Congo election postponement not a threat to Ivanhoe projects

Congo election postponement not a threat to Ivanhoe projects

21/11/2016

Robert Friedland, president & CEO, Ivanhoe Mines

A DELAY in elections in the Democratic Republic of Congo (DRC) did not pose a threat to agreements signed between it and Ivanhoe Mines, said the mining firm’s president and CEO, Robert Friedland.

The coalition government in the DRC, led by president Joseph Kabila, agreed in October to delay elections until April 2018 – a development that opposition parties viewed as an attempt by Kabila to cling to power.

Kabila will have served two terms – the maximum in terms of the DRC’s constitution – and was due to call an election at the end of this year.

“We have read in the press that the election will be delayed for two years,” said Friedland in a conference call which updated investors on Ivanhoe Mines’ projects in the DRC and South Africa.

“This is a legitimate issue for a large country, but we don’t see any impact whatsoever with our agreement,” he said. On November 18, Ivanhoe Mines said it had agreed the transfer of 15% in its Kamoa-Kakula copper project to the DRC which it described as “a landmark moment”.

In terms of the agreement, Ivanhoe and its joint venture partner, Zijin Mining Group Company, will each hold an indirect 39.6% interest in the Kamoa-Kakula while the DRC Government holds a direct 20% stake. One element of the agreement is that no parties will receive dividends until 80% of shareholder debt – currently at $452m – has been rubbed out.

Said Friedland: “There is no controversy about the fact the current government is legitimate until 19 December of this year. Having said that we wish the best for the Congolese people; we are in favour of elections, but we are not engaged in playing politics at all”.

He added that if there was an election to worry about, it was events in the US where there are efforts to launch a recount of voting in the states of Wisconsin, Michigan and Pennsylvania which were surprisingly won by president-elect, Donald Trump in the country’s presidential elections on November 8.

KIPUSHI

In addition to building the Kamoa-Kakula copper mine, Ivanhoe Mines is also re-developing the Kipushi zinc mine just as commodity prices emerge from a three-year slump. The price of zinc for instance is more than 75% more than a year ago.

“The wind is very clearly now at our backs,” said Friedland. “We used to develop them with the winds in our face; but now we have a favourable tailwind, to say the least,” he added.

He said the company had been approached by numerous investors wanting to finance the project, as well as the company’s other assets. “We are feeling better about our position in the industry than we have ever felt in our 20-years. We have not has as many suitors that want to marry us as now,” he said.

Kipushi is expected to operate at a steady-state mining rate of 1.1 million tonnes of zinc concentrate. The initial capital expenditure is estimated to be $409m, according to an Ivanhoe Mines presentation in October.

Friedland said there were a number of possible ways of financing the mine, however including taking Kipushi public as a pure play on the zinc price “with or without” Gecamines, the DRC’s state-owned base metals company. A joint listing was a possibility as well as an outright sale “if our shareholders think that is an attractive thing to do,” he said.

Ivanhoe Mines said in a statement last month that it was “… exploring strategic options to help address unsolicited interest that has been received regarding potential corporate and project opportunities”.

“Ivanhoe remains engaged in friendly and detailed discussions with potential strategic partners and investors relating to the company and its projects,” it said.

By David McKay 

Mininggmx

DRC government increases stake in Ivanhoe Mines’ Kamoa-Kakula copper project

DRC government increases stake in Ivanhoe Mines’ Kamoa-Kakula copper project

21/11/2016

Ivanhoe Mines has signed an agreement confirming that the government of the DRC wants to play a prominent part in the development of the Kamoa-Kakula Copper project.

Ivanhoe Mines announced on Monday that together with its joint-venture partner, Zijin Mining Group, the company has signed a landmark agreement confirming that the government of the Democratic Republic of Congo (DRC) wants to be a prominent partner in the development of the Kamoa-Kakula Copper Project.

The agreement, which was signed in Kinshasa, DRC, by the Minister of Mines and Minister of Portfolio on 11 November 2016, transfers an additional 15% interest in the Kamoa-Kakula copper project to the DRC government, increasing its total stake in the project to 20%.

As a result of the transaction, Ivanhoe Mines and Zijin each hold an indirect 39.6% interest in the Kamoa-Kakula copper project, while Crystal River Global holds an indirect 0.8% interest and the DRC government holds a direct 20% interest in the Kamoa-Kakula Copper Project.

“This is a historically significant event for the people of the Democratic Republic of Congo,” said Robert Friedland, executive chairman of Ivanhoe.

“We are now united as partners committed to working toward our shared objective of ensuring that the major copper discoveries we have made at Kamoa and Kakula during the past eight years are predictably, efficiently and expeditiously developed into a world-scale mining venture with a lifespan of multiple generations.”

