Ivanhoe Australia, through its wholly-owned subsidiary, Ivanhoe Cloncurry Mines, holds 100% title to the Mount Elliott project. The Mount Elliott project is located around 13 km to the north of the Mount Dore project.

The region has a long history of mining and several operating and historical mines are located within close proximity to the Mount Elliott project site.

Mining commenced on the Mount Elliott zone shortly after its discovery by John Elliott in 1899. The mining and on-site smelting of high grade copper-gold ores continued until the 1920s, producing around 24,800 tonnes of copper and 34,000 ounces of gold from 1909 to 1919.

Modern exploration in the area has been undertaken by a number of companies since the 1950s and the SWAN zone was first recognised in 1975. However the discovery of the Starra Line shortly afterwards saw the focus of exploration shift to that prospect.

The Mount Elliott mine was reopened as a modern decline mine in 1993 and mining and treatment of high grade copper-gold ores continued until closure due to low copper and gold prices in 2003. During this period, the Mount Elliott mine produced approximately 5.06 million tonnes of ore at 2.90% copper and 1.5 g/t gold. Ivanhoe Cloncurry Mines acquired the Mount Elliott project in 2003.

Geology

The Mount Elliott project comprises a number of previously identified zones of mineralisation including the South West Anomaly ("SWAN"), Mount Elliott, South West Elliott ("SWELL") and Corbould zones. Mineralisation is primarily hosted in banded and brecciated calc-silicates and is associated with albite-pyroxene-magnetite-chalcopyrite-pyrite alteration.

Early explorative work undertaken by Ivanhoe Australia was focussed on the SWAN zone, located west of the old Mount Elliott mine, with the intention of expanding the known oxide and secondary copper and gold mineralisation that had been identified by previous explorers and mine operators. The drill program undertaken by Ivanhoe Australia in 2004 was successful in expanding the area of known copper and gold mineralisation in both the oxide and secondary copper sulphide zones and also encountered strong primary copper sulphide and gold mineralisation at depth.

Drilling from 2006 to 2009 increased the footprint of the SWAN resource and greatly increased its depth extent.

The resource below no longer includes the copper in the oxide clay zone where metallurgical difficulties in recovering copper from the refractory clays reduce the likelihood of this material being economic to treat. In the past this material has been classified as Measured and Indicated and in 2008 Inferred to reflect the uncertainty in eventual economic extraction of copper from the clays.

The discovery holes for the deeper Mount Elliott system were MEHQ 1095, which intersected 290 metres averaging 0.74% copper and 0.62 g/t gold, and MEHQ 1130, which included an intersection of 81.2 metres averaging 1.71% copper and 0.90 g/t gold. One particularly significant hole was drill hole MEQ1194 on the eastern flank which intersected 342 metres @ 1.77% copper equivalent (eCu) and indicated the presence of a large, near-surface zone of additional higher-grade mineralisation between the SWAN high-grade zone (HGZ) and the original Mount Elliott mine.

There are now 2,969 holes drilled into the Mount Elliott mineralised area for 304,930 m of drilling, including 210 deep holes for 124,683 m drilled by Ivanhoe since 2004.

Mineral Resource Estimate

The Indicated and Inferred Mineral Resource for Mount Elliott was announced in October 2010 and is shown in the tables below.

Table 1: Mineral Resource Estimates for Mount Elliott deposits as at September 1, 2010, at 0.3% eCu cut-off grade

Classification	Area	Ore Type/	Tonnes	Cu	Au	eCu	Copper	Gold
>0.3eCu%(0.7)		Location	(M)	(%)	(g/t)	(%)	(,000 tonnes)	(,000 ounces)
Indicated	Mount Elliott	Mine	15	1.24	0.63	1.68	181	296
	SWAN	Clay	3.8		0.64	0.45	-	78
		Transitional	50	0.44	0.28	0.64	220	450
		Primary	120	0.51	0.31	0.72	612	1,196
	Other	Transitional	20	0.34	0.22	0.51	68	141
		Primary	1.2	0.42	0.21	0.57	5	8
	Sub total		210	0.52	0.32	0.74	1,086	2,170
Inferred	Mount Elliott	Mine	7.0	0.60	0.30	0.81	42	68
	SWAN	Clay	2.5		1.10	0.76	-	88
		Transitional	7.0	0.34	0.16	0.46	24	36
		Primary	250	0.41	0.22	0.55	1,025	1,768
	Other	Transitional	36	0.33	0.19	0.48	118	219
		Primary	60	0.38	0.17	0.52	228	328
	Sub total		360	0.40	0.22	0.56	1,437	2,507
	Total		570	0.44	0.26	0.62	2,523	4,677

