Source: Ivanhoe Mines                             Date: 16 December, 2010

Mr. Robert Friedland, Executive Chairman and CEO of Ivanhoe Mines, and Mr. John Macken, President, announced on Tuesday that a USD2.3-billion capital budget has been approved for 2011 in what will be the peak year of construction activity on the first phase of the Oyu Tolgoi project. Approval of the budget by the Ivanhoe Mines Board of Directors followed earlier full approval of the 100,000-ton-per-day project by the Ivanhoe Mines-Rio Tinto joint Technical Committee, which is overseeing the project, and the board of Oyu Tolgoi LLC, the Mongolian company that holds the Oyu Tolgoi licenses and is 66% owned by Ivanhoe Mines and 34% owned by the Mongolian government.

"Our ramp-up to full-scale construction during 2010 was so successful that we now are targeting to deliver the first ore to the concentrator up to six months earlier than previously projected. Oyu Tolgoi should be making its first sales of copper and gold in concentrate produced from ore from the Southern Oyu open pit during the fourth quarter of 2012," Mr. Macken said.

"The announcement of a series of financing measures last week as part of a new agreement with Rio Tinto will enable us to proceed in coming weeks with the signing of the largest contracts of the entire phase-one construction program," he said.

The principal elements of the 2011 construction program include:

--  USD561 million for the copper-gold concentrator, which will see complete enclosure of the building, completion of steel work for the overland ore conveyor, installation of one of four ball mills and installation of all material-handling equipment in the pebble crusher.

--  USD186 million to purchase the initial mining fleet of trucks, shovels   and ancillary equipment, and to start pre-stripping of the Southern Oyuopen-pit mine.

--  USD713 million for project infrastructure and electrical power, including completion of the central substation, completion of the  process-water supply, completion of the truck maintenance shop and phases one and two of the operations camp.

--  USD211 million for ongoing underground mine development at the Hugo North Deposit, construction of the headframe on Shaft #2 and further sinking of Shaft #2, which are critical elements of the development of the block-cave mine planned to begin production in 2015.

Total capital required for phase one from January 1, 2011, to the start of commissioning of the ore processing plant, which is planned for the second half of 2012, is projected to be USD3.5 billion. This includes approximately USD2.9 billion to complete construction of the Southern Oyu open-pit mine, processing plant and essential infrastructure, including electricity, water, roads, a paved airport runway and Mongolian-designed passenger terminal; it also includes taxes and continued underground development of the phase-two Hugo North mine.

The commissioning will be followed later in 2012 by initial phase-one production, and then by commercial production expected during the first half of 2013. Capital required from January 1, 2011, through to completion of the phase-one, 100,000-ton-per-day project is expected to total approximately USD4.5 billion. This estimate makes no allowance for potential revenues from the sale of copper-gold concentrate produced from the milling of a projected nine million tons of stockpiled ore in the weeks of initial production in 2012.

Mr. Macken said that the engineering and construction stages have recognized the need to accommodate a major increase in ore processing capacity in the future while minimizing potential disruption to operations that will be under way at the time. "Wherever possible, we have taken the opportunity to allow for expansion with minimal impact on operations. Our plans call for initial production of 100,000 tons of ore per day and we expect to move to between 150,000 and 160,000 tons per day when ore from the underground mine becomes available.“

In another development, the Oyu Tolgoi Technical Committee has decided to increase the capacity of the mining fleet's trucks, opting for 290-ton units that will help move an estimated 112 million tons per year of ore and waste - a 12% increase over an earlier plan. Pre-stripping of the open-pit mine will begin in 2011 to ensure that planned production levels can be achieved.