Mine development now underway on the 850-metre level at Ivanhoe’s Platreef platinum-group metals, nickel, copper and gold project in South Africa Shaft 1’s continuing advance has intersected 29 metres of high-grade mineralization from underground mine development,

December 18, 2018

Mine development now underway on the 850-metre level at Ivanhoe’s Platreef platinum-group metals, nickel, copper and gold project in South Africa

Shaft 1’s continuing advance has intersected 29 metres of high-grade mineralization from underground mine development, beginning at a depth of 780 metres

Platreef’s long-term processed wastewater agreement finalized to supply most of the bulk water needed for the first phase of production

Platreef is positioned to become a major producer of palladium, which recently became more valuable than gold

Platreef’s Indicated Mineral Resources contain an estimated 26.8 million ounces of palladium, 25.6 million ounces of platinum, 4.5 million ounces of gold, and 1.8 million ounces of rhodium (a combined 58.7 million ounces of PGMs plus gold), plus 4.1 billion pounds of nickel and 2.1 billion pounds of copper, at a cut-off grade of 1 gram per tonne

Platreef’s Inferred Mineral Resources contain an additional 43.0 million ounces of palladium, 40.4 million ounces of platinum, 7.8 million ounces of gold, and 3.1 million ounces of rhodium (a combined 94.3 million ounces PGMs plus gold), plus 7.7 billion pounds of nickel and 4.1 billion pounds of copper, also at a cut-off grade of 1 gram per tonne

At the base-case cut-off grade of 2 grams per tonne, Indicated Mineral Resources contain an estimated 42.0 million ounces of PGMs plus gold, plus 2.4 billion pounds of nickel and 1.2 billion pounds of copper, with an additional 52.8 million ounces of PGMs plus gold, 3.4 billion pounds of nickel and 1.8 billion pounds of copper in Inferred Resources

Platreef’s T1 and T2 high-grade mineralized zones interpreted as much thicker versions of the high-grade mineralized reefs found on the Western and Eastern limbs of South Africa’s Bushveld Complex

MOKOPANE, SOUTH AFRICA – Ivanhoe Mines’ (TSX: IVN; OTCQX: IVPAF) Co-Chairmen Robert Friedland and Yufeng “Miles” Sun, and Ivanplats’ Managing Director Dr. Patricia Makhesha, announced today that Platreef’s Shaft 1 has reached a depth of 850 metres below surface and development work has begun on the 850-metre station – the second of three horizontal mining access stations planned for Shaft 1.

The first mining access station has been constructed at the 750-metre level, following earlier development of a water-pumping station at the 450-metre level. The third mining access station will be developed at a mine-working depth of 950 metres. Shaft 1 is expected to reach its projected, final depth of approximately 980 metres below surface, complete with all four of the stations, in early 2020.

The Platreef mining team delivered the first high-grade mineralization from underground mine development to surface stockpiles for metallurgical sampling three months ago. The high-grade mineralization intersected in Shaft 1 is contained within two mineralized zones (T1 and T2) totalling 29 metres of the Turfspruit Cyclic Unit (TCU). A total of fifty grab samples from individual 3.2-metre-blast stockpiles yielded an average grab sample grade of 6.35 grams per tonne (g/t) platinum, palladium and rhodium plus gold (3PE+Au), ranging up to 9.6 g/t 3PE+Au, as well as significant quantities of nickel and copper.

The 29-metre mineralized intersection in Shaft 1 yielded approximately 3,500 tonnes of ore that will be used for bulk-scale metallurgical test work. Based on the estimated resource grade of the pilot hole for Shaft 1 (GT008), the 3,500 tonnes are expected to contain more than 400 ounces of platinum-group metals (PGMs).

Ivanhoe Mines indirectly owns 64% of the Platreef Project through its subsidiary, Ivanplats, and is directing all mine development work. The South African beneficiaries of the approved broad-based, black economic empowerment structure have a 26% stake in the Platreef Project. The remaining 10% is owned by a Japanese consortium of ITOCHU Corporation; Japan Oil, Gas and Metals National Corporation; and Japan Gas Corporation.

Photo: Stockpiles of Flatreef ore from the sinking of Shaft 1, with Shaft 1 headframe in the background.

Long-term wastewater agreement finalized to supply most of the bulk water needed for the first phase of production at Platreef

Ivanplats, led by Dr. Makhesha, announced that it has finalized a long-term agreement with the Mogalakwena Local Municipality for the supply of local, treated wastewater to supply most of the bulk water needed for the first phase of production at the Platreef platinum-group metals, nickel, copper and gold mine now being constructed in South Africa.

