I V A N H O E

M I N E S NEW HORIZONS May 2003 Shareholders’ Update

Unlocking The Gobi’s Treasure Chest A train, a modern-day link with ancient traditions of enterprise, exploration and discovery,treks through winter snow in 's north- western Gobi region.

Photo: © Chris Wilson/Exploration Manager - Mongolia, Ivanhoe Mines he stony plains around 200 holes that built success upon larger. By the end of the first quar- We recently established a Preliminary internal scoping Confidence, ,. T Turquoise Hill, known success. The result is the establish- ter of 2003, exploration had top-flight international engineering, studies indicate that the project’s investment and value regionally as Oyu Tolgoi, ment of Turquoise Hill as one of revealed a new, extremely high- construction and project manage- location is more advantageous than Discoveries of this magni- in Mongolia’s Great Gobi region, the world’s largest known deposits grade zone that extended the ment group that gives us the comparable large-scale porphyry tude are great confidence builders. just north of the border with of gold and copper mineralization. strike length of Oyu Tolgoi to essential expertise we will require projects in other parts of the world. History has shown that a major China, are half a world away from By early 2003, indepen- greater than five kilometres — and if we opt to develop the deposit on We are designing the mineral discovery can dramatically the promontories and icebergs of dent experts had verified that the discovery remains wide open our own. The group, directed by Turquoise Hill mine to be world raise the fortunes of a company Voisey’s Bay, on ’s Atlantic Ivanhoe’s discovery at Turquoise for significant expansion. Chief Operating Officer Paul class in every respect, including and build great value that is shared coast. During the past year, though, Hill contains an estimated nine Chare, is being assisted by an environmental design and opera- by the discoverer’s investors. a growing number of investors in million ounces of gold and 22.3 Weighing Development alliance of AMEC E&C Services tion. Our work already has created Based on our continuing Ivanhoe Mines have come to billion pounds of copper within Options Limited, of Canada, and Ausenco hundreds of skilled jobs in Mongolia, strong exploration results, we have appreciate parallels between the an inferred resource of 1.6 billion The people and science Limited, of , and includes for Mongolians, and community raised approximately us$160 million landmark mineral discov- behind Turquoise Hill are making GRD Minproc Limited and SRK support initiatives will continue to in equity financings since our dis- eries at Turquoise Hill ‘‘We are reviewing a range of Ivanhoe’s founding dream a real- Consulting, of Australia.The group be an extension of our operational covery hole first revealed the gold and Voisey’s Bay, each of ity. Exploration advances during is based in Perth, a business hub planning at all of our projects. and copper porphyry system at which now is recognized as options that will accomplish our the past 18 months have brought for Australia’s advanced mining We intend to design and build a Turquoise Hill in July, 2001. a giant in the global mining our development of the Turquoise industry, and is in the same time mine that will qualify for ISO These funds were committed by industry’s yearbooks. .. goals of bringing Turquoise Hill Hill discovery to the scoping zone as Central Mongolia — facili- 14001 environmental certification, institutional investors who visited into production and strengthening study and pre-feasibility stage. . tating synchronized work hours the same international standard our Mongolian projects and saw Ivanhoe Mines was The scale and significance for Ivanhoe’s project teams in achieved by our joint-venture first-hand the potential that exists founded and infused with Ivanhoe’s balance sheet.’’ of our discovery have prompted and Perth. . copper mine in Myanmar. within our company. We are in capital and ambition in the approaches by the largest interna- days of stock market enthusiasm tonnes grading 0.63% copper and tional mining companies and for mining equities that was 0.17 grams of gold per tonne at a Asian government agencies. Many Ivanhoe’s Expanding Interests In Mongolia fuelled in large part by Diamond 0.30% copper equivalent cut-off of these parties are keenly interest- Fields Resources’ discovery of grade. In addition, the project ed in participating in, and assisting n Ra y LAKE BAIKAL eria ilwa one of the world’s largest nickel contains 509 million tonnes of Turquoise IRKUTSK -Sib with, the development of Russia Trans deposits at Voisey’s Bay in the indicated resources grading 0.40% Hill and the newly recognized CHITA mid-1990s. Ivanhoe was launched copper and 0.59 g/t gold, con- Mongolian mineral province. .. and guided in part by people who taining approximately 9.7 million We are reviewing a range 4.5 T were at the centre of the successful ounces of gold and billion r of options that will accomplish our Boroo Gold Mine a n exploration and sale of the pounds of copper. We are keeping Turquoise Hill s goals of bringing -M Voisey’s Bay 24 Erdenet Copper Mine o deposit, which pro- the drills turning hours a day into production and strengthen- n g duced a cdn$4.3 billion payday Ivanhoe’s o and our discovery keeps getting ing balance sheet. . Mongolia li Diamond Fields’ ULAANBAATAR an for shareholders R ai in 1996. lw SSaranaran Uul a To distinguish itself, Ivanhoe OOyutyut OOvoovoo y raised its sights to new horizons in CChandmanhandman Uul Asia. KharKharmagtaimagtai OOyutyut Ulaan SShuteenhuteen Turquoise Hill: . China TTavanavan TTolgoiolgoi a gold and copper giant The quest eventually led 0100 200 Kilometres TTurquoiseurquoise Hill Trans-Manchurian (O(Oyuyu TTolgoi)olgoi) 217 Ivanhoe to Mongolia’s largely 0 100 200 Miles BAYAN Railway unexplored southern Gobi region. GGoldold PProjectroject OBO JINING ailwa An exploration initiative to test the Ivanhoe Mines’ principal discovery and exploration projects. a R y in Turquoise h deeper zones of the Prime exploration areas include Ivanhoe licences C - DATONG Hill s BOHAI mineral system produced the for approx. 90,000 sq. km. (granted & pending). n a GULF r PORT OF TIANJIN spark of initial discovery in July, Option for a 290-km rail link to T (Yellow 2001. In quick succession, a com- China's national railway network and export ports. (exports to Japan & Korea) Sea) prehensive exploration program Possible extension to coal deposit. 2002 during drilled more than Existing railways.