Estimates at higher cut-offs have also been made including at 1% eCu as detailed below;

Table 2: Mineral Resource Estimates for Mount Elliott deposits, at 1.0%eCu cut-off grade

Classification	Area	Ore Type/	Tonnes	Cu	Au	eCu	Copper	Gold
>1.0eCu%(0.7)		Location	(M)	(%)	(g/t)	(%)	(,000 tonnes)	(,000 ounces)
Indicated	Mount Elliott	Mine	10	1.55	0.78	2.02	157	253
	SWAN	Clay					-	-
		Transitional	5.5	0.89	0.56	1.28	49	99
		Primary	22	0.90	0.54	1.33	198	382
	Other	Transitional	0.5	0.82	0.58	1.19	4	9
		Primary	0.1	1.13	0.49	1.46	1	1
	Sub total		38	1.08	0.61	1.50	408	744
Inferred	Mount Elliott	Mine	1.6	1.12	0.59	1.54	18	30
	SWAN	Clay					-	-
		Transitional	1.6	0.71	0.59	1.12	11	30
		Primary	18	0.83	0.53	1.29	148	303
	Other	Transitional	0.70	1.66	0.76	2.20	12	17
		Primary	2.1	1.00	0.44	1.31	21	30
	Sub total		24	0.90	0.53	1.35	210	411
	Total		62	1.01	0.58	1.41	618	1,155

Note:

1. eCu is calculated as eCu = Cu% + 0.7 * Au g/t, Criteria used to estimate the relative value of copper and gold in ore were as follows: Copper recovery to concentrate 92%, gold recovery to copper concentrate 82% based on recent testwork confirming past actual recoveries from the Mount Elliott mine. Copper price of USD 2.30/lb and gold USD 1,000/ounce used. Standard industry deductions used for smelting and refining of copper and gold and deductions of government royalties.

Figure 1 shows the schematic long section diagram of the mineralised zone interpreted at SWAN using the results available to date with a 0.25% copper cut-off.

Figure 1: Mount Elliott Drill Holes and Magnetics Survey Results

Figure 1 highlights the potential size of the deposit and indicates that the surface area of influence of approximately 1 km2 is matched by the 1 km depth extent of the mineralisation (see Figures 2 & 3).


Figure 2: Mount Elliott Drill Holes and mineralised grade-shell at 0.25%eCu


Figure 3: Mount Elliott Drill Holes and mineralised grade-shell at 1%eCu

Ivanhoe Australia will continue exploration to extend known mineralisation along the northern western and southern extensions of the Mount Elliott prospect with the objective being to establish a mineral resource for future development.

Development

The Mount Elliott deposit appears to have the characteristics that it could be exploited using open pit, sub-level and block-caving mining methods, in conjunction with a conventional copper-gold flotation recovery process.

A scoping study to assess the viability of developing Mount Elliott into a significant mining project is expected to commence in 2011.

Assuming an economically viable resource is established at SWAN, Ivanhoe Australia's longer term development strategy for the Cloncurry Project is to use the infrastructure associated with the SWAN development to increase the returns from its other prospects.

The SWAN zone has been deeply weathered and oxidised resulting in a vertical zonation consisting of an oxide zone to a depth of about 60m below surface and an underlying transition zone extending to a depth of up to 150m below surface.

Both the oxide and transition zones may represent material that could be treated by SX-EW although metallurgical test work by previous explorers obtained poor recoveries. The oxide and transition zones contain significant gold which would not be recovered by conventional SX-EW processing and some form of differential leaching may be required.