Ivanhoe Mines issues third quarter financial results and review of mine development and exploration activities

November 8, 2019

Ivanhoe Mines issues third quarter financial results and review of mine development and exploration activities

Ivanhoe and Zijin Mining have made excellent progress developing the Kakula Copper Mine in D.R. Congo, with initial production on track for Q3 2021

Capacity of Kakula’s processing plant modules increased by 26%, from 3.0 Mtpa to 3.8 Mtpa each, significantly boosting projected early-stage copper production

Additional mining crews to be added at Kakula to increase pre-production ore stockpile and to position the mine to accelerate expansion of the second phase of development

Kakula’s initial capital costs now estimated at $1.3 billion, an increase of 18%, including expanded plant capacity, additional mining fleets and pre-production ore stockpile

Initial mineral resource estimate and scoping study test work underway for the latest high-grade discovery at Kamoa-Kakula ─ the Kamoa North Bonanza Zone

Drilling extends the new Kamoa Far North extension discovery on Ivanhoe’s 100%-owned Western Foreland licences to at least 800 metres and the mineralized trend remains open

TORONTO, CANADA ‒ Ivanhoe Mines (TSX: IVN; OTCQX: IVPAF) today announced its financial results for the quarter ended September 30, 2019. 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. The company continues to explore for new copper discoveries on its wholly-owned Western Foreland exploration licences, adjacent to the Kamoa-Kakula mining licence.

HIGHLIGHTS

• CITIC Metal Africa Investments Limited’s (CITIC Metal Africa) C$612 million ($459

million) second equity investment in Ivanhoe Mines at C$3.98 per share successfully closed on August 16, 2019. The investment is an integral part of Ivanhoe and CITIC Metal’s long-term strategic cooperation and brought CITIC Metal’s investment in Ivanhoe Mines in less than one year to more than $1.0 billion. On the same date, CITIC Metal’s Vice President Manfu Ma was appointed to Ivanhoe’s Board of Directors, increasing CITIC Metal’s appointees to Ivanhoe’s 11-person Board to three.

• Also on August 16, 2019, Ivanhoe’s joint-venture partner at Kamoa-Kakula, Zijin

Mining Group Co., Ltd. (Zijin Mining), provided additional proceeds to Ivanhoe of C$67 million ($50 million) also at C$3.98 per share through the exercise of its anti- dilution rights. Zijin Mining’s Chairman Chen Jinghe was elected to Ivanhoe’s Board on June 28, 2019.

• CITIC Metal Africa and Zijin Mining are each subject to long-term standstill

agreements with Ivanhoe Mines that limit the maximum number of shares each may acquire, which in the case of CITIC Metal Africa is 29.9% until January 8, 2023, and in the case of Zijin currently is 9.9% until December 7, 2026, beyond which each can only acquire shares on a consensual, negotiated basis with Ivanhoe Mines until the standstills expire. Zijin Mining’s maximum allowable shareholding under its standstill will increase to 13.88% on completion of the rebalancing transaction announced by Ivanhoe on October 8, 2019, but the standstill expiry date will remain at December 7, 2026.

• On October 8, 2019, Ivanhoe and Zijin announced the employment of a stand-alone

executive team to take Kamoa-Kakula to commercial production. Mark Farren, formerly Ivanhoe’s Executive Vice President, Operations, was appointed as the Chief Executive Officer of the Kamoa-Kakula Copper Joint Venture. Joining Mr. Farren on Kamoa-Kakula’s new executive management team will be Dr. Yong Chen of Zijin Mining, as Chief Operating Officer.

• In two concurrent moves to further enhance Ivanhoe’s development and operating

capabilities, Louis Watum, Ivanhoe’s DRC country manager, was appointed President of the Board of Directors of Kamoa Copper SA, the DRC operating company of the joint venture between Ivanhoe Mines, Zijin Mining, Crystal River and the Government of the Democratic Republic of Congo that is developing the Kamoa- Kakula Project. South African mining veteran Warwick Morley-Jepson was appointed as Ivanhoe’s new Chief Operating Officer, assuming the duties formerly held by Mr. Farren.

• On July 29, 2019, Ivanhoe announced that drilling on its 100%-owned Western

Foreland licences, immediately north of the Kamoa-Kakula mining licence, had discovered the extension of the Kamoa Far North high-grade shallow copper corridor on Ivanhoe’s wholly-owned licences for at least 400 metres. Additional drilling has extended this strongly mineralized corridor to at least 800 metres.

Sixteen holes now have been completed this year in this new high-grade target area and assays are pending.

• On July 29, 2019, Ivanhoe announced assays from 19 new drill holes at the latest

high-grade discovery at Kamoa-Kakula ─ the Kamoa North Bonanza Zone. Multiple, thick drill intercepts of more than 10% copper were recorded at the new discovery, including 13.80% over 15.50 metres in the central discovery area. Work is underway to prepare an initial mineral resource estimate for the Bonanza Zone, as well as geotechnical, hydrogeological and metallurgical test work needed for mine planning.

