Ivanhoe Mines issues Q2 financial results and review of operations, mine construction and exploration progress

August 11, 2021

Ivanhoe Mines issues Q2 financial results and review of operations, mine construction and exploration progress ■ Kamoa-Kakula Copper Mine achieved Phase 1 commercial production on July 1, 2021; first phase projected to produce approximately 200,000 tonnes of copper per year ■ Kamoa-Kakula’s Phase 2 expansion, scheduled for Q3 2022, will double annual copper output to approximately 400,000 tonnes ■ Ivanhoe Mines pledges net-zero greenhouse gas emissions at the Kamoa-Kakula Copper Mine

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Good progress being made on Ivanhoe’s Western Foreland exploration program, searching for DRC’s next tier-one copper discovery

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Development of the world-scale Platreef palladium, rhodium, platinum, nickel, copper and gold project in South Africa making excellent progress

TORONTO, CANADA ‒ Ivanhoe Mines (	TSX: IVN; OTCQX: IVPAF	) today announced its
financial results for the three and six months ended June 30, 2021. Ivanhoe Mines is a
Canadian mining company advancing its three mining projects in Southern Africa: the
Kamoa-Kakula copper mining complex in the Democratic Republic of Congo (DRC); the
Platreef palladium-rhodium-platinum-nickel-copper-gold discovery in South Africa; and
the extensive upgrading of the historic Kipushi zinc-copper-lead-germanium mine, also
in the DRC. Ivanhoe also is exploring for new copper discoveries on its Western
Foreland exploration licences in the DRC, near the Kamoa-Kakula Project. All figures
are in U.S. dollars unless otherwise stated.

HIGHLIGHTS

• Kamoa-Kakula’s Phase 1 concentrator plant achieved commercial production on

July 1, 2021. Kamoa-Kakula’s initial production guidance, on a 100%-project basis, is between 80,000 and 95,000 tonnes of copper in concentrate for 2021.

• Kamoa-Kakula’s Phase 2 construction is progressing slightly ahead of plan and

remains on track for start-up in Q3 2022, which will see a doubling of mill throughput to 7.6 million tonnes per annum (Mtpa). Phases 1 and 2 combined are forecast to produce approximately 400,000 tonnes of copper per year.

• Study work to accelerate Phase 3 mine and concentrator expansion to at least 11.4

Mtpa is ongoing. Based on independent benchmarking, the project’s phased expansion scenario to 19 Mtpa would position Kamoa-Kakula as the world’s second- largest copper mining complex, with peak annual copper production of more than 800,000 tonnes.

• At the end of July 2021, Kamoa-Kakula’s surface ore stockpiles held approximately

3.54 million tonnes grading 4.77% copper, containing more than 168,000 tonnes of copper.

• Ivanhoe, together with its partner Zijin, is exploring the acceleration of the Kamoa-

Kakula Phase 3 concentrator expansion, which includes optimization work to determine mining production capacity and costs at the various mining areas on the Kamoa-Kakula complex, including expanded facilities at the Kansoko Mine, Kamoa North (including the Bonanza Zone) and Kakula West. Kamoa Copper also is refining its longer-term downstream processing strategy, including the potential construction of a smelter or hydrometallurgical processing facility.

• In April 2021, Ivanhoe Mines Energy DRC entered into an agreement with the DRC’s

state-owned power company Société Nationale d'Électricité (SNEL) to upgrade a major turbine at the Inga II hydropower facility. The upgraded turbine is expected to produce 162 megawatts (MW) of clean, renewable hydropower, providing the Kamoa- Kakula Copper Mine with sufficient, sustainable electricity for future expansions, including a copper smelter.

• In May 2021, Ivanhoe pledged to achieve net-zero operational greenhouse gas

emissions (Scope 1 and 2) at the industry-leading Kamoa-Kakula Copper Mine. Since the mine already is powered by clean, renewable hydro-generated electricity, the focus of the company’s net-zero commitment will be on electrifying the project’s mining fleet with new, state-of-the-art equipment powered by electric batteries or hydrogen fuel cells. Emissions-free underground mining equipment, at the size and scale required for Kamoa-Kakula’s bulk-scale operations, is at an advanced stage of development by several of the world’s leading equipment manufacturers.

