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Ivanhoe Mines Announces Updated Independent Preliminary Economic Assessment of its Kamoa Copper Discovery

Ivanhoe Mines Announces Updated Independent Preliminary Economic Assessment of 
its Kamoa Copper Discovery 
Kamoa Mine Projected to have the Highest Grade Among the World's
Largest Copper Mines and Also to Be One of the World's Lowest-Cost
Copper Producers 
Estimated pre-tax NPV of US$4.3 billion and an 18.5% IRR 
LUBUMBASHI, DEMOCRATIC REPUBLIC OF CONGO -- (Marketwired) -- 11/18/13
-- Robert Friedland, founder and Executive Chairman of Ivanhoe Mines
(TSX:IVN), and Lars-Eric Johansson, Chief Executive Officer, today
welcomed the positive findings of an independent, Preliminary
Economic Assessment of the company's major Kamoa copper discovery
near the mining centre of Kolwezi in the Democratic Republic of
Congo's southern province of Katanga.  
"The assessment confirms that Kamoa truly is in a class by itself in
terms of the world's known, undeveloped copper deposits," said Mr.
Friedland.  
"Kamoa has the rare combination of a very high copper grade and very
large tonnage, qualities that position Kamoa to become a substantial
copper producer with one of the lowest cash costs anywhere in the
world. This thorough, independent assessment gives us added
confidence as we proceed with the planning of our next steps to
advance Kamoa's development into a world-class copper mine." 
Highlights of the Preliminary Economic Assessment (PEA): 


 
--  A large mine and smelter would be developed using a two-phased approach.
      
--  Pre-tax internal rate of return of 18.5%; after-tax IRR of 15.2%.
      
--  After-tax Net Present Value, at an 8% discount rate, of US$2.5 billion.
      
--  Pre-tax Net Present Value, at an 8% discount rate, of US$4.3 billion.
      
--  Cash costs of US$1.18 per pound of copper would rank Kamoa near the
    bottom of the global cash-cost curve.
      
--  Steady-state production target of 300,000 tonnes per year of blister
    copper, which would establish Kamoa as one of the world's largest copper
    mines, with the highest grade.
      
--  Low pre-production capital requirement of approximately US$1.4 billion.
      
--  Early cash flows would be generated from the sale of high-grade copper
    concentrate.
      
--  A smaller-scale start-up would establish an operating platform to
    support expansion.

 
The PEA, which conforms with the requirements of Canada's National
Instrument 43-101, was prepared by AMC Consultants, AMEC E&C Services
(AMEC), SRK Consulting, Stantec Consulting International, Hatch and
Golder Associates Africa. The full technical report will be filed on
SEDAR at www.sedar.com and Ivanhoe Mines' website at
www.ivanhoemines.com within 45 days of the issuance of this news
release.  
Two-phased approach to the development of a large mine and smelter 
The PEA reflects a two-phased approach to development of the Kamoa
Project. The first phase of mining would target high-grade copper
mineralization from shallow, underground resources to yield a
high-value concentrate. The second phase would entail a major
expansion of the mine and mill and construction of a smelter to
produce blister copper.  
The PEA contemplates the establishment of a conventional copper mine
and concentrator complex at Kamoa with an initial mining rate and
concentrator capacity of three million tonnes per year. Initial mill
feed would come from the Kansoko Sud mineralized zone and lead into
the Centrale area of Kamoa's mineralized zones. 
The initial mining rate and concentrate feed capacity of three
million tonnes per year would be followed in Year 5 by an additional
expansion of eight million tonnes per year in concentrator capacity
and the construction of an on-site smelter with a capacity to produce
300,000 tonnes per year of blister copper. In addition, an estimated
1,600 tonnes of sulphuric acid per day would be produced as a
by-product in the copper smelting process.The PEA contemplates that
the sulphuric acid produced at Kamoa would be sold to copper-oxide
mining operations on the Central African Copperbelt that currently
purchase acid from Zambia or from overseas. 
The production scenario schedules 326 million tonnes to be mined and
milled at an average copper grade of 3.0% copper over a 30-year mine
life, producing 7.8 million tonnes of payable blister copper (plus
0.5 million tonnes of payable copper in concentrate, in the initial
concentrate phase) over the life of the project. 
The PEA is preliminary in nature and includes an economic analysis
that is based, in part, on Inferred Mineral Resources. Inferred
Mineral Resources are considered too speculative geologically to have
the economic considerations applied to them that would allow them to
be categorized as Mineral Reserves, and there is no certainty that
the results will be realized. Mineral Resources do not have
demonstrated economic viability and are not Mineral Reserves.  
Positive preliminary economic analysis demonstrates Kamoa's
exceptional nature  
The preliminary economic analysis is based on a long-term price
assumption of US$3.00 per pound for copper and a sales price for
sulphuric acid of US$250 per tonne. The economic analysis returns an
after-tax Net Present Value (NPV), at an 8% discount rate, of US$2.55
billion. It has an after-tax internal rate of return (IRR) of 15.2%
and a payback period of 8.4 years. The life-of-mine average total
cash cost, after credits, is US$1.18 per pound of copper. 


