Ivanhoe Mines Issues 2013 Year-End Results and Review of Operations

Ivanhoe Mines Issues 2013 Year-End Results and Review of Operations 
Major progress made at three key development projects in 2013 and the
first quarter of 2014 
TORONTO, ONTARIO -- (Marketwired) -- 03/28/14 --   Ivanhoe Mines
(TSX: IVN) today announced its financial results for the year ended
December 31, 2013. All figures are in US dollars unless otherwise
stated.  
HIGHLIGHTS  


 
 
--  On August 28, 2013, the company changed its name from Ivanplats to
    Ivanhoe Mines to reflect its commitment to development as a leading
    international, multi-commodity mining company. The trading symbol on the
    Toronto Stock Exchange was changed to IVN. 
 
--  On October 4, 2013, Ivanhoe Mines closed a C$108 million financing
    through the issuance of 54 million new Class A common shares at C$2.00
    per share. Robert Friedland, Ivanhoe Mines' Executive Chairman,
    subscribed for C$25 million of the offering, effectively proportionate
    to his holding in the company.  
 
--  On September 9, 2013, Ivanhoe Mines received approval from the South
    African government's Department of Mineral Resources to proceed with the
    sinking of an 800-metre-deep bulk-sample shaft to access the underground
    Flatreef platinum, palladium, nickel, copper, gold and rhodium discovery
    at its Platreef Project on the Bushveld Complex's Northern Limb. Surface
    construction work for the 7.25-metre-diameter shaft now is underway. 
 
--  On March 26, 2014, Ivanhoe welcomed the positive findings of an
    independent, preliminary economic assessment (PEA) of the Platreef
    Project. The PEA estimates that at the planned, base-case mining rate of
    eight million tonnes per year the mine would become Africa's lowest-cost
    producer of platinum-group metals, with annual production of 785,000
    ounces of platinum, palladium, rhodium and gold. 
 
--  A Mining Right Application for the Platreef Project was filed with the
    Department of Mineral Resources in June 2013, which would permit the
    company to mine and process minerals from the mining area for a period
    of 30 years, and which may be extended upon application. 
 
--  On October 16, 2013, Ivanhoe Mines reported an unprecedented 90-metre
    intersection of 4.51 grams per tonne (g/t) of platinum, palladium,
    rhodium and gold (3PE+Au), plus 0.37% nickel and 0.20% copper, at its
    Flatreef Discovery at the Platreef Project. The drill intercept included
    a 41-metre section grading 6.88 grams of platinum, palladium, rhodium
    and gold per tonne, plus 0.51% nickel and 0.21% copper, at a 1.0 g/t
    3PE+Au cut-off. 
 
--  In March 2014, an exploration drill hole in the Ga-Madiba extension zone
    on the eastern flank of the Flatreef extension intersected an estimated
    true thickness of 34.4 metres that contains 4.63 g/t of platinum,
    palladium and gold (2PE+Au), plus 0.30% nickel and 0.13% copper, at a
    1.0 g/t 2PE+Au cut-off. The Ga-Madiba zone, covering approximately three
    square kilometres, adjoins and stretches to the south from the
    established area of Inferred Resources, which in turn surrounds the area
    of Indicated Resources that is at the heart of the Flatreef Discovery -
    where Ivanhoe is planning to develop an underground mine. 
 
--  In March 2014, the Platreef Project achieved a significant operational
    safety milestone when it recorded the completion of three million person
    hours of work without incurring a lost-time injury. The project
    presently has 112 permanent employees, plus an additional 389 contract
    and sub-contract workers, 64% of whom are from the local area. 
 
--  On November 18, 2013, Ivanhoe announced the findings of an updated
    independent preliminary economic assessment of its Kamoa copper
    discovery in the Democratic Republic of Congo (DRC). The Kamoa PEA
    estimated that the planned mine is 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. The PEA also estimated a pre-tax net
    present value of $4.3 billion and an 18.5% internal rate of return. 
 
--  Also in the DRC, underground drilling began in March 2014 at the Kipushi
    copper-zinc-germanium-lead and precious-metals mine, which is southeast
    of Kamoa on the Central African Copperbelt in southern Katanga Province,
   less than one kilometre from the Zambian border. The drilling is
    designed to confirm and update Kipushi's estimated historical resources
    and to further expand the resources on strike and at depth. Access to
    the mine's principal working level at 1,150 metres below the surface was
    restored in December 2013 following an intensive dewatering operation. 
 
--  In March 2014, Ivanhoe Mines signed a financing agreement with DRC's La
    Societe Nationale d'Electricite (SNEL), allowing the rehabilitation of
    three existing hydroelectric power plants. A combined total of 200
    megawatts from the grid would provide sufficient power for Kamoa's
    planned 300,000-tonne-per-year smelter and the associated future mine
    expansions. 