• During Q2, Ivanhoe continued its 2021 copper exploration program on its Western

Foreland licences that cover a combined area of approximately 2,550 square kilometres in close proximity to Kamoa-Kakula. Drilling in the quarter was focused on the western and eastern extensions of the Makoko Discovery, as well as the northern and western extensions of the Kiala Discovery. Good progress was made on construction of critical infrastructure to access high-priority, newly-acquired westerly exploration permits, including construction of a 60-kilometre spine road across the Western Foreland and a new bridge across the Lubudi River.

• In February 2021, Ivanhoe announced that its South African subsidiary, Ivanplats, is

arranging project-level financing of up to $420 million to advance development of the world-scale Platreef palladium, rhodium, platinum, nickel, copper and gold project in South Africa.

• Ivanplats has signed a non-binding term sheet with Orion Mine Finance, a leading

international provider of production-linked stream financing to base and precious metals mining companies, for a $300-million gold, palladium and platinum streaming facility. Ivanplats also has appointed two prominent, international commercial banks

• Societe Generale and Nedbank – as mandated lead arrangers for a senior project

debt facility of up to $120 million.

• Ivanplats’ proposed financings follow the November 30, 2020 issuance of the

outstanding findings of an independent Platreef Integrated Development Plan 2020 (Platreef IDP20), which consists of an updated feasibility study (Platreef 2020 FS) and a preliminary economic assessment (Platreef 2020 PEA). The initial capital cost for the phased development plan under the Platreef 2020 PEA, starting at a mining rate of 700,000 tonnes per annum (700 ktpa), is estimated at $390 million.

• Detailed engineering is progressing on Platreef’s 700-ktpa initial mine design, 770-

ktpa concentrator and associated infrastructure for the phased development plan, which is scheduled to be incorporated into an updated feasibility study by year end or early 2022. The Shaft 1 changeover is progressing well in preparation for permanent hoisting in early 2022. Construction activities on the Shaft 2 headframe also are advancing. In July 2021, Ivanplats ordered emissions-free, battery electric drill rigs and underground loaders from leading Swedish manufacturer Epiroc, for use in the mine’s underground development.

• Construction activities on Platreef’s Shaft 2 headframe also are advancing.
• At the Kipushi Mine redevelopment project in the DRC, the Kipushi Project’s draft

feasibility study, and development and financing plan are being reviewed by Ivanhoe Mines together with its joint-venture partner and state-owned mining company, Gécamines. The project is maintaining a reduced workforce to conduct maintenance activities and pumping operations.

• Ivanhoe has made excellent progress in upgrading Kipushi’s underground

infrastructure to allow for mining to quickly begin at the ultra-high-grade Big Zinc orebody. Resumption of production at the mine now requires the construction of a surface processing plant and other related production facilities. Discussions are continuing with Gécamines to advance a new era of production at Kipushi and it is anticipated that these discussions will be concluded with the finalization of the feasibility study and the agreement on the development and financing plan.

• At the end of Q2 2021, Kamoa-Kakula had reached 1.49 million work hours free of a

lost-time injury, Kipushi had reached 3.44 million work hours free of a lost-time injury, and Platreef had reached 57,000 work hours free of a lost-time injury.

Principal projects and review of activities

1. Kamoa-Kakula Project

39.6%-owned by Ivanhoe Mines Democratic Republic of Congo

The Kamoa-Kakula Project, a joint venture between Ivanhoe Mines and Zijin Mining, has been independently ranked as the world’s fourth-largest copper deposit by international mining consultant Wood Mackenzie. The project is approximately 25 kilometres west of the town of Kolwezi and about 270 kilometres west of Lubumbashi. The Kamoa-Kakula Project began producing copper in May 2021 and achieved commercial production on July 1, 2021.

Ivanhoe sold a 49.5% share interest in Kamoa Holding Limited (Kamoa Holding) to Zijin Mining and a 1% share interest in Kamoa Holding to privately-owned Crystal River in December 2015. Since the conclusion of the Zijin transaction, each shareholder has been required to fund expenditures at the Kamoa-Kakula Project in an amount equivalent to its proportionate shareholding interest in Kamoa Holding.

A 5%, non-dilutable interest in the Kamoa-Kakula Project was transferred to the DRC government on September 11, 2012, for no consideration, pursuant to the 2002 DRC mining code. Following the signing of an agreement with the DRC government in November 2016, in which an additional 15% interest in the Kamoa-Kakula Project was transferred to the DRC government, Ivanhoe and Zijin Mining now each hold an indirect 39.6% interest in the Kamoa- Kakula Project, Crystal River holds an indirect 0.8% interest and the DRC government holds a direct 20% interest. Kamoa Holding holds an 80% interest in the project.