 
Table 1: Summary of financial results.                                      
                                                                            
                                      --------------------------------------
                                                   Before              After
                                                 Taxation           Taxation
----------------------------------------------------------------------------
Net Present Value                                                           
 (US$ billion)            Undiscounted              25.57              17.70
                   ---------------------------------------------------------
                                  4.0%              10.37               6.85
                   ---------------------------------------------------------
                                  6.0%               6.68               4.23
                   ---------------------------------------------------------
                                  8.0%               4.29               2.55
                   ---------------------------------------------------------
                                 10.0%               2.70               1.44
                   ---------------------------------------------------------
                                 12.0%               1.64               0.71
----------------------------------------------------------------------------
IRR                                  -              18.5%              15.2%
----------------------------------------------------------------------------
Project Payback                                                             
 (years)                             -               7.64               8.43
----------------------------------------------------------------------------
                                                                            
Table 2: Mining and processing production statistics.                       
                                                                            
                                     Conc. Phase Blister Phase              
                         Total LOM    Average(i)    Average(i)   LOM Average
----------------------------------------------------------------------------
Total Plant Feed                                                            
 Mined ('000 t)            326,064         2,417        12,183        10,869
----------------------------------------------------------------------------
Quantity Plant Feed                                                         
 Treated ('000 t)          326,064         3,000        12,243        10,869
Copper Feed Grade                                                           
 (%)                          3.00          4.00          2.94             -
Copper Recovery (%)          85.91         85.87         85.91             -
----------------------------------------------------------------------------
Concentrate Produced                                                        
 ('000 t)                   21,802           258           805           727
Copper Concentrate                                                          
 Grade (%)                   39.00         40.40         38.91             -
----------------------------------------------------------------------------
                       Contained Metal in Concentrate                       
----------------------------------------------------------------------------
Copper ('000 t)              8,502           104           313           283
Copper (Mlb)                18,744           230           691           625
----------------------------------------------------------------------------
                                Payable Metal                               
----------------------------------------------------------------------------
Copper ('000 t)              8,312           103           306           277
Copper (Mlb)                18,325           227           675           611
----------------------------------------------------------------------------
                                                                            
(i) Excludes Year 5 (2022), which is a transition year between concentrate  
and blister production. Mining averages on Conc. Phase includes Years -2 and
-1.                                                                         
                                                                            
Table 3: Unit operating costs.                                              
                                                                            
                                     US$/lb Payable Copper                  
                   ---------------------------------------------------------
                           LOM Average     Conc. Phase(i)   Blister Phase(i)
----------------------------------------------------------------------------
Mine Site Cash Cost               1.05               0.85               1.07
                   ---------------------------------------------------------
Realization Cost                  0.33               0.91               0.29
----------------------------------------------------------------------------
Total Cash Costs                                                            
 Before Credits                   1.38               1.76               1.36
----------------------------------------------------------------------------
Acid Credits                      0.20                  -               0.21
----------------------------------------------------------------------------
Total Cash Costs                                                            
 After Credits                    1.18               1.76               1.15
----------------------------------------------------------------------------
                                                                            
(i) Concentrate and blister averages exclude Year 5 (2022), which is a      
transition year between concentrate and blister.                            