Principal Projects and Review of Activities 
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 mine, also on the
    Copperbelt in the DRC and now being drilled and upgraded, following a
    care-and-maintenance program conducted between 1993 and 2011. 

Ivanhoe is evaluating other opportunities as part of its objective to
become a broadly based, international mining company.  


 
 
1. Kamoa Project                                                            
95%-owned by Ivanhoe Mines                                                  
Democratic Republic of Congo (DRC)                                          

Kamoa is world's largest undeveloped high-grade copper discovery 
The Kamoa Project 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 Katangan
provincial capital of Lubumbashi.  
Ivanhoe holds its 95% interest in the Kamoa Project through a
subsidiary company, Kamoa Copper SPRL. A 5%, non-dilutable interest
in Kamoa Copper SPRL was transferred to the DRC government on
September 11, 2012, for no consideration, pursuant to the DRC Mining
Code. Ivanhoe also has offered to sell an additional 15% interest to
the DRC government on commercial terms to be negotiated. 
Kamoa is the world's largest undeveloped, high-grade copper deposit.
On January 17, 2013, an updated mineral resource estimate was
announced that increased Kamoa's Indicated Mineral Resources to a
total of 739 million tonnes grading 2.67% copper and containing 43.5
billion pounds of copper. This was an increase of 115% over the
previous estimate in September 2011 of 348 million tonnes grading
2.64% copper and containing 20.2 billion pounds of copper. Both
estimates used a 1.0% copper cut-off grade and a minimum vertical
mining thickness of three metres. 
In addition to the Indicated Mineral Resources, the updated estimate
included Inferred Mineral Resources of 227 million tonnes grading
1.96% copper and containing 9.8 billion pounds of copper, also at a
1.0% copper cut-off grade and a minimum vertical mining thickness of
three metres. 
The latest Kamoa resource estimate was prepared by AMEC, based on
core from 555 holes drilled to December 10, 2012, in accordance with
CIM Guidelines and directed by AMEC's Technical Director Dr. Harry
Parker. 
At a higher, 2.0% copper cut-off grade, Kamoa's Indicated Resources
now total 550 million tonnes grading 3.04% copper and containing 36.9
billion pounds of copper. At the 2.0% cut-off, Kamoa also has 93
million tonnes of Inferred Resources grading 2.64% copper, which
contain an estimated 5.4 billion pounds of copper. 
Phased approach to the development of a large mine and smelter 
An updated preliminary economic assessment (PEA) was published in
November 2013 that reflects a 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. 
Highlights of the Kamoa PEA: 


 
 
--  A large mine and smelter would be developed using a two-phased approach.
 
--  A smaller-scale start-up would establish an operating platform to
    support expansion. 
 
--  Early cash flows would be generated from the sale of high-grade copper
    concentrate. 
 
--  Low pre-production capital requirement of approximately $1.4 billion. 
 
--  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. 
 
--  Cash costs of $1.19 per pound of copper would rank Kamoa near the bottom
    of the global cash-cost curve. 
 
--  Pre-tax Net Present Value, at an 8% discount rate, of $4.3 billion. 
 
--  After-tax Net Present Value, at an 8% discount rate, of $2.6 billion. 
 
--  Pre-tax internal rate of return of 18.4%; after-tax IRR of 15.3%. 

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. 
Steady-state production from Year 6 onward of 306,000 tonnes per year
of blister copper would establish Kamoa 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. Average cash
costs of $1.19 per pound of copper (after sulphuric acid credit) over
the life of the mine rank Kamoa near the bottom of the 2013 cash-cost
curve for copper mines globally. 
Work on underground mine-access decline at Kamoa planned to begin in
2014 
Preparations are underway to start the first mine-access decline at
Kamoa. The decline would provide access to the high-grade,
near-surface copper resources that would be targeted for the planned
first phase of production using the room-and-pillar mining method. 
A development study is underway to advance the geotechnical,
engineering and metallurgical understanding of Kamoa. Phase 6 of the
metallurgical testwork program is underway at the XPS laboratories in
Sudbury, Canada, and the Mintek laboratories in Johannesburg, South
Africa. Phase 6A testwork considers the first four years of mining
during which time flotation concentrate will be sold. Phase 6B
considers the next 15 years of mining; from year five onward, during
which blister copper would be produced. The mining areas for phases
6A and 6B are different and representative samples from these areas
were collected during Q4 2013.  
Drilling during the fourth quarter of 2013 was focused on resource
infill and metallurgical studies. In total, 8,450 metres in 56 holes
were completed for the quarter. A combined 6,483 metres were drilled
for resource evaluation - 5,555 metres on the Kansoko Sud area and
928 metres on the Kansoko Centrale area; 1,619 metres were drilled
for metallurgical testing in the Kamoa Sud, Kansoko Central, Kansoko
sud and Makalu areas. In addition, 348 metres of hydrogeology
drilling was completed in the Kansoko East, Kansoko Nord and Kansoko
Sud areas. Total drilling costs during the fourth quarter were $4.7
million. 
Agreement signed to upgrade existing hydroelectric power plants 
In March 2014, a financing agreement was signed between Ivanhoe and
the DRC's La Societe Nationale d'Electricite (SNEL). Ivanhoe is
working with SNEL to upgrade two existing hydroelectric power plants
at a first stage, Mwadingusha and Koni, to feed up to 113 megawatts
into the national power supply grid. SNEL will provide the Kamoa
Project with up to 100 megawatts from the grid, which would be
sufficient to operate the initial Kamoa mine.  
A third hydroelectric power plant - Nzilo 1 - would follow under the
same financing agreement. Nzilo 1 will have a capacity of about 108
megawatts upon its completion, entitling Kamoa to receive another 100
megawatts from the grid. The upgrading of technology which will be
applied on these power plants will allow up to 10% more to the
initial capacity of these power plants.  
A combined total of 200 megawatts from the grid would provide
sufficient power for Kamoa's planned 300,000-tonne-per-year smelter
and the associated future mine expansions. 