Ivanhoe CEO Eric-Lars Johansson said the agreement “paves the way to fulfill Kamoa-Kakula’s promise of decades of substantial, long-lasting, economic and social benefits for the Congolese people and the strengthening of the national government’s capacity to support the development of international trade and building of the country.”

The highlights of the agreement include the following:

Kamoa Holding will transfer 300 Class A shares in the capital of Kamoa Copper − representing 15% of Kamoa Copper’s share capital − to the DRC government, for a nominal cash payment and other guarantees from the DRC government. In addition, the DRC owns 100 non-dilutable Class B shares, representing 5% of Kamoa Copper’s share capital.

The parties agreed that the 300 Class A shares shall be non-dilutable until the earlier of (i) five years from the date of the first commercial production and (ii) the date on which the DRC government ceases to hold all of its 300 Class A shares.

Kamoa Holding undertakes to provide all shareholder loans to Kamoa Copper and/or procure financing from third parties for the development of the Kamoa-Kakula Copper Project. The interest on all shareholder loans will be LIBOR plus 7%.

The parties acknowledge that they shall not be entitled to any dividends from Kamoa Copper prior to the repayment of 80% of all shareholder loans, currently totaling $452 million, and 100% of any financing provided by a third party.

The Kamoa-Kakula copper project will be developed with the full support of the DRC government.

The DRC government has reaffirmed Kamoa Copper’s mineral tenements and has guaranteed that the Kamoa-Kakula copper project will not be subject to any taxes or duties other than those legally required by the applicable statutory and regulatory provisions for the life of the project.

At Kamoa Copper’s request and subject to the satisfaction of the applicable conditions, the DRC will provide its assistance in obtaining the advantages contemplated by the DRC’s special law – No. 14/005, enacted to facilitate Sino-Congolese cooperation – relating to the tax, customs, parafiscal tax, non-tax revenues and currency exchange regime applicable to cooperation projects.

Kamoa Holding will have a pre-emptive right, and right of first refusal, to purchase any or all of the DRC’s shares in Kamoa Copper, should the DRC wish to directly or indirectly sell, transfer or otherwise dispose of any or all of its shares.

The agreement will be governed by the laws of the DRC. Any dispute will be subject to binding arbitration, conducted in French, in Paris, France, in full accordance with the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. An arbitral decision will be subject to enforcement under the New York Convention of 1958, to which the DRC is a contracting party.

By Mining Review Africa

UNESCO chief demands DR Congo action over journalist murder

UNESCO chief demands DR Congo action over journalist murder

21/11/2016

Director-General of the UN Educational, Scientific and 

Cultural Organization (UNESCO), Irina Bokova speaks

 during a press conference in New York on September

 20, 2016.

UNESCO's director-general Irina Bokova on Monday urged authorities in Democratic Republic of Congo to bring the murderers of a television journalist to justice.

Marcel Lubala was killed at his home in Mbuji-Mayi, central DR Congo, on the night of November 14-15 by armed men. The 59-year-old had worked for the RTNC MbujiMayi television channel that is part of state broadcaster RTNC.

"I condemn the murder of Marcel Lubala. Journalists must be able to do their work informing citizens without fearing for their lives," said Bokova in a statement published in Paris.

"I trust the authorities will conduct a thorough investigation and that those responsible for this crime will be brought to justice."

According to local authorities in the Kasai-Oriental province, where Mbuji-Mayi is located, an investigation has been opened into the murder and five people have been arrested.

But various charities and media rights organisations decried the fact the murder took place during a curfew between 10pm and 5am, when local security forces were supposed to be in control of the town.

Following the murder, local activists Journalists in Danger (JED) denounced "the increase in targeted attacks against the press".

Joseph Tshilunde, president of the national union of Congolese media (UNPC), told AFP that Lubala was the "16th journalist killed in DRC in 10 years and too often the perpetrators and organisers are not sanctioned".

DR Congo has been wracked by recent violence sparked by a political crisis brought on by the postponing of a presidential election which had been due to take place before the end of the year.

President Joseph Kabila has been in power since 2001 when he succeeded his father Laurent Kabila, who had been assassinated.

Joseph Kabila is constitutionally barred from standing for re-election having served two terms but his opponents are worried the election postponement is part of a wider bid to hold onto power.

Anti-Kabila protests have been suppressed by police while authorities have used various means to clamp down on the press.

Kabila's government has frequently blocked the signal of foreign media such as Radio France International any time opposition supporters have organised protests.

Ten days ago, the government also issued a decree affecting foreign broadcasters that gave them a month to hand over a majority share of their companies to locals, a move criticised by the United Nations.

