Development of the flagship Kakula Copper Mine continues to exceed expectations; with initial production well on track for third quarter of 2021

Definitive Feasibility Study for the Kakula Mine, and an updated Integrated Development Plan for multiple expansions of the entire Kamoa-Kakula mining licence, nearing completion

Mine development work at the Platreef PGMs-gold-nickel-copper mine now focused on preparing Shaft 1 for initial production; updated Definitive Feasibility Study and phased-development plan to be issued in September

Toronto, Ontario--(Newsfile Corp. - August 10, 2020) - Ivanhoe Mines (TSX: IVN) (OTCQX: IVPAF) today announced its financial results for the six months ended June 30, 2020. Ivanhoe Mines is a Canadian mining company advancing its three mining projects in Southern Africa: the Kamoa-Kakula copper discovery in the Democratic Republic of Congo (DRC); the Platreef palladium-platinum-nickel-copper-gold-rhodium discovery in South Africa; and the extensive upgrading of the historic Kipushi zinc-copper-silver-lead-germanium mine, also in the DRC.

The company also is exploring for new copper discoveries on its wholly-owned Western Foreland exploration licences, adjacent to the Kamoa-Kakula mining licence. All figures are in U.S. dollars unless otherwise stated.

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.

Ivanhoe sold a 49.5% share interest in Kamoa Holding Limited (Kamoa Holding) to Zijin Mining in December 2015 for an aggregate consideration of $412 million. In addition, Ivanhoe sold a 1% share interest in Kamoa Holding to privately-owned Crystal River for $8.32 million - which Crystal River will pay through a non-interest-bearing, 10-year promissory note. Since the conclusion of the Zijin transaction in December 2015, 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.

At the end of June 2020, the Kamoa-Kakula Project reached 4,704,185 work hours free of a lost-time injury. The project continues to strive toward its workplace objective of zero harm to all employees and contractors.

The project had to adapt its activities due to the COVID-19 pandemic. In accordance with new health guidelines from the DRC government reflecting the improving COVID-19 situation in the Lualaba Province, DRC, Kamoa-Kakula lowered its quarantine and lockdown measures from level 3 to level 2 on July 27th. This means that the mine's Congolese workforce have gone back to normal rotation. Most activities on site are proceeding as normal with some delays being experienced due to reduced staff numbers and skills on-site. Rigorous testing, physical distancing, wearing face masks, frequent hand washing and contact tracing measures are still in place to protect the safety and health of the workforce and community members. All expatriate employees are still required to quarantine for two weeks upon arrival at Kamoa-Kakula.

As part of Kamoa-Kakula's COVID-19 readiness initiatives, the project has procured a polymerize chain reaction (PCR) device from German-based Bosch (similar device to the GeneXpert). The device arrived in July, with an initial supply of 500 tests. The device's capacity is 15 tests per 24-hour period.

PCR tests are used to directly detect the presence of an antigen, rather than the presence of the body's immune response, or antibodies. By detecting viral RNA, which will be present in the body before antibodies form or symptoms of the disease are present, the tests can tell whether or not someone has the virus very early on.

Early detection of potential cases based on symptoms and contact tracing is imperative. PCR tests will give the project's medical team a good indication of who is infected. This allows for fast isolation, and contact tracing of potential additional cases for quarantine.

The project has established a COVID-19 isolation facility at the Kamoa camp. Any suspected or symptomatic cases are moved to this facility, where they are isolated, treated and tested. Once the patient has recovered and is deemed no longer infectious, they can return to work only after an additional quarantine period determined by the project's medical staff. As the pandemic evolves, the medical team at Kamoa-Kakula is purposefully reviewing and updating its risk mitigation protocols.

Definitive Feasibility Study nearing completion for the Kakula Mine

An independent definitive feasibility study (DFS) for the Kakula Mine is well advanced and is expected to be finalized shortly. At the same time, Ivanhoe expects to issue an updated Integrated Development Plan for the entire Kamoa-Kakula mining complex, which will include details on the planned expansion phases for the greater Kamoa-Kakula mining complex, incorporating updates for mineral resources, production rates and economic analysis.

A separate study for an on-site smelter has been completed in parallel to a feasibility level of detail and will be incorporated into the integrated Kamoa-Kakula PEA.

