IVN.TO · 2018-02-26 12:00:00

Ivanhoe Mines announces a 50% increase in Indicated Mineral Resources, at a 3% cut-off grade, at the ultra-high-grade Kakula Copper Discovery in D.R. Congo. Kakula now contains Indicated Mineral Resources of 174 million

Resource Estimates

February 26, 2018

Ivanhoe Mines announces a 50% increase

in Indicated Mineral Resources, at a 3% cut-off grade,

at the ultra-high-grade Kakula Copper Discovery in D.R. Congo.

Kakula now contains Indicated Mineral Resources of 174 million

tonnes at 5.62% copper, plus additional Inferred Mineral Resources

of 9 million tonnes at 3.66% copper, at a 3% cut-off.

At a 1% cut-off, Kakula’s Indicated Mineral Resources have

increased by 58%, now totalling 585 million tonnes

at 2.92% copper.

Kakula’s strike length now extends to 13.3 kilometres

and remains open for significant expansion.

New Mineral Resource estimate establishes the Kamoa-Kakula

Project as the world’s fourth-largest copper discovery.

Project’s copper grades are the highest, by a wide margin,

of the world’s top 10 copper deposits.

Average true thickness of Kakula’s selective mineralized zone is

10.1 metres in the Indicated Mineral Resources area,

at a 1% cut-off.

Kakula’s new estimate boosts combined Kamoa-Kakula

Indicated Mineral Resources to 1.03 billion tonnes at 3.17%

copper, containing approximately 72 billion pounds of copper,

plus an additional 183 million tonnes of Inferred Mineral Resources

at 2.31% copper, at a 1.5% cut-off.

Consultation between industry participants and government

set to begin to review the DRC 2002 Mining Code.

Geophysical surveys underway to help identify new exploration

targets on the highly prospective Kamoa-Kakula mining licence.

KOLWEZI, DEMOCRATIC REPUBLIC OF CONGO – Robert Friedland, Executive

Chairman of Ivanhoe Mines (TSX: IVN; OTCQX: IVPAF), and Lars-Eric Johansson, Chief

Executive Officer, announced today that the company has completed an independently

verified, updated Mineral Resource estimate for the ultra-high-grade Kakula Discovery

on the Kamoa-Kakula Copper Project, near the mining centre of Kolwezi in the

Democratic Republic of Congo.

The tier-one Kamoa-Kakula Project is a joint venture between Ivanhoe Mines, Zijin

Mining and the government of the Democratic Republic of Congo (DRC).

The updated Kakula Mineral Resource estimate, prepared under the direction of

independent consultant Amec Foster Wheeler, covers a mineralized strike length of 13.3

kilometres. For the first time, the updated estimate incorporates Mineral Resources

contained in the Kakula West Discovery area and the saddle area between the main

Kakula Discovery area and Kakula West (see Figure 1).

The new estimate boosts the total tonnage of Kakula’s Indicated Mineral Resources by

50%, at a 3% copper cut-off, compared to the previous Kakula resource estimate issued

in May 2017 that covered a strike length of 7.7 kilometres.

Kakula’s new Indicated Mineral Resources at a 3% cut-off grade have increased by 58

million tonnes and currently total 174 million tonnes at a grade of 5.62% copper. This

compares to the May 2017 estimate of 116 million tonnes at 6.09% copper, at the same

cut-off grade. Estimated Inferred Mineral Resources now total an additional nine million

tonnes at a grade of 3.66% copper, at a 3% cut-off.

At a 1% copper cut-off, Kakula’s Indicated Mineral Resources have increased by 58%, to

now total 585 million tonnes at 2.92% copper.

The Kakula high-grade mineralized trend remains open in multiple directions. Mr.

Friedland said Ivanhoe expects that ongoing in-fill and step-out drilling will yield

significant expansions and further upgrades to the current resources.

“Kakula is the most remarkable mineral discovery we have seen during our 35-plus

years in the exploration industry. The new, independently-verified resource estimate

now places Kamoa-Kakula ahead of Indonesia’s renowned Grasberg Deposit as the

world’s fourth-largest copper discovery on the planet in terms of contained copper. And

it still is growing.

“The exceptionally high copper grades, thicknesses and continuity of the mineralization

at Kakula distinguish this discovery from anything else in the Central African

Copperbelt,” Mr. Friedland added.