Health and safety at Kamoa-Kakula

At the end of June 2021, the Kamoa-Kakula Project reached 1,492,769 work hours free of a lost-time injury. A fatality occurred on May 31, 2021 when a contractor’s employee was hit in the leg by a loose falling rock while working at one of the mine’s underground faces, which caused the employee to fall backwards, striking his head. Despite immediate first-aid assistance by his colleagues, he passed away at the accident scene. Since the fatality, remedial safety interventions have been implemented. Two other lost-time injuries occurred in Q2 2021. The project continues to strive toward its workplace objective of zero harm to all employees and contractors.

Kamoa-Kakula has successfully focused on prevention, preparation, and mitigation in managing the risks associated with COVID-19. Large-scale testing, combined with focused preventative measures, ensured that positive cases were quickly identified, isolated, and treated, with cross contamination kept to a minimum. Maintaining this high standard of risk management remains a daily focus, to prevent future cases. During the first six months of 2021, the Kamoa-Kakula Project conducted 3,743 COVID-19 tests, with 163 patients testing positive for COVID-19.

Kamoa Copper has secured an initial supply of the AstraZeneca vaccine for employees, contractors and Democratic Republic of Congo residents who live in the mine’s host communities. Kamoa Copper continues to administer its initial supply of 1,500 doses. The second dose will be administered eight to 12 weeks after the first and a certificate of vaccination completion will be issued to those who have received two doses.

The Kamoa COVID-19 hospital continues to treat patients when required, as construction progresses well for the expansion and upgrade of the primary healthcare wing. Kamoa- Kakula’s highly-experienced doctors and nurses apply the latest medical treatments, supported by a world-leading emergency response and paramedic team.

Kamoa is one of 15 sites in the province where COVID-19 vaccination programs are being rolled-out to curb the spread of the virus. As the pandemic evolves, the medical team at the Kamoa hospital continues to review and update risk mitigation protocols, while ensuring that new medical advances are investigated and applied to protect the health and safety of employees and community members.

Copper concentrate production from the initial 3.8-Mtpa Kakula concentrator plant commenced in May 2021; commercial production achieved on July 1, 2021

Overall progress of Kamoa-Kakula’s first phase, 3.8-Mtpa mining and milling operation (covering mine infrastructure, concentrator plant and surface infrastructure) was very nearly complete at the end of Q2 2021. The only major construction activity that still was outstanding was the backfill plant which was completed in July 2021, with the first paste to be delivered to underground stopes in August 2021.

The backfill plant will be used to mix tailings from the processing plant with cement to produce paste backfill. The backfill will be pumped back into the mine and used to help support minedout areas. Approximately one-half of the mine’s tailings will be sent back underground, significantly reducing the surface tailings storage. Construction of the tailings storage facility has been completed and first tailings deposited.

Overall construction of the project’s first phase, 3.8-Mtpa concentrator plant and associated facilities is complete, with C4 or hot commissioning advancing according to plan. First ore was introduced into the ball mills on May 20, 2021, and first saleable concentrate was filtered on May 25, 2021, marking the start of concentrate production. Lower-grade ore was fed into the plant during initial hot commissioning and the feed grade has since been increased.

The Kamoa-Kakula Project was deemed to have reached commercial production on July 1, 2021, after achieving a milling rate in excess of 80% of design capacity and recoveries close to 70% for a continuous, seven-day period. Revenue recognition, as well as depreciation of Kamoa-Kakula’s first phase, 3.8-Mtpa concentrator plant and milling operation, commenced from this date.

Approximately 500,000 tonnes of ore had been milled by early August 2021. Copper production has steadily increased since hot commissioning began at the end of May 2021. Copper production exceeded 500 tonnes per day on occasion during July, nearing the Phase 1 steady-state design capacity of approximately 550 tonnes per day, or 200,000 tonnes per year. During August, the focus of the commissioning team will shift from the front end crushing and milling circuit to balancing and optimizing the flotation and regrind milling areas. This is expected to further improve concentrate grade and recovery.

Copper recoveries increased from an average of approximately 70% in June 2021 to approximately 81% in July 2021, progressively increasing toward the Phase 1 steady-state design copper recoveries of approximately 86%.

