Ivanhoe Mines installs new primary crusher as underground mine upgrading work nears completion at the historic Kipushi zinc-copper-silver-germanium mine in the Democratic Republic of Congo Kipushi’s unmined Big Zinc Deposit has an estimated 10.2 million tonnes

May 29, 2018

Ivanhoe Mines installs new primary crusher as underground mine upgrading

work nears completion at the historic Kipushi zinc-copper-silver-germanium

mine in the Democratic Republic of Congo

Kipushi’s unmined Big Zinc Deposit has an estimated 10.2 million tonnes

of Measured and Indicated Mineral Resources grading 34.9% zinc, 0.65% copper,

19 grams per tonne silver and 51 grams per tonne germanium

Updated mineral resource estimate expected in June;

definitive feasibility study scheduled for release later this year

KIPUSHI, 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 a large-

capacity rock crusher now has been successfully installed 1,150 metres below surface at the upgraded Kipushi

zinc-copper-silver-germanium mine in the Democratic Republic of Congo (DRC).

The Sandvik jaw crusher has a maximum capacity of 1,085 tonnes an hour. After the 54-tonne machine was

disassembled on surface, the pieces were lowered down Kipushi’s main production shaft – Shaft 5 – and

installed in the crusher chamber. Reassembly of the crusher is underway and commissioning is expected to

begin in June.

“The installation of the massive new rock crusher at the bottom of Shaft 5 is a noteworthy engineering

accomplishment,” said Mr. Friedland. “It marks the final, major underground infrastructure upgrading project

needed to resume underground mining, crushing and hoisting operations at Kipushi.”

Main frame of the new underground rock crusher secured onto the base plate

at the 1,150-metre level, ready for reassembly and commissioning.

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Mr. Friedland said negotiations are ongoing with government agencies – Gécamines, the state-owned miner

and Ivanhoe’s partner at Kipushi, and Société Nationale des Chemins de Fer du Congo (SNCC), the DRC’s

national railway company – and potential project financiers to advance agreements to launch a new era of

commercial production at Kipushi.

“Since acquiring our 68% interest in the Kipushi Project in 2011, our team has worked with Gécamines to

achieve our shared objective of resuming commercial production,” Mr. Friedland added. “In parallel with

ongoing mine upgrading work and completion of the definitive feasibility study, we are evaluating a number of

proposals we have received to fund the remaining infrastructure construction.”

Ivanhoe’s planned resumption of production at Kipushi focused on mining

the high-grade Big Zinc Deposit

The Kipushi Mine is owned by Kipushi Corporation (KICO), a joint venture between Ivanhoe Mines (68%) and

Gécamines (32%). Kipushi is on the Central African Copperbelt in the province of Haut-Katanga, approximately

30 kilometres southwest of the provincial capital of Lubumbashi and less than one kilometre from the

international border with Zambia.

Built and then operated by Union Minière for 42 years, Kipushi began mining a reported 18% copper from a

surface open pit in 1924. Then it transitioned to become a high-grade, underground copper, zinc and

germanium mine. State-owned Gécamines gained control of Kipushi in 1967 and operated the mine until 1993,

when it was placed on care and maintenance due to a combination of economic and political factors. The

planned restoration of production at Kipushi is based on initial mining that will be focused on the Big Zinc

Deposit.

Before Kipushi was idled in 1993, Gécamines discovered the Big Zinc Deposit at a depth of approximately

1,250 metres below surface and adjacent to the producing Fault Zone (see Figure 1). No mining ever has been

conducted on the Big Zinc’s mineral resources.

Ivanhoe’s drilling has upgraded and expanded the Big Zinc Deposit’s Measured and Indicated Mineral

Resources to an estimated 10.2 million tonnes grading 34.9% zinc, 0.65% copper, 19 grams/tonne (g/t) silver

and 51 g/t germanium, at a 7% zinc cut-off – containing an estimated 7.8 billion pounds of zinc.

During a span of 69 years, Kipushi produced a total of 6.6 million tonnes of zinc and 4.0 million tonnes of

copper from 60 million tonnes of ore grading 11% zinc and approximately 7% copper. It also produced 278

tonnes of germanium and 12,673 tonnes of lead between 1956 and 1978. There is no formal record of the

production of precious metals as the concentrate was shipped to Belgium and the recovery of precious metals

remained undisclosed during the colonial era. However, drilling by Ivanhoe Mines has encountered significant

silver values within Kipushi’s current deposits that are rich in zinc and copper.

Most of Kipushi’s historical production was from the Fault Zone, a steeply-dipping ore body rich in copper and

zinc that initially was mined as an open pit. The Fault Zone extends to a depth of at least 1,800 metres below

surface, along the intersection of a fault in carbonaceous dolomites (see Figure 1).

