanhoe has contracted Mining Company Katanga (MCK) to repair the main road through the community, which has been damaged by rain erosion and heavy traffic over many years.

Project development and infrastructure

The mine, which had been placed on care and maintenance in 1993, flooded in early 2011 due to a lack of pump maintenance over an extended period. At its peak, water reached 851 metres below the surface level. A major milestone was reached in December 2013 when Ivanhoe restored access to the mine’s principal haulage level at 1,150 metres below the surface. Since then, crews have been upgrading underground infrastructure to permanently stabilize the water levels.

A Mineral Resource estimate has been declared and the findings of a preliminary economic assessment (PEA) for the Kipushi Project were announced on May 2, 2016.

Since completion of the drilling program, water levels have been lowered to approximately the 1,400-metrelevel in Shaft 5. Engineering work has focussed on refurbishment of Shaft 5 conveyances and infrastructure, cleaning of the shaft bottom to facilitate the installation of new hoist ropes, repairs and upgrades to the hoisting infrastructure and cleaning and stripping of the main pump station at the 1,200-metre-level.

Replacing wire rope on Shaft 5 personnel cage using the friction winder.

Sulzer centrifugal pump on the 1,200-metre-level pump station.