 
Steady-state production from Year 6 onward of 306,000 tonnes per year
of blister copper would establish the Kamoa Project as one of the
world's largest copper mines. Kamoa also would have the highest
average grade among the 20 largest copper mines currently in
production or expected to be in production, according to data from
Wood Mackenzie, an international industry research and consulting
group.  
Figure 1: Annual copper production for top 20 mines and undeveloped
projects globally, can be viewed here: 
http://media3.marketwire.com/docs/912093fig1.pdf 
Figure 2: Annual copper production for all undeveloped projects
globally, can be viewed here:
http://media3.marketwire.com/docs/912093fig2.pdf 
Average cash costs of US$1.18 per pound of copper (after sulphuric
acid credit), over the life of the mine, rank the Kamoa Project near
the bottom of the 2013 cash-cost curve for copper mines globally. 
Figure 3: 2013E copper cash costs, can be viewed here:
http://media3.marketwire.com/docs/912093fig3.pdf 
The estimated capital costs for the Kamoa Project are detailed in
Table 4, below. 


 
Table 4: Capital investment summary.                                        
----------------------------------------------------------------------------
US$M                Concentrate                                             
                          Phase  Blister Phase     Sustaining          Total
----------------------------------------------------------------------------
                                   Mining                                   
----------------------------------------------------------------------------
Underground                                                                 
 Mining                     259          1,125          1,864          3,248
----------------------------------------------------------------------------
Capitalized Pre-                                                            
 Production                  41              -              -             41
----------------------------------------------------------------------------
Subtotal                    301          1,125          1,864          3,290
----------------------------------------------------------------------------
                               Power & Smelter                              
----------------------------------------------------------------------------
Smelter                       -            539            297            836
Power                       141            100              -            241
----------------------------------------------------------------------------
Subtotal                    141            639            297          1,077
----------------------------------------------------------------------------
                           Concentrate & Tailings                           
----------------------------------------------------------------------------
Concentrator                214            312            207            734
----------------------------------------------------------------------------
Subtotal                    214            312            207            734
----------------------------------------------------------------------------
                               Infrastructure                               
----------------------------------------------------------------------------
Infrastructure               81            133             61            274
TSF                          73            181              -            254
Accommodations               75             10             25            111
Rolling Stock &                                                             
 Spur                         -             46              -             46
----------------------------------------------------------------------------
Subtotal                    229            370             86            685
----------------------------------------------------------------------------
                                  Indirects                                 
----------------------------------------------------------------------------
EPCM                         79            220              -            299
Temporary                                                                   
 Facilities                  43             78              -            121
----------------------------------------------------------------------------
Subtotal                    122            298              -            420
----------------------------------------------------------------------------
                   Owners Cost (incl. Drilling & Studies)                   
----------------------------------------------------------------------------
Owners Cost                 103             67              -            171
Closure                       -              -            166            166
----------------------------------------------------------------------------
Subtotal                    103             67            166            337
----------------------------------------------------------------------------
Capital                                                                     
 Expenditure                                                                
 Before                                                                     
 Contingency              1,110          2,812          2,621          6,543
----------------------------------------------------------------------------
Contingency                 292            717              -          1,009
----------------------------------------------------------------------------
Capital                                                                     
 Expenditure                                                                
 After                                                                      
 Contingency              1,402          3,529          2,621          7,552
----------------------------------------------------------------------------