DRC was classed 152nd out of 180 countries in 2016 for press freedom by Reporters Without Borders.

Lubala had worked for RTNC for 15 years, presenting a television show about hygiene and the environment.

By AFP

DR Congo: Political Prisoners in Detention

DR Congo: Political Prisoners in Detention

16/11/2016

The following people were arrested in the past year after

 speaking out against attempts to extend President 

Joseph Kabila’s term in office or participating in

 peaceful demonstrations or other political 

activities in the Democratic Republic of 

Congo. They remain in detention.

The following individuals were arrested in the Democratic Republic of the Congo since early 2015. Most had spoken out against attempts to extend President Joseph Kabila’s term in office or participated in peaceful demonstrations or political activities. Others were suspected of having links with political opposition leaders. These individuals are all still in custody.

Detained in Kinshasa:

1. Jean-Claude Muyambo: president of the political party Congolese Solidarity for Democracy and Development (Solidarité congolaise pour la démocratie et le développement, SCODE) and former president of the bar association of ex-Katanga province, arrested in Kinshasa on January 20, 2015 after having mobilized participation in demonstrations against proposed changes to the election laws. First held in Kinshasa's central prison, he was subsequently transferred to a medical center for health reasons and is on trial for allegedly selling a building that did not belong to him.

The following seven people were arrested on August 7, 2016 in Kinshasa at the home of Norbert Luyeye, president of the opposition political party Union of Republicans (Union des Républicains, UR). On August 4, Luyeye had declared at his party headquarters that a legal vacuum would ensue if the National Independent Electoral Committee (CENI) failed to convoke election in September. He also announced a popular meeting in Kinshasa’s Ndjili neighborhood on September 4 to raise awareness among the population and prepare for the demonstrations scheduled to begin on September 19. They are all being held by the military intelligence services in Kinshasa without charge and without access to their families or a lawyer:

2. Norbert Luyeye: Union of Republicans, president;
3. Nsiala Bukaka: UR member;
4. Paul Yoka: UR member;
5. Nathan Lusela: UR member;
6. Lyongo: UR member;
7. Boba: visitor at the UR meeting;
8. Jean Paul: visitor at the UR meeting.

At least a dozen people were arrested on September 15 and 16, 2016 in Kinshasa and held incommunicado by the intelligence services after having participated in an awareness campaign organized by the Union of Congolese Youth for Change (Union des Jeunes Congolais pour le Changement, UJCC), a youth platform for debate and action focused on non-violence, peace and respect of the constitution. While the others were later released, the organization’s president remains in detention:

9. Totoro Mukenge: president of the UJCC, arrested at his home the day after the meeting, on September 16, 2016.

The following people were arrested just before or immediately after the Congolese Justice Minister announced on May 4, 2016, the start of an investigation into Moïse Katumbi, the former Katanga governor and an opposition leader and presidential candidate, for having allegedly “recruited mercenaries [including] several American ex-servicemen.” These allegations appear to have been politically motivated and no credible proof has been presented to date. These individuals have all been accused of maintaining links with Katumbi or being involved in the alleged recruiting of mercenaries, and have been charged with endangering state security:

