Ivanhoe Mines Ltd (IVN)

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Ivanhoe Mines Releases Positive Independent Preliminary Economic Assessment of Its Platreef Platinum-Group Elements, Nickel, ...
Date : 03/26/2014 @ 7:16AM
Source : Marketwired Canada
Stock : Ivanhoe Mines Ltd (IVN)
Quote : 1.72 -0.01 (-0.58%) @ 3:59PM
Ivanhoe Mines Releases Positive Independent Preliminary Economic Assessment of Its Platreef Platinum-Group Elements, Nickel, ...
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Ivanhoe Mines (TSX:IVN) Executive Chairman Robert Friedland and Chief Executive
Officer Lars-Eric Johansson today welcomed the positive findings of an
independent, preliminary economic assessment of the company's major Platreef
Project in the heart of South Africa's Bushveld Complex, the world's premier
platinum producing region.


The Platreef Project is a Tier One discovery by Ivanhoe Mines' geologists of
platinum-group elements, nickel, copper and gold, which contains the Flatreef
underground deposit, on the Bushveld's Northern Limb.


"Completion of the Platreef preliminary economic assessment is another
significant step in the progression of our plan to develop this remarkable
discovery into a world-class, underground mine," said Mr. Friedland.


"We're looking forward to working with all of our stakeholders to advance the
Platreef Project to production, to create valued and skilled jobs and to
significantly contribute to the socio-economic development of the people of area
communities who will have a voice in decision making and a direct share in our
success through our responsively structured, broad-based, black economic
empowerment partner."


Highlights of the preliminary economic assessment (PEA):



-- Development of a large, mechanized, underground mine is planned 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.

-- Options available to accelerate expansions to the base-case 8 Mtpa and
also the 12 Mtpa scenarios, 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:



-- Base-case 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
platinum-group metals producers, would rank at the bottom of the cash-
cost curve, at an estimated US$341 per ounce of 3PE+Au, net of by-
products.

-- Estimated pre-production capital requirement of approximately US$1.7
billion, including US$381 million in contingencies.

-- After-tax Net Present Value of US$1.6 billion, at an 8% discount rate.

-- After-tax internal rate of return of 14.3%.



The PEA was prepared by report contributors OreWin Pty. Ltd.; AMEC E&C Services
Inc.; SRK Consulting Inc.; Stantec Consulting International LLC; Metallicon
Process Consulting (Pty.) Ltd.; and Geo Tail (Pty.) Limited. The full technical
report will be filed on SEDAR at www.sedar.com and on the Ivanhoe Mines website
at www.ivanhoemines.com within 45 days of the issuance of this news release.


The PEA 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 are not Mineral Reserves because
they do not have demonstrated economic viability.


Phased approach to the development of a large, mechanized, underground mine

Ivanhoe's plan for the Platreef Project considers three phases of potential
development for an underground mine and the concentrator processing facility:




-- Phase 1 - 4 Mtpa mine and concentrator.
-- Phase 2 - 8 Mtpa mine and concentrator (base case).
-- Phase 3 - 12 Mtpa mine and concentrator.



The base case for the Platreef PEA analysis is the 8 Mtpa production scenario.
The range of development scenarios and additional options for the Platreef
Project are shown in Figure 1. 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.


To view Figure 1: Platreef Project development scenarios, please visit the
following link:


http://media3.marketwire.com/docs/935569FIG1.pdf

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.


Site preparation is underway for the sinking of the planned exploration shaft to
obtain a bulk sample for metallurgical test work. This shaft would form an
important part of a Phase 1 project. A Mining Right Application was filed with
South Africa's Department of Mineral Resources in June 2013 and is awaiting
approval. When granted, it will permit Ivanhoe Mines to mine and process
minerals from the mining area for an initial period of 30 years, which may be
extended.


The capital and operating costs for the three phases have been estimated by
independent technical consultants and have been included in the economic
analysis reported in the PEA. This modular approach has the same underlying plan
for the construction and operation of a concentrator processing facility for
each phase. The planned rate of mine production will be optimized to supply the
progressive expansion of processing capacity in the accompanying concentrator.
Infrastructure constructed to support the mine also is common to all phases.


