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EXHIBIT 1 IVANHOE MINES LTD. Annual Information Form FOR THE YEAR ENDED
DECEMBER 31, 2004 DATED MARCH 30, 2005




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TABLE OF CONTENTS ITEM 1: COVER PAGE
    
    
    1ITEM 2: CORPORATE STRUCTURE
    
    
    9Name, Address and Incorporation
    
    
    9Subsidiaries and Management Structure
    
    
    9ITEM 3: GENERAL DEVELOPMENT OF THE BUSINESS
    
    
    11Overview
    
    
    11Three Year History
    
    
    11Outlook
    
    
    14Risk Factors
    
    
    16ITEM 4: DESCRIPTION OF THE BUSINESS
    
    
    22Overview
    
    
    22Qualified Persons
    
    
    22Oyu Tolgoi Copper and Gold Project, Mongolia
    
    
    23Monywa Copper Project, Myanmar
    
    
    39Savage River Iron Ore Project, Tasmania, Australia
    
    
    47Other Projects
    
    
    54Mongolia
    
    
    54China
    
    
    56Kazakhstan
    
    
    58Australia
    
    
    60Myanmar
    
    
    61Equity Investments
    
    
    61Exploration Expenditures
    
    
    62Human Resources
    
    
    63ITEM 5: DIVIDENDS
    
    
    63ITEM 6: DESCRIPTION OF CAPITAL STRUCTURE
    
    
    63ITEM 7: MARKET FOR SECURITIES
    
    
    64ITEM 8: DIRECTORS AND OFFICERS
    
    
    65ITEM 9: INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
    
    
    67ITEM 10: TRANSFER AGENTS AND REGISTRARS
    
    
    68ITEM 11: MATERIAL CONTRACTS
    
    
    68ITEM 12: INTERESTS OF EXPERTS
    
    
    69ITEM 13: ADDITIONAL INFORMATION
    
    
    70SCHEDULE A
    
    
    71
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Forward-Looking Statements Except for statements of historical fact relating to IVN, certain information contained herein
constitutes forward-looking statements within the meaning of Section 21E of the United States
Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of
1933, as amended. Forward-looking statement include, but are not limited to, statements concerning
estimates of expected capital expenditures, statements relating to expected future production and
cash flows, statements relating to the continued advancement of the Corporations exploration,
development and production projects, statements relating to the potential of the Oyu Tolgoi
Project, statements relating to target milling rates and other statements that are not historical
facts. When used in this document, the words such as could, plan, estimate, expect,
intend, may, potential, should and similar expressions, are forward-looking statements.
While IVN believes that its expectations reflected in these forward-looking statements are
reasonable, such statements involve risks and uncertainties and no assurance can be given that
actual results will be consistent with these forward-looking statements. Important factors that
could cause actual results to differ from these forward-looking statements include the potential
that IVNs projects will experience technological and mechanical problems, geological conditions in
the deposits may not result in commercial levels of mineral production, changes in product prices,
changes in political conditions, changes in the opinions and estimates of management at the date
the statements are made, and are subject to a variety of risks and uncertainties and other factors
that could cause actual events or results to differ materially from those projected in the
forward-looking statements. The Corporation undertakes no obligation to update forward-looking
statements if circumstances or managements estimates or opinions should change. The reader is
cautioned not to place undue reliance on forward-looking statements. This Annual Information Form contains references to estimates of mineral resources and mineral
reserves. The estimation of resources and reserves is inherently uncertain and involves
subjective judgments about many relevant factors. 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. There can be no
assurance that these estimates of mineral resources and mineral reserves will be accurate or that
such mineral resources and mineral reserves can be mined or processed profitably. Mineral
resources that are not mineral reserves do not have demonstrated economic viability. Factors that
could cause actual results to differ materially include, but are not limited to, those set forth
herein under Risk Factors. Currency and Exchange Rates In this Annual Information Form, all funds are quoted in United States dollars unless otherwise
indicated. References to $ and US$ are to United States dollars, references to Cdn$ are to
Canadian dollars and 3




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references to Aus$ are to Australian dollars. The Bank of Canada noon buying rates for the
purchase of one United States dollar using Canadian dollars were as follows during the indicated
periods: (Stated in Canadian dollars) Year Ended December 312004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000End of period
    
    
    1.2036
    
    
    
    1.2924
    
    
    
    1.5796
    
    
    
    1.5928
    
    
    
    1.4995High for the period
    
    
    1.3968
    
    
    
    1.5777
    
    
    
    1.6184
    
    
    
    1.6052
    
    
    
    1.5601Low for the period
    
    
    1.1774
    
    
    
    1.2839
    
    
    
    1.5155
    
    
    
    1.4901
    
    
    
    1.4349Average for the period
    
    
    1.3015
    
    
    
    1.40146
    
    
    
    1.5703
    
    
    
    1.5484
    
    
    
    1.4859
 The Bank of Canada noon buying rate on March 29, 2005 for the purchase of one United States dollar
using Canadian dollars was Cdn$1.2136 (one Canadian dollar on that
date equalled US$0.82399). Defined Terms and Abbreviations Throughout this AIF, there are terms that are defined in the document and used only in the relevant
section in which they are defined. There are also a number of defined terms and abbreviations that
are used consistently throughout the document as follows: AAJV means AMEC Ausenco Joint Venture, a joint venture of AMEC E&C Services Ltd. and Ausenco; ABM means ABM Mining Limited; AMEC means AMEC Americas Ltd.; ASG means Asia Gold Corp.; au means gold; Ausenco means Ausenco Limited; BHP Exploration means BHP Minerals International Exploration Inc.; CIM means the Canadian Institute of Mining, Metallurgy and Petroleum; CIM Standards means CIM Standards on Mineral Resources and Mineral Reserve Guidelines; Common
Shares means common shares in the capital of the
Corporation; Corporation means Ivanhoe Mines Ltd.; cu means copper; CuEq means copper equivalent grade, calculated using assumed metal prices for copper and gold.
The assumed prices used in this Annual Information Form are $0.80 for copper and $350/oz for gold,
with the formula CuEq = %Cu + (g/t Au*11.25)/17.64; Entrée means Entrée Gold Inc.; g/t means grams per tonne; Goldamere means Goldamere Pty. Ltd.; Hugo Dummett Deposits means collectively, the Hugo North and the Hugo South deposits; 4




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Hugo Dummett
Technical Report means a technical report on the Hugo Dummett Deposits of the Oyu
Tolgoi Project dated May 3, 2004 prepared by AMEC; Hugo North means the Hugo North deposit of the Oyu Tolgoi Project; Hugo South means the Hugo South deposit of the Oyu Tolgoi Project; IMMI means Ivanhoe Mines Mongolia Inc. XXK; Integrated
Development Plan means a proposed preliminary assessment report on the development of the Oyu
Tolgoi Project, the bulk of which consists of information intended for a feasibility study on the
Southern Oyu Deposits and a pre-feasibility study for the Hugo Dummett Deposits, plus certain
additional assumptions and planning regarding the proposed operations and recently identified drill
data; IP means induced polarization; IVN means Ivanhoe Mines Ltd; IVN Group means, collectively, the Corporation and its subsidiaries or a group of subsidiaries,
as the context requires; Jinshan means Jinshan Gold Mines Inc.; JORC Code means the Australasian Code for Reporting of Identified Mineral Resources and Ore
Reserves; km means kilometres; km2 means square kilometres; lb means pound; LME means London Metal Exchange; m means metres; MEL means Mongolian mineral exploration license; Monywa Copper Project means the copper mine and related deposits located at Monywa, Myanmar owned
by Monywa JVCo; Monywa JVCo means Myanmar Ivanhoe Copper Company Limited; NI 43-101 means National Instrument 43-101 of the Canadian Securities Administrators; Oyu Tolgoi Project means the Corporations copper and gold exploration and development project
located at Oyu Tolgoi in Mongolia; oz means ounce; Preferred Shares means preferred shares in the capital of the Corporation; Preliminary Assessment Report means a technical report on the Oyu Tolgoi Project dated January
26, 2004 prepared by AAJV; RC means reverse circulation; Savage River Project means the iron ore mine located at Savage River, Tasmania and related
processing facilities and deposits; Southern Oyu Deposits means collectively, the South Oyu, Southwest Oyu and Central Oyu deposits
of the Oyu Tolgoi Project as well as smaller, satellite zones of mineralization, including the
Wedge deposit, Bridge deposit, Far Southwest deposit and Southern
Sliver deposit; Southern Oyu Technical Report means a technical report on the Southern Oyu Deposits dated
September 16, 2004 prepared by AMEC; 5




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Stability
Agreement means an agreement being negotiated between the State of Mongolia and IVN setting the terms of
various government related inputs for the Oyu Tolgoi Project; Stemcor means Stemcor Holdings Limited; and tpy means tonnes per year. Conversion Factors For ease of reference, the following conversion factors are provided: Imperial Measure =
    
    Metric Unit
    
    Metric Unit =
    
    Imperial Measure2.47 acres
    
    1 hectare
    
    0.4047 hectares
    
    1 acre3.28 feet
    
    1 m
    
    0.3048 m
    
    1 foot0.62 miles
    
    1 km
    
    1.609 km
    
    1 mile0.032 ounces (troy)
    
    1 gram
    
    31.1 grams
    
    1 ounce (troy)2.205 pounds
    
    1 kilogram
    
    0.454 kilograms
    
    1 pound1.102 tons (short)
    
    1 tonne
    
    0.907 tonnes
    
    1 ton0.029 ounces (troy)/ton
    
    1 gram/tonne
    
    34.28 grams/tonne
    
    1 ounce (troy)/ton
 Glossary of Geological and Mining Terms andesite:a dark-coloured, fine grained extrusive rock. anomaly:a departure from the norm which may indicate the presence of mineralization in the
underlying bedrock. assay:the chemical analysis of an ore, mineral or concentrate of metal to determine the amount of
valuable species. breccia:rock consisting of fragments, more or less angular, in a matrix of finer-grained material
or of cementing material. chalcocite:a form of copper mineral ore that generally contains a high copper content. chalcopyrite:a form of copper mineral ore that generally contains a low copper content. concentrate:a product containing valuable metal from which most of the waste material in the ore
has been eliminated. concentrator:a plant for recovery of valuable minerals from ore in the form of concentrate. The
concentrate must then be treated in some other type of plant, such as a smelter, to effect recovery
of the pure metal. covellite:a supergene mineral found in copper deposits; a source of copper. cut-off grade:the lowest grade of mineral resources considered economic; used in the calculation
of reserves and resources in a given deposit. dilution:an estimate of the amount of waste or low-grade mineralized rock which will be mined
with the ore as part of normal mining practices in extracting an orebody. 6




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dacitic:fine grained extrusive rock having the same general composition as andesite, but with
less plagioclase and more quartz. dyke:a tabular igneous intrusion that cuts across the bedding or foliation of the country rock. DTR:means Davis Tube Recovery, which is a measure of the percentage of magnetite mineral that
will be recovered into concentrate from a magnetite ore. The iron content of pure magnetite is
approximately 72%. Accordingly, to determine the iron content of a magnetite ore from a DTR grade,
multiply the grade by 0.72. electrowinning:recovery of a metal from an ore by means of electro-chemical processes. fault:a fracture in rock along which the adjacent rock surfaces are differentially displaced. flotation:a milling process by which some mineral particles are induced to become attached to
bubbles of froth and float, and others to sink, so that the valuable minerals are concentrated and
separated from the gangue. gangue:valueless rock or mineral material in ore. heap leaching:a process whereby valuable metals are leached from a heap, or pad, of crushed ore
by leaching solutions percolating down through the heap and are collected from a sloping,
impermeable liner. hypogene:primary mineralization formed by mineralizing solutions emanating up from a deep
magnetic source. HQ:diamond drilling equipment that produces a 63.5 millimetre core diameter. indicated mineral resource:that part of a mineral resource for which quantity, grade or quality,
densities, shape and physical characteristics can be estimated with a level of confidence
sufficient to allow the appropriate application of technical and economic parameters to support
mine planning and evaluation of the economic viability of the deposit. The estimate is based on
detailed and reliable exploration and test information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough
for geological and grade continuity to be reasonably assumed. inferred mineral resource:that part of a mineral resource for which the quantity and grade or
quality can be estimated on the basis of geological evidence and limited sampling and reasonably
assumed, but not verified, geological and grade continuity. The estimate is based on limited
information and sampling gathered through appropriate techniques from locations such as outcrops,
trenches, pits, workings and drill holes. intrusive:rock which while molten, penetrated into or between other rocks but solidified before
reaching the surface. leach:to dissolve minerals or metals out of ore with chemicals. measured mineral resource:that part of a mineral resource for which quantity, grade or quality,
densities, shape and physical characteristics are so well established that they can be estimated
with confidence sufficient to allow the appropriate application of technical and economic
parameters to support production planning and evaluation of the economic viability of the deposit.
The estimate is based on detailed and reliable exploration, sampling and testing information
gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings
and drill holes that are spaced closely enough to confirm both geological and grade continuity. 7