“Based on the findings of the independent preliminary economic assessment

completed in November of last year, the resources we’ve discovered should allow us to

build a world-scale, highly-mechanized, underground copper mine with an initial capital

cost expected to be far lower than other operations of this size.

“With this initial Mineral Resource estimate at Kakula West, we can begin to evaluate

technical and infrastructure options to expeditiously develop the zones of thick, high-

grade, bottom-loaded chalcocite in this latest discovery area.”

Mr. Friedland said that a development scenario using a mining rate of six million tonnes

a year and a copper cut-off grade of 3% indicates that Kakula already has enough

Indicated Mineral Resources to mine at an average grade of between 5.5% and 6%

copper for approximately 30 years.

“If we lower the copper cut-off grade to 1%, which is higher than the mining grades at

most of the world’s major copper mines, we could be mining almost 3% copper at

Kakula for approximately 100 years,” Mr. Friedland said.

“Importantly, the western trend of Kakula’s high-grade mineralized core appears to be

open to the southwest, suggesting that potential extensions of the Kakula West

Discovery could remain within the Kamoa-Kakula mining licence for a considerable

distance. The ongoing gravity and geophysical seismic surveys will provide our

geological team with additional data to better assess the direction and extent of

Kakula’s high-grade mineralized zone.

“The unparalleled strength and continuity of the Kakula mineralized trend also bodes

well for the potential for exploration success on Ivanhoe’s 100%-owned Western

Foreland licences, to the west of Kamoa-Kakula. Given the accumulation of in-depth,

proprietary geological insights gained by Ivanhoe's geological team into the features

controlling the high-grade copper mineralization during almost two decades of

exploring in the region, we are highly confident of further exploration successes in 2018

and beyond.”

The Kakula Discovery is approximately 10 kilometres southwest of Kamoa’s initial

Kansoko Mine development (see figures 1 & 2). Ivanhoe and Zijin have been conducting

an aggressive drilling program totalling more than 181,500 metres at the Kakula

Discovery since April 2016. The program is expected to continue through 2018.

The February 23, 2018 Kakula Mineral Resource estimate was prepared by George

Gilchrist, Ivanhoe Mines’ Mineral Resources Manager, under the direction of Dr. Harry

Parker and Gordon Seibel, both RM SME, of Amec Foster Wheeler, of Reno, Nevada, and

is reported in accordance with the 2014 CIM Definition Standards for Mineral Resources

and Mineral Reserves. Dr. Parker and Mr. Seibel are the Qualified Persons for the

estimate. A technical report will be filed on SEDAR at www.sedar.com and on the

Ivanhoe Mines website at www.ivanhoemines.com within 45 days of the issuance of this

news release.

Highlights include:

 Indicated Mineral Resources total 585 million tonnes at a grade of 2.92% copper,

containing 37.7 billion pounds of copper at a 1% copper cut-off. At a 2% copper cut-

off, Indicated Mineral Resources total 330 million tonnes at a 4.07% copper grade,

containing 29.6 billion pounds of copper. At a higher cut-off of 3% copper, Indicated

Mineral Resources total 174 million tonnes at a grade of 5.62% copper, containing

21.5 billion pounds of copper.

 Inferred Mineral Resources total 113 million tonnes at a grade of 1.90% copper,

containing 4.7 billion pounds of copper at a 1% copper cut-off. At a 2% copper cut-

off, Inferred Mineral Resources total 44 million tonnes at a 2.59% copper grade,

containing 2.5 billion pounds of copper. At a higher cut-off of 3% copper, Inferred

Mineral Resources total 9 million tonnes at a grade of 3.66% copper, containing 0.7

billion pounds of copper.

 The average true thickness of the selective mineralized zone (SMZ) at a 1% copper

cut-off is 10.1 metres in the Indicated Mineral Resources area and 6.7 metres in the

Inferred Mineral Resources area. At a higher 3% copper cut-off, the average true

thickness of the SMZ is 4.7 metres in the Indicated Mineral Resources area and 3.3

metres in the Inferred Mineral Resources area.

