EXHIBIT 3
  IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
  INTRODUCTION
    www.sedar.com.
    44
    OVERVIEW
  HIGHLIGHTS
  
    Completion of an Investment Agreement for the development of
    the Oyu Tolgoi copper-gold mining complex will continue to be a
    principal priority for Mongolias coalition government when
    the Parliament reconvenes during the first week of April in its
    2009 spring session. A draft agreement was approved in principle
    by the Mongolian Cabinet and National Security Council in March
    and Ivanhoe Mines is awaiting Parliaments review and
    approval.
    In December 2008, Ivanhoe Mines discovered a new zone of
    high-grade gold and copper mineralization at Oyu Tolgoi, between
    the previously discovered Heruga Deposit and the Southwest Oyu
    Deposit.
    The Oyu Tolgoi mineralized structural corridor, as currently
    defined, now has a total strike length in excess of 20
    kilometres  encompassing Oyu Tolgoi in the centre and
    more recent extensions to the south and north onto the joint
    Ivanhoe-Entrée agreement area.
    Ivanhoe Mines 80%-owned subsidiary, SouthGobi Energy
    Resources (SouthGobi) (SGQ  TSX.V), commenced sales
    of high-quality thermal coal at its Ovoot Tolgoi mine in
    southern Mongolia in September 2008.
    SouthGobi received an initial NI
    43-101
    resource report for its Mamahak metallurgical coal project in
    East Kalimantan, Indonesia. SouthGobi is studying the
    opportunity to begin surface coal mining at the Mamahak Project
    later this year.
    Ivanhoe Mines 83%-owned subsidiary, Ivanhoe Australia
    Limited (Ivanhoe Australia) (IVA  ASX), has
    discovered a new, high-grade molybdenum and rhenium deposit at
    its Merlin Project on its Cloncurry tenements in northwestern
    Queensland. Drilling continues to encounter significant
    intercepts of high-grade molybdenum and rhenium and expand the
    size of the deposit, which is open along strike and to depth.
    Ivanhoe Australia has significantly expanded the
    mineralization of its Swan high-grade copper-gold zone at the
    Mount Elliott Project. 1




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
   
    Ivanhoe Mines, together with several Kazakh strategic
    partners, is advancing the Altynalmas Gold Project in
    Kazakhstan.
    In May 2008, Ivanhoe Mines sold its shareholdings of Jinshan
    Gold Mines. Proceeds received totalled $216.7 million.
    Ivanhoe Mines recorded a $201.4 million gain on the sale of
    its interest in Jinshan in Q208.
    Ivanhoe Mines incurred $260.3 million in exploration and
    mine development expenses in 2008, down from $304.0 million
    in 2007.  FINANCIAL
    RESULTS
         2




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
  INDEX
    1.

Selected Annual Financial Information


42.

Review of Operations


4A. Exploration Activities


5B. Discontinued Operations


17C. Administrative and Other


183.

Selected Quarterly Data


194.

Fourth Quarter


205.

Liquidity and Capital Resources


206.

Share Capital


237.

Outlook


238.

Off-Balance-Sheet Arrangements


249.

Contractual Obligations


2510.

Changes in Accounting Policies


2511.

Critical Accounting Estimates


2612.

Recent Accounting Pronouncements


2813.

International Financial Reporting Standards


2914.

Risks and Uncertainties


2915.

Related-Party Transactions


4016.

Disclosure Controls and Procedures


4217.

Managements Report on Internal Control over Financial
    Reporting


4218.

Qualified Persons


4319.

Oversight Role of the Audit Committee


4320.

Cautionary Statements


4321.

Forward-Looking Statements


4422.