10. Yannick Kibinga: an associate of Katumbi, arrested on April 24, 2016 in Lubumbashi and transferred on April 25 to the National Intelligence Agency (ANR) in Kinshasa, where he was held by the intelligence agency before being transferred to Kinshasa’s central prison on June 4;
11. Franck Mwashila: an associate of Katumbi, arrested on April 24, 2016 in Lubumbashi and transferred to the ANR in Kinshasa on April 25. Detained at Kinshasa's central prison since June 4;
12. Sefu Idi: an associate of Katumbi, arrested on April 24, 2016 in Lubumbashi and transferred on April 25 to the ANR in Kinshasa. Detained at Kinshasa's central prison since June 4;
13. Gédeon Butandu: a pastor, arrested on May 1, 2016 in Kolwezi, Lualaba province. Transferred to the ANR in Kinshasa on May 3, where he was held incommunicado by the intelligence services until being transferred to Kinshasa's central prison on June 4;
14. Fiston Malanga: a student, arrested on May 2, 2016 in Lubumbashi. Transferred to Kinshasa on May 3, where he was held incommunicado by the intelligence services until being transferred to Kinshasa's central prison on June 4;
15. Aaron Ngwashi: an officer of the Congolese National Police (PNC) seconded to Katumbi’s security service when he was governor of Katanga province. Arrested in Lubumbashi on May 4, 2016 and detained by the ANR in Lubumbashi before being transferred to the military prosecutor’s office and then the Lubumbashi central prison. He was sent to the ANR in Kinshasa on May 29, where he was held incommunicado before being transferred to Kinshasa's central prison on June 13;
16. Augustin Kabamba: a police officer seconded to Katumbi’s security service when he was governor of Katanga province, arrested in Lubumbashi on May 4, 2016. He was detained by the ANR in Lubumbashi before being transferred to the military prosecutor’s office and then the Lubumbashi central prison where he was prosecuted for forgery. He was sent to the ANR in Kinshasa on May 29, held incommunicado and subsequently transferred to Kinshasa's central prison on June 13;
17. Bruno Vumbi: a police officer arrested in Lubumbashi on May 4, 2016. He was detained by the ANR in Lubumbashi before being transferred to the military prosecutor’s office and then the Lubumbashi central prison where he was prosecuted for forgery. On May 29, he was sent to the ANR in Kinshasa where he was held incommunicado. He was subsequently sent to Kinshasa's central prison on June 13;
18. Ndol Tshamundj: an army officer, on duty in Katumbi’s home village, arrested in Lubumbashi on May 8, 2016 and transferred to Kinshasa on May 29, where he was held incommunicado by the ANR. He has been detained in Kinshasa's central prison since June 13;
19. Gabriel Tambwe: member of a Congolese non-governmental organization, arrested on May 13, 2016 in Kinshasa. Held incommunicado by the ANR before being transferred to Kinshasa's central prison on June 4;
20. Philippe Namputu: a teacher and a member of a Congolese non-governmental organization, arrested on May 14, 2016 in Kinshasa. Held incommunicado by the ANR before being transferred to Kinshasa's central prison on June 4.

The following individuals, members of the opposition party National Union of Congolese Federalists (Union Nationale des Fédéralistes du Congo, UNAFEC), were arrested in Lubumbashi on July 16, 2016. Initially held by intelligence services in Lubumbashi, they were transferred on August 9 to the intelligence services in Kinshasa where they are still held incommunicado, without charges and without access to their families or to a lawyer:

21. Lwembe Munika;
22. Mukonde Kapenda.

The following people were arrested in the context of protests organized the week of September 19 against the electoral commission’s failure to convoke presidential elections three months before the end of President Kabila’s mandate, as called for by the constitution:

23. Moïse Moni Della: President of the opposition party Nature Conservationists and Democrats (CONADE), arrested in the morning of September 19, 2016, as he was going to the demonstrations. Soldiers beat him as they arrested him. He was later accused of having incited acts of pillage. He remains in prison and his trial is ongoing;
24. Bruno Tshibala: Deputy Secretary-General of one of the leading opposition parties Union for Democracy and Social Progress (UPDS) and spokesperson of the opposition coalition Rassemblement. Immigration officials arrested him at Kinshasa’s international airport when he was attempting to board a plan for Brussels on October 9, 2016. He remains in prison and has been accused of plotting to commit a massacre and acts of pillage and destruction, charges that appear politically motivated. His trial is ongoing.

Detained in Lubumbashi:

25. Huit Mulongo: former chief of staff of Moïse Katumbi, and one of the leaders of the Front Citoyen 2016, a coalition of parties and groups calling on President Kabila to step down at the end of his constitutionally mandated two term limit. Arrested during the night of April 22, 2016 at his home by policemen who searched his home and found a revolver in his jeep, which Mulongo said he had registered, and leaflets in his home about the Front Citoyen and the G7 (a platform of seven political parties sacked from the majority coalition of President Kabila in September 2015 after having publicly urged him to hold the presidential election as scheduled and support a successor). He was then taken to the ANR and transferred the next day to the military prosecutor’s office. He is currently being held at Kassapa prison in Lubumbashi, where his state of health is deteriorating. On August 30, the military court sentenced him to three years in prison and a fine of 250,000 Congolese francs (USD 250) for illegally carrying a firearm. He has filed an appeal.
26.  Ngongo Kasongo: a member of the National Union of Congolese Federalists (Union Nationale des Fédéralistes du Congo, UNAFEC), arrested on July 18, 2016 at his home in Lubumbashi, together with another member of the same party, Jules Kikungulu. They were then both transferred to the ANR. Tried for rebellion, Kikungulu was acquitted while Kasongo was sentenced to 15 years in prison. He has filed an appeal. He is currently being held in Lubumbashi central prison.

