Name and Location
Platreef platinum group metals/copper/nickel/gold project, Limpopo, South Africa.



Client
The project is 64%-owned by Ivanhoe Mines and 10%-owned by a Japanese consortium of Itochu Corporation; ITC Platinum, an Itochu affiliate; Japan Oil, Gas and Metals National Corporation; and Japan Gas Corporation. The Japanese consortium's 10% interest in the Platreef project was acquired in two tranches for $290-million.

Ivanhoe recently implemented its proposed broad-based, black economic-empowerment structure, which includes communities, employees and entrepreneurs, who together own 26% of the Platreef project. The company will begin the roll-out of its social and labour plan, which includes the identification and implementation of local economic development projects.

Project Description
The Platreef project involves the development and construction of a highly mechanised underground mine to access the underground Flatreef discovery at Ivanhoe’s Platreef project, on the northern limb of the Bushveld Igneous Complex, near Mokopane, in Limpopo. The company is sinking a bulk-sample shaft to obtain mineralised bulk samples for further studies. Ivanhoe has started the sinking of Shaft No 1 to obtain a mineralised bulk sample to complete the development assessment of the Flatreef.

The Flatreef mineral resource, with a strike length of 6 km, predominantly lies within a flat to gently-dipping portion of the Platreef mineralised belt at relatively shallow depths of about 700 m to 1 100 m below surface.

A preliminary economic assessment (PEA) recommends a phased approach to the development of a large, mechanised, underground mine.

Ivanhoe's plan for the project entails three phases of potential development for an underground mine and the concentrator processing facility:
• Phase 1 – a four-million-tonne-a-year mine and concentrator.
• Phase 2 – an eight-million-tonne-a-year mine and concentrator (base case).
• Phase 3 – a 12-million-tonne-a-year mine and concentrator.

Opportunities also exist for additional phases of development beyond 12-million tonnes a year, subject to further study.

The base case for the Platreef PEA analysis is the eight-million-tonne-a-year mine and concentrator production scenario.

The base case is targeting 785 000 oz/y of platinum, palladium, rhodium and gold production.

The development phases will be implemented depending on market demand, smelting and refining capacity and capital availability. It could even consider an expansion beyond the third phase, subject to further study.

Value
The base case scenario is targeting an estimated preproduction capital requirement of about $1.7-billion, including $381-million in contingencies.

Duration
Phase 1 to establish an operating platform to support the start of production at a nominal plant capacity of four-million tonnes a year is expected by 2020. Phase 2, which includes a ramp-up to a plant capacity of eight-million tonnes a year, is expected by 2024.Phase 3, to a steady-state plant capacity of 12-million tonnes a year, is expected by 2028.

Latest Developments
A mining right application for the Platreef project was lodged with the South African government's Department of Mineral Resources (DMR) in June 2013, approved on May 30, 2014, and officially executed by the Mineral Resources Minister on November 4, 2014.

The mining right authorises the company to exclusively mine and process platinum-group metals, nickel, copper, gold, silver, cobalt, iron, vanadium and chrome from the mining area for an initial period of 30 years, and may be renewed for an unlimited number of consecutive periods each of up to 30 years, in accordance with Section 24 of the Mineral and Petroleum Resources Development Act.

Mining operations must be conducted in accordance with the Mining Work Programme (MWP) and any amendment to such MWP, and with an approved Environmental Management Plan.

The company will resume all physical exploration activities and Shaft 1 site work as soon as possible.

Surface construction work for Shaft 1, which was suspended on May 26, 2014, will resume following the execution of the Platreef mining right. Shaft 1 will have an internal diameter of 7.25 m, with a hoisting capacity of 2.5-million tonnes a year. It is projected to reach a total depth of 975 m in 2018. In the interim, it is planned to be used in 2017 to collect a mineralised bulk sample for metallurgical testing from the
800 m level of the project's Flatreef deposit. South Africa-based Aveng Mining, the shaft-sinking contractor, is responsible for the excavation of the boxcut access for the shaft collar and vent plenum. The stage- and hoist-winding equipment has been refurbished and is being stored off-site. The fabrication of the temporary head frame has started.

Shaft 1, including some initial lateral, underground development work, is expected to be fully funded from dedicated funds remaining in Ivanhoe's treasury from the $280-million received in 2011 for the sale of an 8% interest in the Platreef project to the Itochu-led Japanese consortium.

Ivanhoe awarded the contract for the design and engineering of Shaft 2 – the ten-metre-diameter main production shaft capable of hoisting six-million tonnes a year, fitted with a 150-person equipment cage – to South Africa-based Murray & Roberts Cementation in June 2014. This will enable the company to start Shaft 2 development works in the first quarter of 2015, subject to necessary approvals and funding. The boxcut designs are complete and the contract for the early engineering works for the winding equipment has been awarded to South Africa-based FLSmidth.

Whittle Consulting, an Australian firm, has been contracted to conduct an enterprise optimisation study for each phase of the project. The study is based on the four-million-tonne-a-year PFS case and identifies the key drivers of net present value and possible opportunities to enhance driver performance by applying simultaneous optimisation through the use of Whittle's in-house software. Completion of the study, with recommendations, is targeted for the fourth quarter of 2014.

Completion of a PFS – currently focused on the Phase 1, four-million-tonne-a-year production case – is targeted for the fourth quarter of 2014. Studies will continue on the Phase 2 base-case eight-million-tonne-a-year and Phase 3, 12-million-tonne-s-a-year production scenarios in 2015.

Key Contracts and Suppliers
Aveng Mining (primary sinking contractor); DRA, in consultation with Stantec, SRK, Geo Tail, Golder Associates and Digby Wells (PFS); Murray & Roberts Cementation (design and engineering of Shaft No 2); FLSmidth (early engineering works for the winding equipment); Whittle Consulting (an enterprise optimisation study for each phase of the project) and Mintek (metallurgical testwork).

On Budget and on Time?
The Platreef project is on target for initial underground development in 2018 and concentrator start-up in the fourth quarter of 2019.



Contact Details for Project Information
Ivanhoe Mines VP communications & public affairs Jeremy Michaels, tel +27 11 088 4300 or email jeremy.michaels@ivanplats.com.
Ivanhoe Mines VP and project director Gerick Mouton, tel +27 11 088 4300 or email gerickm@ivanplats.com.
Aveng Mining, tel +27 11 821 1800.
DRA, tel  +27 11 202 8600 or email info@DRAglobal.com.
SRK, tel +27 11 441 1111, fax +27 11 880 8086 or email johannesburg@srk.co.za.
Geo Tail, tel +27 12 348 1051, fax +27 86 686 9023 or email ejc@geotail.co.za
Golder Associates, Elize Herselman, tel +27 21 912 1060, fax +27 86 582 1561 or email eherselman@golder.co.za
Digby Wells, tel +27 11 789 9495, fax +27 11 789 9498 or email info@digbywells.co.za.
Murray & Roberts Cementation, tel +27 11 201 5000, fax +27 11 201 5500 or email info.cementation@murrob.com
Mintek, tel +27 11 709 4111 or fax +27 11 793 2413.
FLSmidth, tel +1 801 871 7000, fax +1 801 871 7001 or email info.slc@flsmidth.com.
Whittle Consulting, tel +61 3 9898 1755 or email info@whittleconsulting.com.au.