Positive preliminary economic analysis demonstrates Platreef's exceptional
economic potential


The economic analysis uses price assumptions of $8.35/lb nickel, $1,700/oz
platinum, $820/oz palladium, $1,300/oz gold, $3.00/lb copper and $1,700/oz
rhodium. The prices are based on a review of consensus price forecasts from
financial institutions and similar studies that recently have been published.
The after-tax net present value (NPV) at a real 8% discount rate, Internal Rate
of Return (IRR) and project payback period for each scenario are shown in Table
1.


Table 1: After-tax financial results.



----------------------------------------------------------------------------
Phase 2
Phase 1 8 Mtpa Phase 3
4 Mtpa (Base Case) 12 Mtpa
----------------------------------------------------------------------------
Net Present Value (US$M) Undiscounted 6,992 12,527 17,078
5% 2,040 3,593 4,818
8% 897 1,620 2,179
10% 449 868 1,193
12% 149 374 554
15% -133 -77 -17
----------------------------------------------------------------------------
IRR 13.37% 14.34% 14.88%
----------------------------------------------------------------------------
Project Payback Period (Years) 5.59 6.40 7.55
----------------------------------------------------------------------------
Exchange Rate ZAR : US$ 10:1
----------------------------------------------------------------------------



Table 2: Production summary.

Key production totals are compared for each of the development scenarios.



----------------------------------------------------------------------------
Production Summary
----------------------------------------------------------------------------
Phase 2
Phase 1 8 Mtpa Phase 3
4 Mtpa (Base Case) 12 Mtpa
----------------------------------------------------------------------------
Total Mined Mt 117 219 310
----------------------------------------------------------------------------
Nickel % 0.34 0.35 0.34
----------------------------------------------------------------------------
Platinum g/t 1.84 1.70 1.71
----------------------------------------------------------------------------
Palladium g/t 1.93 1.78 1.77
----------------------------------------------------------------------------
Copper % 0.16 0.16 0.16
----------------------------------------------------------------------------
Gold g/t 0.27 0.27 0.27
----------------------------------------------------------------------------
Rhodium g/t 0.13 0.12 0.12
----------------------------------------------------------------------------
Recoveries (Life-of-Mine Average)
----------------------------------------------------------------------------
Nickel Recovery % 69.13 69.47 69.05
----------------------------------------------------------------------------
Platinum Recovery % 88.21 87.15 87.24
----------------------------------------------------------------------------
Palladium Recovery % 87.63 86.85 86.77
----------------------------------------------------------------------------
Copper Recovery % 87.89 87.90 87.84
----------------------------------------------------------------------------
Gold Recovery % 76.69 76.72 76.72
----------------------------------------------------------------------------
Rhodium Recovery % 85.92 86.62 86.62
----------------------------------------------------------------------------
Concentrate Produced (Life-of-Mine Average Annual Production)
----------------------------------------------------------------------------
Concentrate ktpa 156 292 413
----------------------------------------------------------------------------
Nickel % 5.8 6.0 5.8
----------------------------------------------------------------------------
Platinum g/t 40.50 37.04 37.30
----------------------------------------------------------------------------
Palladium g/t 42.41 38.71 38.37
----------------------------------------------------------------------------
Copper % 3.6 3.6 3.5
----------------------------------------------------------------------------
Gold g/t 5.26 5.19 5.18
----------------------------------------------------------------------------
Rhodium g/t 2.76 2.63 2.64
----------------------------------------------------------------------------
3PE+Au g/t 90.92 83.56 83.49
----------------------------------------------------------------------------
Metal Sold (Life-of-Mine Average Annual Production Metal Units per Year)
----------------------------------------------------------------------------
Nickel Mlb 20 39 53
----------------------------------------------------------------------------
Platinum koz 203 348 495
----------------------------------------------------------------------------
Palladium koz 212 364 510
----------------------------------------------------------------------------
Copper Mlb 12 23 32
----------------------------------------------------------------------------
Gold koz 26 49 69
----------------------------------------------------------------------------
Rhodium koz 14 25 35
----------------------------------------------------------------------------
3PE+Au koz 455 785 1,109
----------------------------------------------------------------------------



Table 3: Pre-production capital cost.