An expansion in initial plant capacity from 3.0 Mtpa to 3.8 Mtpa is planned, which requires increasing the underground mining crews in 2020 from 11 to 14 to ensure sufficient mining operations to feed the expanded plant throughput. This would have the benefit of producing a larger surface stockpile of ore before the scheduled commissioning of the processing plant, as well as accelerating the mine development schedule, providing the opportunity to bring forward the commencement of the second phase of development at Kakula. The second 3.8 Mtpa plant module will be primarily fed from the Kakula Mine at a planned full production mining rate of 6 Mtpa. It is envisaged that an additional 1.6 Mtpa will be sourced from the Kansoko Mine, or elsewhere, to maximize the full milling capacity of 7.6 Mtpa.

There are currently 10 mining crews (three owner crews and seven contractor crews) at Kakula and one mining crew at Kansoko. The project will continue to add additional crews over the next 12 months to further accelerate development. One crew is currently being trained at the Kamoa training centre.

Figure 1: Underground development completed to the end of July (in black) and scheduled development (green, brown, blue & black) until September 30, 2020. Shown are the 3%, 5% and 8% copper contours and the location where the northern and southern access drives are scheduled to join in Q4 2020.

To view an enhanced version of Figure 1, please visit:https://orders.newsfilecorp.com/files/3396/61360_2569658254345a27_005full.jpg

Figure 2: The eastern portion of Kakula Mine representing less than half of the overall 13.3-kilometre-long Kakula Deposit overlain on southern Manhattan Island to give a sense of the enormous scale of the underground operations.

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Figure 3: Aerial view of the Kakula Mine showing the tonnes and grade of the main pre-production stockpiles at the northern declines. The high-grade stockpile currently contains approximately 116,000 tonnes grading 6.08% copper, and the medium-grade stockpile currently contains approximately 325,000 tonnes grading 2.94% copper.

To view an enhanced version of Figure 3, please visit:https://orders.newsfilecorp.com/files/3396/61360_2569658254345a27_007full.jpg

Figure 4: Geologist Kally Mbumba showing ultra-high-grade, chalcocite-rich ore at Kakula Mine. Chalcocite has the greatest percentage of copper of all the common sulphide-copper-bearing minerals almost 80% copper by weight.

To view an enhanced version of Figure 4, please visit:https://orders.newsfilecorp.com/files/3396/61360_2569658254345a27_008full.jpg

Kakula crews are currently mining and stockpiling ore with an average grade between 3% and 8% copper. At the end of June 2020, Kakula's high-grade, pre-production ore stockpile contained 67,553 tonnes grading 5.90% copper, the medium-grade ore stockpiles, including satellite stockpiles at Kakula South and Kansoko, contained an additional 394,119 tonnes at 2.71% copper. This has been increased to a high-grade, pre-production ore stockpile containing approximately 116,000 tonnes grading 6.08% copper and medium-grade ore stockpiles containing an additional 446,000 tonnes at 2.73% copper at the end of July 2020. The high-grade stockpile is projected to significantly expand in the coming months as the majority of Kakula's underground development will be in mining zones grading +5% copper.

Basic engineering design and costing for the expansion from 3.8 Mtpa to 7.6 Mtpa is complete. The scope of facilities includes underground expansion at Kakula to reach an annual production rate of 6 Mtpa, the commencement of mining operations at Kansoko at a steady-state 1.6 Mtpa, a second 3.8 Mtpa concentrator module at Kakula as well as associated surface infrastructure to support the expansion at the various sites.

Figure 5: Ongoing construction of the flotation section of Kakula's 3.8 Mtpa processing plant.

To view an enhanced version of Figure 5, please visit:https://orders.newsfilecorp.com/files/3396/61360_2569658254345a27_009full.jpg

Figure 6: Ongoing construction of the flotation section of Kakula's 3.8 Mtpa processing plant.

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The current estimate of the project's initial capital costs is approximately $1.3 billion as of January 1, 2019, which assumes commissioning of the first processing plant module in Q3 2021 and includes expanded plant capacity and pre-production ore stockpiles.

The capital costs incurred by the Kamoa-Kakula joint venture in 2019 amounted to $309.1 million, of which $125.2 million was spent on the Kakula declines and mine development. A further capital cost of $242.7 million, that includes the costs allocated to the pre-production ore stockpiles, has been incurred in the six months ended June 30, 2020. Ivanhoe's share of the capital costs incurred in the six months ended June 30, 2020, was $120 million, representing its share of approximately 40% of the initial capital costs, plus its share of capital associated with the 20% carried interest owned by the Government of the DRC, which will be repaid through future cash flows from the project. Ivanhoe has budgeted $257 million for its proportionate funding of approximately 50% for the Kamoa-Kakula Project for the remainder of 2020. As of June 30, 2020, the joint venture had an estimated $750 million of capital costs remaining until initial production.

Ivanhoe expects that it will continue to have sufficient cash resources or financing options available to cover its proportionate share of the remaining initial capital costs.