 
Kamoa discovery forms an extension of the Central African Copperbelt 
Ivanhoe Mines' Kamoa copper project, located in the Democratic
Republic of Congo's (DRC) Province of Katanga, is a newly discovered,
very large, stratiform copper deposit with adjacent prospective
exploration areas within the Central African Copperbelt,
approximately 25 kilometres west of the town of Kolwezi and about 270
kilometres west of the provincial capital of Lubumbashi.  
Ivanhoe holds its 95% interest in the Kamoa Project through a
subsidiary company, African Minerals Barbados Limited SPRL (AMBL). A
5%, non-dilutable interest in AMBL was transferred to the DRC
government on September 11, 2012, for no consideration, pursuant to
the DRC Mining Code.  
The company also has offered to sell an additional 15% interest to
the DRC on commercial terms to be negotiated. 
Access to the Kamoa Project from Kolwezi is via unsealed roads. The
road network throughout the project area has been upgraded by Ivanhoe
to provide reliable drill and logistical access. A portion of the
1,500-kilometre-long railway line and electric power line from
Lubumbashi to the Angolan town of Lobito passes approximately 10
kilometres to the north of the project area. 
Kamoa was discovered by Ivanhoe in 2008, west of the known limit of
the Central African Copperbelt in the DRC. The deposit lies under
cover and does not outcrop. The copper mineralization identified at
Kamoa is typical of sediment-hosted stratiform copper deposits and is
similar to the Polish Kupferschiefer and Zambian Ore Shale deposits.
The Kamoa discovery occurs within a regional,
northeast-southwest-trending structural corridor that has been traced
for approximately 35 kilometres. Copper mineralization at Kamoa has
been defined over an area of 20 kilometres by 15 kilometres. The dip
of the mineralized body ranges from 0 degrees to 10 degrees
near-surface above the Kamoa dome, to 15 degrees to 20 degrees on the
flanks of the dome. 
In August 2012, the DRC approved Ivanhoe's application to convert
three exploration permits at Kamoa to exploitation permits (mining
licences). The Kamoa Mining Licences, covering a total of 400 square
kilometres, allow the company to develop and exploit copper and other
minerals for a renewable, 30-year term.  
A regional exploration program is ongoing, with drilling planned at
prospective targets on the more than 9,000 square kilometres of
exploration tenements held by Ivanhoe in a variety of geological
settings within Katanga Province. 
Estimating Kamoa's Mineral Resources 
Resources were classified using a nominal, 400-metre drillhole
spacing for classification of Indicated and a nominal, 800-metre
spacing for Inferred. 
AMEC used a 1% copper cut-off grade as a base case to declare Mineral
Resources. This choice of cut-off is based on many years of
experience on the Zambian Copperbelt at mines with similar
mineralization, such as Konkola, Nchanga, Nkana and Mufulira, where
the 1% cut-off is a natural cut-off. The 1% copper cut-off also is a
"natural" cut-off for the Kamoa deposit, with most single mineralized
zone (SMZ) intercepts (selected using the criteria of a minimum
copper grade of 1% copper and a minimum downhole length of three
metres) grading a few tenths of a percent copper above and below the
composite and well over 1% copper within the SMZ composite. To test
the 1% cut-off grade and various sensitivity cases for the purposes
of assessing reasonable prospects of economic extraction, AMEC
performed a conceptual analysis based on the metallurgical recovery
algorithms, operating costs and economic parameters. 
The Mineral Resources have been defined taking into account the 2010
CIM Definition Standards for Mineral Resources and Mineral Reserves.
Dr. Harry Parker, SME Registered Member, and Gordon Seibel, SME
Registered Member, both employees of AMEC, are the Qualified Persons
for the Mineral Resource estimates.  
Mineral Resources are stated in terms of total copper (Cu). Mineral
Resources are reported at a base-case, total copper cut-off grade of
1% copper and a minimum vertical thickness of three metres, and are
summarized in Table 5. 


 
Table 5: Indicated and Inferred Mineral Resources, Domain 1.                
----------------------------------------------------------------------------
                                                     Contained     Contained
           Tonnage    Area      CuTrue Thickness       Copper         Copper
Category      (Mt)   (km2)     (%)           (m)          (kt) (billion lbs)
----------------------------------------------------------------------------
Indicated      739    50.5    2.67          5.20        19,700          43.5
----------------------------------------------------------------------------
Inferred       227    20.5    1.96          3.84         4,460           9.8
----------------------------------------------------------------------------

 
Notes: 