Detained in Goma:

Six activists of the youth movement Struggle for Change (LUCHA) were arrested on October 24, 2016 in Goma while mobilizing students of a local university to participate in demonstrations and a general strike (or “ville morte”) planned for October 26 and 27. Three of them were released on October 29 while the three others were transferred to the central prison in Goma. During a press conference on October 30, a police spokesperson said they had “attempted disruption of public order.” They remain in detention:

27. Glody Ntambwe
28. Faustin Dunia
29. Jacques Muhindo

Human Rights Watch 

CONGO SIGNS OVER MINING MILLIONS TO COMPANY OWNED BY PRESIDENT’S FRIEND

CONGO SIGNS OVER MINING MILLIONS TO COMPANY OWNED BY PRESIDENT’S FRIEND 

DRC’s state mining company signed over a potential $880m in royalties from Glencore project to an offshore company owned by the president’s friend, Dan Gertler.

15/11/2015

Dan Gertler’s business confirms deal but challenges valuation as Global Witness goes to press

Global Witness today reveals that the state mining company in Democratic Republic of Congo last year signed over royalty rights in its most lucrative mining project, owned and operated by giant London-listed commodities trader Glencore, to an offshore company belonging to a friend of the president. The contract does not explain what, if anything, Congo’s state mining company received in compensation for handing over these rights, and neither Gecamines nor the offshore company involved has provided a full explanation.

Global Witness estimates that the royalties could generate as much as $880m – more than Congo’s annual health spending. Typically royalties like this are for the benefit of the population. This is especially vital in Congo, which ranks near the bottom of the UN Human Development Index and has one of the lowest rates of GDP per capita in the world.

Under the terms of the agreement, dated January 2015, the royalties due to state mining company Gecamines from Glencore’s KCC copper project in southeast Congo were assigned to an anonymous Cayman Islands company called Africa Horizons Investment Limited. Africa Horizons is part of Dan Gertler’s Fleurette Group. Gertler is an Israeli billionaire mining magnate and close friend of Congolese President Joseph Kabila. He was the Congo partner of US hedge fund Och-Ziff in deals for which it was charged by US authorities for foreign corruption, eventually paying out over $400m in a settlement. Gertler has been linked to several other suspicious mining deals in Congo, some of which involved Glencore.

“It’s troubling that the state miner Gecamines has signed away rights to potentially huge flows of cash that should go towards building Congo’s future. It’s even worse that it has handed them to this unknown, anonymous company belonging to an individual with a track record of suspicious deals,” said Pete Jones, campaigner at Global Witness. “The state mining company should be trying to make money for the Congolese people, but here it is signing away its rights to potentially huge royalties.”

“The contract we have seen provides no reason for Gecamines giving away these royalties. Neither Gecamines nor Gertler’s representatives have told us whether Gecamines received any payment in return. It is imperative that Gecamines and Gertler explain what is behind this agreement. If they can’t show that this is a good deal for Congo, there should be an investigation into what’s really behind the agreement,” said Jones.

A spokesperson for Gertler’s holding company, Fleurette, from Powerscourt public relations firm did not comment after having been granted extra time to respond to questions from Global Witness.

As Global Witness went to press it became aware of a statement from Fleurette via Powerscourt that said the agreement between Africa Horizons and Gecamines ends in early 2019, and that this information is “publicly available”. Powerscourt did not respond to requests to provide this information or explain where it could be located. Fleurette also said the valuation of the royalties was “entirely wrong” and said it had made a “considerable loss” on the deal.

Glencore confirmed the transaction to Global Witness, asserting that Gecamines had “sold its rights to certain royalties” from its subsidiary KCC to Africa Horizon. It added that KCC was not involved in the original discussions and had subsequently “acted in accordance with the instructions it received from Gecamines” after having taken “reasonable measures” to check out the validity of the sale. Gecamines representatives did not respond to emailed questions and a phone call from Global Witness.

At the time of the deal, KCC was Congo’s third-largest copper mine by production volume and its largest tax contributor, according to statistics published by the Extractive Industries Transparency Initiative (EITI). EITI reported that KCC paid royalties totalling over $63m to Gecamines in 2014, but now any such payments will go to Africa Horizons. The document seen by Global Witness suggests that royalty payments were made from KCC to Africa Horizons beginning 9 July 2014 under a separate earlier agreement. Gertler’s representatives did not say how much had been transferred to date in royalties under the agreement.

Congo is in the midst of an escalating political crisis. Kabila is obliged by the constitution to step down when his second term ends in December, but elections have been postponed and the opposition has accused Kabila of clinging to power. Riots against Kabila’s government have led to the deaths of at least 80 civilians in two major protests in January 2015 and September 2016, according to Human Rights Watch. Global Witness warned in May that off-the-books sales of natural resource rights could be used to finance a political campaign.