Managements Report to Shareholders


45  3




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
  SELECTED
    ANNUAL FINANCIAL INFORMATION
    Years Ended December 31,2008


2007


2006($ in millions of U.S. dollars, except per share
    information)Revenue

$
3.1


$



$
Exploration expenses


(260.3
)


(304.0
)


(213.0
)General and administrative


(27.5
)


(27.1
)


(28.2
)Foreign exchange (losses) gains


(62.9
)


11.9



0.4Gain on sale of long-term investment and note receivable


201.4



1.0



2.7Write-down of carrying value of investment held for sale






(134.3
)


Write-down of carrying value of long-term investments


(7.1
)






(1.0
)Write-down of carrying value of other long-term investments


(18.0
)


(24.5
)


Net loss from continuing operations

$
(218.1
)

$
(489.6
)

$
(218.3
)Net income from discontinued operations


34.0



31.9



19.6Net loss

$
(184.1
)

$
(457.7
)

$
(198.7
)Net loss per share from continuing operations

$
(0.58
)

$
(1.31
)

$
(0.65
)Net income per share from discontinued operations


0.09



0.09



0.06Net loss per share

$
(0.49
)

$
(1.22
)

$
(0.59
)Total assets

$
742.2


$
530.2


$
703.2Total long-term financial liabilities

$
354.4


$
142.9


$
5.1   REVIEW OF
    OPERATIONS
    
    Ivanhoe Mines 100%-owned Oyu Tolgoi Copper and Gold
    Project in southern Mongolia.
    Ivanhoe Mines 80% stake in SouthGobi, which is producing
    and selling coal from its Ovoot Tolgoi Mine in southern Mongolia
    to customers in China and has ongoing exploration and
    development programs at several other Mongolian and Indonesian
    coal prospects.
    Ivanhoe Mines 83% stake in Ivanhoe Australia, which is
    exploring its Cloncurry Iron-Oxide-Copper-Gold (IOCG) Project in
    Queensland, Australia.
    Ivanhoe Mines 49% interest in Altynalmas Gold which owns
    the Bakyrchik Gold Mine in Kazakhstan.   4




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
            A.
    EXPLORATION
    ACTIVITIES   5




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
    Years Ended December 31,2008


2007($000s of U.S. dollars)MongoliaOyu Tolgoi

$
155,999


$
245,520Coal Division


44,696



14,760Other Mongolia Exploration


6,560



14,595207,255



274,875Australia


46,457



22,096Indonesia


4,547



3,669Other


2,022



3,384$
260,281


$
304,024   MONGOLIA
  OYU
    TOLGOI COPPER-GOLD PROJECT
  www.sedar.com.
    Oyu
    Tolgoi awaiting an approved Investment Agreement
         6




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
                    Oyu
    Tolgoi Project Development
  Underground
    development program advancing at high-grade Hugo Dummett North
    Deposit
   7




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
      31-year-old
      Ivanhoe
    Mines received $121.5 million from Rio Tinto from the sale
    of Oyu Tolgoi mining equipment
     8




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
  Engineering
    and development advancing in readiness for mine
    construction
      Oyu
    Tolgoi Exploration
    Additional
    drilling increases size of Heruga Deposit
    Oyu
    Tolgoi exploration now concentrated on gold-rich copper
    discovery between Heruga and Southern Oyu Deposits
       9




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
    Geological
    mapping and ground magnetometer surveys locate southern
    extension of Heruga Deposit
      Entrée
    Gold Joint Venture is being formed
    MONGOLIA
  COAL
    PROJECTS
  SOUTHGOBI
    ENERGY RESOURCES (80% owned)
  SouthGobis
    Ovoot Tolgoi coal mine in production
    24-hour
 10




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
          SouthGobi
    has reported a revision of the previous independent resource
    estimate for the West Field at its Ovoot Tolgoi coal mine in
    Mongolia
       11




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
      Table 1:
    TAG Surface Coal Resources Summary for the West Field of the
    Ovoot
    Tolgoi Project as of June 20, 2008
    (incorrect  as originally reported in July
    2008)
  Resources at Ovoot TolgoiASTM Coal


Measured


Indicated


InferredResource Area

Rank


(Tonnes)


(Tonnes)


(Tonnes)West Field


hvB to hvA



79,567,545



113,623,016



138,821,278Total





193,190,561


138,821,278     Table 2:
    TAG Surface Coal Resources Summary for the West Field of the
    Ovoot
    Tolgoi Project as of June 20, 2008
    (corrected)
  Resources at Ovoot TolgoiASTM Coal