 
 
2. Platreef Project                                                         
90%-owned by Ivanhoe Mines                                                  
South Africa                                                                

The Platreef Project, in South Africa's Limpopo province, is 90%-owned
by Ivanhoe and 10%-owned by a Japanese consortium of Itochu
Corporation; ITC Platinum, an Itochu affiliate; Japan Oil, Gas and
Metals National Corporation; and Japan Gas Corporation. The Japanese
consortium's 10% interest in the Platreef Project was acquired in two
tranches for a total investment of $290 million. 
The Platreef Project includes the underground Flatreef Deposit of
thick, platinum-group elements, nickel, copper and gold
mineralization in the Northern Limb of the Bushveld Complex,
approximately 280 kilometres northeast of Johannesburg.  
In the Northern Limb, such mineralization primarily is hosted within
the Platreef, a mineralized sequence that is traced more than 30
kilometres along strike. Ivanhoe's Platreef Project, within the
southern sector of the Platreef, is comprised of three contiguous
properties: Turfspruit, Macalacaskop and Rietfontein. The
northernmost property, Turfspruit, is contiguous with, and along
strike from, Anglo Platinum's Mogalakwena group of properties and
mining operations. 
Since 2007, Ivanhoe has focused its exploration activities on
defining and advancing the down-dip extension of its original
Platreef discovery, now known as the Flatreef Deposit, which
potentially is amenable to highly mechanized, underground mining
methods. The Flatreef area lies entirely on the Turfspruit and
Macalacaskop properties. 
Platreef also is planning a phased approach to a large, mechanized
mine 
An independent preliminary economic assessment was released in March
2014 that reflects a phased approach to development of the Platreef
Project. Initiating production with a four-million-tonne-per-year
first phase would establish an operating platform to support future
expansions. Subsequent phases would see production expanded to eight
million tonnes and 12 million tonnes per year. 
Highlights of the Platreef PEA: 


 
 
--  A large, mechanized, underground mine is planned to be developed through
    a phased approach. 
 
--  Three run-of-mine production scenarios were examined - 4 million tonnes
    per year (Mtpa); a base case of 8 Mtpa; and 12 Mtpa. 
 
--  An initial 4 Mtpa scenario would establish an operating platform. 
 
--  Expansions, to the base-case 8 Mtpa scenario and also to the 12 Mtpa
    scenario, can be accelerated as the market dictates. 
 
--  Opportunities exist for additional phases of development beyond 12 Mtpa,
    subject to further study. 

Key features of the 8 million tonnes/year base-case scenario
include: 


 
 
--  Annual production target of 785,000 ounces of platinum, palladium,
    rhodium and gold. (At an expanded operating scenario of 12 million
    tonnes per year, the annual production target would be 1.1 million
    ounces of platinum, palladium, rhodium and gold (3PE+Au)). 
 
--  Platreef, with the highest concentration of base metals among Africa's
    producers of platinum-group metals, would rank at the bottom of the
    cash-cost curve at an estimated $341 per ounce of 3PE+Au, net of by-
    products.  
 
--  Estimated pre-production capital requirement of approximately $1.7
    billion, including $381 million in contingencies. 
 
--  An after-tax Net Present Value of $1.6 billion, at an 8% discount rate. 
 
--  An after-tax internal rate of return of 14.3%. 