Global Witness

DR Congo mayor suggests political motive in massacres

DR Congo mayor suggests political motive in massacres

11/11/2016

Between 700 and 1,300 people have been killed, mostly hacked to death, in attacks in the troubled area around the town of Beni, in North Kivu province, since October 2014.

An influential mayor in eastern Congo has suggested political leaders in the country may have been involved in a string of recent massacres in the unstable region.

Bwanakawa Nyonyi, the mayor of Beni, said in an interview with AFP that "it is possible that there are Congolese political hands behind the phenomenon" of recent violence.

Congolese officials have blamed the attacks on the Allied Democratic Forces (ADF), a group of rebels dominated by puritanical Ugandan Muslims.

"Why and how is a Ugandan rebel group able to kill, with impunity, Congolese citizens regardless of age, sex, profession or religion? That's the question that everyone is asking," said Nyonyi.

Several experts have published reports suggesting that the ADF has benefitted from local support -- notably from elements within the Congolese army.

Nyonyi described the ADF as a "nebulous mosaic" responsible for the "suffering of the population".

He added that the group only began to pose a problem to the region from July 2011, just ahead of the bitterly contested November 2011 election which President Joseph Kabila won amid accusations of irregularities.

Fears of violence run deep in Beni, a town of 800,000 people.

Fifty-one people were killed in the town on August 13, a gruesome slaying that touched off mass protests against the central government in Kinshasa.

Little more than a week later, two more people were hacked to death in Beni near the site of the initial massacre. Rebels were blamed once again.

Last week, six civilians were hacked to death in the region, according to local officials who blamed the ADF.

Formed by the elusive militant Jamil Mukulu in 1989 and initially focused on overthrowing Ugandan President Yoweri Museveni, the ADF absorbed other rebel groups into its ranks and started carrying out attacks in 1995.

Gradually pushed westwards by the Ugandan army, the ADF relocated much of its activities to the DRC.

World Bulettin

Excellent Copper Recoveries and Concentrate Grades Confirmed by Second-Stage Metallurgical Testing of Drill Core From Kakula Discovery at the Kamoa-Kakula Project in D.R. Congo

Excellent Copper Recoveries and Concentrate Grades Confirmed by Second-Stage Metallurgical Testing of Drill Core From Kakula Discovery at the Kamoa-Kakula Project in D.R. Congo

08/11/2016

Independent tests produced a concentrate with an extremely high grade of 56% copper

KOLWEZI, DEMOCRATIC REPUBLIC OF CONGO--(Marketwired - Nov. 8, 2016) - Robert Friedland, Executive Chairman of Ivanhoe Mines (TSX:IVN), and Lars-Eric Johansson, Chief Executive Officer, today announced additional excellent metallurgical results from tests conducted on drill core from ongoing exploration at the Kakula Discovery, in a southerly portion of the Kamoa-Kakula Copper Project.

The bench-scale metallurgical flotation test work carried out at XPS Consulting and Testwork Services laboratories in Falconbridge, Canada, achieved copper recoveries of 87.8% and produced a concentrate with an extremely high grade of 56% copper using the flowsheet developed during the Kamoa pre-feasibility study (PFS). The material tested was a composite of recent, chalcocite-rich Kakula drill core, assaying 8.1% copper.

"These new Kakula metallurgical test results are highly positive as they indicate that, by employing a conventional milling and flotation process, Kakula should produce an extremely high-grade and clean copper concentrate that would be highly coveted by copper smelters around the world," said Vongani Nkuna, Kamoa's Senior Process Engineer. "The XPS metallurgical results further demonstrate the high quality of the Kakula Discovery."

The Kamoa-Kakula Copper Project, located approximately 25 kilometres west of the town of Kolwezi, is a joint venture between Ivanhoe Mines and Zijin Mining Group Co., Ltd. The 60-square-kilometre Kakula Discovery zone is on the Kamoa mining licence, approximately 10 kilometres southwest of the project's planned initial mining area at Kansoko Sud.

XPS's metallurgical results build upon initial test results from Zijin's laboratory in China

The XPS bench-scale test work findings will be used in the ongoing preliminary economic assessment now underway for Kakula. The XPS results corroborate the results from testing of a Kakula drill core composite sample that was conducted at Zijin's laboratory in China in July 2016.

The July 2016 initial metallurgical test results achieved copper recoveries of 86% and produced a copper concentrate with a grade of 53% copper. The results also indicated that material from Kamoa's Kakula and Kansoko zones could be processed through the same concentrator plant, which could yield significant operational and economic efficiencies.