Ivanplats signed a memorandum of agreement earlier this year with the Mogalakwena Local Municipality for the supply of a minimum of five million litres of treated water a day for 32 years, beginning in 2022, from the town of Mokopane’s new Masodi Treatment Works. Last week, the agreement was officially approved in a signing ceremony in Mokopane.

Ivanplats expects to begin receiving a small quantity of processed wastewater early next year after the Masodi plant has been commissioned. Further treatment will be conducted at the Platreef Mine’s on-site filtration plant to ensure compliance with Ivanplats’ quality standards. The initial supply will be used in Platreef’s ongoing underground mine development and surface infrastructure construction.

Ivanplats estimates that it will require approximately 7.5 million litres per day (Ml/day) of bulk water during the first-phase of steady-state production. A water-balance model developed for the mine calls for the bulk water for the first phase of production to consist of five Ml/day from the Masodi treatment plant, with the balance provided from ground water from local, licenced boreholes, and rainwater collected in storage ponds at the mine.

Photo: Platreef’s long-term wastewater agreement finalized between Dr. Patricia Makhesha, Ivanplats’ Managing Director (left), and Kenneth Maluleke, Mogalakwena Acting Municipality Manager.

In July 2017, Ivanhoe issued an independent, definitive feasibility study (DFS) for Platreef covering the first phase of production at an initial mining rate of four million tonnes per annum (Mtpa). The DFS estimated that Platreef’s initial, average annual production rate will be approximately 219,000 ounces of palladium, 214,000 ounces of platinum, 30,000 ounces of gold and 14,000 ounces of rhodium (combined 477,000 ounces of 3PE+Au), plus 21 million pounds of nickel and 13 million pounds of copper.

The Platreef DFS was based on the development of a large, mechanized, underground mine with an initial, four Mtpa concentrator and associated infrastructure. Platreef would rank at the bottom of the cash-cost curve, at an estimated US$351 per ounce of 3PE+Au produced, net of by-products and including sustaining capital costs, and US$326 per ounce before sustaining capital costs.

The thick Flatreef orebody at the Platreef Project is ideal for bulk-scale, mechanized mining. As underground development progresses, the mine plan calls for the addition of large, mechanized mining equipment, such as 14- and 17-tonne load-haul-dump machines and 50-tonne haul trucks to support the planned long-hole mining method.

The mineral resources used as the basis of the Platreef DFS were those amenable to underground selective mining. Detailed information about assay methods and data verification measures used to support the scientific and technical information is set out in the Platreef 2017 Feasibility Study NI 43-101 Technical Report dated September 2017, available under Technical Reports at www.ivanhoemines.com and on Ivanhoe Mines SEDAR profile at www.sedar.com.

Key features of the 2016 Platreef Mineral Resource estimate include:

• Indicated Mineral Resources contain an estimated 41.9 million ounces of

platinum, palladium, rhodium and gold with an additional 52.8 million ounces of platinum, palladium, rhodium and gold in Inferred Resources (using a cut-off grade of 2.0 g/t 3PE+Au).

• Indicated Mineral Resources contain an estimated 2.44 billion pounds of nickel

and 1.23 billion pounds of copper, with an additional 3.44 billion pounds of nickel and 1.78 billion pounds of copper in Inferred Mineral Resources (using a cut-off grade of 2.0 g/t 3PE+Au).

• Indicated Mineral Resources totalling 346 million tonnes, at an average grade of

3.77 g/t 3PE+Au, 0.32% nickel and 0.16% copper, at a cut-off grade of 2.0 g/t 3PE+Au.

• Inferred Mineral Resources totalling an additional 506 million tonnes, at a grade

of 3.24 g/t 3PE+Au, 0.31% nickel and 0.16% copper, at a cut-off grade of 2.0 g/t 3PE+Au.

The 2016 Mineral Resource estimate was prepared by Ivanhoe Mines under the direction of Dr. Harry Parker, RM SME, of Wood Group (formerly Amec Foster Wheeler E&C Services Inc.). Dr. Parker and Timothy Kuhl RM SME, also of Wood Group, have independently confirmed the Mineral Resource estimate and are the Qualified Persons for the estimate, which has an effective date of April 22, 2016.

The platinum-to-palladium ratio at the Platreef Mine is approximately 1:1. Palladium and rhodium are used as catalysts to control exhaust emissions in gasoline-fuelled vehicles, while diesel vehicles mostly use platinum. Platinum also is used as the catalyst in zero-emission, hydrogen-powered, fuel-cell electric vehicles now being developed by leading, global automakers including Honda, Toyota, Hyundai, BMW, Mercedes-Benz and Hyundai.

A sustained palladium-supply deficit, coupled with robust demand from automakers, has seen palladium prices increase by approximately 50% during the past four months, making it more valuable than gold for the first time since 2002.