The pre-production capital cost, including contingency, for each development
scenario.




----------------------------------------------------------------------------
Phase 2
Phase 1 8 Mtpa Phase 3
US$M 4 Mtpa (Base Case) 12 Mtpa
----------------------------------------------------------------------------
Mining
Underground 540 633 673
Capitalized Pre-Production 24 24 25
----------------------------------------------------------------------------
Subtotal 564 657 698
----------------------------------------------------------------------------
Processing
Concentrator 201 201 201
----------------------------------------------------------------------------
Subtotal 201 201 201
----------------------------------------------------------------------------
Infrastructure
Bulk Water/Power 76 76 76
Tailings Dam 39 46 39
General Infrastructure 29 29 29
Subtotal 144 151 144
----------------------------------------------------------------------------
Indirects
Drilling & Studies - 19 19
Mining: Indirects 55 58 58
Mining: EPCM 80 93 97
Processing & Infrastructure:
EPCM 37 37 37
----------------------------------------------------------------------------
Subtotal 172 207 211
----------------------------------------------------------------------------
Owners Cost
Capitalized G&A 26 26 26
Mining 60 79 79
Processing & Infrastructure 17 18 17
----------------------------------------------------------------------------
Subtotal 103 123 122
----------------------------------------------------------------------------
Capital Expenditure Before
Contingency 1,185 1,338 1,376
----------------------------------------------------------------------------
Mining Contingency 221 259 272
----------------------------------------------------------------------------
Processing & Infrastructure
Contingency 120 122 120
----------------------------------------------------------------------------
Capital Expenditure After
Contingency 1,525 1,719 1,769
----------------------------------------------------------------------------



Table 4: Unit operating costs.



----------------------------------------------------------------------------
$/oz Payable 3PE+Au
---------------------------------------------
Phase 2
Phase 1 8 Mtpa Phase 3
4 Mtpa (Base Case) 12 Mtpa
----------------------------------------------------------------------------
Mine-Site Cash Cost 412 425 441
----------------------------------------------------------------------------
Realization Cost 402 416 413
----------------------------------------------------------------------------
Total Cash Costs Before Credits 814 840 854
----------------------------------------------------------------------------
Nickel Credits -367 -411 -397
----------------------------------------------------------------------------
Copper Credits -81 -89 -86
----------------------------------------------------------------------------
Total Cash Costs After Credits 367 341 371
----------------------------------------------------------------------------



As illustrated in Figure 2, the Platreef Project has Africa's highest
concentration of copper and nickel among platinum-group metals (PGM) producers.
UG2 ore bodies have relatively low by-products of nickel and copper to credit
against operating costs, while the Merensky Reef and the main Sulphide Zone, in
Zimbabwe, contain 0.10% to 0.25% nickel and 0.08% to 0.15% copper. The Platreef
Project's Indicated Mineral Resources (within the 2.0 g/t grade shell) contain
0.34% nickel and 0.17% copper.


The PEA includes an economic analysis that is based, in part, on Inferred
Mineral Resources. Inferred Mineral Resources are considered too speculative
geologically to have 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 are not Mineral Reserves because
they do not have demonstrated economic viability.


To view Figure 2: Base-metal (nickel and copper) concentrations by PGM-bearing
reef, please visit the following link:


http://media3.marketwire.com/docs/935569FIG2.pdf

The higher nickel and copper grades contribute to lower operating cash costs for
the Northern Limb as illustrated by Figure 3. Among the current and future
Northern Limb producers, Platreef's potential US$341 per 3PE+Au ounce, (net of
base-metal by-products), ranks at the bottom of the cash-cost curve.


To view Figure 3: Net total cash cost (2013 mines in production and selected
projects), US$/3PE+Au oz, please visit the following link:


http://media3.marketwire.com/docs/935569FIG3.pdf

Pre-feasibility study and development of bulk-sample shaft under way

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;
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 are scheduled to begin
this month.


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 Japanese consortium of Itochu Corporation; ITC Platinum,
an Itochu affiliate; Japan Oil, Gas and Metals National Corporation; and Japan
Gas Corporation.