 
1.  Domain 1 at 1% Cu cut-off grade. 
2.  Mineral Resources have an effective date of 10 December 2012. Harry M.
    Parker and Gordon Seibel, both SME Registered Members, are the Qualified
    Persons responsible for the Mineral Resource estimates. The Mineral
    Resource estimate was prepared by Mr. Seibel. 
3.  Mineral Resources are reported using a total copper (Cu) cut-off grade
    of 1% Cu and a minimum assumed thickness of 3 metres. A 1% Cu cut-off
    grade is typical of analogue deposits in Zambia. There are reasonable
    prospects for economic extraction under assumptions of a copper price of
    US$3.30/lb; sulphuric acid credits of US$300/t of acid produced;
    employment of underground mechanized room-and-pillar mining methods; and
    that copper concentrates will be produced and smelted. 
4.  Reported Mineral Resources contain no allowances for hanging wall or
    footwall contact boundary loss and dilution. No mining recovery has been
    applied. 
5.  The Mineral Resources include the mineralization above a 1% total copper
    cut-off that is potentially amenable to open-pit mining. 
6.  Tonnage and grade measurements are in metric units. Contained copper
    tonnes are reported using metric units; contained copper pounds use
    imperial units. 
7.  True thickness ranges from 2.4 metres to 17.6 metres for Indicated
    Mineral Resources and 2.8 metres to 
    8.4 metres for Inferred Mineral Resources. 
8.  Depth of mineralization below the surface ranges from 10 metres to 1,320
    metres for Indicated Mineral Resources and 20 metres to 1,560 metres for
    Inferred Mineral Resources. Indicated Mineral Resources are supported by
    drilling at a less than or equal to400-metre spacing; Inferred Mineral
    Resources are supported by drilling at 400-metre to 800-metre spacing. 
9.  Tonnages are rounded to the nearest million tonnes; grades are rounded
    to two decimal places. 
10. Rounding as required by reporting guidelines may result in apparent
    summation differences between tonnes, grade and contained metal content.
11. Mineral Resources that are not Mineral Reserves do not have demonstrated
    economic viability. 

 
Additional tonnage estimated in exploration target 
The area inside the model perimeter surrounding the Indicated and
Inferred Mineral Resources is considered an exploration target. The
ranges of the exploration target tonnages and grades are summarized
in Table 6.  
Tonnage and grade ranges were estimated using an inverse distance to
the fifth power for Domain 2 and applying a +/-20% variance to the
resulting tonnage and grade estimate. 
AMEC cautions that the potential quantity and grade of exploration
targets are conceptual in nature and that it is uncertain if
additional drilling will result in the exploration targets being
delineated as a Mineral Resource. 


 
Table 6: Tonnage and grade ranges for Exploration Targets.                  
----------------------------------------------------------------------------
        Low-range Tonnage       High-range  Low-range Grade High-range Grade
Target               (Mt)     Tonnage (Mt)           (% Cu)           (% Cu)
----------------------------------------------------------------------------
Total                 520              790              1.6              2.5
----------------------------------------------------------------------------