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mineral resource (deposit):a concentration or occurrence of natural, solid, inorganic or
fossilized organic material in or on the earths crust in such form and quantity and of such a
grade or quality that it has reasonable prospects for economic extraction. The location, quantity,
grade, geological characteristics and continuity of a mineral resource (deposit) are known,
estimated or interpreted from specific geological evidence and knowledge. NQ:diamond drilling equipment that produces a 47.5 millimetre core diameter. ore reserve:the economically mineable part of a measured or indicated mineral resource
demonstrated by at least a preliminary feasibility study. This study must include adequate
information on mining, processing, metallurgical, economic and other relevant factors that
demonstrate, at the time of reporting, that economic extraction can be justified. An ore reserve
includes diluting materials and allowances for losses that may occur when the material is mined. porphyry:any igneous rock in which relatively large, conspicuous crystals (called phenocrysts)
are set in a fine-grained ground mass. probable ore reserve:the economically mineable part of an indicated and, in some circumstances, a
measured mineral resource demonstrated by at least a preliminary feasibility study. This study
must include adequate information on mining, processing, metallurgical, economic and other relevant
factors that demonstrate, at the time of reporting, that economic extraction can be justified. proven ore reserve:the economically mineable part of a measured mineral resource demonstrated by
at least a preliminary feasibility study. This study must include adequate information on mining,
processing, metallurgical, economic and other relevant factors that demonstrate, at the time of
reporting, that economic extraction can be justified. PQ:diamond drilling equipment that produces an 85 millimetre core diameter. qualified person:an individual who: (a) is an engineer or geoscientist with at least five years
of experience in mineral exploration, mine development or operation, or mineral project assessment,
or any combination of these; (b) has experience relevant to the subject matter of the mineral
project; and (c) is a member in good standing of a professional association as defined by National
Instrument 43-101 of the Canadian Securities Administrators. quartz monzodiorite:plutonic rock containing quartz, alkali feldspars, plagioclase feldspars and
feldspathoid minerals. schist:a strongly foliated crystalline rock which readily splits into sheets or slabs as a result
of the planar alignment of the constituent crystals. The constituent minerals are commonly
specified (e.g. quartz-muscovite-chlorite schist). scoping study:the first level of a study performed on a mineral deposit to determine its economic
viability. shear zone:a tabular zone of rock which has been crushed and brecciated by parallel fractures due
to shearing along a fault or zone of weakness. Shear zones can be mineralized with ore-forming
solutions. stock:an irregular, metalliferous mass in a rock formation. strike:the direction, or course or bearing, of a vein or rock formation measured on a level
surface. 8




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sulphides:compounds of sulphur with other metallic elements. supergene:ore minerals that have been formed by the effects (usually oxidization and secondary
sulphide enrichment) of descending ground water. SX-EW:solvent extraction and electrowinning processing. Recovery of a metal from an ore by means
of acid leaching and organic extraction, combined with electro-chemical processes. tailing:material rejected from a mill after the recoverable valuable minerals have been
extracted. tuffs:a general term used for all consolidated pyroclastic rocks. vein:sheet-like body of minerals formed by fracture filling or replacement of host rock. vug:a small cavity in a vein or rock usually lined with crystals. ITEM 2: CORPORATE STRUCTURE Name, Address and Incorporation IVN was incorporated under
the Company Act(British Columbia)
on January 25, 1994 under the name
463212 B.C. Ltd. In February 1994 the Corporation
changed its name to Indochina Goldfields Ltd.
In March 1994 the Corporation increased its authorized capital
from 10,000 Common Shares without
par value to 100,000,000 Common Shares without par value and created
100,000,000 Preferred shares
without par value. In February 1995 the Corporation was
continued under the Business Corporations
Act(Yukon). In July 1997 the Corporation increased
its authorized capital to an unlimited number
of Common Shares without par value and an unlimited number
of Preferred Shares without par value.
In June 1999 the Corporation changed its name to Ivanhoe Mines Ltd. The Corporations North American headquarters are located at 654  999 Canada Place, Vancouver,
British Columbia, Canada, V6C 3E1. The Corporations Asian headquarters are located at 37th Floor
#2, Millenia Tower, 1 Temasek Avenue, Singapore 039192. The Corporations registered office is
located at 300  204 Black Street, Whitehorse, Yukon, Canada, Y1A 2M9. Subsidiaries and Management Structure The corporate structure of the Corporation, its material active subsidiaries, the percentage
ownership in such subsidiaries which are not wholly-owned by the Corporation and the jurisdiction
of incorporation of such corporations as at March 15, 2005 are set out in the following chart. 9




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(CHART)  Note:

All subsidiaries are wholly-owned unless otherwise indicated
BVI means British Virgin Islands 10




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ITEM 3: GENERAL DEVELOPMENT OF THE BUSINESS Overview IVN is an international mineral exploration and
development company. The IVN Group holds interests
in several mineral resource properties ranging from full production mining operations to
grass-roots exploration projects, with a particular emphasis on resource properties located in
Asia. The IVN Group also holds equity investments in several junior, publicly-listed mineral
exploration companies. The IVN Groups principal mineral
resource properties are the Oyu Tolgoi in Mongolia and the Monywa Copper
Project in Myanmar. The IVN Group holds a 100% interest in the Oyu Tolgoi Project
and a 50% interest in the
Monywa Copper Project. The IVN Group also owned a 100% interest in the
Savage River Project in Tasmania, Australia, but sold its
interest in this project in
February 2005. Three Year History 2002 During the first quarter of 2002, IVN completed the expenditures necessary to earn its interest in
the Oyu Tolgoi Project and paid $5 million to BHP Exploration in order to complete its acquisition
of a 100% interest in the project. BHP Exploration retained a 2% net smelter returns royalty and
certain back-in rights which became exercisable if, prior to the completion of the subsequent $3
million exploration program mandated by the earn-in agreement, mineralization meeting certain
contractually defined parameters was identified. Depending on the quantity of mineralization
identified, and the means by which it was amenable to extraction, BHP Exploration would be entitled
to back-in to either a 40% or a 60% participating interest in the project. In either case, BHP
would have been required to relinquish its 2% net smelter returns royalty and pay to IVN an amount
equal to three times the amount of exploration expenditures incurred. BHP Explorations back-in
rights expired in June 2002. In March 2002, AMEC completed an initial resource estimate for the Oyu Tolgoi Project. AMEC
estimated an inferred mineral resource of 587.7 million tonnes, grading 0.41% copper and 0.53 g/t
gold and above a cut-off grade of 0.3% copper equivalent. The copper equivalent cut-off grade was
established at an assumed recovery of 100% of both gold and copper and prices of $300 per ounce
for gold and $0.80 per pound for copper. Throughout the year, the Corporation continued its
extensive drilling and other exploration activities at the Oyu Tolgoi Project and carried out a
substantial reconnaissance and property acquisition program in the South Gobi region of Mongolia.
During 2002, the Corporation spent approximately $30 million in Mongolia, including $18 million at
the Oyu Tolgoi Project. In September 2002, negotiations between IVNs subsidiary ABM and UBS Australia Ltd. (UBS), the
project lender to the Savage River Project, to restructure the projects finances culminated in an
agreement whereby ABM indirectly acquired approximately Aus$74.9 million ($41 million) of project
debt obligations owed to UBS by ABMs wholly-owned subsidiary Goldamere Pty. Ltd. (the owner and
operator of the Savage River Project), in consideration for a cash payment by ABM to UBS of Aus$15
million ($8.2 million). The transaction had the effect of reducing current and long term
liabilities on IVNs consolidated balance sheet by approximately $41 million and resulted in a
non-cash gain for the 2002 fiscal year of approximately $32.5 million. Following the restructuring
of the project debt and a revision to the Savage River mine plan, IVN undertook a further review of
the carrying value of the Savage River Project and recorded an additional write-down of $18 million
for the 2002 fiscal year. 11




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During 2002 and through January 2003, the Corporation raised approximately $113.8 million to fund
its exploration and other corporate development activities through a series of public and private
equity financings, resulting in the issuance of approximately 49.4 million additional Common Shares. 2003 In February 2003, AMEC completed an updated independent resource estimate for the Oyu Tolgoi
Project based on extensive additional drilling carried out after March 2002. The updated estimate
covered the four principal exploration zones of the Oyu Tolgoi Project, known as Southwest Oyu,
Central Oyu, South Oyu and Far North Oyu. AMEC estimated inferred mineral resources of
approximately 1.60 billion tonnes, grading 0.63% copper and 0.17 g/t of gold at a 0.30% copper
equivalent cut-off grade. AMEC estimated indicated mineral resources at Southwest Oyu of an
additional 509 million tonnes grading 0.40% copper and 0.59 g/t of gold at a 0.30% copper
equivalent cut-off grade. IVN also retained AMEC and Ausenco to prepare scoping and pre-feasibility
studies of the Oyu Tolgoi Project in order to consider a range of mining, processing,
infrastructure, development alternatives and varying production rates. In July 2003, AMEC completed a further updated estimate of resources in the Far North zone of the
Oyu Tolgoi Project. Based on drilling undertaken after February 2003, AMEC estimated an inferred
resource at Far North Oyu of 642.8 million tonnes, grading 1.19% copper and 0.10 g/t of gold, at a
0.60% copper equivalent cut off, containing approximately 7.66 million tonnes (16.9 billion pounds)
of copper and 2.1 million ounces of gold. AMEC further updated and increased its inferred resource
estimate for Far North Oyu (renamed the Hugo Dummett Deposit) in November 2003 to 1.36 billion
tonnes, grading 1.04% copper and 0.15 g/t of gold, at a 0.40% copper equivalent cut off, containing
approximately 14.14 million tonnes (31.2 billion pounds) of copper and 6.43 million ounces of gold. In November 2003, IVN reached an agreement with BHP Exploration to purchase BHP Explorations 2%
net smelter returns royalty in respect of the Oyu Tolgoi Project. The purchase price was $37
million, payable in two installments. The first installment of $17 million was paid in November
2003 and the second $20 million installment was paid in February 2004. In December 2003, IVN purchased $50 million of treasury bills issued by the Government of Mongolia.
The treasury bills, which are denominated in U.S. dollars, bear interest at 3% per year and mature
on December 31 2004, were issued as part of the Governments initiative to retire, at a substantial
discount, its Soviet-era foreign debt to the Russian Federation. IVN funded the purchase of the
Mongolian treasury bills from the proceeds of a $100 million underwritten offering of
Common Shares and share purchase warrants completed in December 2003. During 2003, the Corporation raised approximately $214.7 million to fund its exploration and other
corporate development activities through a series of public and private equity financings,
including the $100 million underwritten equity offering referred to above, resulting in the
issuance of approximately 46.9 million additional Common Shares and share purchase warrants
exercisable to purchase an additional 12 million Common Shares. In November 2003, the Corporations
Common Shares commenced trading on the Nasdaq Stock Market. 2004 In January 2004, John Macken was appointed President of IVN with the primary task of overseeing
construction of a mine at the Oyu Tolgoi Project. Mr. Macken had a 19 year career with Freeport
McMoran Copper and Gold. He spent 13 of those years with that companys operating unit in
Indonesia, culminating in the position of Executive Vice-President and General Manager of the
Grasberg mining complex, the worlds single largest copper and gold mine. 12