The base case for the Platreef PEA analysis is the 8 Mtpa production
scenario. The scenarios describe a staged approach, where there is
opportunity to expand the operation depending on demand, smelting and
refining capacity and capital availability. As Phase 1 is developed
and placed into production, there is opportunity to modify and
optimize the subsequent phases, allowing for changes to the timing or
expansion capacity to suit the conditions at the time. Opportunities
for additional expansion beyond Phase 3 may be available, but require
additional investigation. 
Phase 1 would include the construction of a concentrator and other
associated infrastructure to establish an operating platform to
support the start of production at a nominal plant capacity of 4 Mtpa
by 2020. Phase 2 includes a ramp-up to a plant capacity of 8 Mtpa by
2024; Phase 3 envisages a further ramp-up to a steady-state plant
capacity of 12 Mtpa by 2028. 
The Platreef preliminary economic assessment technical report has
been filed on SEDAR at www.sedar.com and on the Ivanhoe Mines website
at www.ivanhoemines.com. 
Mining Right approval pending 
A Mining Right Application (MRA) for the Platreef Project was filed
with the Department of Mineral Resources (DMR) in June 2013 to permit
the company to mine and process minerals from the mining area for a
period of 30 years, and which may be extended upon application.  
The application review process involves a thorough assessment of
Ivanhoe's Environmental Management Program (EMP), Social and Labour
Plan, Mining Works Program and Broad-Based Black Economic Empowerment
structure. The Environmental and Social Impact Assessment will engage
with all interested stakeholders, including local communities and
governments. A complete EMP must be filed with the DMR within 180
days of its acceptance of the MRA. The entire application process is
being administered by the DMR. Ivanhoe has received feedback from the
DMR on all of these items and now expects to receive approval of its
Mining Right in May 2014.  
Based on legal consultation, it has been established that if Ivanhoe
does not receive the Mining Right by May 31, 2014, the company will
be required to suspend all operational work on the Platreef Project
until the Mining Right is granted by the DMR.  
Development work focused on resources in Flatreef underground
discovery 
The Flatreef Mineral Resource, with a strike length now extended to
6.5 kilometres, predominantly lies within a flat to gently dipping
portion of the Platreef mineralized belt at relatively shallow depths
of approximately 700 to 1,100 metres below surface.  
The Flatreef Deposit is characterized by its very large vertical
thicknesses of high-grade mineralization and a platinum-to-palladium
ratio of approximately 1:1, which is significantly higher than other
recent PGM discoveries on the Bushveld's Northern Limb. The grade
shells used to constrain mineralization in the Flatreef Indicated
Mineral Resource area have average true thicknesses of approximately
24 metres at a cut-off grade of 2.0 grams per tonne (g/t) of 2PE+Au
(platinum-palladium-gold) while the indicated Mineral Resource grade
at equivalent 2.0 gram-per-tonne 3PE cut off is 4.1 g/t 3PE+Au
(platinum-palladium -rhodium-gold), 0.34% nickel and 0.17% copper.
Flatreef's Indicated Mineral Resources of 214 million tonnes contain
an estimated 28.5 million ounces of platinum, palladium, gold and
rhodium, 1.6 billion pounds of nickel and 0.8 billion pounds of
copper.  
At the same cut-off of 2.0 g/t 3PE+Au, the latest Flatreef estimate
includes Inferred Mineral Resources of 415 million tonnes grading 3.5
g/t 3PE+Au, 0.33% nickel and 0.16% copper, containing an estimated
additional 47.2 million ounces of platinum, palladium, gold and
rhodium, 3.0 billion pounds of nickel and 1.5 billion pounds of
copper. Inferred Mineral Resource estimates, under CIM guidelines, do
not have demonstrated economic viability and may never achieve the
confidence to be Mineral Reserve estimates or to be mined. 
Development of bulk-sample shaft proceeding 
Surface construction work is underway for Shaft #1, the
7.25-metre-diameter bulk-sample shaft. The vertical shaft is planned
to be sunk to a depth below surface of 800 metres and enable the
collection of a mineralized bulk sample, expected in the first half
of 2016, to complete the company's development assessment of the
Flatreef. South Africa-based Aveng Mining, the sinking contractor for
Shaft #1, is continuing surface preparation work at the site, where
excavation of the box-cut access has begun. Upgrading of hoisting
equipment to be installed in the shaft headframe, is underway;
excavations for concrete foundations of the shaft collar and
ventilation casing recently began. 
Shaft #1, including some initial lateral, underground development
work, is expected to be fully funded from dedicated funds remaining
in Ivanhoe's treasury from the US$280 million received in 2011 for
the sale of an 8% interest in the Platreef Project to the Itochu-led
Japanese consortium.  
Ivanhoe will begin the design and engineering of Shaft #2, the main
production shaft, in Q2 2014. This will enable the company to start
Shaft #2 development works in Q1 2015, subject to necessary approvals
and funding. 
A pre-feasibility study (PFS) also is underway and completion is
targeted for the second half of 2014. The PFS currently focuses on
the Phase 1, 4 Mtpa production case, based on selling or tolling
concentrate at local smelters. Studies will continue on the Phase 2,
8 Mtpa base case and Phase 3, 12 Mtpa production scenarios, with the
intention of presenting an integrated development plan for the
project incorporating the Phase 1 PFS. 
Exploration and development drilling 
Diamond drilling of 53 holes totalling 23,054 metres was completed
during Q4 2013, including 18 deflections. Geotechnical and
metallurgical development drilling totalled 8,020 metres in 35 holes,
while exploration drilling totalled 15,033 metres in 18 holes.
Exploration drilling focused on expanding the Indicated Mineral
Resources around the planned initial mining area (Mine 1 area) and on
defining the 400-metre Inferred Mineral Resources grid at the
Ga-Madiba extension zone. Drilling costs for Q4 2013 amounted to $3.4
million. 
A total of 40,336 metres of diamond drilling was completed during all
of 2013. The initial focus was completion of the development-drilling
program to support the ongoing pre-feasibility study; a total of
24,625 metres of development drilling was completed in 88 holes,
including deflections. Exploration drilling for the year was split
between the Ga-Madiba prospect and the expansion of Indicated
Resources to the north, west and south of the initial Mine 1 area. A
total of 11,938 metres of exploration drilling was completed in 14
holes, including deflections on Ga-Madiba. Ten holes remain
outstanding on the Inferred grid. Exploration drilling is focused on
expanding the Indicated Resource to allow for the phase 2
pre-feasibility study of eight-million-tonne per year mining
scenario.  
2014 exploration program 
Ivanhoe is planning more than 90,000 metres of diamond drilling in
2014 at a budgeted cost of $16.2 million. The 2014 exploration and
expansion program will focus on four areas: Northern Zone 1, Zone 3,
Zone 2 and the Ga-Madiba 400-metre grid. The goal is to delineate
additional Indicated Resources in the immediate vicinity of Zone 1
that would support an eight-million-tonne per year (phase 2)
pre-feasibility study and allow for the potential declaration of an
initial Inferred Resource estimate on the Ga-Madiba extension
zone. 