 
Figure 4: Kamoa plan map showing total copper grade for Indicated and
Inferred Mineral Resources, can be viewed here:
http://media3.marketwire.com/docs/912093fig4.pdf. 
Figure 5: Contained copper in high-grade deposits (Measured &
Indicated Mineral Resources, inclusive of Mineral Reserves, and
Inferred Mineral Resources; with grades above 2.5% copper), can be
viewed here: http://media3.marketwire.com/docs/912093fig5.pdf. 
Figure 6: Contained copper in undeveloped deposits (Measured &
Indicated Mineral Resources, inclusive of Mineral Reserves, and
Inferred Mineral Resources), can be viewed here:
http://media3.marketwire.com/docs/912093fig6.pdf  
Focus of current drilling program 
Ivanhoe is undertaking a drilling program that encompasses
metallurgical, geotechnical, civil geotechnical and hydro-geological
holes. Additional planned holes will be a combination of exploration,
infill and delineation to target potential upgrades in Mineral
Resource confidence categories and zones of additional mineralized
material. The focus of this drilling will be down-dip expansion of
the Kansoko trend, extension of the mineralization to the western
extents of the mining licence and exploration drilling at Kakula for
hypogene and shallow, open-pittable supergene targets.  
Additional engineering drill holes, including metallurgical drilling,
will be completed. Sterilization drilling using a Land
Cruiser-mounted diamond-drill rig is planned. Drill holes that will
target sources of aggregate for construction purposes also are
planned. 
Large-scale underground mining to use room-and-pillar and
drift-and-fill methods 
Given the favourable mining characteristics of the Kamoa Deposit as
derived from the December 2012 mineral resource - including its
relatively undeformed, continuous mineralization, local continuity
between closely-spaced drillholes and flat-to-moderate dips - it is
considered amenable to large-scale, mechanized, room-and-pillar or
drift-and-fill mining. The low dip and the flat, geometry of the
resource make it conducive to room-and-pillar mining in the shallow
portions of the deposit, transitioning to drift-and-fill mining in
the deeper sections. These conventional mining methods are the
accepted standards for mining deposits such as Kamoa.  
A minimum mining thickness of 3.5 metres was used for the PEA. Any
blocks less than 3.5 metres thick were diluted to 3.5 metres using
the average grade of the adjacent hanging wall and footwall blocks.
Room-and-pillar panels are designed to be 80 metres wide and 500
metres long, with in-panel extraction ratios ranging from 60%-80%,
depending on the panel depth below surface. Partial extraction of the
barrier pillars (up to 50%) is planned at the end of mining of each
section. The overall extraction ratio in the room-and-pillar areas is
expected to be between 56%-82%, depending on the depth below surface.
Higher in-panel extraction ratios of up to 95% are expected within
the drift-and-fill areas, with an overall extraction ratio of 85%
after partial extraction of barrier pillars. 
A strategy of prioritizing higher-grade mining areas early in the
mine's life, and then returning to the lower-grade areas later in the
mine's life, has been built into the mine plan. 
Figure 7: Mining panel layout by mining section, can be viewed here:
http://media3.marketwire.com/docs/912093fig7.pdf 
Infrastructure to support a 30-year mine plan 
The mine infrastructure for the Kamoa Project has been designed to
support a 30-year mine plan, which produces a total of 326 million
tonnes to support an annual blister-copper production rate of 300,000
tonnes. The facility design incorporates early access to the Kansoko
Sud and the southern portion of Kansoko Centrale, which are
higher-grade areas within the deposit. Development of the Kamoa Sud
access begins in Year 1 and provides access to Kamoa Sud, Kansoko
Centrale and Kansoko Nord mining sections. Later in the mine's life,
at Year 16, as the production from the Kansoko Sud mining section is
ramping down, production from the Kamoa Nord mining section is
scheduled to begin. 
The planned accesses to each mining section include a conveyor
decline and two access declines. Additional infrastructure
requirements, such as surface and underground offices, surface and
underground maintenance facilities, ventilation raises and paste
backfill plants, are designed to support operations at the
blister-copper production rate of 300,000 tonnes per year. 
Since the separation between the three portals ranges from 2.2
kilometres to 5.8 kilometres, each site will require separate
infrastructures. 
Development of the main access declines will be in mineralized
material whenever possible, but some of the development will be in
unmineralized waste. 
Building of underground mine-access decline planned to begin early
next year 
Excavation of the first mine-access decline at Kansoko Sud is
expected to begin early next year. The decline will provide access to
high-grade, near-surface copper resources that are targeted for the
planned first phase of production. 
Metallurgical testwork and concentrator design 
Circuit development work during 2011 to 2013 primarily was conducted
at Xstrata Process Support (XPS) Laboratories in Sudbury, Ontario. A
flow sheet was developed that was tailored to the fine-grained nature
of the deposit. The circuit relied on a traditional
mill-float-mill-float (MF2) approach to partially liberate particles,
followed by fine regrinding of concentrates to achieve a concentrate
