Ivanhoe Mines Offers '15 Year-End Results, Review of Operations

Ivanhoe Mines

today announced its financial results for the year ended December 31, 2015. All figures are in US dollars unless otherwise stated. Ivanhoe Mines is a Canadian mining company focused on advancing its three mine-development projects in Sub-Saharan Africa: the Platreef platinum-palladium-gold-nickel-copper discovery in South Africa; and the Kipushi zinc-copper-lead-germanium mine and the Kamoa copper discovery in the DRC. HIGHLIGHTS - On December 8, 2015, Ivanhoe Mines and Zijin Mining Group Co. Ltd., of China, completed a landmark, strategic co-development transaction on the Kamoa Copper Project in the Democratic Republic of Congo (DRC) whereby Zijin, through a subsidiary company, acquired a 49.5% interest in Kamoa Holding Limited for a total of $412 million in a series of payments. Ivanhoe received an initial $206 million from Zijin on December 8, 2015; the remaining $206 million will be received in five equal installments, payable every 3.5 months from December 8, 2015. In addition, Ivanhoe sold a 1% share interest in Kamoa Holding to privately-owned Crystal River Global Limited for $8.32 million. - The first installment payment from Zijin, in the amount of $41.2 million, was received by Ivanhoe Mines on March 23, 2016. - In an earlier, separate transaction, on April 20, 2015, Zijin Mining Group completed a private placement to help advance Ivanhoe's three mine-development projects in Africa. Zijin acquired approximately 9.9% of Ivanhoe Mines' issued and outstanding common shares at a price of C$1.36 per share. The placement provided Ivanhoe Mines with gross proceeds of approximately C$105 million. - Ivanhoe Mines recorded a total comprehensive profit of $668.3 million for the year ending December 31, 2015. The profit was attributable mainly to the gain on the partial sale of Kamoa Holding of $357.7 million and the re-measurement to fair value of the interest retained in the joint venture of $376.1 million. - On January 25, 2016, the Kamoa exploration team reported a new discovery at its Kakula Prospect. The Kakula Discovery is situated within the 400-square-kilometre Kamoa Mining Licence area and represents a major extension of the Kamoa copper deposit, which the company discovered in 2008. Two exploration drill holes completed in late 2015 in the Kakula exploration area - DD996 (13.14 metres true width of 5.26% copper) and DD997 (14.94 metres true width of 5.33% copper) - rank among the highest-grade and highest-grade-thickness intersections drilled to date within the Kamoa copper deposit licence area. - On February 23, 2016, Ivanhoe Mines reported the positive findings of an independent pre-feasibility study (PFS) for the first phase of development of the Kamoa Copper Project. First phase of development envisages an annual production rate of three million tonnes of ore per annum at an average grade of 3.86% copper over a 24-year mine life, resulting in annual copper production of approximately 100,000 tonnes. Initial capital costs, including contingency, is estimated at $1.2 billion, approximately $200 million lower than estimated in the Kamoa 2013 preliminary economic assessment (PEA). - Construction work on the twin declines at Kamoa began in March 2016. The declines are designed to intersect the high-grade copper mineralization in the initial mining area at Kansoko Sud, approximately 150 metres below surface. Ivanhoe's drilling program in this area defined a thick, near-surface zone of high-grade copper mineralization, where a drill hole intercepted 15.7 metres (true width) of 7.04% copper. Byrnecut Underground Congo SARL (BUCS) was awarded the contract for the permanent support of the box-cut walls and the initial 1.2 kilometres of development for each of the two declines. - Also in the DRC, on January 27, 2016, Ivanhoe Mines announced the receipt of a new, independent, Mineral Resource estimate for the company's historic, high-grade, Kipushi zinc-copper-germanium-lead- silver mine. Kipushi's Big Zinc Zone is estimated to contain Measured and Indicated Mineral Resources of 10.2 million tonnes at 34.89% zinc, containing 7.8 billion pounds of zinc and adjacent zones of copper-rich mineralization containing Measured and Indicated Mineral Resources of 1.6 million tonnes at 4.01% copper, containing 144 million pounds of copper. - With a current Mineral Resource now established at Kipushi, Ivanhoe Mines is continuing its upgrading work at the mine and evaluating technical and infrastructure options to best advance the project. A preliminary economic assessment is expected to be finalized in the near future. - At the Platreef PGM Project in South Africa, Shaft 1 development has made good progress. Pre-sinking of the shaft has been completed to a depth of 54 metres below surface. The changeover from pre-sinking activities to main-sinking activities is expected to be completed by April 2016, which will enable the start of the main sinking. Aveng Mining, the shaft sinking contractors, expects to sink at a daily average rate of approximately 2.5 metres. Shaft 1 is expected to reach the Flatreef Deposit at a depth of 777 metres below surface by late 2017. - The headgear design for the six-million-tonne-per-year permanent hoisting facility for Platreef's Shaft 2 has been completed by South Africa-based Murray & Roberts Cementation. Ivanhoe expects to start Shaft 2 early works in 2017, including civil work for the box cut and hitch foundation. - Ivanhoe announced in February 2015 that Ivanplats, Ivanhoe's 64%-owned subsidiary that owns the Platreef Project, had achieved Level 3 status in its first verification assessment on a broad-based, black economic empowerment scorecard, the highest-ranking platinum-sector mining company in compliance with South Africa's black empowerment laws. Ivanplats again achieved Level 3 status in February 2016, further demonstrating the company's dedication and commitment toward transformation on all levels of business. - The three projects achieved a combined nine million hours of lost-time- injury-free (LTIF)work by the end of 2015, reflecting, in part, the company's continued efforts to prioritize the management of health and safety on its job sites. Ivanhoe had recorded 0.5 million LTIF hours at Platreef, 4.56 million hours at Kamoa and 3.90 million hours at Kipushi to the end of 2015. The Platreef Project reported two lost-time injuries in Q4 2015. Principal Projects and Review of Activities 1. Platreef Project 64%-owned by Ivanhoe Mines South Africa The Platreef Project in South Africa's Limpopo Province is owned by Ivanplats (Pty.) Ltd., which is 64%-owned by Ivanhoe Mines. A Japanese consortium of ITOCHU Corporation and its affiliate, ITC Platinum, plus Japan Oil, Gas and Metals National Corporation and JGC Corporation, owns a 10% interest in Ivanplats, which it acquired in two tranches for a total investment of $290 million. The remaining 26% interest is held by Ivanhoe's broad-based, black economic empowerment partners, which include communities, employees and entrepreneurs. Ivanhoe announced in February 2015 that Ivanplats had achieved Level 3 status in its first verification assessment on a B-BBEE scorecard, the highest-ranking platinum-sector mining company in compliance with South Africa's black empowerment laws. Ivanplats again achieved Level 3 status in February 2016, further demonstrating the company's dedication and commitment toward transformation on all levels of business. The Platreef Project hosts an underground deposit of thick, platinum-group metals, nickel, copper and gold mineralization in the Northern Limb of the Bushveld Igneous Complex, approximately 280 kilometres northeast of Johannesburg and eight kilometres from the town of Mokopane in Limpopo Province.