 
 
3. Kipushi Project                                                          
68%-owned by Ivanhoe Mines                                                  
Democratic Republic of Congo (DRC)                                          

The Kipushi copper-zinc-germanium-lead mine, in southern Katanga
province, is adjacent to the town of Kipushi and approximately 30
kilometres southwest of the provincial capital of Lubumbashi. It also
is on the Central African Copperbelt, southeast of the company's
Kamoa Project, and less than one kilometre from the Zambian border.
Ivanhoe acquired its 68% interest in the Kipushi Project in November
2011; the balance of 32% is held by La Generale des Carrieres et des
Mines (Gecamines), the DRC's state-owned mining company.  
Successful dewatering program opens underground access for drill rigs 
Work began in early March 2014 on the company's planned 20,000-metre
diamond-drilling program at the Kipushi Mine, a major advance made
possible by the ongoing, successful dewatering program directed by
Ivanhoe during the past two years after it acquired a 68% interest in
Kipushi in November 2011. 
The mine, which had been placed on care and maintenance in 1993,
flooded in early 2011 due to a lack of pump maintenance over an
extended period. Water reached 851 metres below surface at its peak.
A major turning point was reached in December 2013 when access was
restored to the mine's principal working level at 1,150 metres below
the surface. 
The planned upgrading of the mine had succeeded in clearing water to
the 1,267-metre level as of March 26, 2014.  
100 holes planned in underground drilling program  
Ivanhoe's 2014 drilling program is scheduled to complete
approximately 100 holes totalling more than 20,000 metres, which has
been budgeted at $9.8 million. The drilling is designed to confirm
and update Kipushi's estimated historical resources and to further
expand the resources on strike and at depth.  
Specific objectives are to: 


 
 
--  Conduct confirmatory drilling to validate the historical resources
    within Kipushi's Big Zinc zone and Fault Zone. 
 
--  Conduct extension drilling to test and upgrade the deeper portions of
    the Big Zinc and Fault zones, below the 1,500-metre level, which
    previously were classified as Inferred Resources. 
 
--  Conduct exploration drilling to test areas that have not been previously
    evaluated, such as the deeper portions of the Fault Zone and extensions
    to the high-grade copper mineralization of the mine's Northern zone. 
 
--  Obtain large-diameter drill core from the Big Zinc zone for confirmatory
    metallurgy test work. 