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In February 2004, IVN completed the Preliminary Assessment Report, a scoping study in respect of
the Oyu Tolgoi Project, with the assistance of AAJV. The scoping study examined development
alternatives based on three different production scenarios. The three development concepts involve,
respectively, a full-scale development in one step with a start-up production rate of 40 million
tpy, a two stage build-out option involving the initial development of open pits at the Southwest
Oyu and Central Oyu deposits and a start-up production rate of 17 to 20 million tpy followed by an
expansion to 40 million tpy through a large open pit at the Hugo South deposit and underground
block-caving at the Hugo North deposit and, finally, a stand-alone development of open pits at the
Southwest Oyu and Central Oyu deposits at a start-up production rate of 17 to 20 million tpy. In May 2004, AMEC issued an updated independent resource estimate in respect of the Hugo Dummett
Deposits. AMEC estimated inferred resources on the Hugo Dummett Deposits of 1.16 billion tonnes, grading 1.29%
copper and 0.23 g/t of gold, at a 0.60% copper equivalent cut-off. AMEC also issued an updated
independent resource estimate in August 2004 in respect of the Southern Oyu Deposits. For
these deposits, AMEC estimated measured and indicated resources of 1.06 billion tonnes, grading
0.48% copper and 0.36 g/t of gold (a copper equivalent grade of 0.71%), at a 0.30% copper
equivalent cut-off down to 560 metres below surface and 0.60% copper equivalent cut-off below a
depth of 560 metres, plus inferred mineral resources totalling 285 million tonnes grading 0.35%
copper and 0.23 g/t gold. In July 2004, IVN completed an underwritten public offering consisting of 20,000,000 Common Shares
at a price of Cdn$7.00 per share for gross proceeds of Cdn$140 million. The bulk of the proceeds
were allocated to ongoing exploration and development expenditures on the Oyu Tolgoi Project,
including resource definition drilling, engineering and feasibility study activities. In October 2004, the Corporation received a $12.5 million prepayment of principal plus accrued
interest of approximately $1.16 million from the Government of Mongolia in respect of the treasury
bills the Corporation purchased from the Government in December 2003. Three additional instalments
of principal and interest were received in November and December and the treasury bills were fully
repaid as of December 31, 2004. In November 2004, the Corporation closed on an earn-in and equity participation agreement with
Entrée to explore and potentially develop a 40,000 hectare portion of Entrées 100%-owned, Shivee
Tolgoi (Lookout Hill) mineral exploration concession, which is adjacent to the Oyu Tolgoi Project.
Under the terms of the agreement, IVN can acquire an interest of up to 80% in all minerals
extracted below a sub-surface depth of 560 metres and up to 70% in all minerals extracted from
surface to a depth of 560 metres on the optioned portion of the Shivee Tolgoi property by incurring
$35 million in exploration and/or development on the property over an eight-year period. The
Corporation also has the right to acquire all of Entrées surface rights on the property by
spending a minimum of $3 million in the first year and performing sufficient condemnation drilling
to ensure there is no economic mineralization below the surface of the areas directly affected. As
part of the transaction, the Corporation purchased 4.6 million units of Entrée at a price of
Cdn$1.00 per unit. Each unit consisted of one Entrée common share and one purchase warrant
exercisable for two years to purchase an additional Entrée common share at a price of Cdn$1.10. 2005 To Date In January 2005, the Corporations Common Shares commenced trading on the New York Stock Exchange
and were concurrently delisted from the NASDAQ Stock Market. The listing of the Corporations
Common Shares on the Australian Stock Exchange is expected to terminate in the second quarter of
2005. In February 2005, IVN sold its entire interest in the Savage River Project to Stemcor Holdings
Limited (Stemcor) for $21.5 million in cash and a series of contingent,
escalating-scale annual payments based on iron ore pellet prices over the next five years.
The first $15 million tranche was paid at closing and the 13




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remaining $6.5 million tranche will be paid on July 31, 2005 or, at Stemcors election, on January
31, 2006. The escalating scale payments will commence in March 2006 and pricing will be based on
the iron-ore year starting April 2005. Determination of the contingent, escalating-scale annual
payments to IVN will be based on Savage River iron-ore pellet sales of 1.8 million tonnes per year
for the next five years and an escalating pellet-price formula using the annual Nibrasco/JSM pellet
price as the pricing benchmark. The payments will be calculated at an
initial rate of $1.00 a tonne if the annual benchmark price exceeds $30 a tonne, and will escalate
to a maximum of $16.50 a tonne if annual pellet prices exceed $80 a tonne. If the Nibrasco/JSM
pellet price were to average $40 per tonne over the next five years, the total deferred annual
payments to the Company would be approximately $18 million. Based on a five year average
Nibrasco/JSM pellet price of $65 per tonne, the total deferred annual payments to the Company would
be approximately $101.5 million and at a five year average of $70 per tonne the total deferred
annual payments would be approximately $117 million. For the
iron-ore year starting April 2005, the benchmark price increased by
71.5% from $38.10 per tonne to $65 per tonne. Outlook IVN expects that, for the foreseeable future, it will continue to concentrate most of its business
activities and financial resources in Mongolia with a particular focus on the Oyu Tolgoi Project. The Oyu Tolgoi Project is transitioning from an exploration-stage project to a development-stage
project. While IMMI conducted exploratory drilling and other exploration on the property in the
past year, most of its efforts have been dedicated to supporting the preparation of a feasibility
study on the Southern Oyu Deposits and a pre-feasibility study on the
Hugo North deposit,
including in-fill drilling programs to raise the confidence levels of the mineral resource
estimates and metallurgical studies. It was IVNs intention to use those studies as the basis of a
comprehensive mine plan for the project. IVN had expected to conclude the negotiations for the
Stability Agreement in 2004. Several of the inputs required for the
studies are dependent on the
terms and conditions of the Stability Agreement, which will crystallize taxation rates,
cross-border import/export, supply of power, labour, land use, water rights and other
government-related inputs. As the life span of the Oyu Tolgoi Project is currently estimated to
exceed 40 years, the completion of the Stability Agreement was deemed essential to allow the
Corporation to finance the development of the project. However, the
Stability Agreement has not been finalized. Rather than wait for completion of the Stability Agreement, the Corporation has
elected to proceed with the Integrated Development Plan for release near the end of the second
quarter of 2005. The Integrated Development Plan will include information prepared in connection
with the originally planned studies, but will be at a preliminary assessment level because several
of the inputs will not have enough certainty to upgrade the overall level of the report. Data from the open pit feasibility study for the Southern Oyu Deposits and the underground
pre-feasibility study for the underground block caving operation at the Hugo North deposit, will be
integrated and combined within the economics of the Integrated
Development Plan. The plan will also
incorporate the results of an independent estimate of indicated resources at the Hugo North deposit and the
updated inferred resources at the Hugo North and the Hugo South deposits that is expected to be
completed in the second quarter of 2005. IVN believes that the Integrated Development Plan will
present a more informative, overall picture of the future development of the Oyu Tolgoi Project,
especially given the recent exploration success on the Hugo North deposit and the expected 40 year
mine life under the current plan. To bring the underground resources into a proven and probable
category for feasibility purposes, actual underground development and characterization within the
Hugo Dummett Deposits is required. A planned 1,200 m exploration shaft and subsequent horizontal
development is planned in order to accomplish this requirement. 14




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IVN holds an extensive inventory of exploration leases in Mongolia totalling approximately 11.8
million hectares. The Corporation believes that these properties are prospective for gold and
copper occurrences similar to its Oyu Tolgoi discovery, as well as metallurgical and thermal coal
deposits that would be in close proximity to Chinese markets. In 2004, regional reconnaissance
work, rock sampling, induced polarization surveys and diamond drilling were carried out mainly on
the Kharmagtai property, the Bronze Fox District and the Nariin Sukhait property, a coal property
located in the South Gobi Region of Mongolia. In December 2004, the Company announced its
intention to initiate the development of, what the Company currently believes to be extensive coal
deposits in the South Gobi Region of Mongolia. Following a year-long evaluation of the
coal-bearing basins in southern Mongolia, the Company has delineated three major coal opportunities
located on lands wholly controlled by IVN. IVN is engaged in the final stages of negotiations with Mongolian government representatives for
the Stability Agreement. Through June 2004, the Corporation worked extensively with a formally
designated working group appointed by the Mongolian government for the purpose of negotiating and
drafting the Stability Agreement. In February 2005, a senior management team of IVN made a
presentation on the Oyu Tolgoi Project to the Mongolian Cabinet as part of their internal process
to consider the Stability Agreement. To date, the Cabinet has not made a determination on this
matter, and while IVN is hopeful that the form of agreement will be
approved, during 2005,
there can be no assurance that this will be the case. The Stability Agreement is designed to follow
the framework of current Mongolian laws. Once the agreement has been executed, IVN may, in the
future, seek additional agreements and assurances from the government pertaining to the Oyu Tolgoi
Project. Some of these agreements and assurances may involve matters beyond the parameters of
existing Mongolian law and, as such, may require formal action by the Mongolian Parliament to amend
current legislation or enact new legislation. No assurances can be given as to when, or if, IVNs
discussions with the Mongolian government will result in a Stability
Agreement, that such
agreement, if and when obtained, will contain all of the terms and conditions IVN considers
necessary or desirable to facilitate development of the project or that such terms and conditions
will be, in all material respects, favourable to IVN. IVNs management continues to assess strategic alternatives for the development and financing of
the Oyu Tolgoi Project. The Corporations current plan is to continue aggressively advancing the
development of the project while concurrently discussing financing options with various parties. In
this regard, the Corporation is in discussions with Chinese mining and financial companies, major
Japanese mining and metal trading houses, international mining companies and other third parties
capable of financing the project, with a view to selecting suitable strategic partners to develop
the Oyu Tolgoi Project and associated infrastructure. IVN believes that significant advantages
could be realized from the participation of strategic partners and continues to assess
opportunities, as they arise, to extend to one or more such partners a participating interest in
the project. The Corporation is not soliciting bids
from potential partners and has not set a deadline or target date for concluding any such
agreement. Accordingly, there can be no assurance that any ongoing or future discussions will
result in an agreement with a strategic partner or that the Corporation will pursue development of
the Oyu Tolgoi Project with a strategic partner at all. In keeping with the sale of the Savage River Project, the Corporation will continue to explore
opportunities to rationalize non-core assets in order to maximize value and generate, or otherwise
preserve, cash. Alternatives to be explored will continue to include the outright or partial sale
of certain assets, joint venture arrangements with third parties in respect of particular projects
or the reorganization of certain assets within distinct corporate entities for the purpose of
creating one or more separate economic enterprises that would be spun off to the Corporations
shareholders. The proceeds, if any, from the sale of non-core assets would likely be used to
finance development activities at the Oyu Tolgoi Project. No assurances can be given as to when or
if any such transaction or series of transactions will take place or that any such transaction or
series of 15




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transactions will be of an economic magnitude sufficient to materially advance IVNs development
objectives for the Oyu Tolgoi Project. The Corporation continues to rely on capital markets (and in particular, equity markets) to
generate the financial resources it needs to fund its exploration activities and expects, in 2005
and thereafter, to require continued access to capital markets in order to advance the development
of the Oyu Tolgoi Project. Capital markets are subject to significant volatilities and
uncertainties and IVNs ability to access capital markets, as and when needed or at all, may be
adversely affected by factors beyond IVNs control. The inability to access capital markets on a
timely basis would likely have a materially adverse impact on IVNs ability to fully develop and
maximize the economic potential of the Oyu Tolgoi Project and to pursue other valuable business
opportunities. Risk Factors There can be no assurance that IVN will be capable of raising the additional funding that it
needs to carry out its development and exploration objectives. The further development and exploration of the Oyu Tolgoi Project and the various other mineral
properties in which it holds interests depends upon IVNs ability to obtain financing through
capital markets, sales of non-core assets or other means. There is no assurance that IVN will be
successful in obtaining financing as and when needed. Depressed markets for precious and base
metals may make it difficult or impossible for IVN to obtain debt financing or equity financing on
favourable terms or at all. IVN operates in a region of the world that is prone to economic and
political upheaval and certain mineral properties held by IVN are located in politically and
economically unstable countries, which may make it more difficult for IVN to obtain debt financing
from project lenders. IVN must arrange significant project financing for development of the Oyu
Tolgoi Project. Failure to obtain additional financing on a timely basis may cause IVN to postpone
its development plans, forfeit rights in some or all of its properties or joint ventures or reduce
or terminate some or all of its operations. IVN may be unsuccessful in obtaining the taxation and fiscal concessions and legal and investor
protection assurances it is seeking from the Government of Mongolia
in its negotiations for the Stability Agreement in respect of the Oyu Tolgoi Project. Certain concessions and accommodations that IVN is seeking from the Government of Mongolia
respecting taxation, fiscal, legal and other matters germane to the development and operation of
the Oyu Tolgoi Project are inconsistent with, or not recognized by, the prevailing laws of Mongolia
and the Government may be unable or unwilling to take the executive or legislative action necessary
in order to grant all of the concessions and accommodations sought by IVN. Until the Stability
Agreement negotiations are concluded, it is impossible to predict to what extent IVN will be
successful in obtaining those concessions and accommodations regarded by management as key to the
economic viability of the Oyu Tolgoi Project nor the degree to which IVNs success or failure in
obtaining such concessions and accommodations will affect IVNs ability to finance the development
of the project. It is likely that the outcome of these negotiations will have a material impact
upon IVNs prospects for successfully developing the Oyu Tolgoi Project. The mineral resources identified on the Oyu Tolgoi Project do not have demonstrated economic
viability and the feasibility of mining has not been established. The mineral resources identified to date on the Oyu Tolgoi Project are not mineral reserves and do
not have demonstrated economic viability. There can be no assurance that mineral reserves will be
identified on the property. The feasibility of mining from the Oyu Tolgoi Project has not been,
and may never be, established. 16