Measured


Indicated


InferredResource Area

Rank


(Tonnes)


(Tonnes)


(Tonnes)West Field


hvB to hvA



74,973,000



27,687,000



18,761,000Total





102,660,000


18,761,000     Table 3:
    Restated Ovoot Tolgoi West Field and South-East Field In-Place
    Surface
    Coal Resources Summary
  Resources at Ovoot TolgoiASTM Coal


Measured


Indicated


InferredResource Area

Rank


(Tonnes)


(Tonnes)


(Tonnes)South-East Field


hvB to hvA



49,752,000



15,987,000



6,502,000West Field


hvB to hvA



74,973,000



27,687,000



18,761,000Total





168,399,000


25,263,000  12




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
  Ovoot
    Tolgoi Underground Project  thick seams of coking and
    semi-soft coals identified at depth provide potential for the
    development of an underground mining operation
  43-101-compliant
  Table 4:
    Underground Resources Summary for the West Field of the Ovoot
    Tolgoi Project
  Underground Resourcesat Ovoot TolgoiASTM Coal


Measured


Indicated


InferredResource Area

Rank


(Tonnes)


(Tonnes)


(Tonnes)West Field


mhB to hvA



3,867,000



12,590,000



36,735,000Total





16,457,000


36,735,000     Sumber
    Project a new coal discovery near Ovoot Tolgoi
      SouthGobi
    closed four equity financings in 2008
    SouthGobi
    names senior Asia mining investment banker Alexander Molyneux as
    President to lead the expansion of coal projects in Mongolia and
    Indonesia
   13




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
  INDONESIA
  COAL
    PROJECTS
  SOUTHGOBI
    ENERGY RESOURCES (80% owned)
  SouthGobi
    increased its working interest in Mamahak Coal Project,
    Indonesia
    43-101-compliant
        AUSTRALIA
  IVANHOE
    AUSTRALIA (83% owned)
  A$125 million
    IPO successfully completed; trading initiated on the Australian
    Stock Exchange
     14




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
  Cloncurry
    IOCG Project reports ongoing discoveries
          Major New
    Discovery of Molybdenum and Rhenium  Merlin
    Project
            55-degree
     15




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
    Mount
    Elliott Project
        Mount
    Dore Project
      Starra
    Line Project
    Exco
    Resources Shareholding and Joint Venture Agreement
    KAZAKHSTAN
  Bakyrchik
    Gold Mine forms part of new gold company with Ivanhoe
    partners
   16




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
    Pilot
    Roaster plant commissioned
    CHINA
  Gain
    of $201.4 million from sale of Ivanhoe Mines stake in
    Jinshan
    Exploration
    continues in Northern China, focusing on high-quality projects
    for acquisition
      OTHER
  Ivanhoe
    Mines appoints Livia Mahler as an independent
    director
    B.
    DISCONTINUED
    OPERATIONS   17




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
          C.
    ADMINISTRATIVE
    AND OTHER  General and administrative
    costs.
  Interest income.
  Interest expense.
  Foreign exchange loss.
  Share of loss on significantly influenced
    investees.
  Writedown of long-term investments.
  Writedown of other long-term investments.
  Gain on sale of long-term investment and note
    receivable.
 18




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
  SELECTED
    QUARTERLY DATA
  Quarter Ended



Year EndedDec-31


Sep-30


Jun-30


Mar-31



Dec-312008


2008


2008


2008



2008($ in millions of U.S. dollars, except per share
    information)Revenue

$
3.1


$
0.0


$
0.0


$
0.0



$
3.1Exploration expenses


(76.0
)


(59.7
)


(67.3
)


(57.3
)



(260.3
)General and administrative


(8.1
)


(5.1
)


(7.5
)


(6.8
)



(27.5
)Foreign exchange (losses) gains


(40.6
)


(20.0
)


(1.0
)


(1.3
)



(62.9
)Writedown of other long-term investments


(18.0
)