I VA N H O E IVN NEW HORIZONS 2 3 New Independent Estimate Of Mineral Resources

Ivanhoe’s discovery at Turquoise Hill (Oyu Tolgoi) in Mongolia’s southern Gobi ranks among Indicated and inferred resources based on a 0.30% copper equivalent cut-off *1 the world’s largest gold and copper deposits Gold Copper Gold Copper Zone Tonnes Grade Grade (million (billion As reported February 26th, 2003, four co-genetic copper and gold deposits discovered by (g/t) (%) ounces) pounds) Ivanhoe 4.5 Turquoise Hill along a -kilometre-long zone at , Mongolia, contain: Southwest Zone *1. Copper equivalent Estimated inferred resources totalling 1.60 billion tonnes grading 0.63% copper and Indicated 508,900,000 0.59 0.40 9.69 4.54 cut-off grades calculated 0.17 grams of gold per tonne, containing approximately 22.2 billion pounds of Inferred 290,776,000 0.50 0.32 4.70 2.03 using assumed metal prices copper and 9.0 million ounces of gold, at a 0.30% copper-equivalent cut-off grade. South Zone (US$0.80/lb. for copper 509 0.40% 0.59 Inferred 270,283,000 0.13 0.39 1.10 2.35 and US$350/oz. for PLUS million tonnes of indicated resources grading copper and grams gold); %Cu eq. = %Cu + 4.5 Central Zone of gold per tonne, containing approximately billion pounds of copper and Au (g/t) x 9.7 Inferred 236,795,000 0.18 0.67 1.36 3.51 million ounces of gold. (11.25/17.64). Resource Following the release of the updated resource estimate Feb. 26, Ivanhoe announced on Far North Zone classifications conform to March 31 that it had discovered a new zone of high-grade copper-gold mineralization Inferred 804,450,000 0.07 0.81 1.80 14.39 CIM Standards on Mineral at the Far North Zone, extending the length of the Turquoise Hill deposit to more Total Indicated 508,900,000 0.59 0.40 9.69 4.54 Resources and Reserves than five kilometres. Total Inferred 1,602,304,000 0.17 0.63 8.96 22.28 referred to in N1 43-101.

