Ivanhoe Mines provides 2022 production and cost guidance for Kamoa-Kakula Copper Complex

January 10, 2022

Ivanhoe Mines provides 2022 production and cost guidance for Kamoa-Kakula Copper Complex ■ 2022 production guidance of between 290,000 to 340,000 tonnes of copper in concentrate ■ Kamoa Copper produced 105,884 tonnes of copper in concentrate in 2021, exceeding the upper end of the guidance range, reflecting outstanding ramp-up of the Phase 1 operation ■ Record monthly production of 18,853 tonnes achieved in December, with plant recovery averaging 88.5% ■ Phase 2 expansion now 80% complete, expected to start operations in Q2 2022; pre-commissioning activities underway ■ Phase 3 concentrator expansion targeted for 2024, with earthworks to access new mining areas well underway ■

RIYADH, SAUDI ARABIA – Ivanhoe Mines (TSX: IVN; OTCQX: IVPAF) Executive Co-Chair Robert Friedland announced today, ahead of the inaugural Future Minerals Forum, that the 2022 annual production guidance for the Kamoa-Kakula Copper Complex in the Democratic Republic of Congo (DRC) is between 290,000 and 340,000 tonnes of copper in concentrate.

The figures are on a 100%-project basis and metal reported in concentrate is prior to refining losses or deductions associated with smelter terms.

The guidance range for cash costs (C1) per pound of payable copper in 2022 is between $1.20 and $1.40 per pound of payable copper. Cash costs (C1) per pound of payable copper for Q3 2021 totaled $1.37/lb, while cost of sales per pound of payable copper sold for Q3 2021 was $1.08/lb. "Cash costs (C1) per pound" is a non-GAAP financial performance measure. Additional information is provided in the Non-GAAP Financial Performance Measures section of this news release.

Kamoa Copper’s copper-in-concentrate production for the year ended December 31, 2021, totalled 105,884 tonnes, exceeding the upper end of the increased guidance range of 92,500 to 100,000 tonnes. The year-end total was boosted by record monthly production of 18,853 tonnes achieved in December.

2021 guidance had been raised from an initial range of 80,000 to 95,000 tonnes, during the course of the successful ramp-up of Kamoa Copper’s Phase 1 concentrator plant, which began operations in late May 2021 and reached commercial operations on July 1, 2021.

During the month of December, a record 372,000 tonnes of ore were milled at an average feed grade of 5.98% copper, exceeding the monthly design run rate of 316,667 tonnes by more than 17%.

Copper flotation recoveries also achieved a record 88.5% in December. The Phase 1, steady-state design copper recovery is approximately 86%, depending on ore feed grade.

Kamoa Copper expects to begin operations at the Phase 2 concentrator plant in Q2 2022. The Phase 2 concentrator plant is identical to the Phase 1 concentrator, with a nameplate milling capacity of 3.8 million tonnes per annum (Mtpa), and a similar ramp-up profile for the new concentrator is targeted, with the benefit of additional knowledge gained during the commissioning of Phase 1.

The Phase 3 expansion also is advancing, with work ongoing on new box cut to open up the Kamoa Mine. An updated pre-feasibility study (PFS), including the Phase 3 expansion, is expected in Q3 2022.

Watch a new video showcasing Phase 1 operations and the Phase 2 and Phase 3 expansion work underway at the Kamoa-Kakula Copper Complex:

https://vimeo.com/663982551/a4a47fa41f

Chart 1: Cumulative tonnes of copper produced from May 2021 to December 31, 2021.

2022 Guidance for Kamoa-Kakula

Guidance is based on a number of assumptions and estimates as of December 31, 2021, including among other things, assumptions about the timing of the Phase 2 expansion and anticipated costs and expenditures. Production and cost guidance assumes the Phase 2 concentrator plant will commence copper production in Q2 2022 and that ramp-up will be in line with what was achieved with Phase 1. Guidance involves estimates of known and unknown risks, uncertainties and other factors which may cause the actual results to be materially different.

Kamoa-Kakula 2022 Guidance

Contained copper in concentrate (tonnes) 290,000 - 340,000

Cash cost (C1) ($ per pound) 1.20 - 1.40

Cash costs (C1) per pound of payable copper for Q3 2021 of $1.37/lb reflected the measured ramp-up of production at Kamoa-Kakula to steady-state, and are expected to trend downward as the Phase 2 concentrator plant is commissioned and the mine’s fixed operating costs are spread over increased copper production.

C1 cash cost is a non-GAAP measure used by management to evaluate operating performance and include all direct mining, processing, and general and administrative costs. Smelter charges and freight deductions on sales to final port of destination (typically China), which are recognized as a component of sales revenues, are added to C1 cash cost to arrive at an approximate cost of delivered finished metal.

Cost of sales per pound of payable copper sold for Q3 2021 was $1.08/lb. For historical comparatives see the Non-GAAP Financial Performance Measures section of this news release. Please also see the Management’s Discussion and Analysis for the three and nine months ended September 30, 2021, for discussion of non-GAAP measures. All figures in the above table are on a 100%-project basis.

“Kamoa Copper’s outstanding operational success in 2021 is a product of the culture and values promoted throughout the organization,” said Mr. Friedland. “We are focused on training and empowering our young, talented Congolese workforce to operate this globally significant copper mining and smelting complex for generations to come. We invest deeply in our people and we celebrate their diversity, as diversity is a core value and a key to our strength. Collectively we are determined to create long-term stakeholder and shareholder value through continued investment in discovering and developing world-class orebodies, technological innovation, strong corporate governance, environmental stewardship, empowering our host communities and intense focus on health and safety.