(18.0
)Gain on sale of long-term investments










201.4








201.4Net (loss) income from continuing operations


(168.1
)


(98.7
)


118.3



(69.6
)



(218.1
)Income from discontinued operations


8.1



10.7



9.2



6.0




34.0Net (loss) income


(160.0
)


(88.0
)


127.5



(63.6
)



(184.1
)Net (loss) income per share  basic
    Continuing operations

$
(0.45
)

$
(0.26
)

$
0.32


$
(0.19
)


$
(0.58
)Discontinued operations

$
0.02


$
0.03


$
0.02


$
0.02



$
0.09Total

$
(0.43
)

$
(0.23
)

$
0.34


$
(0.17
)


$
(0.49
)Net (loss) income per share  diluted
    Continuing operations

$
(0.45
)

$
(0.26
)

$
0.29


$
(0.19
)


$
(0.58
)Discontinued operations

$
0.02


$
0.03


$
0.02


$
0.02



$
0.09Total

$
(0.43
)

$
(0.23
)

$
0.31


$
(0.17
)


$
(0.49
)   Quarter Ended



Year EndedDec-31


Sep-30


Jun-30


Mar-31



Dec-312007


2007


2007


2007



2007Revenue

$
0.0


$
0.0


$
0.0


$
0.0



$
0.0Exploration expenses


(96.6
)


(74.8
)


(79.1
)


(53.5
)



(304.0
)General and administrative


(9.0
)


(7.0
)


(5.9
)


(5.2
)



(27.1
)Foreign exchange gains (losses)


2.3



2.1



6.7



0.8




11.9Writedown of other long-term investments


(24.5
)















(24.5
)Gain on sale of long-term investments














1.0




1.0Net (loss) income from continuing operations


(265.5
)


(90.0
)


(78.7
)


(55.4
)



(489.6
)Income from discontinued operations


11.9



6.8



4.6



8.6




31.9Net (loss) income


(253.6
)


(83.1
)


(74.2
)


(46.8
)



(457.7
)Net (loss) income per share  basic
    Continuing operations

$
(0.71
)

$
(0.24
)

$
(0.21
)

$
(0.15
)


$
(1.31
)Discontinued operations

$
0.04


$
0.02


$
0.01


$
0.02



$
0.09Total

$
(0.67
)

$
(0.22
)

$
(0.20
)

$
(0.13
)


$
(1.22
)Net (loss) income per share  diluted
    Continuing operations

$
(0.71
)

$
(0.24
)

$
(0.21
)

$
(0.15
)


$
(1.31
)Discontinued operations

$
0.04


$
0.02


$
0.01


$
0.02



$
0.09Total

$
(0.67
)

$
(0.22
)

$
(0.20
)

$
(0.13
)


$
(1.22
)  19




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
  FOURTH
    QUARTER
  Revenue.
  Exploration.
  Administrative costs.
  Foreign exchange loss.
  Writedown of other long-term investments.
  Net income from discontinued
    operations.
  LIQUIDITY
    AND CAPITAL RESOURCES
  Cash
    Flow
  Operating activities.
  Investing activities.
  Financing activities.
  Liquidity
    and Capital Resources
     20




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
      Asset-Backed
    Commercial Paper
          
    $22.7 million of MAV2
    Class A-1
    Notes;
    $22.7 million of MAV2
    Class A-2
    Notes;
    $4.1 million of MAV2 Class B Notes;
    $1.5 million of MAV2 Class C Notes;
    $1.3 million of MAV2 IA Class 1 Notes;
    $1.0 million of MAV2 IA Class 2 Notes; 21




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
   
    $0.9 million of MAV2 IA Class 3 Notes;
    $1.2 million of MAV2 IA Class 13 Notes;
    $1.6 million of MAV3 TA Class 14 Notes; and
    $3.2 million of MAV3 TA Class 25 Notes.      Accrued Interest from August 2007:

$2.7 millionBankers Acceptance Rate:

1.5%Discount Rates:

9% to 25%Maturity Dates:

7.92 yearsExpected Return of Principal:A-1 Notes

100%A-2 Notes

100%B Notes

10%C Notes

0%IA Notes

0%TA Notes

100%       Financial
    Instruments
       22




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
        SHARE
    CAPITAL
    
    378.1 million common shares outstanding.
    14.0 million incentive stock options outstanding, with a
    weighted average exercise price of C$7.88 per share. Each option
    is exercisable to purchase a common share of the Company at
    prices ranging from C$2.82 to C$16.79 per share.
    92.1 million share purchase warrants outstanding granted to
    Rio Tinto, with exercise prices ranging between US$8.38 and
    US$9.02 per share (Series A and B warrants). These warrants
    are exercisable until two years after the earlier of completion
    of the Investment Agreement and October 27, 2009.
    35.0 million Series C share purchase warrants
    outstanding granted to Rio Tinto as part of the
    $350.0 million credit facility agreement, with an exercise
    price of US$10.00 per share. These warrants are exercisable
    until October 24, 2012.
    1.4 million share purchase warrants with an exercise price
    of C$3.15 per share. These warrants were granted to Rio Tinto
    under certain anti-dilution provisions in the 2006 Private
    Placement Agreement (Anti-Dilution warrants). These warrants are
    divided into two series and have lives identical to the
    Series A warrants and B warrants.  OUTLOOK
    General
    Economic Conditions
    Exchange
    rates
   23




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
    Capital
    Expenditures
          Other
    information
    OFF-BALANCE-SHEET
    ARRANGEMENTS
   24




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
  CONTRACTUAL
    OBLIGATIONS
  Payments Due by PeriodLess than 1








AfterYear


1 - 3 Years


4 - 5 Years


5 Years



Total($000s of U.S. dollars)Operating leases(1)

$
2,488


$
3,811


$
3,010


$




$
9,309Purchase obligations(1)


37,550
















37,550Debt obligations(2)


15,963



374,165












390,128Other long-term obligations(3)


2,229











17,891




20,120Total

$
58,230


$
377,976


$
3,010


$
17,891



$
457,107     (1)
    
    These amounts mainly represent various long-term contracts that
    include commitments for future operating payments under
    contracts for drilling, engineering, equipment purchases,
    rentals and other arrangements.(2)
    
    Debt obligations consist of amounts due under credit facilities
    and long-term convertible credit facility.(3)
    
    Other long-term obligations consist of asset retirement
    obligations.    CHANGES
    IN ACCOUNTING POLICIES
    SFAS No. 157-3, FAS 157-3), FAS 157-3 states FAS 157-3 FAS 157-3
   25




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
      CRITICAL
    ACCOUNTING ESTIMATES
      
    Carrying Values of Property, Plant and Equipment;
    Depletion and Depreciation of Property, Plant and Equipment;
    Asset Retirement Obligations; and
    Income Taxes.  Carrying
    values of Property, Plant and Equipment
      Depletion
    and Depreciation of Property, Plant and Equipment
     26




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
        Asset
    Retirement Obligations
        Income
    Taxes
     27




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
        RECENT
    ACCOUNTING PRONOUNCEMENTS
    Business Combinations
  Noncontrolling
    Interests in Consolidated Financial Statements  an
    amendment of ARB No. 51
  No. 08-6, Equity Method Investment Accounting
    Considerations (EITF 08-6), EITF 08-6 EITF 08-6 EITF 08-6
  14-1, Accounting for Convertible Debt Instruments That May be
    Settled in Cash upon Conversion (Including Partial Cash
    Settlement) 14-1). 14-1
 28




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
  14-1 14-1. 14-1 14-1 14-1 14-1
  INTERNATIONAL
    FINANCIAL REPORTING STANDARDS
  52-321 Early adoption of International Financial Reporting
    Standards, Use of US GAAP and References to IFRS-IASB
  RISKS AND
    UNCERTAINTIES
    Ivanhoe
    Mines may be unsuccessful in completing an Investment Agreement
    with the Government of Mongolia.
   29