New, underground drill holes also may provide a platform for
geophysical exploration of Kipushi's deep mineral potential,
leveraging the Ivanhoe group's proprietary, in-house expertise.
Kipushi has never been evaluated using modern geophysical techniques. 
Most of the drilling will be conducted from sites on the hanging-wall
development drift at the 1,270-metre level and from the footwall ramp
below the 1,150-metre level.  
The first hole was started on the 1,225-metre level at an inclination
of -67 degrees and is designed to test the depth continuity of the
Big Zinc zone and the down-dip extension of the adjacent, copper-rich
Fault zone. The hole is expected to be drilled for approximately 600
metres to a depth of greater than 1,800 metres below surface. It also
will provide sample material for ongoing metallurgical studies.  
The second rig is underground at the 1,125-metre level staging area,
awaiting preparation of the drill station, and is expected to start
drilling from March 31, 2014. The third rig arrived at site on March
25 and is being tested on surface before being lowered to the staging
area. A 280-metre step-back extension of the hanging-wall drift will
be driven to enable the drill rigs to test deep extensions of the Big
Zinc and Fault zones. 
Independent consulting engineering firm MSA Group, of Gauteng, South
Africa, has been appointed to prepare a current estimate of the Big
Zinc resources to CIM standards following completion of the
confirmation drilling program. 
Previous drilling at Kipushi 
Previous mining at Kipushi was conducted to a below-surface depth of
1,207 metres on the Kipushi Fault, a deposit of high-grade,
copper-zinc-lead mineralization that has a strike length of 600
metres. The Fault Zone mineralization is known to extend to at least
1,800 metres below surface, based on previous drilling reports
prepared by state-owned mining company Gecamines.  
The Big Zinc zone, adjacent to the Fault Zone on the footwall side,
was discovered shortly before the mine ceased production in 1993 and
never has been mined. From its top at approximately the 1,200-metre
level, the Big Zinc zone extends down dip to at least the 1,640-metre
level, as indicated by Gecamines' drilling reports.  
Accessible from existing underground workings, the Big Zinc has a
strike length of at least 100 metres, a true thickness calculated at
40 to 80 metres and is open to depth. Gecamines also reported that
multiple, steeply-dipping, Big Zinc exploratory holes intersected
exceptionally high-grade zinc mineralization, grading 42% to 45%
zinc, between the 1,375-metre and 1,600-metre levels, with estimated,
apparent thicknesses of between 60 and 100 metres. 
Regional Exploration 
Katanga Province, DRC 
The 2013 field season wrapped up during the fourth quarter at the
onset of the rainy season. During the year, the company drilled a
total of 6,150 metres in 43 holes, using contractor and company-owned
rigs. Contractor drilling at the Nzilo project, a Kamoa-style
stratiform copper prospect, amounted to 3,654 metres in nine holes.
The company's in-house rigs completed 2,496 metres in 34 holes at the
Lufupa project, west of Kamoa, and the Kale prospect, north of
Tenke-Fungurume. Other 2013 activities included soil sampling,
prospecting, mapping, ground magnetics and AMT surveys. Licence
renewals filed in August 2013 were confirmed in Q4 2013. 
Gabon 
Ivanhoe holds two exploration licences in Gabon at Ndangui and
Makokou, areas prospective for greenstone gold deposits. Eight
diamond boreholes totalling 1,774 metres were completed at Ndangui in
Q3 2013 and early Q4 2013. Gold and sulphide mineralization was
encountered in most holes. Auger drilling at Makokou was completed to
better define gold-in-soil anomalies. The Ndangui and Makokou
licences were successfully renewed during Q4 2013, and are valid
through 2016. 
SELECTED ANNUAL FINANCIAL INFORMATION 
This selected financial information is in accordance with IFRS as
presented in the annual consolidated financial statements. Other than
its share of revenue from the RK1 Consortium, Ivanhoe had no
operating revenue in any financial reporting period and did not
declare or pay any dividend or distribution in any financial
reporting period. 


 
 
                                      For the year ended December 31,       
                                         2013            2012           2011
----------------------------------------------------------------------------
                                        $'000           $'000          $'000
 
Exploration and project                                                     
 expenditure                          173,943         128,435         96,594
Impairment of mineral                                                       
 property, goodwill and other         334,338               -              -
Legal settlement                       10,000               -              -
General administrative                                                      
 expenditure                           39,384          28,180         24,584
Finance costs                           1,644          26,670          4,560
Deferred tax recovery                 (75,701)              -              -
Total comprehensive loss                                                    
 attributable to:                                                           
  Owners of the Company               373,720         166,485        122,457
  Non-controlling interest            110,575          13,152          4,280
 
Loss per share (basic and                                                   
 diluted)                                0.69            0.38           0.30
----------------------------------------------------------------------------
 