More than 18.7 kilometres of underground development now completed as the project tracks towards first production in Q3 2021

A total of 17.1 kilometres of underground development was completed by the end of June 2020, which was 5.2 kilometres ahead of plan. A record of 1.87 kilometres development was achieved in May 2020. At the end of July 2020, more than 18.7 kilometres had been completed.

Mine access drives 1 and 2 (interconnected, parallel tunnels that will provide access to ore zones) continue to advance towards the southern portion of the orebody and are currently developing through the 3% - 5% copper zones. Development also is well advanced on the eastern perimeter drives, western perimeter drives and the room-and-pillar mining area.

Development along south access drives 1 and 2 is progressing well and has reached the 3% - 5% copper zones, with mining crews working to establish the connection of these drives with mine access drives 1 and 2 from the north side of the orebody, this is scheduled to occur in November 2020.

Engineering, procurement and construction advancing well

Project engineering and procurement activities are nearing completion with the focus currently on logistics and construction. The current primary construction focus that runs through the project's critical path is the construction of the processing plant and the electrical high-voltage infrastructure installation.

Construction of the underground rock handling system is complete with the first rock being conveyed to surface in June 2020.

The civil construction of Ventilation Shaft 2 is underway with fan delivery scheduled in September 2020; the system is expected to be operational before the end of the year. Reaming of Ventilation Shaft North East is expected to start shortly after the completion of the pilot hole. The fan is scheduled to be operational by Q1 2021. Additional material is being procured ahead of the relocation of Ventilation Fan 1 to the North West 1 location.

Figure 7: One of Kakula's high pressure grinding rolls (HPGR) for the processing plant being offloaded at the port of Durban, South Africa, for transport to Kamoa-Kakula by truck.

To view an enhanced version of Figure 7, please visit:https://orders.newsfilecorp.com/files/3396/61360_2569658254345a27_011full.jpg

Figure 8: Surveyor, Betty Kabey, scanning the East Spiral drive at the Kakula Mine.

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The construction of the dams in the room-and-pillar mining area and the south ventilation shaft central transfer dam is underway; and both of these dams will be complete in Q3 2020.

Civil construction of the process plant is progressing, with over 16,000 cubic metres of concrete already poured. A number of work areas have been completed and handed over for the erection of steel and the installation of mechanical equipment. Steel fabrication in China is nearing completion with the bulk of the steel either delivered to site or being transported. Steel erection has started at the flotation and thickener areas. Fabrication of plate work and piping is well advanced with some material being transported to site.

Manufacture of all long-lead mechanical items is complete with the crushers, low entrainment flotation cells and concentrate filter already delivered to site. Final deliveries for the mills, high pressure grinding rolls (HPGR), flotation cells and thickeners are expected to arrive on-site before the end of August.

Figure 9: Underground pumping station and water dam at Kakula's 1,050 level. Construction of a second permanent underground water-handling system is progressing well and commissioning is expected this month. The new system will add 800 litres per second of underground pumping capacity, bringing the total installed capacity to 1,400 litres per second.

To view an enhanced version of Figure 9, please visit:https://orders.newsfilecorp.com/files/3396/61360_2569658254345a27_013full.jpg

Figure 10: Mukalayi Masengo, Technician, installing bolts on steel support structures for the surface conveyor that will transport ore from the surface stockpiles to the processing plant.

To view an enhanced version of Figure 10, please visit:https://orders.newsfilecorp.com/files/3396/61360_2569658254345a27_014full.jpg

The mine is receiving hydro-generated electrical power for the Kamoa 120kV overhead line via the 18MW mobile substation, which is connected to the national grid. The mobile substation was recently relocated to the Kakula Mine from the Kansoko Mine to increase transmission capacity to Kakula. Construction of the permanent 220-kilovolt overhead power line, the electrical switching substation (NRO substation) and the Kamoa Consumer Substation are underway. The objective is to energize the mine on 220kV grid power early in 2021.

All the newly built accommodation at the Kakula camp has been completed and is occupied. Construction of the kitchen, mess area and laundry will be completed shortly.

Ongoing upgrading work enables Mwadingusha hydropower station to supply clean, sustainable electricity

Ongoing upgrading work at the Mwadingusha hydropower plant in the DRC has significantly progressed. The two main activities remaining are the final installation of the turbines and the completion of the penstock replacement.

Current activities include the installation of the turbine cooling and electrical systems as well as the welding of the valve chambers in the penstocks. Delays were experienced due to some of the European engineers leaving site at the beginning of the COVID-19 pandemic, however these engineers now are returning to site.