• The controlling east-west striking structure thought to be responsible for the

massive copper sulphide mineralization in the Kamoa North Bonanza Zone is visible as a lineament on airborne magnetic images and can be traced over a distance of up to 20 kilometres. It trends west onto the adjacent Western Foreland exploration licences that are 100%-owned by Ivanhoe Mines.

• Development of the Kakula Mine, the first of multiple, planned mining areas at

Kamoa-Kakula, is making excellent progress. The first underground access drives intersected Kakula’s initial high-grade ore (+3% copper) in late August, then intersected an even higher grade zone (approximately 6% copper) in late October as the drives advance towards mining zones of +8% copper in the center of the Kakula deposit. Ivanhoe and its joint-venture partner Zijin Mining are advancing rapidly on earthworks for the processing plant and other surface infrastructure. The joint venture has issued purchase orders for the long-lead mining and processing equipment. Initial copper concentrate production from the Kakula Mine currently is scheduled for the third quarter of 2021.

• Following the completion of basic engineering and procurement, as part of the

forthcoming Kakula DFS, Kakula’s initial processing plant capacity has increased from 3.0 Mtpa to 3.8 Mtpa. The expansion in initial plant capacity requires increasing the underground mining crews in 2020 from 11 to 14 to ensure sufficient mining operations to feed the expanded plant and create pre-production stockpiles of approximately 1.5 million tonnes of high-grade ore and an additional 700,000 tonnes of lower-grade material (approximately 1% to 3% copper). This should allow the plant to ramp up quickly and maintain a steady state throughput of 3.8 Mtpa.

• The project team has recently completed basic engineering design and costing for

Kakula’s initial mine and underground infrastructure, the first concentrator module and associated surface infrastructure. The updated estimate of the project’s initial capital costs is approximately $1.3 billion (from January 1, 2019), which assumes commissioning of the processing plant in Q3 2021. The capital costs incurred by the Kamoa-Kakula joint venture during the first nine months of 2019 were $182.5 million.

• Other engineering and construction activities underway at Kamoa-Kakula include the

refurbishment of six turbines at the Mwadingusha hydro-electric power plant and associated 220-kilovolt infrastructure to supply the mine with clean hydro-power, construction of a permanent road between the mine site and the Kolwezi airport, construction of the first phase of accommodations for 1,000 employees and contractors, and earthworks for the processing plant and other surface infrastructure.

• An independent preliminary economic assessment (PEA) issued in February 2019

indicates that Kamoa-Kakula has a potential production rate of at least 18 Mtpa. Once this expanded rate 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.

• At the Kipushi mine redevelopment project in the DRC, the definitive feasibility study

(DFS), which will update and refine the findings of the PFS issued in December 2017, is being reviewed by Ivanhoe’s engineering team who continues to work toward completion. Similar to the PFS, the DFS will focus on the initial mining of Kipushi’s Big Zinc Zone.

• At the Platreef mine development project in South Africa, the project’s first shaft

(Shaft 1) has been sunk to a depth of more than 953 metres below surface. The 950- metre-level station development for Shaft 1 is well underway, with completion of the shaft to a final depth of approximately 1,000 metres planned for mid-2020.

• The concrete foundation for Platreef’s Shaft 2 headframe was completed in mid-July.

Shaft 2 will have an internal diameter of 10 metres and will be equipped with two Koepe winding plants, one equipped with 40-tonne rock-hoisting skips providing the mine with a total capacity to hoist six million tonnes of ore per year – the single largest hoisting capacity at any mine in Africa.

• Palladium prices continued to surge to new record highs in the third quarter, topping

$1,800 an ounce as stricter air-quality rules boost demand for the metal used in vehicle pollution-control devices. The price increase has propelled Ivanhoe’s Platreef Project ‘metals-price basket’ to a new, multi-year high.

• Ivanhoe is investigating an alternative early production plan for the Platreef Project,

targeting significantly lower initial capital, to accelerate first production by using Shaft 1 as the mine’s initial production shaft, followed by expansions to the production rate as outlined in the DFS.

• Ivanhoe Mines deeply regrets to report that a fatal accident involving a contractor's

employee occurred at the Kamoa-Kakula Project in September. The accident involved a civil contractor at a surface cement batching plant. The Kamoa-Kakula senior management team worked with the DRC authorities to facilitate their investigation of the accident. The Kamoa-Kakula Project implemented additional safety measures to prevent such an accident from recurring. This is the first fatality at the Kamoa-Kakula Project. The project had gone more than 7.5 years without a lost-time injury prior to the fatal injury.

• At the end of Q3 2019, Kamoa-Kakula reached 120,501 work hours free of a lost-time

injury, Kipushi 1.488 million work hours free of a lost-time injury, and Platreef 214,111 work hours free of a lost-time injury.

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. In Q2 2019, Ivanplats reached Level 2 contributor status in its verification assessment on the B-BBEE scorecard. 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 Q3 2019, the Platreef Project reached a total of 214,111 lost-time, injury-free hours worked in accordance with South Africa’s Mine Health and Safety Act, and Occupational Health and Safety Act. Unfortunately a lost-time injury (LTI) occurred in July 2019 after the project had reached 14 months without a LTI. The Platreef Project continues to strive toward its workplace objective of an environment that causes zero harm to employees, contractors, sub-contractors and consultants.