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There is a degree of uncertainty attributable to the calculation of reserves, resources and
corresponding grades being mined or dedicated to future production. Until reserves or resources
are actually mined and processed, the quantity of reserves or resources and grades must be
considered as estimates only. In addition, the quantity of reserves or resources may vary
depending on metal prices. Any material change in the quantity of its reserves, resources, grades
or stripping ratio may affect the economic viability of a particular property. In addition, there
can be no assurance that metal recoveries in small-scale laboratory tests will be duplicated in
larger scale tests under on-site conditions or during production. Lack of infrastructure in proximity to the Oyu Tolgoi Project could adversely affect mining
feasibility. The Oyu Tolgoi Project is located in an extremely remote area which lacks basic infrastructure,
including sources of power, water, housing, food and transport. While IVN has established the
limited infrastructure necessary to conduct exploration activities, it would need to establish
substantially greater sources of power, water, physical plant and transport infrastructure in the
area before it could conduct mining operations. The availability of such sources may adversely
affect mining feasibility and will, in any event, require IVN to arrange significant financing,
locate adequate supplies and obtain necessary approvals from national, provincial and regional
governments, none of which can be assured. IVNs business in Mongolia may be harmed if the country fails to complete its transition from
state socialism and a planned economy to political democracy and a free market economy. Since 1990, Mongolia has been in transition from state socialism and a planned economy to a
political democracy and a free market economy. Much progress has been made in this transition but
much progress remains to be made, particularly with respect to the rule of law. Many laws have
been enacted, but in many instances they are neither understood nor enforced. For decades
Mongolians have looked to politicians and bureaucrats as the sources of the law. This has
changed in theory, but often not in practice. With respect to most day-to-day activities in
Mongolia government civil servants interpret, and often effectively make, the law. This situation
is gradually changing but at a relatively slow pace. Laws may be applied in an inconsistent,
arbitrary and unfair manner and legal remedies may be uncertain, delayed or unavailable. Future amendments to Mongolian laws could weaken, shorten or curtail IVNs mining rights in the
Oyu Tolgoi Project or make it more difficult or expensive to develop the project and carry out
mining. Mongolias Minerals Law was drafted with the assistance of Western legal experts and is regarded as
one of the most logical, internally consistent and effective pieces of mining legislation among all
of the developing countries of Asia. However, future amendments to the Minerals Law or new
legislation covering ostensibly unrelated matters could affect the existing tenure regime under the
Minerals Law and harm IVNs ability to carry on business in Mongolia. Mongolian government civil
servants have, in the past, unsuccessfully attempted to introduce amendments to the Minerals Law
which would, from the perspective of the international mining industry, be regarded as
counterproductive. Future amendments to the Minerals Law or new legislation, if implemented, could
vary or abrogate key provisions of the Minerals Law in a manner that impairs IVNs ability to
conduct exploration and mining in Mongolia. Economic sanctions imposed by the United States, the European Union and Canada against Myanmar
may adversely affect the Monywa Copper Project. In May 1997, the United States government imposed economic sanctions on Myanmar, banning new
investments in Myanmar by any United States investor. Additional U.S. sanctions were imposed in
2003. The European Union and the Canadian government have also imposed selective economic
sanctions on Myanmar. These sanctions were imposed based on the belief that the current government
of Myanmar has repressed opposition to the government. While the sanctions in their current form
do not affect the Corporations 17




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investments in Myanmar, there can be no assurances that the sanctions will not be broadened or that
other countries will not adopt sanctions in the future. The existence of United States sanctions
may restrict the ability of United States companies to participate in the Monywa Copper Project.
It is not possible to assess whether additional legislation will be enacted by the United States,
the European Union, Canada or elsewhere or, if enacted, such legislation will ultimately affect the
Corporation or investment in the Corporation. IVN faces geotechnical and development risks at the Monywa Copper Project, including generating
capacity shortages and leaching process technical risks. IVN faces a number of potential risks with respect to the proposed development of the Letpadaung
deposit and the proposed expansion of the S&K mine as part of the Monywa Copper Project. Myanmar
is currently short of the generating capacity necessary to deliver sufficient power to the project
to support any further expansion and there can be no assurance that improvements to Myanmars
national power system, sufficient to furnish the required power, will be made on a timely basis or
at all. If not, it may be necessary to construct a local source of power which may not be feasible
or which may render the project uneconomic. The high lift leach piles planned for both the S&K mine and the Letpadaung deposit carry technical
risks. These risks include geotechnical failure, chemical degradation of the heap material,
compaction and loss of permeability, lack of oxygen, excessive iron build-up and excessive acid
generation. Manifestation of these risks could adversely affect operating costs. Although IVN believes that the Letpadaung pit run ore will exhibit the same heap leaching
characteristics as the Sabetaung ore currently being mined at the S&K mine, this assumption cannot
be confirmed prior to mining. Different metallurgical characteristics in the Letpadaung deposit,
if and to the extent they might exist, could adversely affect the technical feasibility and
economics of IVNs Letpadaung development plans. IVN has a limited customer base for its products and needs to secure additional markets. All of IVNs production from the Monywa Copper Project is sold to a single Japanese buyer. If, for
any reason, IVN was unable to sell all of its production to its existing buyer, economic sanctions
against trade with Myanmar may significantly reduce the number of potential alternative buyers. Metal prices are volatile. The mining industry is intensely competitive and there is no assurance that, even if commercial
quantities of a mineral resource are discovered, a profitable market will exist for the sale of the
same. There can be no assurance that metal prices will be such that IVNs properties can be mined
at a profit. Factors beyond the control of IVN may affect the marketability of any minerals
discovered. Metal prices are subject to volatile price changes from a variety of factors including
international economic and political trends, expectations of inflation, global and regional demand,
currency exchange fluctuations, interest rates and global or regional consumption patterns,
speculative activities and increased production due to improved mining and production methods. The
supply of, and demand for, IVNs principal product, copper, is affected by various factors,
including political events, economic conditions and production costs. There can be no assurance that the interest held by IVN in its exploration, development and
mining properties is free from defects or that material contractual arrangements between IVN and
entities owned or controlled by foreign governments will not be unilaterally altered or revoked. IVN has investigated its rights to explore and exploit its various properties and, to the best of
its knowledge, those rights are in good standing but no assurance can be given that such rights
will not be revoked, or significantly altered, to the detriment of IVN. There can also be no
assurance that IVNs rights will not be 18




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challenged or impugned by third parties. IVN has also applied for rights to explore, develop and
mine various properties, but there is no certainty that such rights, or any additional rights
applied for, will be granted on terms satisfactory to IVN or at all. 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 While part of the proceeds payable to IVN from the sale of the Savage River Project are fixed
payments, a substantial portion of the proceeds are deferred, and the amount of such payments are
dependent on prevailing prices for iron ore (as represented by the Nibrasco/JSM pellet price) in
the year that the compensation is paid and the amount of ore sold from the Savage River Project in
that year, up to a maximum of 1,800,000 tonnes per year. While there
have been recent increases in the price of iron ore, the current
price is at the high end of recent historical trends. Such prices are
very volatile and in the past prices have suffered significant
declines. There is a risk that prices will fall in subsequent years,
meaning that corresponding payments to IVN will be lower than the
annual payment expected to be received in March 2006. In addition, while current reserve and resource
estimates indicate that the mine will be capable of producing sufficient ore to meet the 1,800,000
tpy threshold for the next five years, there is no assurance that these estimates will actually
bear themselves out. If insufficient ore is actually present to produce the maximum threshold
amount of ore, then the corresponding payments to IVN will be lower. Competition for new mining properties by larger, more established companies may prevent IVN from
acquiring interests in additional properties or mining operations. Significant and increasing competition exists for mineral acquisition opportunities throughout the
world. As a result of this competition, some of which is with large, better established mining
companies with substantial capabilities and greater financial and technical resources, IVN may be
unable to acquire rights to exploit additional attractive mining properties on terms it considers
acceptable. Accordingly, there can be no assurance that IVN will acquire any interest in
additional operations that would yield reserves or result in commercial mining operations. IVN has a limited operating history, and there is no assurance that it will be capable of
consistently producing positive cash flows. The Corporation has paid no dividends on its Common Shares since incorporation and does not
anticipate doing so in the foreseeable future. IVN has not received
any cash
flow from its Monywa Copper Project and all of its other
exploration and development projects will require further funding. IVN has a limited operating history and there can be no
assurance of its ability to operate its projects profitably. While IVN may in the future generate
additional working capital through the operation, development, sale or possible syndication of its
properties, there is no assurance that IVN will be capable of producing positive cash flow on a
consistent basis or that any such funds will be available for exploration and development programs. A substantial portion of IVNs operations involve exploration and development and there is no
guarantee that any such activity will result in commercial production of mineral deposits. Development of IVNs mineral properties is contingent upon obtaining satisfactory exploration
results. Mineral exploration and development involves substantial expenses and a high degree of
risk, which even a combination of experience, knowledge and careful evaluation may not be able to
adequately mitigate. There is no assurance that commercial quantities of ore will be discovered on
any of IVNs exploration properties. There is also no assurance that, even if commercial
quantities of ore are discovered, a mineral property will be brought into commercial production.
The discovery of mineral deposits is dependent upon a number of factors not the least of which is
the technical skill of the exploration personnel involved. The commercial 19