The progressive re-commissioning of the turbines is underway with three turbines expected to be in operation by December 2020 and the three remaining turbines in Q1 2021. The refurbished plant is projected to deliver approximately 72 megawatts (MW) of power to the national grid.

The work at Mwadingusha is being conducted by engineering firm STUCKY of Lausanne, Switzerland, under the direction of Ivanhoe Mines and Zijin Mining, in conjunction with the DRC's state-owned power company, La Socit Nationale d'Electricit (SNEL SA).

The Kansoko Mine, Kakula Mine and Kamoa camp have been connected to the national hydroelectric power grid since the completion of a 20-kilometre long, 120-kilovolt, single-circuit power line between Kansoko and SNEL SA's high voltage national grid in September 2016. A 12-kilometres long, 120-kilovolts, dual-circuit power line between Kansoko and Kakula was completed in December 2017. The design of permanent, 11-kilovolt reticulation to the ventilation shafts and mine has started, which includes substations, overhead lines and surface cables.

Figure 11: The dam at the Mwadingusha hydropower station that will supply clean, sustainable electricity to the DRC national power grid.

To view an enhanced version of Figure 11, please visit:https://orders.newsfilecorp.com/files/3396/61360_2569658254345a27_015full.jpg

Continued focus on enriching communities through sustainable development

The Kamoa-Kakula Sustainable Livelihoods Program is committed to sustainable development in the communities within the project's footprint. The main objective of the livelihoods program is to enhance food security and living standards of the people who reside within the project area. The program consists primarily of fish farming, poultry production, beekeeping and food crops; including the farming of maize (corn), vegetables and bananas. With the increase in development activities at the project, a significant number of employment opportunities have also been made available to residents of the local communities.

The Sustainable Livelihoods Program started in 2010 in an effort to strengthen food security and farming capacity in the host communities near Kamoa-Kakula by establishing an agricultural training garden and support for farmers at the community level. Today, approximately 350 community farmers are benefiting from the Sustainable Livelihoods Program, producing high-quality food for their families and selling the surplus for additional income.

Additional non-farming related activities for Q2 2020 included education and literacy programs, the continuation of a community brick-making program and the supply of fresh water to a number of local communities using solar powered boreholes.

Construction of resettlement houses for the second phase of the relocation program is underway. The survey for the final phase of relocation has been completed and crop compensation has commenced, with only five permanent structures being identified. The entire Kakula Mine area, including the tailings dam area, will be secured once these relocation phases are complete.

Figure 12: A farmer weeding in his vegetable nursery. The Livelihoods Program at Kamoa-Kakula has developed into a large-scale operation, with hundreds of beneficiaries raising fish; growing maize and vegetables; and selling poultry and honey.

To view an enhanced version of Figure 12, please visit:https://orders.newsfilecorp.com/files/3396/61360_2569658254345a27_016full.jpg

Figure 13: Construction of a community clinic at the local village of Muvunda, a Kamoa-Kakula Livelihoods Program initiative.

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2. Platreef Project 64%-owned by Ivanhoe MinesSouth Africa

The Platreef Project is owned by Ivanplats (Pty) Ltd (Ivanplats), which is 64%-owned by Ivanhoe Mines. A 26% interest is held by Ivanplats' historically-disadvantaged, broad-based, black economic empowerment (B-BBEE) partners, which include 20 local host communities with approximately 150,000 people, project employees and local entrepreneurs. Ivanplats reached Level 4 contributor status in its most recent verification assessment on the B-BBEE scorecard. A Japanese consortium of ITOCHU Corporation, Japan Oil, Gas and Metals National Corporation; and Japan Gas Corporation, owns a 10% interest in Ivanplats, which it acquired in two tranches for a total investment of $290 million.

The Platreef Project hosts an underground deposit of thick, platinum-group metals, nickel, copper and gold mineralization on the Northern Limb of the Bushveld Igneous Complex in Limpopo Province - approximately 280 kilometres northeast of Johannesburg and eight kilometres from the town of Mokopane.

On the Northern Limb, platinum-group metals mineralization is hosted primarily within the Platreef, a mineralized sequence that is traced more than 30 kilometres along strike. Ivanhoe's Platreef Project, within the Platreef's southern sector, is comprised of two contiguous properties: Turfspruit and Macalacaskop. Turfspruit, the northernmost property, is contiguous with, and along strike from, Anglo Platinum's Mogalakwena group of mining operations and properties.

Since 2007, Ivanhoe has focused its exploration and development activities on defining and advancing the down-dip extension of its original discovery at Platreef, now known as the Flatreef Deposit, which is amenable to highly mechanized, underground mining methods. The Flatreef area lies entirely on the Turfspruit and Macalacaskop properties, which form part of the company's mining right.

