IVN.TO · 2020-03-08 12:00:00

Ivanhoe Mines issues 2019 full-year results and review of mine construction progress and exploration activities Excellent development progress being made at the high-grade Kakula Copper Mine in D.R. Congo, with initial production

Mine Development & Operations Financials Exploration Programs

March 8, 2020

Ivanhoe Mines issues 2019 full-year results and review of mine

construction progress and exploration activities

Excellent development progress being made at the high-grade

Kakula Copper Mine in D.R. Congo, with initial production

on track for third quarter of 2021

February 2020 Independent Resource Estimate boosts the

combined Kamoa-Kakula Project Indicated Mineral Resources to

1.4 billion tonnes grading 2.7% copper, at a 1% cut-off

Initial Indicated Mineral Resource estimate for the Kamoa North

Bonanza Zone includes 1.5 million tonnes grading 10.7% copper,

at a 5% cut-off

Drilling extends the new high-grade 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 year ended December 31, 2019. Ivanhoe Mines is a Canadian

mining company advancing its three joint-venture mining projects in Southern Africa:

the Kamoa-Kakula copper discovery in the Democratic Republic of Congo (DRC); the

Platreef palladium-platinum-nickel-copper-gold-rhodium discovery in South Africa; and

the extensive upgrading of the historic Kipushi zinc-copper-lead-germanium mine, also

in the DRC. All figures are in U.S. dollars unless otherwise stated.

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 13.88% 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 increased from 9.9% to 13.88% on completion of the rebalancing

transaction announced by Ivanhoe on October 8, 2019.

 On October 8, 2019, Ivanhoe and Zijin announced the installation 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. Dr. Yong Chen of Zijin

Mining was appointed 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.

 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

civil works for the processing plant and other surface infrastructure. The joint

venture has issued purchase orders for the long-lead mining and processing

equipment. The first oversized loads of equipment for the processing plant arrived at

the mine on February 21, 2020. Initial copper concentrate production from the Kakula

Mine is scheduled for the third quarter of 2021.

 In parallel with the construction of Kamoa-Kakula’s phase 1 Kakula Mine, work is

progressing on the independent Kakula Definitive Feasibility Study (DFS) and an

updated Integrated Development Plan for the entire Kamoa-Kakula mining complex.

The Kakula DFS will provide an increased level of accuracy for the design,

production schedule and expenditures for the initial phase of mine development at

Kakula. The Integrated Development Plan will include details on the planned

expansion phases for the greater Kamoa-Kakula mining complex, incorporating

updates for mineral resources, production rates and economic analysis.

 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 material grading approximately 1% to 3% copper. This should allow the plant to

ramp up quickly and maintain a steady state throughput of 3.8 Mtpa.

 In November 2019, the Kamoa-Kakula Project team 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.

 Ivanhoe will continue to fund its share of approximately 40% of the initial capital

costs, plus it will fund its share of capital associated with the 20% carried interest

owned by the Government of the DRC, from its existing cash resources. Ivanhoe and

Zijin Mining are jointly reviewing equipment and project-related financing options to

potentially accelerate the timeline for Kakula’s Phase 2 development ─ a doubling of

mill throughput to 7.6 Mtpa.

 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 hydropower,

construction of the first phase of accommodations for 1,000 employees and

contractors, civil works 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.

 On February 6, 2020, Ivanhoe announced an updated independently verified

Indicated Mineral Resource increased the combined Kamoa-Kakula Project Indicated

Mineral Resource to 423 million tonnes grading 4.68% copper, at a 3% cut-off. The

combined Kamoa-Kakula Project Indicated Mineral Resource now stands at 1.4

billion tonnes grading 2.7% copper, at a 1% cut-off.

 The initial Indicated Mineral Resource estimate for the Kamoa North Bonanza Zone

includes 1.5 million tonnes grading 10.7% copper, at a 5% cut-off. Drilling continues

to target additional resources in the vicinity of the ultra-high-grade Bonanza Zone

and the Far North Zone. Given the shallow depth, remarkable thickness and massive

copper sulphide mineralization discovered within the Kamoa North Bonanza Zone,

Kamoa-Kakula’s engineers are evaluating potential options to accelerate the

development of this new discovery.

 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.

 Drilling also has confirmed the extension of the Kamoa North high-grade copper

structure for at least 800 metres in the Kiala Discovery area, part of Ivanhoe’s 100%-

owned Western Foreland licences that adjoin the Kamoa-Kakula mining licence to

the north. The high-grade copper zone on Ivanhoe’s 100%-owned exploration

licences is being delineated through a series of step-out fences of holes drilled in a

northerly direction.

 During 2019, Ivanhoe significantly expanded the size of its 100%-owned exploration

licences in the Western Foreland area. Ivanhoe now controls more than 2,500 square

kilometres of highly-prospective land holdings in the vicinity of the 400-square-

kilometre Kamoa-Kakula mining licence.

 At the Kipushi mine redevelopment project in the DRC, the project team continues to

work towards the completion of the Kipushi Project’s definitive feasibility study

(DFS). The DFS will update and refine the findings of the pre-feasibility study (PFS)

issued in December 2017 and will focus on the initial mining of Kipushi’s Big Zinc

Zone.