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 initial 4 Mtpa Phase 1
production case, based on selling or tolling concentrate at local smelters.
Studies will continue on the base case 8 Mtpa Phase 2 and 12 Mtpa Phase 3
production scenarios with the intention of presenting an integrated development
plan for the project incorporating the Phase 1 PFS.


Platreef ownership interests

Ivanhoe Mines holds an indirect 90% interest in the Platreef Project and the
Itochu-led Japanese consortium holds the remaining 10% interest that it acquired
in two investments made in 2010 and 2011.


In accordance with South African law, Ivanhoe Mines has proposed transferring a
26% interest in the Platreef Project to BBBEE SPV, a broad-based, black economic
empowerment partner. Ivanhoe is discussing the required finalization of the
BBBEE structure with the government's Department of Mineral Resources, with a
goal of securing the granting of the Platreef Mining Right by the department by
the end of May this year. The proposed BBBEE, in which Ivanhoe would retain a
49% interest, would represent the interests of employees, as well as
communities.


Upon receipt of the Mining Right, Ivanhoe will own 64% of the Platreef Project,
BBBEE SPV will own 26% and the Japanese consortium will own 10%.


Mineral Resources characterized by large thicknesses

The Flatreef Mineral Resource, with a strike length of 6.5 kilometres,
predominantly lies within a flat to gently-dipping portion of the Platreef
mineralized belt that occurs 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 2.0 g/t 2PE+Au grade shells used to constrain
mineralization in the Indicated Resource area within the Flatreef have average
true thicknesses of approximately 24 metres, while the Indicated Mineral
Resource grade at the equivalent 2.0 g/t 3PE+Au cut-off is 4.1 g/t
platinum-palladium-gold-rhodium (3PE+Au), 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 current Flatreef estimate also 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. Mineral resources that are not mineral reserves do not have
demonstrated economic viability. Details of the current Mineral Resource
estimate, including a discussion of assumptions, parameters and methods, risks
and uncertainties, individual metal grades and the relevant qualified persons,
are set out in the Platreef Project NI 43-101 Technical Report on Updated
Mineral Resource Estimate dated March 13, 2013, available on Ivanhoe Mines'
SEDAR profile at www.sedar.com and www.ivanhoemines.com.


Table 5: Mineral resources amenable to selective underground mining methods
within and adjacent to the Turfspruit cyclic unit mineralized zone (based on
resources reported to April 2013).




----------------------------------------------------------------------------
Indicated Mineral Resources
Tonnage and Grades
----------------------------------------------------------------------------
Cut-off Platinum Palladium Gold Rhodium 3PE+Au Nickel Copper
3PE+Au Mt (g/t) (g/t) (g/t) (g/t) (g/t) (%) (%)
----------------------------------------------------------------------------
3 g/t 137 2.27 2.31 0.35 0.15 5.09 0.38 0.18
2 g/t 214 1.83 1.89 0.29 0.12 4.13 0.34 0.17
1 g/t 387 1.28 1.34 0.21 0.09 2.92 0.28 0.14
----------------------------------------------------------------------------
Contained Metal
----------------------------------------------------------------------------
Cut-off Platinum Palladium Gold Rhodium 3PE+Au Nickel Copper
3PE+Au - (Moz) (Moz) (Moz) (Moz) (Moz) (Mlbs) (Mlbs)
----------------------------------------------------------------------------
3 g/t - 10.0 10.2 1.53 0.67 22.4 1,133 558
2 g/t - 12.6 13.0 2.00 0.85 28.5 1,610 794
1 g/t - 15.9 16.7 2.67 1.09 36.3 2,408 1,189
----------------------------------------------------------------------------
Inferred Mineral Resources
Tonnage and Grades
----------------------------------------------------------------------------
Cut-off Platinum Palladium Gold Rhodium 3PE+Au Nickel Copper
3PE+Au Mt (g/t) (g/t) (g/t) (g/t) (g/t) (%) (%)
----------------------------------------------------------------------------
3 g/t 211 2.09 2.06 0.34 0.14 4.63 0.38 0.18
2 g/t 415 1.57 1.59 0.27 0.11 3.54 0.33 0.16
1 g/t 1,054 0.96 1.02 0.18 0.07 2.23 0.26 0.13
----------------------------------------------------------------------------
Contained Metal
----------------------------------------------------------------------------
Cut-off Platinum Palladium Gold Rhodium 3PE+Au Nickel Copper
3PE+Au - (Moz) (Moz) (Moz) (Moz) (Moz) (Mlbs) (Mlbs)
----------------------------------------------------------------------------
3 g/t - 14.2 14.0 2.29 0.97 31.5 1,764 855
2 g/t - 20.9 21.3 3.58 1.44 47.2 3,032 1,490
1 g/t - 32.7 34.7 5.95 2.32 75.7 5,934 3,035
----------------------------------------------------------------------------