grade suitable for smelting. Separate treatment of the primary and
secondary rougher concentrates allowed for separately-optimized
cleaner flotation of fast and slow species.  
This configuration became known as the Milestone flow sheet and forms
the basis of the Net Smelter Return (NSR) model and mine plan. The
circuit was tested on various composites from across the resource and
was able to achieve a recovery of 85.4% and a copper grade of 32.8%
for hypogene material, and a recovery of 83.2% and copper grade of
45.1% for supergene material. 
In the first half of 2013, the focus of development work shifted
toward a reduction in the silica content of the final concentrate.
Adjustments were made to the re-agent dosages, as well as the
grinding media type, resulting in an improvement to 86.7% recovery at
a 37.0% copper grade for hypogene material, and 82.9% recovery at a
51.4% copper grade for supergene material. Silica levels in the final
concentrate also dropped from 19.1% to 13.1% for hypogene and from
26.0% to 18.1% for supergene. 
Although these improvements were not realized in time to be
incorporated into the mine plan and NSR, the updated hypogene results
were incorporated into the design basis for the concentrator and
smelter and form the basis of the PEA and associated economic
results. 
The concentrator is expected to be constructed in two phases and
consists of a three million tonnes per year run-of-mine concentrator
during the first four years of operation, followed by the
commissioning of an additional eight million tonnes per year
run-of-mine concentrator in Year 5. 
The design incorporates a three-stage crushing circuit (underground
primary crushing, run-of-mine stockpiling and secondary and tertiary
crushing at the concentrator) to feed the primary mill-feed
stockpile. The primary and secondary ball mills would operate in
closed circuit with hydrocyclones. The flotation circuit would
consist of primary and secondary rougher flotation, with a secondary
grind stage located between the primary and secondary rougher
flotation stages. The cleaner flotation circuit would consist of
primary cleaners with scavengers and re-cleaners, and secondary
cleaners with re-cleaners. The cleaner circuit would incorporate
concentrate regrind stages for both the primary and secondary
circuits. The final concentrate would be thickened before it is
pumped to the concentrate filter(s).  
During the initial years of production, the concentrate would be
bagged in a bagging plant to facilitate transport. Following
commissioning of the smelter, the concentrate filter cake would be
conveyed to the smelter's concentrate storage and blending area. The
secondary rougher tails and multiple non-float streams from the
secondary cleaner circuit report to the final tailings facility.  
Smelter and acid plant details 
The smelting process proposed in the PEA is based on the use of
Direct-to-Blister flash smelting technology (DBF). For slag cleaning,
a two-stage electric furnace process is applied. The smelter has a
concentrate smelting capacity of 800,000 tonnes per year, which
corresponds to a copper product capacity of 300,000 tonnes per year. 
In the DBF concept, copper concentrate is processed by flash smelting
to produce blister copper (approximately 98% copper) in a single
smelting stage. Blister copper is transferred via launders to
refining furnaces, after which it is cast as final product. 
The function of the sulphuric-acid plant is to receive the SO2 and
SO3 containing process gases from the direct-to-blister and refining
furnaces and to produce concentrated sulphuric acid from these gases.
The estimated average sulphuric-acid production is 1,600 tonnes per
day and the estimated product quality is 98.5% sulphuric acid. A
detailed marketing study has been carried out for the DRC's Province
of Katanga and the Zambian Copperbelt. The Congolese Copperbelt is a
net acid-consuming area. The majority of the copper and cobalt in the
area is in the form of copper or cobalt oxides, and a leach solvent
extraction-electrowinning process is utilized to produce final
product. This process consumes acid and a number of the operations on
the Copperbelt run sulphur-burning acid plants to produce acid;
others purchase acid from Zambia or from overseas. Operators in the
DRC reportedly are paying US$300-$400 per tonne and prices have been
up to $800 per tonne in previous years. It is estimated that the full
production cost of producing sulphuric acid in a sulphur-burning acid
plant in Katanga is approximately US$246 per tonne, excluding the
capital cost of the sulphur-burning acid plant. For the purpose of
the Kamoa PEA, a long-term acid credit of US$250 per tonne was used.  
Agreement to ensure supply of electrical power from DRC grid 
Power for the Kamoa Project is planned to be sourced from the DRC
grid following the rehabilitation of three existing hydro power
plants: Koni, Mwadingusha and Nzilo 1. A financing agreement between
Ivanhoe Mines and DRC's state-owned power company, La Societe
Nationale d'Electricite (SNEL), has been finalized and initialled by
the two parties for the rehabilitation of these plants to secure a
sustainable power supply to meet the requirements of Kamoa's planned
mine and smelter development. Kamoa will be powered by electricity
from the national grid and on-site diesel generators until
rehabilitation of the existing plants has been completed. 
Qualified persons, quality control and assurance 
The following companies have undertaken work in preparation of the
PEA: 


