copper Zambia

Robert Friedland, Executive Chairman of Ivanhoe Mines and CEO, Lars-Eric Johansson, state the placement transaction with CITIC Metal has received all necessary recordals and registration with Chinese government regulatory agencies.

The transaction is scheduled to close on September 19, 2018.

Upon closing, Ivanhoe will receive gross proceeds of C$723 million (approximately US$549 million) from CITIC Metal and will issue 196,602,037 common shares to CITIC Metal through a private placement at a price of C$3.68 per share.

CITIC Metal will then own approximately 19.5% of Ivanhoe Mines’ issued and outstanding common shares.

Friedland will become the second largest Ivanhoe Mines shareholder, with an ownership stake of approximately 17%.

Approximately C$133 million of the C$723 million owing from CITIC Metal will be used to repay an interim loan of US$100 million from CITIC Metal Group Limited that was received on August 9, 2018, but never used, resulting in a net cash payment by CITIC Metal of C$591 million.

With the repayment of the interim loan in full, the limited-recourse guarantee and share pledge by Friedland securing Ivanhoe Mines’ obligation under the loan facility will be eliminated.

Zijin exercises anti-dilution rights at C$3.68 per share to raise an additional C$78 million
Ivanhoe’s joint-venture partner at the Kamoa-Kakula Project, Zijin Mining Group has
exercised its existing anti-dilution rights, which will yield additional proceeds to Ivanhoe of
C$78 million (approximately US$59 million).

These funds will be received concurrently with the CITIC Metal private placement. The exercise by Zijin of its anti-dilution rights also was at a price of C$3.68 per share and will result in Zijin having a 9.7% ownership stake in Ivanhoe Mines, its ownership level prior to the completion of the CITIC Metal strategic investment.

With the receipt of the combined proceeds of more than C$800 million (approximately US$608 million) from CITIC Metal and Zijin, and the repayment of the interim loan, Ivanhoe will have cash and cash equivalents of approximately C$850 million (US$645 million) and no significant debt.

The company intends to use the funds to continue to advance its exploration and development activities at the Kamoa-Kakula, Platreef and Kipushi projects on current accelerated timetables.