“The Phase 2 expansion remains significantly ahead of schedule, and we are well on the way to doubling our annualized copper production to more than 400,000 tonnes starting early in Q2 2022, vaulting Kamoa Copper into the ranks of the world’s ten largest copper mines.

“Our outstanding team of geologists are confident that the Kamoa and Kakula mines are just the initial discoveries of a major new mining district, which extends the storied African Copperbelt in a southwesterly direction all the way to the Zambian border. We will be conducting an extensive drilling campaign on our majority-owned Western Foreland exploration licences this year to unlock the potential of this highly-prospective ground.”

The Kamoa Copper Complex with the Phase 1 and Phase 2 concentrator plants at the Kakula Mine. A small portion of Ivanhoe’s Western Foreland exploration licences are in the background.

Muhemba Richard (left), operating an ore-truck simulator under the guidance of trainer Kasongo Kabila at Kamoa Copper’s state-of-the-art training centre.

A 3D illustration of Kamoa-Kakula’s Phase 2 concentrator flotation cells. The picture below shows the current progress, which is approximately 80% complete.

A convoy of trucks transporting Kamoa Copper’s copper concentrate for export to international markets.

Kamoa-Kakula’s Phase 1 (at top) and Phase 2 ball mills.

Phase 2 expansion now 80% complete, expected to start operations in Q2 2022

Construction of the second 3.8-Mtpa concentrator plant (Phase 2) continues to progress ahead of schedule with hot commissioning expected to start in Q2 2022. Engineering, procurement and fabrication activities all are effectively complete, with construction activities well advanced. As of the end of December, the overall project was approximately 80% complete. Some pre-commissioning activities have started.

The main construction focus now has shifted from structural steel erection and installation of platework, equipment and piping (SMPP) to electrical, control and instrumentation (EC&I) installation. Most areas have been handed over from the SMPP contractor to the EC&I contractor. All of the Phase 2 surface piping has been installed. Installation of cable racking is nearing completion and cable pulling and instrument installation is well advanced.

More than 675 truckloads of Phase 2 plant construction equipment and materials already have been delivered to site.

Updated PFS study, including Phase 3 expansion, expected in Q3 2022; work on new box cut to open up the Kamoa Mine advancing

Kamoa Copper also is advancing the Phase 3 expansion, with operations at the first stream of the Phase 3 concentrator expected by the end of 2024. The Phase 3 concentrator will be located adjacent to the Kansoko Mine (at the Kansoko Sud orebody) and is being designed as two identical streams with a common dry front end, the same as the Phase 1 and 2 concentrators, but at a larger nameplate milling capacity per stream than the 3.8-Mtpa capacity of the Phase 1 and 2 concentrators.

The Phase 3 concentrator is expected to be supplied with ore from the established mine at Kansoko, as well as from two new planned mines, named Kamoa 1 and Kamoa 2. The Kamoa 1 and Kamoa 2 mining areas will be accessed via a twin-decline system (the Kamoa Mine decline), and the box cut for the declines is under construction.

Phase 3 also includes the construction of a direct-to-blister smelter, with a production capacity of 500,000 tonnes per annum of blister copper. Basic engineering, led by China Nerin Engineering Co., Ltd. of Jiangxi, China, is ongoing and expected to be completed in Q2 2022.

The planned smelter is to be built adjacent to the Phase 1 and 2 concentrator plants, and is designed to meet the International Finance Corporation’s emissions standards. The smelter has been sized to process the majority of the copper concentrate forecast to be produced by Kamoa-Kakula’s Phase 1, Phase 2 and Phase 3 concentrators. With a nameplate capacity of 500,000 tonnes per annum of blister copper, it is projected to be one of the largest, single-line blister- copper flash smelters in the world, and the largest in Africa.

Power for the Phase 3 expansion will be supplied by the upgrading of turbine 5 at the Inga II hydropower complex to provide an additional 162 megawatts (MW) of renewable hydropower. Basic engineering for the design of a new turbine wheel and runners is ongoing at the Heidenheim offices of contractor Voith Hydro, and the contractor’s team is preparing to mobilize on site.

Study work on all aspects of the Phase 3 expansion is progressing well, with further information to be provided in Q2 2022 as estimates are completed, and an updated PFS expected to be released in Q3 2022.

Mining crews produce 756,000 tonnes grading 5.25% copper from the Kakula and Kansoko mines in December

Underground mine production from the Kakula and Kansoko mines was 756,000 tonnes grading 5.25% copper from November 21^st to December 31^st, including 272,000 tonnes grading 6.53% copper from the Kakula Mine’s high-grade centre and 77,600 tonnes grading 4.15% copper from the Kansoko Mine. The production measuring month was longer than normal in order to close out the year.

Production levels from the mine are well above target, and will be boosted by three additional underground ore trucks commissioned on December 28, 2021.

The project’s surface stockpiles now contain approximately 4.19 million tonnes of high-grade and medium-grade ore at an estimated, blended average of 4.63% copper. Contained copper in the stockpiles at the end of December now totals more than 194,000 tonnes (the current copper price is approximately $9,600 per tonne).

Chart 2: Growth in cumulative tonnes of contained copper in surface stockpiles from May 2020 to December 31, 2021.

Chart 3: Cumulative tonnes and grade of contained copper in surface stockpiles from May 2020 to December 31, 2021.

Ore stockpiles at the Kakula North decline containing 2.04 million tonnes grading 5.13% copper as of December 31, 2021.

Ore stockpiles at the Kakula South decline containing 1.45 million tonnes grading 4.26% copper as of December 31, 2021.

The Kansoko Mine decline and ore stockpiles containing 696,000 tonnes grading 3.92% copper as of December 31, 2021.

Floribert Monga, Instrument Technician, wiring a distribution box for a control valve in the Phase 2 concentrator plant.