Notes:



1. Mineral Resources have an effective date of 3 April 2013. The Qualified
Persons for the estimate are Dr. Harry Parker, RM SME, and Timothy Kuhl,
RM SME.
2. Mineral Resources estimated assuming underground selective mining
methods within and adjacent to the TCU are exclusive of the Mineral
Resources estimated assuming mass-mining methods.
3. The 2.0 g/t 3PE+Au cut-off is considered the base-case estimate
(highlighted); the 3.0 g/t 3PE+Au cut-off also is being considered.
4. Mineral Resources are reported on a 100% basis. Mineral Resources are
stated from approximately -200 m to 650 m elevation (from -500 m to
1,350 m depth). Indicated Mineral Resources are drilled on approximately
100 m x 100 m spacing; Inferred Mineral Resources are drilled on 400 m x
400 m (locally to 400 m x 200 m and 200 m x 200 m) spacing.
5. Reasonable prospects for economic extraction were determined using the
following assumptions. Assumed commodity prices are: nickel $8.81/lb;
copper $2.73/lb; platinum $1,699/oz; palladium $667/oz; gold $1,315/oz;
and rhodium $2,065/oz. It has been assumed that payable metals would be
82% from smelter/refinery and that mining costs (average $40/t) and
process, G&A, and concentrate transport costs (average $12.50/t of mill
feed for a 4 Mtpa operation) would be covered. The process recoveries
vary with block grade but typically would be 85-90% for platinum,
palladium and rhodium; 75% for gold; 70% for nickel; and 85% for copper.
6. Totals may not sum due to rounding.



Indications of significant additional mineralization in adjacent exploration targets

As updated in Ivanhoe Mines' recent news release issued on March 19, 2014,
mineralization at the Platreef Project is open to expansion to the south and
west, beyond the currently established Mineral Resources (see Figure 4). Two
exploration targets have been identified.


Target 1, the Ga-Madiba extension zone, is based on results from 14 wide-spaced,
step-out drill holes completed between October 26, 2012, and February 18, 2014.
Ga-Madiba, which adjoins and stretches to the south from the area where Inferred
Mineral Resources are estimated, could contain 115 to 235 million tonnes grading
3.1 to 4.5 g/t 3PE+Au (comprising 1.2 to 1.7 g/t platinum, 1.7 to 2.3 g/t
palladium, 0.06 to 0.14 g/t rhodium, 0.17 to 0.26 g/t gold), 0.23% to 0.28%
nickel and 0.11% to 0.14% copper over an area of 3.7 square kilometres. The
tonnage and grade ranges are based on intersections of 2.0 g/t 3PE+Au
mineralization in drill holes completed in Target 1.


Drilling to date has successfully identified the T1 and T2 mineralized reefs and
confirmed the initial interpretation that the Ga-Madiba target represents the
southern strike extension to the shallow-lying Flatreef. The overall drill
results are encouraging and the depth, range of grade, thickness and
grade-thickness are comparable to the initial, 400-metre-spaced drill results in
Flatreef's zone 1 (prior to completion of the 100-metre x 100-metre infill drill
program).


