Recent bench-scale metallurgical flotation testwork carried out at XPS Consulting and Testwork Services laboratories in Falconbridge, Ontario, Canada, has shown positive preliminary results. The work was conducted on a composite sample of drill core from the Kansoko Sud and Kansoko Centrale areas in the southern part of the Kamoa resource area. The sample is representative of the first four to five years of planned Kamoa mine production, when Ivanhoe Mines intends to produce and sell a clean, high-grade copper flotation concentrate.

Highlights:

Copper recoveries of 88.3%.
Copper concentrate grade of 39.0%.
Very low arsenic levels in concentrate are expected to attract a premium from concentrate traders.
Flowsheet improvements derived from this testwork are expected to result in lower up-front capital costs and reduced operational costs and risks.
The testing is the first metallurgical work done on material from the Kansoko Sud area of the resource. The results are integral to the final metallurgical design input parameters that will be needed for the completion of the Kamoa development studies.

Copper recoveries of 88.3%, at a concentrate grade of 39.0% copper, were achieved for the composite sample – an improvement on the previously published 85.9% life-of-mine average copper recovery projected in the November 2013 Kamoa preliminary economic assessment (PEA).

Arsenic levels in concentrate were measured to be 0.010%, which is significantly lower than the limit of 0.5% imposed by Chinese smelters. Ivanhoe believes that Kamoa concentrate with such low arsenic levels should attract a premium from concentrate traders.

"This testwork further confirms the attractiveness of the high-grade Kansoko Sud area for initial mine development at Kamoa," said Mr. Friedland.

The testwork results were achieved using a laboratory flowsheet with a single stage of primary milling followed by rougher and scavenger flotation. The rougher concentrate was cleaned in two stages to produce a high-grade copper concentrate without regrinding. The scavenger concentrate and a screened, coarse portion of the final tailings were combined and reground to between 10 and 15 micrometres (µm), before being cleaned in two stages. The concentrate then was combined with the cleaned, rougher concentrate to form the final concentrate. The flowsheet is a simplification of the previous flowsheet, which included two stages of mainstream grinding and two separate regrind stages.

Progress on development studies, with initial mining planned at Kansoko Sud

In line with the phased approach to project development outlined in the 2013 updated Kamoa PEA, the Kamoa development studies are progressing on the basis of an initial three-million-tonne-per-annum (3Mtpa) mine and concentrator. The mine plan produced in the PEA focused initial mining in the shallower portion of Kansoko Sud, an area previously drilled with holes spaced 400 metres apart.

Since completion of the PEA, Ivanhoe has concentrated on substantially reducing the drill spacing in this area, initially to 100-metre spacing on 200-metre-spaced, east-west lines and subsequently to a 100-metre-spaced grid. The goal of the drilling program has been to confirm grade and structural continuity of this high-grade zone at potentially elevated cut-offs. Results to date from the infill drilling have been encouraging and have confirmed the continuity of the deposit and its copper grades. The close-spaced drilling, combined with a better understanding of geological controls, will allow resource models to be constrained at higher grade cut-offs than the 1% total copper used to define the mineralized zone in the current estimate.

The 3Mpta mine and concentrator can be split into modules to potentially better match the underground ramp-up and further reduce the pre-production development capital. This will be examined in more detail as part of the development studies to provide flexibility to the development of the Kamoa Project.

Good progress being made on box-cut construction

Construction of the box cut for the initial decline portals, being performed by Lubumbashi-based Mining Company Katanga SPRL (MCK), is progressing well.

Work on the box cut began in July 2014 and is expected to take approximately five months, after which development of the first set of twin declines can commence. The declines have been designed to intersect the high-grade copper mineralization in Kansoko Sud area, approximately 150 metres below surface. A recently reported drill hole in Kansoko Sud intercepted 15.7 metres (true width) of 7.04% copper, at a 1.5% total copper cut-off. Additional details of the recent drill results are contained in Ivanhoe Mines’ May 13, 2014, news release.

Kamoa Project description

The Kamoa Project is a very large, stratiform copper deposit with adjacent prospective exploration areas within the Central African Copperbelt, approximately 25 kilometres west of the town of Kolwezi and about 270 kilometres west of the provincial capital of Lubumbashi. Ivanhoe Mines holds its 95% interest in the project through an indirect subsidiary company, Kamoa Copper SA. A 5%, non-dilutable interest in Kamoa Copper was transferred to the DRC government on September 11, 2012, for no consideration, pursuant to the DRC Mining Code. Ivanhoe also has offered to sell an additional 15% interest to the DRC on commercial terms, to be negotiated.

In December 2012, an independent mineral resource estimate was prepared for the Kamoa Project by AMEC E&C Services, of Reno, Nevada. The new estimate ranked Kamoa as Africa’s largest, high-grade copper discovery and the world’s largest, undeveloped high-grade copper discovery.

As of January 2013, Ivanhoe Mines had discovered Indicated Mineral Resources of 739 million tonnes grading 2.67% copper, containing 43.5 billion pounds of copper, and Inferred Mineral Resources of 227 million tonnes grading 1.96% copper, containing 9.8 billion pounds of copper. A 1% copper cut-off grade and a minimum vertical mining thickness of three metres were applied in each classification.

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