Total assets                          287,576         726,682        632,194
----------------------------------------------------------------------------
Non-current liabilities                21,974          84,336        237,620
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Review of the year ended December 31, 2013 vs. December 31, 2012 
The company's total comprehensive loss for the year ending December
31, 2013, was $304.7 million higher than for the same period in 2012:
$484.3 million in 2013 compared to $179.6 million in 2012. The
increase was attributable mainly to the impairment of the Kipushi
mineral property, goodwill and related loans and advances, which had
a post-tax effect of $258.6 million. The remainder of the increase
resulted from the $45.5 million year-on-year increase in the
exploration and project expenditure, and the one-time
legal-settlement expense recognized in Q3 2013 of $10.0 million. This
was partially offset by the decrease in finance costs of $25.0
million.  
As at December 31, 2013, the company recorded an impairment charge of
$334.3 million upon completion of its annual assessment of the
carrying value of goodwill, mineral properties and related loans and
advances. The impairment charge, which was recorded within a separate
line in the consolidated statement of comprehensive loss, included
$252.3 million relating to Kipushi mineral properties; $67.4 million
relating to goodwill recognized upon acquisition of Kipushi; $25.1
million relating to the long-term loan receivable from Gecamines; and
$1.5 million relating to a common share investment funded on behalf
of a non-controlling interest. The advances payable to Gecamines have
been assessed as zero in the current year and resulted in a reduction
of the impairment by $12.1 million. A tax recovery of $75.7 million
was recorded as a result of the impairment charge on the Kipushi
mineral property.  
Significant judgments and assumptions were required in making
estimates of the recoverable amount of cash generating units. This
was particularly so in the assessment of long-life assets such as
Kipushi. It should be noted that the valuations are subject to
variability in key assumptions including, but not limited to,
long-term commodity prices, capital expenditures, discount rates,
transport costs, the cost of production and operating costs. 
A change in one or more of the assumptions used to estimate the
recoverable amount could result in a reduction or an increase in the
recoverable amount. 
All current exploration and refurbishment costs incurred on the
Kipushi Project are expensed in accordance with Ivanhoe's accounting
policy. 
The increase in exploration and project expenditures resulted from
increases in expenditure of $32.1 million at the Kipushi Project and
$7.4 million at the Kamoa Project, which were partially offset by the
decrease in expenditure at the Platreef Project by $4.9 million.
There also was an increase in expenditure on regional exploration in
the year ended December 31, 2013, compared to the same period in
2012. The main classes of expenditure on the company's material
projects in the two preceding financial years are set out in the
following table:  


 
 
                                              Year ended          Year ended
                                            December 31,        December 31,
                                                    2013                2012
                                                   $'000               $'000
Kamoa Project                                                               
Drilling                                          17,530              32,206
Studies                                           16,317               4,736
Salaries and benefits                             10,862              11,358
Indirect taxes                                     7,706                 208
Travel                                             2,490               2,315
Other expenditure                                 16,707              13,384
                                    ----------------------------------------
Total project expenditure                         71,612              64,207
                                    ----------------------------------------
                                    ----------------------------------------
 
Platreef Project                                                            
Studies                                            9,417               8,742
Drilling                                           6,906              14 916
Salaries and benefits                              3,738               4,470
Assaying and sampling                                377                 876
Other expenditure                                  8,244               4,619
                                    ----------------------------------------
Total project expenditure                         28,682              33,623
                                    ----------------------------------------
                                    ----------------------------------------
 
Kipushi Project                                                             
Repair and maintenance                            11,599                 907
Electricity                                       11,007               6,727
Contracting work                                  10,349               9,527
Salaries and benefits                             10,059                 774
Indirect taxes                                     4,464                 461
Equipment rental                                   2,268               2,125
Travel                                             1,483               2,006
Other expenditure                                  7,668               4,320
                                    ----------------------------------------
Total project expenditure                         58,897              26,847
                                    ----------------------------------------
                                    ----------------------------------------