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
    Ivanhoe
    Mines ability to carry on business in Mongolia is subject
    to political risk.
        There
    can be no assurance that Ivanhoe Mines will be capable of
    raising the additional funding that it needs to carry out its
    development and exploration objectives.
   30




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
  and/or
    Lack
    of infrastructure in proximity to Ivanhoe Mines material
    properties could adversely affect mining
    feasibility.
   31




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
  The
    resource and reserve estimates for Ivanhoe Mines projects
    disclosed in this MD&A are estimates only and are subject
    to change based on a variety of factors, some of which are
    beyond Ivanhoe Mines control. Ivanhoe Mines actual
    production, revenues and capital expenditures may differ
    materially from these estimates.
        Mining
    projects are sensitive to the volatility of metal
    prices.
     32




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
      Copper


GoldYear

High


Low


Average


High


Low


Average2004

$
1.49


$
1.06


$
1.30


$
454


$
375


$
4092005

$
2.11


$
1.39


$
1.67


$
536


$
411


$
4442006

$
3.99


$
2.06


$
3.05


$
725


$
524


$
6042007

$
3.77


$
2.37


$
3.23


$
841


$
604


$
6952008

$
4.08


$
1.26


$
3.15


$
1,011


$
713


$
872   Ivanhoe
    Mines business in Mongolia may be subject to legal
    risk.
    Recent
    and future amendments to Mongolian laws could adversely affect
    Ivanhoe Mines mining rights in the Oyu Tolgoi Project or
    make it more difficult or expensive to develop the project and
    carry out mining.
     33




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
    Ivanhoe
    Mines may experience difficulties with its joint venture
    partners.
    Ivanhoe
    Mines may be unable to enforce its legal rights in certain
    circumstances.
    Changes
    in, or more aggressive enforcement of, laws and regulations
    could adversely impact Ivanhoe Mines
    business.
      Ivanhoe
    Mines is subject to substantial environmental and other
    regulatory requirements and such regulations are becoming more
    stringent. Non-compliance with such regulations, either through
    current or future operations or a pre-existing condition could
    materially adversely affect Ivanhoe Mines.
   34




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
          Previous
    mining operations may have caused environmental damage at
    current and former Ivanhoe Mines mining projects, and if Ivanhoe
    Mines cannot prove that such damage was caused by such prior
    operators, its indemnities and exemptions from liability may not
    be effective.
    The
    actual cost of developing the Oyu Tolgoi Project may differ
    significantly from Ivanhoe Mines estimates and involve
    unexpected problems or delays.
    
    anticipated tonnage, grades and metallurgical characteristics of
    ore to be mined and processed;
    anticipated recovery rates of copper and gold from the ore;
    cash operating costs of comparable facilities and
    equipment; and
    anticipated climatic conditions. 35




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
     
    the timing and cost, which can be considerable, of the
    construction of mining and processing facilities;
    the availability and cost of skilled labour, power, water and
    transportation;
    the availability and cost of appropriate smelting and refining
    arrangements;
    the need to obtain necessary environmental and other government
    permits, and the timing of those permits; and
    the availability of funds to finance construction and
    development activities.  start-up.
  Ivanhoe
    Mines valuation of its investment in the commercial paper
    it received as a result of the ABCP settlement may not reflect
    actual amounts recovered in the future
    Ivanhoe
    Mines ability to obtain dividends or other distributions
    from its subsidiaries may be subject to restrictions imposed by
    law, foreign currency exchange regulations and financing
    arrangements.
    There
    can be no assurance that the interest held by Ivanhoe Mines in
    its exploration, development and mining properties is free from
    defects or that material contractual arrangements between
    Ivanhoe Mines and entities owned or controlled by foreign
    governments will not be unilaterally altered or
    revoked.
   36




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
  The
    proceeds from the sale of the Savage River Project are dependent
    on iron ore prices and the remaining supply of ore at the Savage
    River Project.
    Competition
    for new mining properties by larger, more established companies
    may prevent Ivanhoe Mines from acquiring interests in additional
    properties or mining operations.
    There
    is no assurance that Ivanhoe Mines will be capable of
    consistently producing positive cash flows.
    A
    substantial portion of Ivanhoe Mines operations involve
    exploration and development and there is no guarantee that any
    such activity will result in commercial production of mineral
    deposits.
   37