The Kakula Mineral Resources are defined within a total area of 24.9 square kilometres

at a 1% copper cut-off. At the same cut-off grade, the areal extent of Indicated Mineral

Resources is 19.4 square kilometres and the areal extent of the Inferred Mineral

Resources is 5.5 square kilometres. Figure 6 shows the expansion of Kakula’s Indicated

and Inferred Mineral Resources since May 2017.

The Kakula Discovery remains open for significant expansion in multiple directions,

while the remainder of the southern parts of the Kamoa-Kakula mining licence area is

virtually untested (see figures 2 and 3). Drilling by nine rigs is continuing at Kakula;

more than 25,000 metres have been drilled since the beginning of this year.

DRC Mining Code update

Ivanhoe Mines recently has had constructive discussions in Kinshasa, the capital of the

DRC, regarding the review of the DRC 2002 Mining Code. In conjunction with other

international mining companies operating in the DRC, progress has been made toward

understanding the key issues of concern to both the government and industry

participants.

Ivanhoe Mines has received specific assurance that a detailed consultation process will

commence in the near future with the goal of reaching a collaborative, sustainable, and

stable long-term fiscal and regulatory framework that provides the foundation for the

continued development of the mineral resources sector, and helps create a brighter

future for all the citizens of the DRC. The organization of all major mining companies

operating in the DRC, announced at the 2018 Cape Town Mining Indaba, will represent

the industry during the upcoming consultation period.

Figure 1. Kamoa-Kakula mining licence, showing the Kamoa, Kakula

and Kakula West Mineral Resource areas.

Figure 2. Kamoa, Kakula and Kakula West Indicated and Inferred Mineral

Resource areas, with existing power and rail infrastructure.

The February 2018 Kakula Mineral Resource estimate is based on results from

approximately 151,000 metres of drilling in 271 holes completed by December 31, 2017.

Indicated Resources are classified when the drill-hole spacing approximates a 400-

metre grid, while Inferred Resources are classified when the drill-hole spacing

approximates an 800-metre grid.

The February 2018 Kakula Mineral Resources, along with sensitivities at various cut-

offs, are shown in tables 1, 2 and 3.

Table 1. Indicated and Inferred Mineral Resources at a 1% copper cut-off grade,

Kakula Deposit.

Category Tonnage

(Mt)

Area

(km2)

Copper

(%)

Vertical

Thickness

(metres)

Contained

Copper

(kTonnes)

Contained

Copper

(billion lbs)

Indicated 585 19.4 2.92 10.8 17,100 37.7

Inferred 113 5.5 1.90 7.3 2,150 4.7

Notes:

1. Ivanhoe’s Mineral Resources Manager George Gilchrist, a Member of the Geology Society of South Africa and

Professional Natural Scientist (Pr. Sci. Nat) with the South African Council for Natural Scientific Professions

(SACNASP), estimated the Mineral Resources under the supervision of Dr. Harry Parker and Gordon Seibel,

both Registered Members of the Society for Mining, Metallurgy and Exploration (RM SME), who are the

Qualified Persons for the Mineral Resource estimate. The effective date of the estimate is February 23, 2018.

Mineral Resources are estimated using the CIM Definition Standards for Mineral Resources and Reserves

(2014).

2. For Kakula, Mineral Resources are reported using a total copper (TCu) cut-off grade of 1% TCu and an

approximate minimum thickness of 3.0 metres. There are reasonable prospects for eventual economic

extraction under assumptions of a copper price of US$3.00/lb, employment of underground, mechanized, room-

and-pillar and drift-and-fill mining methods, and that copper concentrates will be produced and sold to a smelter.

Mining costs are assumed to be $42/t. Concentrator and general and administrative (G&A) costs are assumed

to be $18/t. Metallurgical recovery is assumed to average 85%. Ivanhoe is studying (preliminary economic

assessment in progress) reducing mining costs using a convergence backfill method.

3. Reported Mineral Resources contain no allowances for hanging wall or footwall contact boundary loss and

dilution. No mining recovery has been applied.

4. Approximate drill hole spacings are 800 metres for Inferred Mineral Resources and 400 metres for Indicated

Mineral resources.

5. Rounding as required by reporting guidelines may result in apparent differences between tonnes, grade and

contained metal content.

Table 2. Kakula Deposit Indicated Mineral Resources, Sensitivity Cases.