I VA N H O E IVN NEW HORIZONS 4 5 excellent financial shape to fund north of the Chinese-Mongolian Monywa Copper our ongoing exploration and border, placing it right on the expansion expected development programs. doorstep of the world’s biggest We are optimistic that copper importer. China has expansion at the Monywa Copper Hallmarks of a approximately 50 principal copper Project in Myanmar will begin new mineral province smelters and the industry now soon. We believe that we are on depends heavily on imported con- The expansion, contingent the threshold of other new discov- centrate shipped from as far away on securing external project eries that could confirm that as Peru, Canada and Australia. financing, will involve a series of Mongolia is one of the world’s The copper market in staged expansions of the Letpadaung largest natural storehouses of cop- China is expected to continue its deposit — considered one of the per and gold. remarkable growth for the fore- world’s best undeveloped copper The rapid unfolding of the seeable future. Ivanhoe is ideally deposits. When completed, pro- Turquoise Hill discovery has positioned to satisfy a significant duction of LME Grade A cathode thrust Mongolia’s South Gobi portion of that demand. copper at Monywa will increase region into the spotlight as the Consumer spending and urban from the current level of around world’s most prospective new growth powered by China’s huge 28,000 tonnes per year to approx- mineral province. imately 130,000 tonnes While our success so far ‘‘History has shown that a per year. The current S&K has been tremendously satisfying, Mine, which has been in we think the best may be yet to major mineral discovery can production since 1998, come. Ivanhoe has key exploration dramatically raise the fortunes recorded a us$6 million rights within the South Gobi operating profit in 2002. region covering more than 90,000 of a company and enhance the The mine now has repaid square kilometres — comparable approximately two-thirds to the size of Austria, or the great value that is shared by the of its original us$90 state of Indiana — that will host discoverer’s investors’’ million loan obtained to other major copper-gold discoveries. develop the project. Mongolia is a unique population base and demograph- Ivanhoe owns a 50% interest in country. Visitors returning to ics are keeping manufacturing the Monywa operation. Mongolia after absences of a year plants humming. Infrastructure or more often remark on the investment in the transportation, Savage River improves positive changes in the country’s telecommunications and energy The Savage River iron ore economic outlook. The people of sectors also is a key element of mine in Australia had an improved Mongolia have worked hard to China’s economic growth. Ivanhoe performance in 2002, with iron transform their nation into a stable is continuing discussions with ore pellet production up 6%,to political democracy with a senior Chinese government offi- 2.14 million tonnes. Pellet sales Western-style, free-market system. cials who are closely following the rose to 2.27 million tonnes, com- Foreign investment is growing, progress of our projects. pared with 1.83 million tonnes in encouraged particularly by the To further position Ivanhoe 2001. The iron ore operations introduction of a progressive mining to capitalize on opportunities recorded a us$15.7 million net law, based on practices in the U.S., available in the mining industry in profit in 2002, which included an Australia and Canada that provide China, Ivanhoe has acquired a operating profit of us$6.6 million important incentives and safeguards major stake in Pacific Minerals, a — an increase of 81% over the to new mining investments. Canadian company that is explor- previous year — plus a gain on ing several precious and base met- settlement of debt of us$32.5 Doorstep of world’s als projects in China. Ivanhoe has million and an asset write-down of biggest copper importer the right to acquire up to 80% of us$18 million. The South Gobi is one of Pacific Minerals’ interests in all of The mine’s operator, the best places in the world to find Pacific’s projects in China, and Goldamere Pty. Ltd., our indi- a copper and gold mine. currently owns approximately rect, 100%-owned subsidiary, has Turquoise Hill is just 80 kilometres 37% of the issued shares of Pacific. worked hard during the past two

I VA N H O E IVN NEW HORIZONS 6 7 years to restructure the Savage We have operating mines that River mine plan and financing are generating profits and our I V A N H O E obligations. The restructuring presence in Mongolia, China, initiatives have positioned the Australia and Myanmar has M I N E S mine to take advantage of an enabled us to take advantage of NEW HORIZONS improved global demand for growth opportunities in those iron ore pellets, which should key markets. lead to stronger financial per- Our progress, and our formances in coming years. success at Turquoise Hill, ivanhoemines.com Ivanhoe’s share of sales could not have been accom- revenue from its various mining plished without the commit- World Trade Centre operations throughout Asia ment and support of our Suite 654 and Australia increased to shareholders, customers, em- 999 Canada Place us$87 million in 2002, up from ployees, partners and suppliers, Vancouver, BC us 75 2001 $ million in . and the ongoing encourage- Canada V6C 3E1 ment of the governments of 1.604.688.5755 Getting it right Mongolia and China. Telephone: . . . Ivanhoe’s most notable Our mission is about Fax:1 604 682 2060 achievements during the past creating value for our share- Email:[email protected] year generally can be attrib- holders and the people of the uted to our exploration strategy countries that host our efforts. that, results demonstrate, is We will continue to focus on one of the most successful of the tasks at hand, expanding its kind in the international our discoveries and building mining business. Throughout world-scale, low-cost copper Asia, we are continuing to dis- and gold production to create cover new mineral deposits wealth. We are determined to that we expect will sustain our do it right. growth well into the future.

Robert M. Friedland R. Edward Flood Chairman and President Deputy Chairman

IVN TSX & ASX

Note: The information in this Update was current as of April 8, 2003, and should be read in conjunction with the company’s financial statements for the year ended December 52-week high / low: 31, 2002. Statements in this letter that are forward-looking statements are subject to cdn$3.78 / cdn$2.00. various risks and uncertainties concerning the specific factors identified in Ivanhoe Mines’ periodic filings with Canadian and Australian Securities Regulators. Such forward-looking Shares issued information represents management's best judgment based on information currently as of April 8, 2003: available. No forward-looking statement can be guaranteed and actual future results may 226.6 million. vary materially. Douglas Kirwin, Ivanhoe Mines’ Senior Vice-President, Exploration, and a “Qualified Person” as defined by National Instrument 43-101 of the Canadian Securities Administrators, oversees the company’s exploration programs and has reviewed the Market capitalization: technical information contained within this Update. approx. cdn$800 million.