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
  Ivanhoe
    Mines cannot insure against all of the risks associated with
    mining.
    
    rock bursts, slides, fires, earthquakes or other adverse
    environmental occurrences;
    industrial accidents;
    labour disputes;
    political and social instability;
    technical difficulties due to unusual or unexpected geological
    formations;
    failures of pit walls; and
    flooding and periodic interruptions due to inclement or
    hazardous weather condition.    
    damage to, and destruction of, mineral properties or production
    facilities;
    personal injury;
    environmental damage;
    delays in mining;
    monetary losses; and
    legal liability.    As a
    result of the rights to acquire Common Shares and other rights
    granted to Rio Tinto pursuant to the Rio Tinto Transaction and
    the Rio Tinto Credit Agreement, Rio Tinto has the ability to
    significantly influence the business and affairs of Ivanhoe
    Mines.
   38




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
    Ivanhoe
    Mines is exposed to risks of changing political stability and
    government regulation in the countries in which it
    operates.
      Ivanhoe
    Mines prospects depend on its ability to attract and
    retain key personnel.
    Certain
    directors of Ivanhoe Mines are directors or officers of, or have
    significant shareholdings, in other mineral resource companies
    and there is the potential that such directors will encounter
    conflicts of interest with Ivanhoe Mines.
   39




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
  Business Corporations Act
  Capital
    markets are experiencing increased volatility.
    RELATED-PARTY
    TRANSACTIONS
    Years Ended December 31,2008


2007($000s of U.S. dollars)Global Mining Management Corporation(a)

$
8,147


$
8,577Ivanhoe Capital Aviation LLC(b)


3,840



3,840Fognani & Faught, PLLC(c)


621



1,583Rio Tinto plc(d)


4,783



1,330Ivanhoe Capital Pte. Ltd.(e)






10Ivanhoe Capital Services Ltd.(f)


601



958$
17,992


$
16,298   40




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
  Years Ended December 31,2008


2007Exploration

$
4,783


$
1,330Legal


621



1,583Office and administrative


2,451



2,756Salaries and benefits


6,297



6,789Travel (including aircraft rental)


3,840



3,840$
17,992


$
16,298                      41




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
  DISCLOSURE
    CONTROLS AND PROCEDURES
    Rules 13a-15(e) 15d-15(e)
    MANAGEMENTS
    REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
  Rules 13a-15(f) 15d-15(f) Form 40-F
    Changes
    in internal control over financial reporting
   42




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
  QUALIFIED
    PERSONS
  43-101)
  Relationship toProject

Qualified Person

Ivanhoe MinesOyu Tolgoi Project

Stephen Torr, P.Geo, Ivanhoe Mines

Employee of the CompanyOvoot Tolgoi Project

Stephen Torr, P.Geo, Ivanhoe Mines

Employee of the Company   OVERSIGHT
    ROLE OF THE AUDIT COMMITTEE
    CAUTIONARY
    STATEMENTS
  LANGUAGE
    REGARDING RESERVES AND RESOURCES
  43-101 Standards of Disclosure for Mineral Projects 43-101)
  NOTE TO
    UNITED STATES INVESTORS CONCERNING ESTIMATES OF MEASURED,
    INDICATED AND INFERRED RESOURCES
  43-101 Standards of Disclosure for Mineral Projects 43-101)
 43




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
  43-101. 43-101 43-101 43-101 43-101;
  FORWARD-LOOKING
    STATEMENTS
       44




---



##### 



IVANHOE
    MINES LTD.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND
    RESULTS OF OPERATIONS
    (Stated in U.S. dollars except where noted)
  MANAGEMENTS
    REPORT TO THE SHAREHOLDERS
          /s/ John Macken

/s/ Tony GiardiniJohn Macken
    President and CEO

Tony Giardini
    Chief Financial Officer     45