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Figure 1. Schematic section of Kipushi Mine.

Key steps toward the start of a new era of mining at Kipushi

Excellent progress has been made by KICO in modernizing the Kipushi Mine’s underground infrastructure as

part of preparations for the mine to resume commercial production. With the underground upgrading program

nearing completion, KICO’s focus now will shift to modernizing and upgrading Kipushi’s surface infrastructure

to handle and process Kipushi’s high-grade zinc and copper resources.

The current mine redevelopment plan, as outlined in the December 2017 independent, pre-feasibility study

(PFS), has a construction period of less than two years, with a life-of-mine average annual production rate of

225,000 tonnes of zinc and cash costs of US$0.48/lb of zinc over an 11-year initial mine life.

The 2017 PFS estimated that Kipushi would have an after-tax NPV of US$683 million and 35% IRR, based on

long-term zinc price of US$1.10/lb, with pre-production capital of US$337 million. At the current zinc price of

approximately US$1.40/lb, the PFS estimated that Kipushi would have an after-tax NPV of US$1.2 billion and

IRR of 51%.

A definitive feasibility study (DFS) is underway to further refine and optimize the project’s economics, taking

into consideration the significant capital already invested to date on critical rehabilitation work. Ivanhoe expects

to complete the DFS later this year.

“Since the PFS was issued six months ago, we have continued to make important strides toward completion of

the underground infrastructure upgrading program,” Mr. Johansson said. “Our goal is to establish Kipushi as

one of the world’s major zinc mines.”

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Highlights of the 2017 PFS, based on a long-term zinc price of US$1.10/lb, include:

 After-tax net present value (NPV) at an 8% real discount rate of US$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 US$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.

 Life-of-mine average cash cost of US$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 globally.

The 2017 PFS was prepared by OreWin, MSA Group, SRK Consulting, Murray & Roberts, Golder Associates

and MDM Engineering, a subsidiary of Amec Foster Wheeler. The PFS was prepared in compliance with

Canadian National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101).

Figure 2: World’s top 20 zinc projects, by contained zinc.

Source: Wood Mackenzie.

Note: All tonnes and zinc grades of the above-mentioned projects (except for Kipushi) are based on public disclosure

and have been compiled by Wood Mackenzie.

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Upgrading of existing underground infrastructure nearing completion;

focus now turns to upgrading surface infrastructure, including the rail siding

and line from the mine to the existing network at Munama

KICO has completed the refurbishment of a significant amount of underground infrastructure at the Kipushi

Project, including a series of vertical mine shafts, with associated head frames, to various depths, as well as

underground mine excavations. A series of crosscuts and ventilation infrastructure still are in working condition.

The underground infrastructure also includes a series of pumps to manage the influx of water into the mine. A

schematic layout of the existing development is shown in Figure 1.

The main production shaft for the Kipushi Mine, Shaft 5 (labelled as P5 in Figure 1), is eight metres in diameter

and 1,240 metres deep, and has been upgraded and re-commissioned. The main personnel and material

winder has been upgraded and modernized to meet global industry standards and safety criteria. The Shaft 5

rock-hoisting winder, which had an annual hoisting capacity of 1.8 million tonnes, also has been upgraded to

international standards and is fully operational.

The main haulage way on the 1,150-metre level between the Big Zinc access decline and Shaft 5 rock load-out

facilities has been resurfaced with concrete so the mine now can use modern, trackless, mobile machinery.

In October 2017, Ivanhoe Mines and the DRC’s state-owned railway company, Société Nationale des Chemins

de Fer du Congo (SNCC), signed a Memorandum of Understanding (MOU) to rebuild 34 kilometres of track to

connect the Kipushi Mine with the DRC national railway at Munama, south of the mining capital of Lubumbashi.

Under the terms of the MOU, Ivanhoe has appointed R&H Rail to conduct a front-end engineering design study

to assess the scope and cost of rebuilding the spur line from the Kipushi Mine to the main Lubumbashi-

Sakania railway at Munama. The study is underway and construction on the Kipushi-Munama spur line could

start later this year. Ivanhoe will finance the estimated US$32 million (plus contingency) capital cost for the

rebuilding, which is included within the overall Kipushi 2017 PFS capital cost.

The proposed export route is to utilize the SNCC network from Kipushi to Ndola, connecting to the north-south

rail corridor from Ndola to Durban. The rail corridor to Durban via Zimbabwe is fully operational and has

significant excess capacity.