As at June 30, 2021, contained copper in concentrate produced by the Kamoa-Kakula Project amounted to 9,858 tonnes. Ivanhoe’s guidance for contained copper in concentrate expected to be produced by the Kamoa-Kakula Project for 2021 assumes ramp-up from first production continues in line with published technical disclosures, and is as follows:

Kamoa-Kakula Project 2021 Guidance

Contained Copper in Concentrate 80,000 to 95,000 tonnes

All figures in the above table are on a 100%-project basis. Metal reported in concentrate is prior to refining losses or deductions associated with smelter terms. Cost guidance is expected to be provided once the Kamoa-Kakula Project’s Phase 1 plant has operated at steady-state production for a continuous period.

Loading high-grade copper concentrate at the Kamoa-Kakula concentrate storage warehouse for transport to the nearby Lualaba Copper Smelter for processing into blister copper ingots, containing approximately 99% copper.

Construction of Kamoa-Kakula’s Phase 2 expansion is more than 35% complete; Phase 3 studies are progressing

Construction of the second 3.8-Mtpa concentrator plant is progressing well toward a Q3 2022 start-up with the current focus on the completion of civil works and early structural steel erection. Civil works are over 80% complete with a number of areas handed over to the steel, mechanical, piping and platework contractor.

Engineering and procurement activities are well advanced with both approximately 80% complete. Structural steel, platework and major equipment has started arriving on site and steel erection in the high-pressure grinding rolls and tailings thickening areas has commenced. The bulk of the structural steel and platework is scheduled to be on site in early Q3 2021. Piping fabrication is advancing well with some piping en route to site.

Ivanhoe and its partner Zijin are exploring the acceleration of the Kamoa-Kakula Phase 3 concentrator expansion, which may be fed from expanded mining operations at Kansoko, or new mining areas at Kamoa North (including the Bonanza Zone) and Kakula West.

Study work for the Phase 3 mine and concentrator expansion is underway, which includes optimization work to determine mining production capacity and costs at the various mining areas. This work also will inform the optimal sizing of the Phase 3 concentrator, which was outlined as a further expansion of 3.8 Mtpa in the Kamoa-Kakula Integrated Development Plan announced in September 2020. In addition, the studies will take into consideration the plans to upgrade Turbine 5 at the Inga II hydropower complex to provide 162 megawatts of renewable hydropower, as well as the construction of a direct-to-blister smelter.

Once the optimization work is completed, Kamoa Copper will advance into a more detailed phase of design and engineering work with its objective to accelerate the Phase 3 concentrator expansion.

Two views of Kamoa-Kakula’s Phase 1 concentrator plant in full operation and the adjacent, parallel Phase 2 concentrator plant under construction.

Construction of the Phase 2 tailings thickener is nearing completion.

Ore stockpiles now hold approximately 3.54 million tonnes grading 4.77% copper, containing more than 168,000 tonnes of copper At the end of March 2021, Kamoa-Kakula’s pre-production surface stockpiles contained approximately 2.56 million tonnes of high-grade and medium-grade ore at an estimated blended grade of 4.60% copper, containing more than 117,000 tonnes of copper.

The project’s combined medium-grade and high-grade ore mined was approximately 409,000 tonnes at an average grade of 5.71% copper in April 2021; approximately 406,000 tonnes at an average grade of 5.77% copper in May 2021; and approximately 338,000 tonnes at an average grade of 4.59% copper in June 2021.

This brings the project’s total pre-production high- and medium-grade ore surface stockpiles to approximately 3.40 million tonnes at an estimated grade of 4.78% copper as of the end of June 2021.

A total of 414,000 tonnes grading 5.16% copper was mined in July 2021 and comprised 367,000 tonnes grading 5.29% copper from the Kakula Mine, including 85,000 tonnes grading 7.70% copper from the mine’s high-grade centre, and 47,000 tonnes grading 4.13% copper from the Kansoko Mine.

First ore was fed into the concentrator plant on May 20, 2021, and the start of copper concentrate production occurred on May 25, 2021, several months ahead of schedule. As of June 30, 2021, 313,000 tonnes of ore grading 4.85% copper had been conveyed to the run-ofmine (ROM) stockpile.

New employee accommodations under construction at the Kakula Mine, with the Kakula North ore stockpiles and concentrator plant in the background.