Chart: Palladium’s price increase since August 2018 (in blue) compared to gold (in white).

Flatreef’s T1 and T2 mineralized zones are 29 metres thick at Shaft 1 intersection

The mineralized zones (reefs) at Ivanhoe’s Platreef Project are the thickest (Platreef’s T2MZ averages 24.7 metres at a 1 g/t 3PE+Au cut-off) among the known reefs in South Africa’s Bushveld Igneous Complex. Although substantially thicker on Ivanhoe’s Platreef Project, Flatreef’s exceptional T1 and T2 reefs have been correlated with the Bushveld Complex’s Bastard and Merensky reefs by Dr. Danie Grobler, Ivanplats’ Head of Exploration and Geology, and other Ivanplats geologists (Grobler et al., published in the international journal, Mineralium Deposita, 2018).

The Turfspruit Cyclic Unit (TCU), which hosts the majority of the Platreef’s selectively mineable Mineral Resources, has two mineralized zones that are laterally continuous across the Platreef Project. The T1 mineralized zone (T1MZ) occurs within cyclical magmatic units and feldspathic pyroxenite (ultramafic igneous rock) immediately below the Main Zone. The T2 mineralized zone (T2MZ) is hosted within a mineralized, PGM- enriched, very coarse-grained pegmatoidal pyroxenite distinct from the feldspathic pyroxenite above it and bound by a top chromite stringer.

The T2MZ occurs at a stratigraphic position similar to the world-renowned Merensky Reef. The T2MZ can be subdivided into an upper pegmatoidal orthopyroxenite, referred to as the T2 Upper, and a lower, less continuous pegmatoidal harzburgite, referred to as the T2 Lower. Recognition of the TCU and the pegmatoidal pyroxenite in 2012 was a key interpretive breakthrough for the Platreef Project.

Shaft 1 intersected the TCU below the Main Zone of the Bushveld Complex in September 2018. The upper T1 mineralized reef was intersected at a depth of 780.11 metres below the shaft bank (Figure 1). Shaft sinking proceeded to intersect the main T2 mineralized reef at a depth of 798 metres, beneath the upper chromitite stringer. The T2 mineralization gradually decreases over a vertical interval of 11 metres to the footwall norite contact at a depth of 809 metres. The total TCU width intersected within the shaft is 28.9 metres.

Photo: Dr. Danie Grobler, Ivanplats’ Head of Exploration and Geology (left), Jan Mapeka, Ivanplats Geologist (centre), and Gerick Mouton, Ivanplats’ Vice President and Project Director (right), at the intersection of the T1 mineralized reef in Shaft 1 at a depth of approximately 780 metres.

Figure 1: Schematic section of the Platreef Mine, showing Flatreef’s T1 and T2 thick, high-grade mineralized zones (red and dark orange), underground development work completed to date in shafts 1 and 2 (white), and planned development work (gray).

Figure 2: Flatreef cross section showing T1 and T2 mineralized zones (T1MZ and T2MZ) and the significant top loading of high-grade PGMs mineralization in the T2 mineralized zone.

Photo: Members of the Platreef Project team and its South African sinking contractor, Aveng Mining, in Shaft 1 at its intersection of the 29-metre Flatreef Deposit in September.

Photo: Platreef’s underground mine development team includes three members from local communities (from left): Nkone Madubana, Learner Sinker; Katlego Nkwana, Learner Sinker; and Caroline Dzivhani, Geologist – who recently became fully certified underground miners.

Photo: Members of Platreef’s underground mining team using a ‘cactus grab’ mucker to excavate broken rock from the bottom of Shaft 1.

The 2016 consolidated Mineral Resources for the Platreef Project are shown in Table 1 (2.0 g/t 3PE+Au base case highlighted; other cases are included to show the sensitivity of the Mineral Resources to changes in cut-off grades).

Table 1: Platreef Mineral Resource – all mineralized zones (2.0 g/t base case).

1. Mineral Resources have an effective date of April 22, 2016. The Qualified Persons for the estimate are Dr. Harry Parker, RM SME, and Timothy Kuhl, RM SME, who are employees of Wood Group (formerly Amec Foster Wheeler E&C Services Inc.) and independent of Ivanhoe. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

2. The 2 g/t 3PE+Au cut-off is considered the base case estimate and is highlighted. The rows are not additive.

3. 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 x 100 m spacing (locally 150 m spacing); Inferred Mineral Resources are drilled on 400 x 400 m (locally to 400 x 200 m and 200 x 200 m) spacing.

4. Mineral Resources have been estimated on an externally undiluted basis and without consideration for mining recovery. Dilution and mining recoveries will vary with the geometry (dip, thickness, faulting and or irregularities in contacts) of the mineralization and the eventual mining method used.