Optimized zinc processing methodology for the PFS

The optimized plant design used for the PFS utilizes dense media separation (DMS), followed by milling and a

flotation recovery plant. The addition of milling and a flotation recovery plant resulted in an overall recovery of

89.6%, producing a consistent, high-grade concentrate of 58.9% contained zinc. DMS is a simple density-

concentration technique that preliminary test work has shown yields positive results for the Kipushi material,

which has a sufficient density differential between the waste rock (predominantly dolomite) and mineralization

(sphalerite). Furthermore, the addition of a milling and flotation circuit to DMS is expected to improve the

project economics as a result of higher concentrate grades.

Given the significant, very-high-grade zinc resource at Kipushi, which is rich in potential by-product credits

including copper, silver and germanium, Ivanhoe and the Gécamines technical team are continuing to

investigate additional downstream processing options.

Germanium is a strategic metal that is a key component of fibre-optic systems, infrared optics, high-efficiency

solar-cell applications, and light-emitting diodes. The current spot price of germanium is approximately

US$2,300 a kilogram.

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New Mineral Resource estimate for Kipushi expected in June

Ivanhoe initiated a second phase of underground drilling at Kipushi in April 2017 with the goal of upgrading

Inferred Mineral Resources on the Southern Zinc and Fault zones to Indicated Mineral Resources, expanding

Mineral Resources in the Série Recurrent Zone and collecting additional sample material for metallurgical

flotation testing.

Logging and sampling of the holes was completed at the end of 2017 and the final assays have been received.

Geological interpretation of the results is ongoing and a new resource update is planned for release in June.

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

The DFS will focus on the mining of Kipushi’s Big Zinc Deposit, which has an estimated 10.2 million tonnes of

Measured and Indicated Mineral Resources grading 34.9% zinc. This zinc grade is more than twice as high as

the Measured and Indicated Mineral Resources of the world’s next-highest-grade, major zinc project, according

to Wood Mackenzie, a leading, international industry research and consulting group.

In addition to the Big Zinc Deposit, Kipushi has several copper-rich zones that also contain silver, germanium

and zinc. Measured and Indicated Mineral Resources contained in the copper-rich Série Récurrente Zone,

Fault Zone, and Fault Zone Splay total 1.63 million tonnes at grades of 4.01% copper, 2.87% zinc and 22 g/t

silver, at a 1.5% copper cut-off, containing 144 million pounds of copper. Inferred Mineral Resources in these

zones total an additional 1.64 million tonnes at grades of 3.30% copper, 6.97% zinc and 19 g/t silver.

The crusher’s largest single unit, the 19-tonne main frame, being prepared to be

lowered down Shaft 5.

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The crusher’s main frame at Shaft 5’s 1,150-metre-level station.

The main frame being transported to the 1,150-metre-level crusher chamber.

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Main frame being moved into position at the crusher chamber.

About the Kipushi Mine

Kipushi is a historic, high-grade, copper-zinc-sliver-germanium mine that operated from 1924 to 1993 in the

DRC’s Central African Copperbelt, adjacent to the town of Kipushi.

After being placed on care and maintenance in 1993, the lower levels of the mine flooded in early 2011 due to

a lack of pumping maintenance over an extended period. Ivanhoe Mines acquired a 68% interest in Kipushi in

November 2011 and assumed responsibility for ongoing redevelopment, dewatering and drilling. In December

2015, Ivanhoe achieved a major milestone in its upgrading of Kipushi’s underground infrastructure when the

water level in Shaft 5 was pumped below the mine’s main pumping station 1,210 metres underground. The

water level now is maintained below the 1,210-metre level and the mine has clear and safe access to all of the

main underground workings, including the Big Zinc Deposit.

Qualified Person, Quality Control and Assurance

The scientific and technical information in this news release has been reviewed and approved by Stephen Torr,

P.Geo., Ivanhoe Mines’ Vice President, Project Geology and Evaluation, a Qualified Person under the terms of

National Instrument 43-101. Mr. Torr is not independent of Ivanhoe Mines. Mr. Torr has verified the technical

data disclosed in this news release.

Ivanhoe has prepared and filed a current independent, NI 43-101 technical report for the Kipushi Project, titled

“Kipushi 2017 Prefeasibility Study”, with an effective date of January 25, 2018, which is available under the

company’s SEDAR profile at www.sedar.com and on the company’s website at www.ivanhoemines.com. The

technical report includes relevant information regarding the effective dates and the assumptions, parameters

and methods of the mineral resource estimates on the Kipushi Project cited in this release, as well as

information regarding data verification, exploration procedures, sample preparation, analysis and security, and

other matters relevant to the scientific and technical disclosure contained in this release in respect of the

Kipushi Project.