Target 2, which surrounds the currently estimated mineral resources in zones 1
and 2, could contain an estimated 260 to 450 million tonnes grading 3.4 to 4.5
g/t 3PE+Au (comprising 1.7 to 2.4 g/t platinum, 1.2 to 1.6 g/t palladium, 0.14
to 0.20 g/t rhodium, 0.26 to 0.33 g/t gold), 0.30% to 0.35% nickel and 0.15% to
0.18% copper over an area of 7.6 square kilometres. The tonnage and grade ranges
are based on 2.0 g/t 3PE+Au intersections of mineralization in 19 wide-spaced
drill holes completed in Target 2 and adjacent drill holes within the Inferred
Mineral Resource area. These drill holes were completed between October 26,
2012, and February 18, 2014.


To view Figure 4: Mineralization at the Platreef Project is open to expansion to
the south and west, beyond the currently established Mineral Resources, please
visit the following link:


http://media3.marketwire.com/docs/935569FIG4.pdf

The potential quantity and grade of these exploration targets is conceptual in
nature. There has been insufficient exploration and/or study to define these
exploration targets as a Mineral Resource. It is uncertain if additional
exploration will result in these exploration targets being delineated as a
Mineral Resource. The potential quantity and grade of these exploration targets
has not been used in the PEA.


In addition, there are approximately 37 square kilometres of unexplored ground
beyond these two exploration target areas on the property under which the
Platreef mineralization is projected to lie. It is not possible to estimate a
range of tonnages and grades for this ground with current information. There is
excellent potential for mineralization to significantly increase with further
step-out drilling to the south-west.


Proposed mining methods

Stantec Consulting prepared an evaluation of three different production-rate
scenarios (4 Mtpa, 8 Mtpa and 12 Mtpa) to mine the Indicated and Inferred
Mineral Resources at the Platreef Project. The mining methods considered are
long-hole stoping and drift-and-fill extraction, followed by either cemented
paste, cemented rock fill or waste rock backfill, where applicable.


The mine plans have been developed for a total project life of 36 years,
including a six-year pre-production period prior to the mill start-up.


To view Figure 5: Mining areas and preliminary layouts for Phase 3 (12 Mtpa)
development scenario (looking southeast), please visit the following link:


http://media3.marketwire.com/docs/935569FIG5.pdf

To view Figure 6: A similar view, to the southeast, illustrating the relative
mine-expansion scenarios for Phase 1 (4 Mtpa), Phase 2 (8 Mtpa) and Phase 3 (12
Mtpa), please visit the following link:


http://media3.marketwire.com/docs/935569FIG6.pdf

Metallurgical test work and concentrator design

There have been a number of metallurgical test-work campaigns and conceptual
flow-sheet designs carried out for the treatment of Platreef samples since 2001.
Metallurgical test work focused on maximizing the recovery of platinum-group
elements (PGEs) and base metals, mainly nickel, while producing an acceptably
high-grade concentrate suitable for further processing and/or sale to a third
party.


Previous comminution tests indicated that the plant feed is competent with
respect to SAG milling and that a crusher and ball-mill circuit will be the
preferred option. The Platreef material is classified as hard to very hard. The
flotation test work has shown that the plant feed is amenable to treatment by
conventional flotation without the need for re-grinding. Flotation losses from
the circuit are due to a non-floating PGM population locked in gangue at sizes
of 10 micrometre or finer.


Although this phase of the test work is preliminary, it did indicate that an
effective flow sheet would involve several stages of cleaner flotation with
recycling of the stage tailings. All of the three geo-met units and the two
blends produced acceptable smelter-grade final concentrates at acceptable
recoveries.


Based on the latest flotation test work results, a concentrator flow sheet was
developed for the treatment of T1, T2 Upper and T2 Lower zones.


Phase 1 would include the construction of a 4 Mtpa concentrator and other
associated infrastructure by 2020, in two modules of 2 Mtpa. Phase 2 would
include a ramp-up to 8 Mtpa by 2024 and Phase 3 a further ramp-up to a plant
capacity of 12 Mtpa by 2028.


A two-phased production approach was used for the Phase 1 flow-sheet development
and design. The selected flow sheet is comprised of a common three-stage
crushing circuit, feeding crushed material to two milling-flotation modules each
of 2 Mtpa capacity. Milling is achieved in a ball mill with classification and
rougher flotation in a split high-, medium- and low-grade circuit. Each
concentrate is cleaned in a dedicated cleaner circuit with varying stages and
recycles. Flotation is followed by tailings handling and concentrate thickening,
filtration and storage.