 
--  AMC Consultants - Overall report preparation, open-pit potential and
    financial model. 
--  AMEC - Mineral Resource estimation. 
--  SRK Consulting - Mine geotechnical recommendations. 
--  Stantec Consulting International - Underground mine plan. 
--  Hatch - Process and infrastructure. 
--  Golder Associates Africa - Environmental, hydrology, hydrogeology,
    geochemistry and Tailings Storage Facility (TSF). 

 
The independent qualified persons responsible for preparing the Kamoa
Preliminary Economic Assessment are Bernard Peters, B. Eng. (AMC);
Dr. Harry Parker (AMEC); Gordon Seibel (AMEC); Jarek Jakubec, C.
Eng., (SRK); Mel Lawson, B. Eng. (Stantec); Arne Weissenberger,
P.Eng. and Francois Marais, P.Eng. (Golder). 
The scientific and technical information in this 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 has verified the
technical data disclosed in this news release. 
Data verification 
AMEC reviewed the sample chain of custody, quality assurance and
control procedures, and qualifications of analytical laboratories.
AMEC is of the opinion that the procedures and QA/QC are acceptable
to support Mineral Resource estimation. AMEC also audited the assay
database, core logging, and geological interpretations on a number of
occasions between 2009 and 2013 and found no material issues with the
data as a result of these audits. 
In the opinion of the AMEC QPs, the data verification programs
undertaken on the data collected from the Kamoa Project support the
geological interpretations, and the analytical and database quality
and the data collected can support Mineral Resource estimation. 
About Ivanhoe Mines 
Ivanhoe Mines, with offices in Canada, the United Kingdom and South
Africa, is advancing and developing its three principal projects:  


 
--  The Kamoa copper discovery in a previously unknown extension of the
    Central African Copperbelt in the DRC's Province of Katanga. 
--  The Platreef Discovery of platinum, palladium, nickel, copper, gold and
    rhodium on the Northern Limb of the Bushveld Complex in South Africa. 
--  The historic, high-grade Kipushi zinc, copper and germanium mine, also
    on the Copperbelt in the DRC, that is being dewatered and upgraded to
    support a future return to production of copper, zinc and other metals
    following a care-and-maintenance program conducted between 1993 and
    2011. 

 
Ivanhoe Mines also is evaluating other opportunities as part of its
objective to become a broadly based, international mining company. 
FORWARD-LOOKING STATEMENTS  
Statements in this release that are forward-looking statements are
subject to various risks and uncertainties concerning the specific
factors disclosed here and elsewhere in the company's periodic
filings with Canadian securities regulators. When used in this
document, the words such as "could," "plan," "estimate," "expect,"
"intend," "may," "potential," "should" and similar expressions, are
forward-looking statements. Information provided in this document is
necessarily summarized and may not contain all available material
information. 
The results of the PEA represent forward-looking information.
Statements in this release that constitute forward-looking statements
or information include, but are not limited to: statements regarding
the Kamoa mine is projected to have the highest grade among the
world's largest copper mines; statements regarding Kamoa to be one of
the world's lowest cost copper producers; statements regarding early
cash flows from the sale of high-grade copper concentrate; statements
regarding cash costs of US$1.18/lb of copper would rank Kamoa near
the bottom of the global cash-cost curve; statements regarding
estimated NPVs and IRRs; statements regarding the additional planned
drilling in the current drill program; statements regarding mine
infrastructure; statements regarding the excavation of the first
mine-access decline at Kansoko Sud is expected to begin early next
year; statements regarding metallurgical testwork and concentrator
design; statements regarding planned smelter and acid plant;
statements regarding the planned supply of electrical power. 
The forward-looking information also includes metal price
assumptions, cash flow forecasts, projected capital and operating
costs, metal recoveries, mine life and production rates, and other
assumptions used in the PEA. Readers are cautioned that actual
results may vary from those presented. The factors and assumptions
used to develop the forward-looking information, and the risks that
could cause the actual results to differ materially are presented in
the body of the Technical Report that will be filed on SEDAR at
www.sedar.com and Ivanhoe Mines' website at www.ivanhoemines.com
within 45 days of this news release.  
All such forward-looking information and statements are based on
certain assumptions and analyses made by Ivanhoe Mines' management in
light of their experience and perception of historical trends,
current conditions and expected future developments, as well as other
factors management believes are appropriate in the circumstances.
These statements, however, are subject to a variety of risks and
uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the
forward-looking information or statements. Important factors that
could cause actual results to differ from these forward-looking
statements include those described under the heading "Risk Factors"
in the company's most recently filed MD&A. Readers are cautioned not
to place undue reliance on forward-looking information or statements.
Contacts:
Investors
Bill Trenaman
+1.604.331.9834 
Media
North America: Bob Williamson
+1.604.512.4856 
Media
South Africa: Jeremy Michaels
+27.11.088.4300
www.ivanhoemines.com
 
 
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