Zijin's tests of the Kakula sample also used the flowsheet developed during the Kamoa PFS. The material tested was a composite of drill holes assaying 4.1% copper. As a comparison, testing of a previous development composite sample from the planned, initial mining deposit at Kamoa's Kansoko Sud zone and the adjacent Kansoko Centrale zone, assaying 3.61% copper, achieved an 85% recovery and a concentrate grade of 37% copper.

Kamoa concentrates contain extremely low arsenic levels, by world standards

Additional, earlier metallurgical testwork indicated that the Kamoa concentrates contain extremely low arsenic levels, by world standards - approximately 0.02%. Given this critical competitive marketing advantage, Kamoa's concentrates are expected to attract a significant premium from copper-concentrate traders for use in blending with concentrates from other mines. The Kamoa concentrates will help to enable the other concentrates to meet the limit of 0.5% arsenic imposed by Chinese smelters to meet China's new environmental restrictions.

Kamoa-Kakula now ranks among the world's 10 largest copper deposits and remains open for significant expansion

On October 12, 2016, Ivanhoe Mines released the initial Resource estimate for its Kakula Discovery at the Kamoa-Kakula Project. Highlights of the initial Kakula Mineral Resource estimate, prepared by Ivanhoe under the direction of Amec Foster Wheeler E&C Services Inc., of Reno, USA, in accordance with the 2014 CIM Definition Standards for Mineral Resources and Mineral Reserves are:

• Indicated Resources total 192 million tonnes at a grade of 3.45% copper, containing 14.6 billion pounds of copper at a 1% copper cut-off. At a 2% copper cut-off, Indicated Resources total 115 million tonnes at a 4.80% copper grade, containing 12.1 billion pounds of copper. At a higher cut-off of 3% copper, Indicated Resources total 66 million tonnes at a grade of 6.59% copper, containing 9.6 billion pounds of copper.
• Inferred Resources total 101 million tonnes at a grade of 2.74% copper, containing 6.1 billion pounds of copper at a 1% copper cut-off. At a 2% copper cut-off, Inferred Resources total 51 million tonnes at a 3.92% copper grade, containing 4.4 billion pounds of copper. At a higher cut-off of 3% copper, Inferred Resources total 27 million tonnes at a grade of 5.26% copper, containing 3.2 billion pounds of copper.

• The average true thickness of the selective mineralized zone (SMZ) at a 1% cut-off is 14.27 metres in the Indicated Resources area and 10.33 metres in the Inferred Resources area. At a higher 3% cut-off, the average true thickness of the SMZ is 5.91 metres in the Indicated Resources area and 5.15 metres in the Inferred Resources area.

The initial Kakula Mineral Resource was defined by drilling covering a total area of 8.7 square kilometres within the larger 60-square-kilometre Kakula Exploration Area. The Kakula high-grade mineralization remains open for significant expansion along trend to the northwest and the southeast, while the remainder of the Kakula Exploration Area remains untested. The Kakula Mineral Resource estimate was based on the results from approximately 24,000 metres of drilling in 65 holes.

With the significance of the Kakula Discovery now firmly established, the Kakula exploration program has been significantly expanded by a further 60,000 metres. The expanded program is planned to run through to the end of the second quarter of 2017 and will consist of infill drilling, resource expansion and exploration.

With the addition of Kakula's Mineral Resources, research by Wood Mackenzie - a prominent, international industry research and consulting group, based in the U.K. - has independently demonstrated that the Kamoa-Kakula Project is the largest copper discovery in Zambia and the Democratic Republic of Congo (DRC), making it the largest copper discovery ever made in the history of mining on the African continent. In addition, research by Wood Mackenzie also shows that Kamoa-Kakula already ranks among the 10 largest copper deposits in the world.

The combined Kamoa-Kakula Indicated Mineral Resources now total 944 million tonnes grading 2.83% copper, containing 58.9 billion pounds of copper at a 1.0% copper cut-off grade and a minimum true thickness of three metres.

Kamoa-Kakula now also has Inferred Mineral Resources of 286 million tonnes grading 2.31% copper and containing 14.6 billion pounds of copper, also at a 1.0% copper cut-off grade and a minimum true thickness of three metres.

The Kakula Mineral Resource estimate was prepared by Ivanhoe Mines under the direction of Dr. Harry Parker and Gordon Seibel, both RM SME, of Amec Foster Wheeler. Dr. Parker and Mr. Seibel are the Qualified Persons for the estimate, which has an effective date of October 9, 2016. A technical report will be filed on SEDAR within 45 days of the issuance of the October 12, 2016 news release.

Kamoa-Kakula studies

With the initial Kakula Mineral Resource estimate completed, Kamoa Copper SA, holder of the Kamoa mining licence, has retained OreWin Pty. Ltd., of Adelaide, Australia, to prepare a preliminary economic assessment (PEA) for the development of the Kakula deposit. The PEA, which is expected to be completed before the end of 2016, will concentrate on establishing the economic parameters of potential mining operations at Kakula, including capital and operating costs for an underground mine.