 Ivanhoe has made excellent progress in upgrading the mine’s underground

infrastructure to allow for mining to quickly begin at the ultra-high-grade Big Zinc

orebody. Resumption of production at Kipushi now requires the construction of a

surface processing plant and other related surface production facilities. Discussions

are continuing with Ivanhoe’s joint-venture partner, Gécamines, in order to help

advance a new era of production at Kipushi.

 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 957 metres below surface. The 950-

metre-level station development for Shaft 1 is nearing completion, with completion

of the shaft to a final depth of approximately 1,000 metres planned for mid-2020.

 Palladium prices continued to surge to new record highs in 2019 and early 2020,

recently topping $2,800 an ounce as stricter air-quality rules boost demand for the

metal used in vehicle pollution-control devices. Rhodium prices also have soared to

more than $12,700 an ounce. The price increases of palladium and rhodium ─ two

key metals in the Platreef orebody ─ has propelled Ivanhoe’s Platreef Project

‘metals-price basket’ to a new, multi-year high.

 Platreef contains an estimated 26.8 million ounces of palladium and 1.8 million

ounces of rhodium in Indicated Resources, plus an additional 43.0 million ounces of

palladium and 3.1 million ounces of rhodium in Inferred Resources, at a cut-off grade

of 1 gram per tonne.

 Ivanhoe is investigating a phased development 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 is evaluating various project-related financing options to fast-track

Platreef’s development schedule and accelerate initial production.

 The concrete foundation for Platreef’s Shaft 2 headframe was completed in July

2019. Work on Shaft 2 has been temporarily deferred while the company completes

its review of the phased development production plan. Shaft 2 is designed with an

internal diameter of 10 metres and 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.

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

employee occurred at the Kamoa-Kakula Project in September 2019. The accident

involved a civil contractor at a surface cement batching plant. On February 6, 2020 a

second contractor's employee passed away due to fat embolism syndrome causing

severe brain damage following a broken bone incurred in a workplace accident on

January 21, 2020 at Kamoa-Kakula. The project had gone more than 7.5 years

without a lost-time injury prior to the fatal injury in September 2019.

 At the end of 2019, Kipushi had reached 1.88 million work hours free of a lost-time

injury, and Platreef 171,525 work hours free of a lost-time injury.

A sample of chalcocite-rich development ore from the Kakula Mine. Based on

Niton (X-ray fluorescence or XRF) analysis, this sample grades 62.9% copper.

Principal projects and review of activities

COVID-19 Response Plan

Ivanhoe Mines is closely monitoring the impact of the COVID-19 virus and is prepared for

potential short-term impacts on its projects and operations worldwide. The company has

appointed a team with overall responsibility for COVID-19 response planning, which includes

senior Ivanhoe Mines representatives with expertise in health and safety, operations, law,

human resources, and communications as well as outside counsel from world-leading

epidemiologists. As part of its COVID-19 Response Plan, the company is putting particular

focus on the health and safety of all its employees and contractors as well as its host

communities. In addition, the company is conducting a careful review of purchase orders and

its supply chain to minimize disruption to its projects.

1. Platreef Project

64%-owned by Ivanhoe Mines

South Africa

The Platreef Project is owned by Ivanplats (Pty) Ltd (Ivanplats), 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.

Aerial view of the Platreef Project, with Shaft 1’s headframe and the boxcut and

concrete shaft collar foundation for Shaft 2. Ivanhoe is looking into accelerating

first production by using Shaft 1 as the mine’s initial production shaft.

Health and safety at Platreef

At the end of 2019, the Platreef Project reached a total of 171,525 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 November 2019. 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 phased development production plan

In July 2017, Ivanhoe Mines announced the results of an independent, definitive feasibility

study (DFS) for the then planned first phase of the Platreef Project’s palladium-platinum-nickel-

copper-gold-rhodium mine in South Africa.

The Platreef DFS covered a four million tonnes per annum 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.

During 2019 and early 2020, palladium prices have continued to surge to new record highs,

recently topping $2,800 an ounce as stricter air-quality rules boost demand for the metal used

in vehicle pollution-control devices, while the price of rhodium hit a record high of more than

$12,700 an ounce. The price increases have propelled Ivanhoe’s Platreef Project ‘metals-price

basket’ to a new, multi-year high.

Platreef contains an estimated 26.8 million ounces of palladium and 1.8 million ounces of

rhodium in Indicated Resources, plus an additional 43.0 million ounces of palladium and

3.1 million ounces of rhodium in Inferred Resources, at a cut-off grade of 1 gram per tonne.

Given the recent surge in Platreef’s ‘metals-price basket’, Ivanhoe Mines is investigating a

phased development 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.

Led by the surge in prices of palladium and rhodium, Platreef’s ‘metals-price

basket’ revenue per tonne of probable reserves recently reached a new, all-time

high of more than $300.

$50

$100

$150

$200

$250

$300

$350

Platreef’s Revenue Per Tonne of Probable

Reserves (US$/t ore)

Platinum Palladium Rhodium Gold Copper Nickel

Total Cash Cost (Mine Site + Realization)

Mine Site Cash Cost

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