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viability of a mineral deposit, once discovered, is also dependent upon a number of factors, some
of which are the particular attributes of the deposit, such as size, grade and proximity to
infrastructure, metal prices and government regulations, including regulations relating to
royalties, allowable production, importing and exporting of minerals, and environmental protection.
In addition, assuming discovery of a commercial ore body, depending on the type of mining
operation involved, several years can elapse from the initial phase of drilling until commercial
operations are commenced. Most of the above factors are beyond the control of IVN. The
Corporation does not maintain insurance over certain of its business
operations Exploration, development and
production operations on mineral properties involve numerous risks,
including unexpected or unusual geological operating conditions, rock
bursts or slides, fires, floods, earthquakes or other environmental
occurrences, and political and social instability. It is not always
possible to obtain insurance against all such risks and the
Corporation
may decide not to insure against certain risks as a result of high
premiums or other reasons. Should such liabilities arise, they could
reduce or eliminate any further profitability and result in
increasing costs and a decline in the value of the securities of the
Corporation. The Corporation does not maintain insurance against
political or environmental risks. Also, because of the recent major
increases in insurance premiums and the inability to obtain full
coverage, the Monywa Copper Project is self-insuring on a portion of
the mine assets. Mining operations are subject to numerous hazards that could have a material adverse effect on
the financial position of IVN. The business of mining is subject to a variety of risks such as groundfall, explosions and other
accidents, flooding, environmental hazards, the discharge of toxic chemicals and other risks. Such
occurrences, against which IVN cannot, or may elect not to, insure, may result in destruction of
mines and other production facilities, damage to life and property, environmental damage, delayed
production, increased production costs and possible legal liability for any and all damages. Such
liabilities may have a material adverse effect on IVNs financial position. IVN is exposed to risks of changing political stability and government regulation in the
countries in which it operates. IVN holds mineral interests in countries which may be affected in varying degrees by political
stability, government regulations relating to the mining industry and foreign investment therein,
and the policies of other nations in respect of these countries. Any changes in regulations or
shifts in political conditions are beyond the control of IVN and may adversely affect its business.
IVNs operations may be affected in varying degrees by government regulations, including those
with respect to restrictions on production, price controls, export controls, income taxes,
expropriation of property, employment, land use, water use, environmental legislation and mine
safety. IVNs operations may also be affected in varying degrees by political and economic
instability, economic or other sanctions imposed by other nations, terrorism, military repression,
crime, extreme fluctuations in currency exchange rates and high inflation. In certain areas where IVN is active, the regulatory environment is in a state of continuing
change, and new laws, regulations and requirements may be retroactive in their effect and
implementation. The laws of many of the countries in which IVN operates also contain
inconsistencies and contradictions. Many of them are structured to bestow on government
bureaucrats substantial administrative discretion in their application and enforcement with the
result that the laws are subject to changing and different interpretations. As such, even the
Corporations best efforts to comply with the laws may not result in effective compliance in the
determination of government bureaucrats. IVN conducts its operations in several countries through co-operative joint ventures with
government controlled entities. While this connection benefits IVN in some respects, there is a
substantial inequality with respect to the influence of the parties with the applicable government.
Governments in these countries hold a substantial degree of subjective control over the application
and enforcement of laws and the conduct of business. This inequality would become particularly
detrimental if a business dispute arises between joint venture parties. IVN seeks to minimize this
issue by including international arbitration clauses in relevant agreements whenever possible and
by maintaining positive relations with both its joint venture partners and local governments, but
there can be no guarantee that these measures will be sufficient to protect IVNs interest in these
countries. 20




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IVN 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 IVN. All phases of IVNs operations are subject to environmental regulations in the various
jurisdictions in which it operates. For example, the Oyu Tolgoi Project is subject to an
environmental impact assessment, as well as other environmental protection obligations.
Environmental legislation is evolving in a manner which will require stricter standards and
enforcement, increased fines and penalties for non-compliance, more stringent environmental
assessments of proposed projects and a heightened degree of responsibility for companies and their
officers, directors and employees. There is no assurance that future changes in environmental
regulation, if any, will not adversely affect IVNs operations. Environmental hazards may exist on
the properties in which IVN holds interests which are presently unknown to IVN and which have been
caused by previous or existing owners or operators of the properties. Government approvals and permits are sometimes required in connection with IVNs operations. To
the extent such approvals are required and not obtained, IVN may be delayed or prohibited from
proceeding with planned exploration or development of its mineral properties. Failure to comply with applicable laws, regulations and permitting requirements may result in
enforcement actions thereunder, including orders issued by regulatory or judicial authorities
causing operations to cease or be curtailed, and may include corrective measures requiring capital
expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining
operations may be required to compensate those suffering loss or damage by reason of the mining
activities and may have civil or criminal fines or penalties imposed for violations of applicable
laws or regulations. Amendments to current laws, regulations and permits governing operations and activities of mining
companies, or more stringent implementation thereof, could have a material adverse impact on IVN
and cause increases in capital expenditures or production costs or reductions in levels of
production at producing properties or require abandonment or delays in development of new mining
properties. Previous mining operations may have caused environmental damage at IVN Group mining sites, and
if IVN cannot prove that it was caused by such prior operators, its indemnities and exemptions
from liability may not be effective. IVN has received exemptions from liability from relevant governmental authorities for environmental
damage caused by previous mining operations at the Monywa Copper Project and the Bakyrchik Project.
There is a risk, however, that, if an environmental accident occurred at those sites, it may be
difficult or impossible to assess the extent to which environmental damage was caused by IVNs
activities or the activities of previous operators. In that event, the indemnities could be
ineffective and possibly worthless. IVNs prospects depend on its ability to attract and retain key personnel. Recruiting and retaining qualified personnel is critical to IVNs success. The number of persons
skilled in the acquisition, exploration and development of mining properties is limited and
competition for such persons is intense. The Corporation believes that it has been successful in
recruiting excellent personnel to meet its corporate objectives but, as IVNs business activity
grows, it will require additional key financial, administrative, mining, marketing and public
relations personnel as well as additional staff on the operations side. Although the Corporation
believes that it will be successful in attracting and retaining qualified personnel, there can be
no assurance of such success. 21




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Certain directors of IVN 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 IVN. Certain of the directors of the Corporation are directors or officers of, or have significant
shareholdings in, other mineral resource companies and, to the extent that such other companies may
participate in ventures in which IVN may participate, the directors of IVN may have a conflict of
interest in negotiating and concluding terms respecting the extent of such participation. Such
other companies may also compete with IVN for the acquisition of mineral property rights. In the
event that any such conflict of interest arises, a director who has such a conflict will disclose
the conflict to a meeting of the directors of the Corporation and will abstain from voting for or
against the approval of such a participation or such terms. In appropriate cases, IVN will
establish a special committee of independent directors to review a matter in which several
directors, or management, may have a conflict. From time to time, several companies may
participate in the acquisition, exploration and development of natural resource properties thereby
allowing their participation in larger programs, permitting involvement in a greater number of
programs and reducing financial exposure in respect of any one program. It may also occur that a
particular company will assign all or a portion of its interest in a particular program to another
of these companies due to the financial position of the company making the assignment. In
accordance with the laws of the Yukon, the directors of the Corporation are required to act
honestly, in good faith and in the best interests of the Corporation. In determining whether or
not IVN will participate in a particular program and the interest therein to be acquired by it, the
directors will primarily consider the potential benefits to IVN, the degree of risk to which IVN
may be exposed and its financial position at that time. ITEM 4: DESCRIPTION OF THE BUSINESS Overview The Oyu Tolgoi Project and the Monywa Copper Project have been identified as the mineral properties
that are material to the IVN Group. The Savage River Project also qualified as a material property
of the Corporation until IVN sold its interest in the project in February 2005. As this sale
occurred after December 31, 2004, IVN has included a
description of the Savage River Project herein and treated the Savage River Project as a material
property. Qualified Persons Disclosure of a scientific or technical nature in this Annual Information Form in respect of each
of the material mineral resource properties of the IVN Group was prepared by or under the
supervision of the qualified persons (as that term is defined in NI 43-101) listed below: Property
    
    Qualified Person
    
    Relationship to CorporationOyu Tolgoi Project(1)
    
    Stephen Juras, AMEC
    
    Independent ConsultantMonywa Copper Project(2)
    
    Paul Chare
    
    Full-time EmployeeSavage River Project(2)
    
    Ben Maynard
    
    Full-time Employee
   (1)
    
    Disclosure respecting exploration results and other recent developments on the
Oyu Tolgoi Project subsequent to the Southern Oyu Technical Report was prepared under the
supervision of Charles Forster, P. Geo., a full-time employee of IVN. Mr. Forster is a
qualified person within the meaning of NI 43-101.(2)
    
    Disclosure respecting mineral resources and ore reserves for the Monywa Copper
Project and Savage River Project was prepared in accordance with the JORC Code. Both Mr.
Chare and Mr. Maynard are competent persons within the meaning of the JORC Code. 22




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Disclosure in this Annual Information Form respecting mineral resources and ore reserves is
based on information compiled by the qualified person noted above for the applicable property.
Each such person has consented to the inclusion in this Annual Information Form of disclosure based
on the information compiled by him in the form and context in which it appears. Oyu Tolgoi Copper and Gold Project, Mongolia Disclosure regarding the
resource estimates on the Hugo Dummett Deposits is based on the Hugo
Dummett Technical Report produced in June 2004 by AMEC and the disclosure regarding resource
estimates on the Southern Oyu Deposits and the bulk of the rest of the disclosure of a scientific
or technical nature on the Oyu Tolgoi Project is based on the Southern Oyu Technical Report
produced in September 2004 by AMEC. Dr. Stephen Juras, P. Geo, an employee of AMEC and an
independent, qualified person for the purposes of NI 43-101, supervised the preparation of the Hugo
Dummett Technical Report and the Southern Oyu Technical Report. Information of a scientific or
technical nature with respect to the Oyu Tolgoi Project subsequent to the date of the Technical
Reports was prepared under the supervision of Charles Forster, P.Geo, a full-time employee of IVN. Project Description and Location The Oyu Tolgoi Project is located in the Aimag (province) of Omnigov, approximately 570 km south of
the capital city of Ulaanbaatar and 80 km north of the border with China. The property hosts a
series of copper, gold and molybdenum deposits in a porphyry system. Mineralization has been
identified within an area of 5.8 km north-south by 3 km east-west, in which five principal mineral
deposits have been delineated, known as the Central Oyu, South Oyu, Southwest Oyu, Hugo South and
Hugo North deposits. IVN operates the Oyu Tolgoi Project through its wholly-owned subsidiary, IMMI. IMMI, in turn,
holds its rights to the Oyu Tolgoi Project through mining license 6709A (the OT License),
comprising approximately 8,496 hectares of property. The Mongolian government granted the OT
License to IMMI on December 23, 2003 along with mining licenses for three adjacent properties
identified as mining licenses 6708A, 6710A and 6711A. IMMI was obligated to file a feasibility
study (as interpreted in the Mongolian Minerals Law) with the Office of Geological and Mining
Cadaster (OGMC) of Mongolia following the grant of the OT License. IVN met this requirement by
preparing a report based on and derived from the Preliminary Assessment Report, which was filed
with OGMC in February 2004. The OT License includes the right to explore, develop mining
infrastructure and facilities and conduct mining operations on the Oyu Tolgoi Project. The OT
License is valid for a term of 60 years, with an option to extend the license for an additional
term of up to 40 years. IVN also holds the right to acquire an interest in 40,000 hectares of MEL 3148X (the Shivee Tolgoi
License) owned by Entrée. IVN holds its rights to the property pursuant to an Earn-in Agreement
dated October 15, 2004 as amended on November 9, 2004. The earn-in entitles IVN up to an 80% interest in minerals below 560 m and
a 70% interest in minerals above that point. In order for IVN to earn its full interest in the
property, the IVN Group must expend $35 million in exploration and development over an eight year
period. The expenses of holding the MEL must be paid by IVN. The Shivee Tolgoi License was
originally granted in 2001, and was renewed by 23




