Ivanhoe Australia has had great success in discovering a series of mineral resources rich in copper, gold, molybdenum and rhenium on the Cloncurry tenements, including Merlin, the world's highest grade molybdenum and rhenium deposit.

These discoveries and the integration of them with the recently acquired Osborne Operation, provide the opportunity for Ivanhoe Australia to start exploiting its mineral resources from as early as late 2011 from the Little Wizard Mo-Re Project.

Ivanhoe Australia's projects which have potential for development in the near term include mineral resources contained at:

• Mount Dore, including the Merlin deposit and the Little Wizard deposit;
• the Osborne Operation, particularly Kulthor and Osborne Deeps;
• Mount Elliott; and
• the Starra Line.

With the exception of Mount Elliot, these projects are being assessed for development in parallel with the Merlin project to be processed in operating campaigns to economically provide the critical mass to allow the Osborne Operation to return to its full operating rate of 2mtpa.


Figure 1 - Plan showing location of major projects and the proposed 58 km Osborne-Merlin haul road

The currently proposed development sequence, which is being evaluated as part of the Merlin pre-feasibility study (expected to be completed by 4Q2010), is as follows:

• 2011 - Access and commence processing of high-grade Little Wizard ore
• 2012 - Continue processing Little Wizard ore
             - Access and commence processing of Merlin molybdenum/rhenium ore through Osborne
             plant
             - Process copper-gold ore from the Kulthor deposit, acquired as part of the Osborne Operation
• 2013 - Increase processing of Merlin molybdenum/rhenium ore through Osborne
             - Process Kulthor copper-gold ore to maximise operational capacity
• 2014 - Full Merlin molybdenum/rhenium production processed through the Osborne treatment
             facilities

Future Integrated Development

The following work is being undertaken in order to integrate the Cloncurry and Osborne sites and achieve the Company's targeted production levels for the 2011-2015 period:

• Development of the Merlin Decline.
• Construction of a 58km haul road between Merlin (Lucky Luke) and the Osborne site.
• Establishment of a site operations team.
• Completion of the copper-gold study.

Construction of Osborne-Merlin haul road

Work has commenced for the 58 km haul road access to the Cloncurry tenements. Ivanhoe Australia's production plans foresee recommencement of operations at the Osborne plant in 2011 with Little Wizard bonanza grade molybdenum and rhenium ore being the first to be processed via gravity separation and/or flotation. In 2012 processing of both Merlin ore and Kulthor copper-gold ore is planned to commence. Prefeasibility study work for Merlin indicates that steady state ore production of 500 ktpa from an underground mine is achievable.