Supply of electricity and water

The Olifants River Water Resource Development Project (ORWRDP) is designed to
deliver water to the Eastern and Northern limbs of South Africa's Bushveld
Igneous Complex. The project consists of the new De Hoop Dam, the raising of the
wall of the Flag Boshielo Dam and related pipeline infrastructure that
ultimately will deliver water to Pruissen, southeast of Mokopane and the
Platreef Project. The Pruissen Pipeline Project will be developed to deliver
water on from Pruissen to the communities and mining projects on the Northern
Limb. Ivanhoe is a member of the Joint Water Forum, which is part of the ORWRDP.



Participants in the water development scheme are required to indicate their
water requirements so that total water demand may be calculated relative to the
scheme's capacity. These requirements are translated into a non-binding
Memorandum of Agreement and then a binding, off-take agreement. The Platreef
Project's water requirement for the 8 Mtpa base case scenario would be
approximately 22 million litres per day.


Eskom, the national power authority, has advised that sufficient power presently
is not available in the Mokopane area due to transmission-line limitations and
generating shortfalls. The generating shortfall should be alleviated with the
first unit of the new Medupi Power Station that is due to begin operation in Q4
2014.


When fully operational, the Medupi Power Station will have the capacity to
generate a total of up to 4,800 megawatts for the national grid.


The Medupi output, combined with the new Borutho main transmission substation,
which is approximately 26 kilometres from the Platreef Project site and is due
to begin operation this year, should ensure that sufficient power will be
available for the Platreef Project.


Qualified persons, quality control and assurance

The following companies have undertaken work in preparation of the PEA:



-- OreWin - Overall report preparation and financial model.
-- AMEC - Mineral Resource estimation.
-- SRK Consulting - Mine geotechnical recommendations.
-- Stantec Consulting International - Underground mine plan.
-- DRA - Process and infrastructure.
-- Geo Tail - Tailings storage facility.



The independent qualified persons responsible for preparing the Platreef
Preliminary Economic Assessment are Bernard Peters (OreWin); Dr. Harry Parker
(AMEC); Timothy Kuhl (AMEC); William Joughin, (SRK); Mel Lawson (Stantec);
Michael Valenta (Metallicon Process Consulting); and Guillaume de Swardt (Geo
Tail).


The scientific and technical information in this news release has been reviewed
and approved by Stephen Torr, P.Geo., Ivanhoe Mines' Vice President, Project
Geology and Evaluation, a Qualified Person under the terms of National
Instrument 43-101. Mr. Torr has verified the technical data disclosed in this
news release.


Base metals and other major-elements assays were determined by multi-acid
digestion with ICP finish and PGEs were determined by conventional fire assay
and ICP finish at Ultra Trace Geoanalytical Laboratories in Perth, Australia, an
ISO 17025-accredited laboratory. Ivanhoe Mines utilized a well-documented system
of inserting blanks and standards into the assay stream and has a strict chain
of custody and independent laboratory re-check system for quality control.


Information on sample preparation, analyses and security is contained in the
Platreef Project NI 43-101 Technical Report on Updated Mineral Resource Estimate
dated March 13, 2013, filed on SEDAR at www.sedar.com and on the Ivanhoe Mines
website at www.ivanhoemines.com.


Data verification

Dr. Parker and Mr. Kuhl, (collectively the AMEC QPs) reviewed the sample chain
of custody, quality assurance and control procedures, and qualifications of
analytical laboratories. The AMEC QPs are 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 Platreef Project support the geological interpretations,
and the analytical and database quality and the data collected can support
Mineral Resource estimation.


Details of the data verification supporting the Mineral Resource estimate are
set out in the Platreef Project NI 43-101 Technical Report on Updated Mineral
Resource Estimate dated March 13, 2013, available on Ivanhoe Mines' SEDAR
profile at www.sedar.com and www.ivanhoemines.com.


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 and now being 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.