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Entrée in 2004 until 2006. The licenseholder will be entitled to obtain one further renewal of the
Shivee Tolgoi License for a further two years, at which point the license will expire if the holder
does not convert the MEL into a mining license. The Shivee Tolgoi License is adjacent to the OT
License, and the northern edge of the Hugo North deposit abuts the southern edge of the MEL. IMMI must pay a yearly per hectare fee to the Mongolian government in order to maintain the OT
License in good standing. The license fees are $5 per hectare in years one to three, $7.50 per
hectare in years four and five and $10 per hectare thereafter. The property was surveyed by a
qualified Mongolian Land Surveyor in 2004 to establish the legal boundaries of the OT License
concession. The Mongolian government imposes a royalty of 2.5% on the sale value of all minerals mined in the
country except gold extracted from placer, which is assessed a royalty at a rate of 7.5% of the
sales value of such mineral. Holders of a mining license in Mongolia must comply with environmental protection obligations.
These obligations include submitting an environmental plan along with annual work plans and posting
an annual bond against completion of environmental compliance obligations with the relevant Soum
(district), which in the case of the OT License is the Khan Bogd Soum. In March 2003, IMMI
completed and submitted to the Mongolian government an environmental baseline study respecting the
Oyu Tolgoi Project. The study is being used to support the preparation of an environmental impact
assessment (an EIA) of the project. An EIA is a statutory requirement for the project
development work, and IMMI has retained independent consultants to assist in the preparation of the
EIA. The EIA consists of three parts: (i) road, (ii) water, and (iii) mine and processing
facilities. IMMI submitted the road component to applicable regulatory bodies in 2004 and received
their approval. IMMI commenced the application process for the water portion of the EIA in late
2004 by submitting a resource study for nearby groundwater reserves. The remainder of the water
portion of the EIA has not yet been submitted. IMMI expects to submit the
mining and process facility component of the EIA in the second or third quarter of 2005. An
environmental performance bond has been deposited with the Khan Bogd Soum administration as surety
for completion of environmental protection work for 2005. The bond reflects the predicted
exploration environmental protection measures submitted for exploration work within the Oyu Tolgoi licenses in
accordance with the Minerals Law of Mongolia. The 2005 environmental protection plan includes
provisions for development of a shaft at Hugo North in addition to the exploration
drilling, trenching and geotechnical investigations. IMMI pays to the Khan Bogd Soum an annual fee to account for water and road usage. IMMI also
retained the Institute of Archaeology at the Mongolian Academy of Science to complete
archaeological studies of the Oyu Tolgoi Project, and has received approval from archaeological
regulatory authorities in Mongolia to disturb the property for the purposes of exploration,
development and mining of the property. Archaeological surveys are
being completed for all pipeline and road corridors off the Mining
Licence to assist in identifying final alignment of infrastructure. Accessibility, Climate, Local Resources and Physiography The Oyu Tolgoi Project is located in the South Gobi region of Mongolia, approximately 570 km south
of the capital city, Ulaanbaatar. There are a number of small communities in the South Gobi
region. The most prominent is Dalanzadgad, with a population of approximately 14,000, which is
located approximately 220 km northwest of the Oyu Tolgoi property. Facilities at Dalanzadgad
include a regional hospital, tertiary technical colleges, domestic airport and a 6 megawatt
capacity coal-fired power station. The closest community to the
property is Khan Bogd, the centre
of the Khan Bogd Soum. Khan Bogd has a population of approximately 2,000 and is located 45 km to the
east of the property. Road access to the property follows a well-defined track directly south from Ulaanbaatar requiring
approximately 12 hours travel time in a four-wheel drive vehicle. IMMI has also developed a 2,000
m dirt airstrip within the Oyu Tolgoi property that allows the property to be serviced by a 50
passenger, turbo prop 24




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aircraft. Mongolian rail service and a large electric power line lie 350 km east of the property
at the main rail line between Ulaanbaatar and China. The China-Mongolia border is located
approximately 80 km south of Oyu Tolgoi. The Chinese government has upgraded a highway to the
Mongolian border, which now provides a direct link between the border south of Oyu Tolgoi to the
trans-China railway system. The south Gobi region has a continental, semi-desert climate with cool springs and autumns, hot
summers, and cold winters. The average annual precipitation is approximately 80 millimetres, 90%
of which falls in the form of rain with the remainder as snow. Local records indicate that
thunderstorms are likely to occur between two and eight days a year at the project area with an
average total of 29 hours of electrical activity annually. IMMI conducts exploration activities
year-round and believes that mining operations can also be run on a year-round basis. Temperatures range from an extreme maximum of about 36 degrees celcius to an extreme minimum of
about -31 degrees celcius. The area occasionally receives very high winds accompanied by sand
storms that often severely reduce visibility for several hours at a time. The property ranges in elevation from 1,140 m to 1,215 m above sea level. The region is covered by
sparse semi-desert vegetation and is used by nomadic herders who tend camels, goats and sheep. The
topography largely consists of gravel-covered plains, with low hills along the northern and western
borders. Scattered, small rock outcrops and colluvial talus are widespread within the northern,
western and southern parts of the property. IMMI believes that this topography will be amenable to
the construction of the necessary infrastructure for mining operations, including tailings storage
sites, heap leach pads, waste disposal, and processing plant sites. An independent consultant was retained by IMMI to conduct a preliminary seismicity review of the
property from the Global Seismic Hazard Assessment Map. The map indicates that the property lies
within a very high hazard zone with a 475 year return period. There are limited records to conduct
a detailed review of seismic events on or near the property, but additional research is being
conducted in connection with the preparation of a feasibility study on the Oyu Tolgoi Project. The Mongolian Minerals Law and Mongolian Land Law govern IMMIs surface rights on the Oyu Tolgoi
Project. Water rights are governed by the Mongolian Water Law and the Mongolian Minerals Law.
These laws permit license holders to use the land and water in connection with exploration and
mining operations, subject to the discretionary authority of Mongolian national, provincial and
regional governmental authorities. IVN expects that it will have to negotiate with all three
levels of government to ensure access to appropriate land and water rights prior to the
commencement of any mining operations. Power sources are currently sufficient for exploration activities. The nearest power line is 350
km away, so IMMI operates two 500 kilowatt and two 200 kilowatt diesel generators for camp
electrical needs. Additional power sources will need to be developed prior to the commencement of
mine development and mining operations. IMMI holds exploration licenses at a coal deposit known as
Tsagaan Tolgoi, which is approximately 110 km west of Oyu Tolgoi. A major metallurgical and thermal
coal deposit is located at Tavan Tolgoi, approximately 110 km west-northwest of Oyu Tolgoi. IVN is
also in discussions with Chinese government authorities about accessing electricity from the
Chinese power grid in Inner Mongolia, China. Water is widely available from shallow wells, and is sufficient for exploration purposes. A more
substantial source of water will be required for development and mining operations. Groundwater
supply investigations by independent consultants for the Oyu Tolgoi Project have been ongoing since
April 2002. Two separate investigations were undertaken; the first was aimed at identifying
groundwater resources within the OT License area to provide camp and construction water while the
second was a regional search for deep groundwater resources to provide a long-term process water
supply. 25




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The regional search for water supply has led to the identification of three deep sedimentary
groundwater systems within 100 km of the Oyu Tolgoi Project. Investigative drilling of two of
these systems and computer modeling of the systems has now been completed and indicates that these
groundwater systems which have not yet been subject to drilling, will be able to meet the water
demand for a production rate of up to 40 million tpy. The use of the water from these systems is
subject to finalization of the EIA for the project and the issue of extraction licenses by the
Mongolian government. History Old diggings and small amounts of slag found in the area indicate that the Oyu Tolgoi area was
subject to small scale mining activity in ancient times. However, modern mineral exploration did
not begin in earnest in the area until 1996, when the Magma Copper Company Ltd. began a
reconnaissance program which examined more than 60 copper occurrences in various parts of Mongolia.
In 1996, after BHP Exploration acquired Magma Copper Company Ltd., BHP Exploration continued the
reconnaissance program in western and southern Mongolia. BHP Exploration first visited the Oyu Tolgoi Project in September 1996 as part of its regional
reconnaissance program of the south Gobi region. BHP Exploration subsequently applied for, and was
granted, an exploration concession covering 1,350 square km. After geological mapping, stream and
soil sediment surveys and magnetic and IP surveys, BHP Exploration completed 6 diamond core holes
totalling 1,102 m during the 1997 field season. With encouraging results from two of the holes, a
second phase of drilling was undertaken in 1998, consisting of an additional 17 widely-spaced core
holes totalling 2,800 m. These holes failed to return significant mineralization and BHP
Exploration suspended the project pending economic review. In 1999, following a review of past
results, additional drilling and continued exploration on the property was planned but never
carried out. BHP Exploration then offered the properties for joint venture. IMMI originally acquired its interest in the property from BHP Exploration in May 2000 pursuant to
the Earn-in Agreement. Shortly thereafter, IMMI carried out a RC drill program to delineate a
chalcocite blanket intersected by one of BHP Explorations diamond drill holes. This program
consisted of 109 RC holes totalling 8,828 m. The holes were targeted to define supergene copper
mineralization that might be amenable to a heap leaching SX-EW process similar to the one used at
the Monywa Copper Project. While the results further defined parameters of a chalcocite blanket at
Central Oyu, IVN reviewed the results and decided that the chalcocite blanket was neither large
enough nor high grade enough to be economic as a stand-alone deposit. In 2001, IMMI continued the RC drilling program to expand the chalcocite blanket and locate
additional supergene resources. IMMI also completed three diamond drill holes to test deep
hypogene copper and gold potential. One of these holes, OTD 150, intersected 508 m of
chalcopyrite-rich mineralization grading 0.81% copper and 1.17 g/t gold, while another hole, OTD
159, intersected a 49 m thick chalcocite blanket grading 1.17% copper and 0.21 g/t gold and 252 m
of hypogene covellite mineralization grading 0.61% copper and 0.11 g/t gold. The diamond drill holes were sufficiently encouraging for IMMI to conduct a major follow-up drill
program that resulted in the discovery of the Southwest Oyu deposit. In late 2002, drilling in the
far northern section of the property intersected 638 m of bornite-chalcopyrite rich mineralization
grading 1.61% copper and 0.07 g/t gold starting at a depth of 222 m. This marked the discovery of
the Hugo Dummett Deposits. IMMI completed the earn-in requirements under the Earn-in Agreement with BHP Exploration by the
first quarter of 2002. After certain back-in rights held by BHP Exploration expired, BHP
Exploration transferred title to the relevant mineral exploration license to IMMI in the summer of
2002. Pursuant to the Earn-in Agreement, BHP Exploration retained a 2% net smelter returns royalty
on production from the Oyu Tolgoi 26




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Project. IVN acquired this royalty from BHP Exploration in November 2003 in consideration for the
payment to BHP Exploration of $37,000,000. Geology and Mineralization The Oyu Tolgoi Project lies near the boundary of the South Mongolian and the South Gobi tectonic
units, in the Kazakh Mongol Belt. The area contains a mixture of mid-Palaeozoic arc and back arc
rocks that accreted to southern Mongolia during the Palaeozoic age. The Oyu Tolgoi Project area falls within Gurvansayhan Terrane, an arc and back arc
assemblage of lower to mid Palaeozoic metasediments and island arc basalts that rest on a lower
Palaeozoic ophiolite complex. The arc terrane is 50 km in scale around Oyu Tolgoi and is dominated
by basaltic volcanics and intercalated volcanogenic sediments, intruded by plutonic-size
hornblende-bearing granitoids of mainly quartz monzodiorite to possibly granitic composition.
During 2004, IVN funded a regional stratigraphic program that utilized stratigraphic experts from
the Mongolian Technical University. The object of this program was to define the Devonian,
Carboniferous sedimentary and volcanic stratigraphy that host the Oyu Tolgoi deposits and to
provide tighter stratigraphic controls for the structural modeling of the property. The property consists of a rectangular block approximately 10 km by 8 km in area which hosts the
five principal mineralized deposits identified to date. In general, outcrops are sparse and
constitute less than 20% of the area. IVN believes that a Neogene piedmont outwash deposit forms a
flat terrace dipping gently to the south and occupies a north-northwest-trending zone in the centre
of the exploration block. This unit comprises red clay and gravel and is up to 40 m thick. Two
major south-southeast drainages incise this terrace and are filled by Quaternary sands and gravels.
A wide variety of felsic to mafic dykes are found throughout the exploration block and in drill
holes. Post mineral dykes comprise basalt, rhyolite, hornblende-biotite andesite, and biotite
granodiorite intrusive units. The property also contains variably altered and mineralised
porphyritic quartz monzodiorite dykes that may be genetically related to the copper-gold porphyry
systems. Satellite imagery and geophysical interpretations indicate that there are two major northeast
trending structures on the property. In addition, recent work in the sedimentary covered northern
part of the property near the Hugo North and Hugo South deposit has confirmed the occurrence of
folded stratigraphy. Ongoing studies are attempting to unravel the attitude and extent of the
folding event. The geology and mineralization of the Southwest Oyu deposit is characterized by a gold-rich
porphyry system, with a high-grade core about 250 m in diameter and extending over 700 m vertically
(the Southwest Gold Zone). The deposit is centred on small quartz monzodiorite (QMD) stocks
intrusive into massive biotite and magnetitite altered porphyritic augite basalt which hosts 80% of
the copper and gold in the deposit. The high-grade core is enclosed by a large, low-grade ore
shell approximately 600 m by 2,000 m in area. The system is low sulphide and the copper and gold
mineralization is related to chalcopyrite. Mineralization at Southwest Oyu consists mainly of finely disseminated pyrite-chalcopyrite with
minor bornite and massive chalcopyrite veins cross-cutting and impregnating earlier deformed quartz
vein stock works and the basalt, quartz monzodiorite host rocks. The mineralization is related to
a late stage sericite and sericite-biotite-albite overprint, which affects the quartz monzodiorite
intrusions and basaltic wall rocks. Gold to copper ratios vary between 0.5 to one and one to one
in the outer margin of the deposits increasing to approximately two to one into the high grade gold
core, with the highest ratios consisting of up to three to one in the deeper parts of the deposit.
Outside the Southwest Gold Zone, the augite basalts contain anomalous gold contents, which become
subtly gold-richer southward. South Oyu is a copper porphyry deposit, developed mainly in basalt. The South Oyu deposit is
characterized by secondary biotite, magnetite and moderate intensity quartz veining, with strong,
late-stage overprinting by 27