As part of the company-wide cost-cutting measures announced on April 27, 2020, Ivanhoe's board of directors allocated a reduced total budget for 2020 of $41.7 million for the Platreef Project, of which $23.4 million remains for the balance of the year. The sinking of Platreef's Shaft 1 has recently been completed, enabling Shaft 1 to be configured for permanent rock hoisting.

Health and safety at Platreef

At the end of Q2 2020, the Platreef Project reached a total of 119,686 lost-time, injury-free hours worked in accordance with South Africa's Mine Health and Safety Act, and Occupational Health and Safety Act.

The last lost-time injury (LTI) occurred on May 18, 2020. The Platreef Project has noted an 80% improvement in the total recordable injury frequency rate (TRIFR) year on year with only one Recordable Injury for 2020.

In response to the country-wide lock down imposed by the South African Government due to the COVID-19 pandemic, Platreef temporarily suspended its shaft-sinking operations on March 26, 2020. During the suspension, the project kept a small workforce to keep the operation ready for when development resumed. Since April 21, 2020, following the announcement of amended regulations authorizing South African mines to operate at a workforce capacity of 50%, site activities resumed under strict mitigation controls.

One employee tested positive for COVID-19 in mid-July and was immediately placed in the project's quarantine facilities that have been set up in close proximity to the minesite. Contact tracing also was performed with direct contacts also being isolated.

Platreef phased development plan and update of Definitive Feasibility Study

Ivanhoe is investigating a phased development plan for the Platreef Project, targeting significantly lower initial capital, to accelerate first production by using Shaft 1 as the mine's initial production shaft. This plan will focus on initially targeting the development of mining zones accessible from Shaft 1 and maximizing the hoisting capacity of this shaft, followed by expansions to the production rate as outlined in the 2017 DFS.

Concurrently, Ivanhoe is updating the Platreef Project's DFS to take into account development schedule advancement since 2017 when the DFS was completed, updated costs and refreshed metal prices and foreign exchange assumptions. This update, together with the study on the phased development plan, is scheduled for completion in Q3 2020.

Shaft 1 successfully completed down to the final depth of 996 metres

Shaft 1 reached the top of the high-grade Flatreef Deposit (T1 mineralized zone) at a depth of 780.2 metres below surface in Q3 2018 and has since been extended to its final depth of 996 metres below surface. The thickness of the mineralized orebody (T1 and T2 mineralized zones) at Shaft 1 is 29 metres, with grades of platinum-group metals ranging up to 11 grams per tonne (g/t) 3PE (platinum, palladium and rhodium) plus gold, as well as significant quantities of nickel and copper. The 29-metre intersection yielded approximately 3,000 tonnes of ore, estimated to contain more than 400 ounces of platinum-group metals. The ore is stockpiled on surface for further metallurgical sampling.

Figure 14: Members of the Platreef team celebrate the completion of sinking Shaft 1 to a final depth of 996 metres below surface. Shaft 1's headframe is in the background.

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Figure 15: 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).

To view an enhanced version of Figure 15, please visit:https://orders.newsfilecorp.com/files/3396/61360_2569658254345a27_019full.jpg

The 750, 850 and 950-metre-level station developments have been completed. The three development stations will provide initial, underground access to the high-grade orebody. Shaft 1 changeover detailed designs are nearing completion and will enable Shaft 1 to be configured for permanent rock hoisting.

Underground mining to incorporate highly-productive, mechanized methods

The mining zones in the current Platreef mine plan occur at depths ranging from approximately 700 metres to 1,200 metres below surface. When completed, Shaft 2 is expected to provide primary access to the mining zones; secondary access is expected to be via Shaft 1. During mine production, both shafts also are expected to serve as ventilation intakes. Three additional ventilation exhaust raises are planned to achieve steady-state production.

Planned mining methods will use highly-productive, mechanized methods, including long-hole stoping and drift-and-fill mining. Each method will utilize cemented backfill for maximum ore extraction. The ore will be hauled from the stopes to a series of internal ore passes and fed to the bottom of Shaft 2, where it will be crushed and hoisted to surface.

Figure 16: In June, Platreef's shaft-sinking team drilled the final round to a depth of 996 metres below surface.

To view an enhanced version of Figure 16, please visit:https://orders.newsfilecorp.com/files/3396/61360_2569658254345a27_020full.jpg

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Ivanhoe Issues Second Quarter Financial Results and Review of Mine Construction Progress and Exploration Activities - Yahoo Finance