The PEA also will analyze process facilities, mining planning and scheduling, including capital costs and operating costs for both mining and concentrator operations. The PEA will draw on recommendations from the Kamoa 2016 PFS, including the potential to increase production up to four million tonnes per year from the proposed initial mining area.

Kakula mineralization is characteristically bottom-loaded. The Kakula Mineral Resource estimate demonstrates that opportunities exist to mine Kakula at much higher lateral and vertical cut-offs than at Kamoa's Kansoko Sud. The clear zonation and grades in the central high-grade core should provide sequencing opportunities to mine at significantly elevated grades.

To help advance the mine-planning work at Kakula, the Kamoa technical team is rapidly proceeding with the engineering of a box cut at Kakula to accommodate decline ramps that will provide underground access to the deposit.

Qualified person

Scientific and technical information in this news release has been reviewed and approved by Stephen Torr, P.Geo., Ivanhoe Mines' Vice President, Project Geology and Evaluation, a Qualified Person under the terms of National Instrument 43-101. Mr. Torr has verified the technical data disclosed in this news release.

About Ivanhoe Mines

Ivanhoe Mines is advancing its three principal projects in Sub-Saharan Africa: Mine development at the Platreef platinum-palladium-gold-nickel-copper discovery on the Northern Limb of South Africa's Bushveld Complex; mine development and exploration at the Kamoa-Kakula Copper Project on the Central African Copperbelt in the DRC; and upgrading at the historic, high-grade Kipushi zinc-copper-lead-germanium mine, also on the DRC's Copperbelt. For details, visit www.ivanhoemines.com.

Cautionary statement on forward-looking information

Certain statements in this release constitute "forward-looking statements" or "forward-looking information" within the meaning of applicable securities laws, including without limitation: (i) statements regarding the expectation that material from Kamoa's Kakula and Kansoko zones can be successfully processed through the same concentrator plant; (ii) statements regarding that by employing a conventional milling and flotation process, Kakula should produce an extremely high-grade and clean copper concentrate that would be highly coveted by copper smelters around the world; (iii) statements that given the expected extremely low arsenic levels, Kamoa's concentrates are expected to attract a significant premium from copper-concentrate traders for use in blending with concentrates from other mines, (iv) statements regarding Kamoa concentrates will help to enable the other concentrates to meet the limit of 0.5% arsenic imposed by Chinese smelters to meet China's new environmental restrictions; (v) statements regarding the completion of 60,000 metres of drilling at Kakula in the second quarter of 2017; and (v) statements regarding that the preliminary economic assessment for the development of the Kakula deposit is expected to be completed before the end of 2016.

Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indicators of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed here, as well as unexpected changes in laws, rules or regulations, or their enforcement by applicable authorities; the failure of parties to contracts with the company to perform as agreed; social, political or labour unrest; changes in commodity prices (and copper in particular); limitations and availability of capital; and the failure of exploration programs or studies to deliver anticipated results (including the actual results of drilling and exploration activities), or results that would justify and support continued exploration, studies, development or operations.

This news release also contains references to estimates of Mineral Resources. The estimation of Mineral Resources is inherently uncertain and involves subjective judgments about many relevant factors. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. The accuracy of any such estimates is a function of the quantity and quality of available data, and of the assumptions made and judgments used in engineering and geological interpretation, which may prove to be unreliable and depend, to a certain extent, upon the analysis of drilling results and statistical inferences that may ultimately prove to be inaccurate. Mineral Resource estimates may have to be re-estimated based on, among other things: (i) fluctuations in copper prices or other mineral prices; (ii) results of drilling; (iii) results of metallurgical testing and other studies; (iv) changes to proposed mining operations, including dilution; (v) the evaluation of mine plans subsequent to the date of any estimates; and (vi) the possible failure to receive required permits, approvals and licences, or changes to any such permits, approvals or licences.

Although the forward-looking statements contained in this release are based upon what management of the company believes are reasonable assumptions, the company cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this release and are expressly qualified in their entirety by this cautionary statement. Subject to applicable securities laws, the company does not assume any obligation to update or revise the forward-looking statements contained herein to reflect events or circumstances occurring after the date of this release. The company's actual results could differ materially from those anticipated in these forward-looking statements as a result of the factors set forth in the "Risk Factors" section and elsewhere in the company's most recent Management's Discussion and Analysis report and Annual Information Form, available at www.sedar.com.

Source: Ivanhoe Mines

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