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seritite, chlorite-smectite. Unlike Southwest Oyu, the South Oyu system is not gold rich. The
deposit is intruded by sericite altered quartz monzodiorite dykes, with weak to locally strong
copper mineralization, and by small post-mineral andesite, rhyolite and basalt dykes, that locally
may occupy up to 50% of the rock volume. Copper mineralization at South Oyu consists of finely
disseminated pyrite-chalcopyrite and bornite. In the nearby vicinity of the South Oyu, Central Oyu and Southwest Oyu deposits lies four small,
newly discovered deposits referred to as the wedge, far southwest, bridge and south sliver
deposits. In each case, mineralization is comprised of bornite and chalcopyrite, with subordinate
enargite and pyrite. With the exception of some minor local areas, gold mineralization is sparse
in these deposits. Central Oyu includes high-sulphidation with copper mineralization consisting of covellite,
chalcocite and minor enargite, a body of copper and gold porphyry mineralization consisting
primarily of chalcopyrite and a shallow chalcocite enrichment blanket. The high-sulphidation
mineralization and its associated advanced argillic alteration and mineralization are telescoped
onto an underlying and peripheral porphyry system. The chalcocite blanket appears to overlie the
covellite-rich quartz-veined zones in pyrite-rich quartz monzodiorite. The quartz-veined zones are
also strongly covellite mineralized. Supergene mineralization underlies a leached cap extending 20
to 80 m below the surface. The upper 20 to 40 m of the chalcocite blanket consists of chalcocite
with minor covellite and digenite. The lower parts of the blanket, which has lower copper grades,
is dominated by covellite. The upper chalcocite and lower covellite zones are a standard feature
of enrichment blankets. The style of mineralization with the largest volume is the
high-sulphidation system with finely disseminated pyrite-covellite-chalcocite. The covellite
mineralization generally averages about 0.7% copper and is characterized by high pyrite content and
minor enargite. The Hugo Dummett Deposits extend over a strike length of approximately 2.9 km. While
mineralization of the Hugo Dummett Deposits is virtually continuous, IMMI has divided the
mineralized zone into the Hugo North and Hugo South deposit for the purposes of resource
estimation, development and mine planning. Hugo South and Hugo North are separated by a 110 degree
sub-vertical fault that displaces Hugo North vertically down a modest distance from Hugo South. The Hugo Dummett Deposits occur in a northerly striking, moderately to steeply east dipping
monocline that is bounded on the west by a near vertical fault know locally as the West Bat Fault.
The host rocks to the deposit are Late Devonian basalt and dacitic ash flow tuffs of the Alagbayan
Formation. These are capped by a dacitic block ash tuff that is seldom mineralized but contains
variable degrees of advance argillic and hematite alteration. Overlying the block ash tuff are a
sequence of unmineralized carbonaceous shale and laminated siltstone and a conglomerate which in
turn is overlain by a thick sequence of basaltic flow breccia, red-green, volcaniclastic siltstones
and green massive sandstone. Carboniferous andesitic ash flow tuffs, carbonaceous siltstones and
basaltic lapillic tuff of the Sainshandhudag Formation unconformably overly the Devonian rocks on a
regional basis but appear to be at a very shallow angle of unconformity to the Devonian
Stratigraphy on Oyu Tolgoi. Intrusive into the Devonian rocks are a series of QMD intrusions that are tentatively divided into
an early QMD, an intra-mineral QMD and a late QMD. The early QMD typically centres on a zone of
intense quartz veining that replaces in excess of 90 percent of the intrusion and hosts a high
grade copper zone of greater than 2.5% copper mineralization virtually along the entire 2.9 km long
strike length of the Hugo Dummett deposits. The intra-mineral QMD is found at the northern end of
the deposits and is distinguished by a significant increase in gold content approaching a ratio of
1:1 gold and copper. The intra-mineral QMD is visibly distinguishable form the early QMD by pink
feldspar altered, less quartz with fine grained bornite. The late QMD forms a large mass that
underlies virtually all of the deposits, carries lower copper and gold grades and is more broadly
sericite altered. A late mineral, biotite, feldspar porphyry granodiorite dyke, sill complex cuts
the west side of the deposits extending from the southwest end where it forms a number of 28




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steeply west dipping sheets through to the northern end where it lies as a mass along the western
margin of the deposit. In the north, the dyke separates a gold-rich zone from the main body of the
deposit. At the farthest north end of Hugo North the dyke merges with the northeasterly trending
West Bat Fault forming a cupola over the apex of the near vertically dipping deposit. Above the
deposit, the dyke broadens into a wide massive body dipping steeply to the west in Late Devonian
sediments and basalt. Where the dyke is in contact with the deposit, it frequently contains
xenoliths of bornite, chalcopyrite-rich QMD that form discrete zones for purposes of resource
modeling. The dyke also contains disseminated pyrite plus veins of chalcopyrite and bornite with
erratic gold values indicating that while it postdates the early stages of high grade copper,
bornite mineralization it was emplaced before the cessation of the final mineralization event. The width of the the mineralized zone on the Hugo Dummett deposit varies along strike from 200 m to
in excess of 500 m. Mineralization dips generally to the east from as low as 40 degrees to up to
80 degrees, but is generally above 60 degrees and increases to sub-vertical at the northern end of
Hugo North. As the drilling has progressed north approaching the boundary with the Shivee Tolgoi
Property including the host Stratigraphy and the West Bat Fault have started to swing to the east.
Based on deep penetrating IP, the deposit will go back onto its northerly trend once it crosses the
boundary with Entrée Gold. Hugo South consists of a lower gold to copper ratio than Hugo North, averaging 10 to one copper to
gold in most of the deposit. It is closer to the surface than Hugo North, with the lowest portion
of the deposit approximately 700 m below surface compared to 1,500 m below the surface for Hugo
North. Alteration in Hugo South is dominated by advanced argillic alteration consisting of
pyrophyillite, diaspore, zunyite and alunite overprinted by topaz and finally by kaolinite and
dickite. The sulphide mineralization is dominated by high-sulphidation type mineralization hosted
primarily in the advanced argillic altered ignimbrite and basalt centred on a core of intense
quartz veining hosting bornite-chalcocite mineralization grading greater than 2.5% copper. The
sulphide mineralization is zoned outward (vertically up and to the east) into bornite, chalcopyrite
then into pyrite, chalcopyrite, enargite mineralization on the outermost and top most extent of the
deposit. The gold-rich QMD does not occur in Hugo South with the result that the gold grades are
typically less than 0.1 g/t while the late, weakly mineralized QMD forms the base of the deposit. IVN originally believed Hugo North struck northerly into a late high angle reverse, northeasterly
trending, fault that juxtaposed younger granodiorite rock against the projected northern extension
of the deposit. Drilling in late 2004 has shown the fault to be shallower and dipping to the
north. As a result, the deposit extends under the granite with the result that it remains open
and, as yet, has not been cut off by the fault or the granite. Hugo North contains a high-grade copper zone, hosted primarily in basalt and quartz monzodiorite in
which mineralization exceeding 2% and ranging up to 5% copper is present. An important feature of
the Hugo North mineralization is a significant increase in the gold to copper ratios as a result of
the presence of the gold-rich QMD. The northern half of Hugo North contains a gold to copper ratio
of 0.5 to 1.0 up to a high of 1:1. This gold-rich zone is dominated by bornite, but is mixed with
minor chalcocite and chalcopyrite and is associated with intense quartz veining occupying up to 50%
of the rock, but more typically 5% to 20%. The high-grade deposit is internal to a significantly
larger body of copper mineralization grading between 1% to 5% copper, consisting of a mixture of
chalcopyrite and bornite. Alteration in Hugo North consist primarily of quartz, sericite, chlorite
and local patches of biotite of the basalt and quartz monzodiorite host rocks. Advanced argillic
alteration and associated high sulphidation mineralization including enargite is present only in
the hanging wall ignimbrite overlying the bulk of the deposit. Exploration IMMIs exploration at Oyu Tolgoi has consisted mainly of remote sensing and geophysical methods,
including satellite image interpretation, detailed ground magnetics, Bouguer gravity and gradient
array IP, as well as 29




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extensive drilling. Gradient array IP has been conducted on north to south and east to west lines
at 100 m line spacing, with electrode spacing up to 15 km. Drill holes have been targeted to test
IP chargeability targets or structural zones. Outcropping prospects, including Southwest, South
and Central Oyu, have been mapped at 1:1,000 scale, while the central part of the exploration block
was mapped at 1:5,000 scale in 2001. The entire remaining exploration block was mapped at 1:10,000
scale in 2002. In 2004, extensive surface trenching by excavators and shallow overburden RC
drilling was conducted to provide bedrock geology over the extensive areas devoid of outcrop. As a
result the geology is well defined over the entire 10 km by 8 km concession block. Initial geophysical surveys were conducted by BHP Exploration in 1996 consisting of airborne
magnetics, ground magnetics and gradient array IP. In 2001, IMMI conducted gradient array IP on
100 m spaced north to south lines over the 3 km by 4 km core block of Oyu Tolgoi. IMMI used
multiple current electrode spacing ranging from 1,000 m to 3,600 m, and was able to define the
sulphide assemblages in Southwest, South and Central Oyu. The IP survey also defined a large,
semi-circular feature with Central Oyu on the southern side and an IP anomaly representing the Hugo
Dummett Deposits on the north side. In 2002, IMMI re-oriented the IP survey lines to east to west to account for a predicted
north-northeast trending high-grade copper zone discovered at Hugo Dummett in drill hole OTD270.
IMMI then re-surveyed the core block of Oyu Tolgoi on 100 m spaced lines using multiple AB current
electrode spacings out to 15 km. This survey resulted in an entirely different chargeability
signature that now appears to reflect a continuous zone of sulphide mineralization extending
north-northeasterly from the southwest end of Southwest Oyu through to the northernmost extent of
the property, for a total strike length of approximately 6.0 km. IP surveying in late 2004 and early 2005 has now extended the IP coverage 9 km north over Entrées
Shivee Tolgoi property, with the result that the IP anomaly that
denotes the Hugo Dummett Deposits
continues 4 km north of the boundary. The anomaly appears to indicate the mineralization has
narrowed, but extends to surface at its northern end. As the IP anomaly lies within a fill-covered
valley, the source of the near surface chargeability is not immediately apparent. IMMI has made
drilling this area a high priority target for 2005 in order to test the full extent of this IP
anomaly. In 2004, IMMI also conducted IP and detailed ground magnetic surveying over the outlying Oyu Tolgoi
concessions, including the mining licences Manakht (6708A), Khukh Khad (6710A) and Ulaan Uul
(6711A) and exploration license 3677X that adjoins and extends the southern limits of the 3 mining
concessions. A number of chargeability anomalies with similarities to the Oyu Tolgoi anomaly were
discovered and to date, six diamond drill holes have tested three of the anomalies with negative
results. Additional evaluation work will be carried out in 2005 to determine the extent to which
other chargeability anomalies might contain sulphide mineralization or precious metals. In January 2005, IMMI completed a 74 m deep, three m diameter shaft at Southwest Oyu. A 246 tonne
bulk sample was taken from the bottom four m of the shaft, believed to represent the average
hardness of the Southwest Oyu deposit. The sample was taken near the top of the mineralized zone
containing greater than one g/t gold. The shaft was sunk on a vertical hole, OTD189, drilled early
in the Southwest Oyu exploration program. The comparable four m assay interval in the original
drill hole averaged 0.58 g/t gold and 0.64% copper. Assays for grab samples taken from the muck
extracted from the last three rounds at the bottom of the shaft averaged 0.66 g/t gold and 0.50%
copper. A mobile crusher unit is being emplaced on the property to produce aggregate for a cement
batch plant. Once the unit is operational, it will be used to crush and bulk sample the individual
stockpiled rounds from the shaft to gain a more representative estimate of the gold and copper
grades as compared to the grades from the original drill hole. 30