Financial position as at December 31, 2013 vs. December 31, 2012 
The company's total assets decreased to $287.6 million as at December
31, 2013, from $726.7 million as at December 31, 2012. This mainly
was due to the impairment of the Kipushi mineral property, goodwill
and long term loan receivable of $252.3 million, $67.4 million and
$25.1 million respectively, as well as a decrease in cash and cash
equivalents of $116.0 million.  
The company utilized $193.6 million of its cash resources in its
operations and earned interest income of $1.3 million on cash
balances. A total of $22.9 million was spent to acquire property,
plant and equipment and other non-current assets. 
Of the $22.9 million spent to acquire non-current assets, $2.6
million related to Ivanhoe's share of the acquisition of an
additional office building in London through Rhenfield Ltd., one of
Ivanhoe's joint operations. The remainder of the additions to
property, plant and equipment mainly related to the procurement of
assets required at the projects.  
The company's total liabilities decreased from $113.1 million as at
December 31, 2012, to $60.3 million as at December 31, 2013. This was
due to a decrease in deferred tax liability of $75.7 million and a
decrease in advances payable to Gecamines of $11.2 million, offset by
an increase in non-current borrowings of $19.9 million, as well as an
increase in trade and other payables of $14.4 million. 
The decrease in the deferred tax liability of $75.7 million was as a
direct result of the tax recovery caused by the impairment of the
Kipushi mineral property.  
This release should be read in conjunction with Ivanhoe Mines'
audited 2013 Financial Statements and Management's Discussion and
Analysis report available at www.ivanhoemines.com and at
www.sedar.com. 
Qualified Person 
Disclosures of a scientific or technical nature in this news release
have been reviewed and approved by Stephen Torr, who is considered,
by virtue of his education, experience and professional association,
a Qualified Person under the terms of National Instrument 43-101.
Ivanhoe Mines has prepared a NI 43-101-compliant technical report for
each of the Kamoa Project, the Platreef Project and the Kipushi
Project, which are available under the company's SEDAR profile at
www.sedar.com. These technical reports include relevant information
regarding the effective date and the assumptions, parameters and
methods of the mineral resource estimates on the Kamoa Project and
Platreef Project cited in this news release, as well as information
regarding data verification, exploration procedures and other matters
relevant to the scientific and technical disclosure contained in this
news release in respect of the Kamoa Project, Platreef Project and
Kipushi Project.  
Cautionary statement on forward-looking information 
Certain statements in this release constitute "forward-looking
statements" or "forward-looking information" within the meaning of
applicable securities laws, including, without limitation, the timing
and results of: (i) a development-study at the Kamoa Project that
contemplates the declaration of a mineral reserve estimate
("Development Study"); (ii) grant of a mining right for the Platreef
Project by May 2014; (iii) the creation of a Broad-Based Black
Economic Empowerment structure for the Platreef Project; (iv) a
pre-feasibility study (PFS) at the Platreef Project; (v) efforts to
upgrade historical resource estimates at the Kipushi Project; (vi)
the de-watering program at the Kipushi Project; and (vii) the
commencement of the design and engineering of the main production
shaft (Shaft #2) at the Platreef Project in Q2 2014. As well, the
results of the preliminary economic analyses at the Platreef Project
and the Kamoa Project also constitute forward-looking statements,
including estimates of internal rates of return, net present value,
future production, estimates of cash cost, proposed mining plans and
methods, mine life estimates, cash flow forecasts, metal recoveries,
and estimates of capital and operating costs. Such statements involve
known and unknown risks, uncertainties and other factors that may
cause the actual results, performance or achievements of the company,
or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements or information. Such statements can be
identified by the use of words such as "may", "would", "could",
"will", "intend", "expect", "believe", "plan", "anticipate",
"estimate", "scheduled", "forecast", "predict" and other similar
terminology, or state that certain actions, events or results "may",
"could", "would", "might" or "will" be taken, occur or be achieved.
These statements reflect the company's current expectations regarding
future events, performance and results and speak only as of the date
of this release. 
This release also contains references to estimates of Mineral
Resources. The estimation of Mineral Resources is inherently
uncertain and involves subjective judgments about many relevant
factors. Mineral Resources that are not Mineral Reserves do not have
demonstrated economic viability. The accuracy of any such estimates
is a function of the quantity and quality of available data, and of
the assumptions made and judgments used in engineering and geological
interpretation (including estimated future production from the
company's projects, the anticipated tonnages and grades that will be
mined and the estimated level of recovery that will be realized),
which may prove to be unreliable and depend, to a certain extent,
upon the analysis of drilling results and statistical inferences that
ultimately may prove to be inaccurate. Mineral Resource estimates may
have to be re-estimated based on: (i) fluctuations in copper, nickel,
platinum-group elements (PGE), gold, zinc or other mineral prices;
(ii) results of drilling, (iii) metallurgical testing and other
studies; (iv) proposed mining operations, including dilution; (v) the
evaluation of mine plans subsequent to the date of any estimates; and
(vi) the possible failure to receive required permits, approvals and
licences.  
Forward-looking statements involve significant risks and
uncertainties, should not be read as guarantees of future performance
or results, and will not necessarily be accurate indicators of
whether or not such results will be achieved. A number of factors
could cause actual results to differ materially from the results
discussed in the forward-looking statements, including, but not
limited to, the factors discussed below and under "Risk Factors", as
well as unexpected changes in laws, rules or regulations, or their
enforcement by applicable authorities; the failure of parties to
contracts with the company to perform as agreed; social or labour
unrest; changes in commodity prices; and the failure of exploration
programs or studies to deliver anticipated results or results that
would justify and support continued exploration, studies, development
or operations.  
Although the forward-looking statements contained in this release are
based upon what management of the company believes are reasonable
assumptions, the company cannot assure investors that actual results
will be consistent with these forward-looking statements. These
forward-looking statements are made as of the date of this release
and are expressly qualified in their entirety by this cautionary
statement. Subject to applicable securities laws, the company does
not assume any obligation to update or revise the forward-looking
statements contained herein to reflect events or circumstances
occurring after the date of this release.  
The company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of the
factors set forth in the "Risk Factors" section in the company's
MD&A. 
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
Website www.ivanhoemines.com
 
 
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