Platreef Project showing the Shaft 1 headframe and the stockpile of development rock from ongoing shaft-sinking work in Shaft 1.

Platreef alternative production plan

Palladium prices continue to surge to new record highs, topping $1,800 an ounce as stricter air-quality rules boost demand for the metal used in vehicle pollution-control devices. The price increase has propelled Ivanhoe’s Platreef Project ‘metals-price basket’ to a new, multi-year high.

Ivanhoe Mines is investigating an alternative production plan for the Platreef Project, targeting significantly lower initial capital, to accelerate first production by using Shaft 1 as the mine’s initial production shaft. This plan will focus on initially targeting the development of mining zones accessible from Shaft 1 and maximizing the hoisting capacity of this shaft, followed by expansions to the production rate as outlined in the DFS.

Shaft 1 now extends to a depth of more than 953 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 a depth of more than 950 metres below surface. The thickness of the mineralized orebody (T1 and 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 further metallurgical sampling.

The 750-metre-level and 850-metre-level stations have both been completed with the 950metre-level station currently in development. Development is being carried out on the north drift of the 950-metre-level to accommodate a temporary refuge bay and rock handling arrangements facilitating early development from Shaft 1.

The final shaft bottom depth has been revised to 1,000 metres below surface in order to cater for a long-term life of mine spillage arrangement. This projected final depth is expected to be reached in mid-2020. The three development stations will provide initial, underground access to the high-grade orebody, enabling mine development to proceed concurrently with the construction of Shaft 2.

Tumelo Maselela, Mining Engineer, marking off shotholes in preparation for the next drilling cycle.

Rock-drill operators preparing to drill shotholes for the next development blast at the 950-metre-level station.

Shaft 2 box cut and concrete foundation completed in July

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 Koepe winding plants, one equipped with 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. The box-cut excavation to a depth of approximately 29 metres below surface, including the concrete foundation, has been successfully completed and will form the foundation of the 103-metre-tall concrete headgear that will house the shaft’s permanent hoisting facilities and support the shaft collar. Work on Shaft 2 has been temporarily deferred while the company completes its review of the alternative production plan using Shaft 1 as the mine’s initial production shaft.

Underground mining to incorporate highly productive, mechanized methods

The mining zones in the current Platreef mine plan occur at depths ranging from approximately 700 metres to 1,200 metres below surface.

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. As per the DFS, the ore will be hauled from the stopes to a series of internal ore passes and transferred to the bottom of Shaft 2 via inter-level ore passes, where it will be crushed and then hoisted to surface.

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).

Development of human resources and job skills

The Platreef Project’s Social and Labour Plan (SLP), towards which it pledged a total of R160 million ($11 million) during the past five years, expires in November 2019. That approved plan included R67 million ($4 million) for the development of job skills among local residents and R88 million ($6 million) for local economic development projects. Consultation regarding the project’s second SLP is in the final stages.

The Ivanplats team celebrated Arbour Day by planting trees near the Platreef project site.

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).

Health, safety and community development

At the end of Q3 2019, the Kipushi Project reached a total of 1,488,337 work hours free of a lost-time injury.

The Kipushi Project operates a potable-water station to supply the municipality of Kipushi with water. This includes power supply, disinfectant chemicals, routine maintenance, security and emergency repair of leaks to the primary reticulation. The Kipushi Project also installed and commissioned new overhead powerlines to the pump station. Other community development projects continued during Q3 2019 included the Kipushi women’s literacy project, the sewing training centre project and the upgrading of the Mungoti School in Kipushi.

Upgrading work now is complete at the Mungoti community school that adjoins the Kipushi Mine. The upgrading project was funded by the Kipushi Mine.

Pre-feasibility study for Kipushi completed in December 2017 and definitive feasibility study in final stages of completion

The Kipushi Project’s PFS, announced by Ivanhoe Mines on December 13, 2017, anticipated annual production of an average of 381,000 tonnes of zinc concentrate over an 11-year, initial mine life at a total cash cost of approximately $0.48 per pound (lb) of zinc.

Highlights of the PFS, based on a long-term zinc price of $1.10/lb include:

• After-tax net present value (NPV) at an 8% real discount rate of $683 million.
• After-tax real internal rate of return (IRR) of 35.3%.
• After-tax project payback period of 2.2 years.
• Pre-production capital costs, including contingency, estimated at $337 million.
• Existing surface and underground infrastructure allows for significantly lower capital costs than comparable greenfield development projects.
• Life-of-mine average planned zinc concentrate production of 381,000 dry tonnes per annum, with a concentrate grade of 59% zinc, is expected to rank Kipushi, once in production, among the world’s largest zinc mines.

All figures are on a 100%-project basis unless otherwise stated. Estimated life-of-mine average cash cost of $0.48/lb of zinc is expected to rank Kipushi, once in production, in the bottom quartile of the cash-cost curve for zinc producers internationally.

The project team continues to work towards the completion of the Kipushi Project’s definitive feasibility study (DFS).

Kaboya Geullord installing brackets along Kipushi’s T4 conveyor belt that will transport ore from the underground mine to surface.