Kamoa-Kakula’s off-take agreements signed for Phase 1 blister copper and copper concentrate

On June 9, 2021, Kamoa Copper signed off-take agreements with CITIC Metal (HK) Limited (CITIC Metal) and Gold Mountains (H.K.) International Mining Company Limited, a subsidiary of Zijin, for 50% each of the copper products from Kamoa-Kakula’s Phase 1 production. The off-take agreements are evergreen for the production volumes from Phase 1, including copper concentrate and blister copper resulting from processing of copper concentrates at the nearby Lualaba Copper Smelter.

The off-take agreements contain standard, international commercial terms, including copper payables and treatment and refining charges based on the annual benchmark across the copper industry. The ultra-high-grade, clean concentrate produced by Kamoa-Kakula is expected to contain approximately 57% copper and very low levels of impurities.

CITIC Metal and Zijin are purchasing the copper concentrate at the Kakula Mine and the blister copper at the Lualaba Copper Smelter on a free-carrier basis, meaning the buyers will be responsible for arranging freight and shipment to the final destination, initially via the port of Durban, South Africa.

CITIC Metal and Zijin each provided an advance payment facility of $150 million ($300 million in total), which was drawn at the election of Kamoa Copper and received in June 2021. The facility carries an annual interest rate of 8% and will be offset against provisional payments due to Kamoa Copper from product deliveries. Payment terms include an option to receive a provisional payment on a 100%-basis within three business days of invoicing, at the end of each delivery month.

Agreement signed with Lualaba Copper Smelter to produce 99% blister copper in the DRC

On May 31, 2021, Kamoa Copper signed a 10-year agreement with the Lualaba Copper Smelter, located outside the town of Kolwezi, for the processing of a portion of Kamoa’s copper concentrate production. Kamoa Copper delivered its first bulk copper concentrates to the Lualaba Copper Smelter on June 1, 2021, and since then, deliveries to the smelter have been occurring on a daily basis. The Lualaba Copper Smelter is 60%-owned by China Nonferrous Metal Mining Group (CNMC) of Beijing, China. Yunnan Copper of Kunming, China, owns the remaining 40%.

The smelter, which began operations in early 2020, will treat up to 150,000 wet metric tonnes of copper concentrates from Kamoa-Kakula, in return for a treatment charge and market-based realization fee, and produce blister copper containing approximately 99% copper that will be returned to Kamoa Copper, and collected by CITIC Metal and Zijin from a dedicated storage area at the Lualaba Copper Smelter.

The Lualaba Copper Smelter is the first modern, large, pyro-metallurgical copper smelter built in the DRC, and is approximately 40 kilometres from Kamoa-Kakula via the recentlyconstructed, dedicated by-pass road.

The first truckloads of Kamoa-Kakula’s blister copper ingots, containing approximately 99% copper, were exported from the Lualaba Copper Smelter to international markets in July 2021.

Pouring Kamoa Copper blister ingots, containing approximately 99% copper, at the local Lualaba Copper Smelter.

Kamoa Copper blister copper ingots produced at the Lualaba Copper Smelter being loaded for transport to international markets.

Kamoa-Kakula begins exporting copper concentrate internationally as production ramps up

Kamoa Copper SA began exporting its copper concentrate internationally in July 2021. The first truckloads of copper concentrate destined for smelters outside of the DRC departed from the mine site on July 17, 2021, marking a significant milestone in the ongoing ramp-up of Kamoa-Kakula’s Phase 1, 3.8-Mtpa concentrator plant.

By early August 2021, approximately 32,700 tonnes of copper concentrate had been loaded at the mine site for delivery to either the Lualaba Copper Smelter, or to international markets.

Kamoa Copper received all necessary authorizations from the DRC government to export copper concentrate and blister copper on June 8, 2021.

Transport trucks loaded with high-grade copper concentrate at Kamoa-Kakula awaiting customs approval, which usually takes five days, before beginning their journey to international smelters, via the port of Durban, South Africa.

Draw-down of equipment financing facility successfully commenced

On December 1, 2020, Ivanhoe announced the Kamoa-Kakula Project had secured an equipment financing facility of up to EUR 176 million (approximately $211 million), together with a $9 million down-payment facility to purchase underground mobile mining equipment and services from leading Swedish manufacturers Sandvik AB and Epiroc AB, and Finnish manufacturer Normet Oy.

The facility has an availability period of three years and amortizes over five years from utilization and is tied to underground mining equipment at the Kamoa-Kakula Project. The Swedish Export Credit Agency (EKN) has provided both political and commercial cover to the lenders and receives a one-off premium per each tranche’s first utilization.