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##### 



The 246 tonne bulk sample was collected in bulk sample bags and packed in 20 foot steel containers.
The samples were then trucked south across the Chinese border and straight to the seaport of
Tinjin for sea transport to Lakefield
Laboratories in Ontario for comminution test work. One of the key near-term exploration priorities on the Oyu Tolgoi Project is to sink a 1,200 m
exploration shaft on the Hugo Dummett Deposits. The purpose of the shaft is to provide access to
both the Hugo North and Hugo South deposits for the purpose feasibility studies, further
delineation and rock characterization of the mineral resources. Long lead items and equipment are
currently being purchased, and surface works are planned so that shaft construction can commence in
the second quarter of 2005. The target completion date is early 2007, with underground drifting
from the shaft occurring in the later part of 2007 and in 2008. Drilling Diamond drill holes are the only source of geological and grade data for the Oyu Tolgoi Project.
BHP Exploration originally drilled 23 holes on the property followed by 109 RC holes by IVN in
2000. In 2001 IMMI started its diamond core drill program, and as at February 1, 2005 it has
drilled approximately 515,000 m of core in over 900 drill holes. IMMI currently has 12 drill rigs
operating on the property cutting approximately 350 m of core per day. At the height of the 2004
drilling campaign, 22 diamond core rigs operated on the property producing 1,200 m of core per day. IMMI has now delineated Southwest Oyu on 40 m to 70 m centres sufficient for measured and indicated
resource definition. Central Oyu has been drilled to 70 m centres, sufficient for indicated
resource classification, while South Oyu was drilled to 70 m centres also for indicated resource
definition. Hugo North has now been drilled on east-west sections spaced at 150 m with holes
spaced on 80 m to 100 m intervals on sections using navi-drill technology to drill multiple holes
from a single trunk hole. This spacing will permit IMMI to upgrade some or all of the resources on
the deposit to the indicated classification. IMMI prioritized its infill drill program at Hugo
North to focus on an area identified as potentially hosting the first 7 years of block cave mining
on the deposit as well as a significant portion of the other relevant areas identified as
potentially representing the first 14 years of a mine plan. This program of detailed delineation
drilling was completed in March 2005, and an updated resource
estimate of the Hugo Dummett Deposits, in which a large portion of
the Hugo North resources are upgraded to an indicated category, is
expected to be completed in the second quarter of 2005. IMMI is now focussing its drilling on the possible
projections of the Hugo North deposit, as well as potential satellite deposits, north into the
Shivee Tolgoi property. Hugo South has been drilled to approximately 100 m by 100 m spacing for
inferred resources, with no additional drilling proposed for 2005. IMMI has also conducted drilling on the land between the Southwest Oyu deposit and the Central Oyu
deposit and between Southwest Oyu and South Oyu. This has resulted in the discovery of additional
mineralization in what is respectively called the bridge, far southwest, southern sliver and wedge
deposits. Certain of this mineralization has been confirmed at an indicated resource confidence
level, and the resource estimates for these deposits have been included in the Southern Oyu Deposit
estimates. IMMI has relied on wireline methods for all drilling, utilizing HQ and NQ size core and some PQ
size core for metallurgical testing. In Hugo North, vitually all holes are initiated in PQ size
core to a depth of at least 450 m to 550 m. The rest of the drill hole is then continued using HQ
or NQ sized core. On two occasions PQ coring was extended to depth of 1,450 m, allowing IMMI to
collect large diameter core from the deep Hugo North deposit. Upon completion of all holes, the
collar and anchor rods on drill holes are removed and a PVC pipe inserted in the hole. Each hole
collar is marked by a cement block inscribed with the hole number. The holes are not grouted or
back filled with cement so as to allow re-entry of individual holes for surveying checks or to
permit IMMI to drill new daughter holes. In future, some holes may have to be grouted or cemented
to keep near surface water from entering the underground mine workings. 31




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##### 



Drill hole collars are located respective to a property grid by either global positioning system or
theodolite and electronic distance measuring instruments. Holes are drilled at an inclination of
between 45° and 90°, with the majority between 60° and 70°. The drill contractors take down-hole
surveys about every 50 m. Where magnetite is present that will affect the deviation of the compass
readings in the survey instruments, gyro compasses are used that are not affected by magnetism in
the rock. IMMI uses standard logging and sampling conventions to capture information from the drill core.
The core is logged in detail onto paper logging sheets and the data are then entered into the
project database. The core is photographed prior to being sampled and the digital photographs are
linked to the drill logs enabling the geologist to quickly access specific photographs for any
given metre. Drill core is then stacked on pallets in an organized core farm. Core recovery in
the mineralized units has been usually between 95% and 100%. IMMIs drill program is now focussing on testing the extent to which the mineralized zone of Hugo
North extends into the Shivee Tolgoi Property and testing satellite deposits throughout the Oyu
Tolgoi Property. Sampling and Analysis IMMIs sampling procedure includes the collection of core samples taken on continuous 2 m intervals
down each drill hole, excluding dykes that extend more than 10 m along the core length. One-half
of each NQ and HQ core and one-quarter of each PQ core is taken in the sampling. The core is split with a rock saw and cooled and lubricated with fresh water. To prevent sampling
bias, the core is marked with a continuous linear cutting line before being split. Samples are
placed in cloth bags and sent to an on-site preparation facility owned and managed by SGS Analabs
Pty. Ltd. (Analabs) of Australia for processing. Core samples are initially assembled into groups of 15 or 16, and then interspersed with four or
five quality control samples to make up a batch of 20. The quality control samples comprise one
duplicate split core sample and one uncrushed field blank, which are inserted prior to sample
preparation, a reject or pulp preparation duplicate, which is inserted during sample preparation,
and one or two standard reference material samples, which are inserted after sample preparation. The prepared samples are placed in wooden shipping boxes, locked, sealed with tamper-proof,
numbered tags and shipped under the custody of IMMI to Ulaanbaatar, where they are assayed at a
facility operated by Analabs. Split core samples are crushed to 90% minus 2 to 3 mm. A one kilogram subsample is then riffle
split from the crushed sample and then pulverized to 90% minus 200 mesh pulp. A 150 gram
sub-sample is split off by taking multiple scoops from the pulverized 200 mesh pulp, which is then
placed in a kraft envelope, sealed in a wire glued top. All samples are routinely assayed for gold, copper, arsenic and molybdenum. Samples are digested
with nitric, hydrochloric, hydrofluoric and perchloric acids to dryness before being leached with
hydrochloric acid to dissolve soluble salts and made to volume with distilled water. Gold is
determined using fire assay fusion, while copper and molybdenum are determined using acid
digestion. Upon receipt of assay results, values for reference material samples and filed blanks are tabulated
and compared to an established round robin program. Assay results that deviate from round robin
program results beyond pre-set parameters are rejected and subject to re-assay. IMMI also performs
check assays at the rate of one per batch of 20 samples. 32




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##### 



The sampling procedure used by IMMI was developed by an independent consultant hired to implement a
formal quality assessment and quality control (QA/QC) program. IMMI adopted the program in April
2002. The original samples taken from diamond drilling at Southwest Oyu were assayed prior to
implementation of the QA/QC program described above. A re-assay program of these early samples
indicated a positive bias in the original gold and copper assays of certain samples. Accordingly,
in AMECs technical reports covering Southwest Oyu, AMEC has made a proportional adjustment of the
grades of a number of pre-OTD231 gold assays and copper assays to account for this bias. Since the
implication of the full QA/QC program, IMMI has not been required to conduct re-assay programs or
make adjustments for bias to its assay results for subsequent resource estimations. In preparation for feasibility level metallurgical testing IMMI has conducted a trace element
analytical program to map the distribution of potential penalty elements within the deposits. This
program has prepared 1 in 5 sample composites from reject -200 mesh pulps representing all drill
core intersections in the deposits. These samples are sent to an independent laboratory in Canada
for 42 element ICP analysis plus sulphur, mercury, uranium and fluorine. Arsenic and fluorine are
currently being modelled to provide a global distribution of the potential penalty elements to
facilitate blending strategies if required to reduce the effects of these elements in the
concentrates. IMMI continues with feasibility level metallurgical test program using PQ half core samples from
Southwest Oyu and pre-feasibity level metallurgical test work on one-quarter PQ core samples from
the Hugo Dummett Deposits, focused on Hugo North. IMMI is currently conducting grinding tests with
a view to providing engineering parameters for semi-autogenous grinding. IMMI is also conducting
column leaching test work to assess the potential for copper recovery from heap leaching of both
the chalcocite supergene mineralization overlying Central Oyu and from covellite mineralization
that underlies the supergene chalcocite blanket. Results of this work is pending release of the
feasibility studies. Mineral Resources The mineral resources of the Oyu Tolgoi Project were classified using logic consistent with the CIM
definitions referred to in NI 43-101. The mineral resource estimates for the Oyu Tolgoi Project
have been calculated by AMEC, with the most current resource estimate of the Southern Oyu Deposits
contained in the August 2004 Southern Oyu Technical Report and the most recent estimate of the Hugo
Dummett Deposits contained in the May 2004 Hugo Dummett Technical Report. These estimates were
prepared by AMEC under the direction of Dr. Stephen Juras, P.Geo. Total Oyu Tolgoi Project Resources(1)(based on a 0.60% copper equivalent cut-off) Contained Metal(3)Cu
    
    
    Au
    
    
    CuEq(2)
    
    
    Cu (000
    
    
    Au
    
    
    CuEq(3)Resource Category
    
    Tonnes
    
    
    (%)
    
    
    (g/t)
    
    
    (%)
    
    
    tonnes)
    
    
    (ounces)
    
    

(000 tonnes)Measured
    
    
    88,840,000
    
    
    
    0.67
    
    
    
    1.09
    
    
    
    1.37
    
    
    
    1,304,500
    
    
    
    3,126,900
    
    
    
    2,677,800Indicated
    
    
    422,740,000
    
    
    
    0.63
    
    
    
    0.46
    
    
    
    0.92
    
    
    
    5,883,800
    
    
    
    6,221,900
    
    
    
    8,571,000Measured + Indicated
    
    
    511,580,000
    
    
    
    0.64
    
    
    
    0.59
    
    
    
    1.00
    
    
    
    7,188,300
    
    
    
    9,348,800
    
    
    
    11,248,800Inferred
    
    
    1,221,990,000
    
    
    
    1.25
    
    
    
    0.24
    
    
    
    1.41
    
    
    
    33,690,000
    
    
    
    9,416,300
    
    
    
    37,890,000
 33




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##### 



Notes:(1)
    
    Mineral resources are not mineral reserves until they have demonstrated economic
viability based on a feasibility study or pre-feasibility study.(2)
    
    CuEq has been calculated using assumed metal prices ($0.80/lb. for copper and
U.S.$350/oz for gold); %CuEq. = % Cu + Au (g/t) x (11.25/17.64).(3)
    
    The contained gold and copper represent estimated contained metal in the ground and
have not been adjusted for the metallurgical recoveries of gold and copper. The
determination of an adjustment factor to account for differences in relative metallurgical
recoveries between gold and copper will depend upon the completion of definitive
metallurgical testing. Southern Oyu Resources In the Southwest Gold Zone at Southwest Oyu, IMMI has conducted drilling with approximately a 50 m
sample spacing. Inspection of the model and drill hole data on plans and sections in the Southwest
Gold Zone area, combined with spatial statistical work and investigation of confidence limits in
predicting planned quarterly production showed good geologic and grade continuity. When taken
together with all observed factors, AMEC decided that blocks covered by this data spacing in the
Southwest Gold Zone area may be classified as a measured mineral resource. A three-hole rule was
used where blocks containing an estimate resulting from three or more samples from different holes
(all within 55 m and at least one within 30 m) were classified as Measured Mineral Resource. The bulk of the remainder of the Southern Oyu Deposits were estimated at an indicated resource
level. The drill spacing is at a nominal 70 m on and between sections. Geologic and grade
continuity is demonstrated by inspection of the model and drill hole data in plans and sections
over the various zones, combined with spatial statistical work and investigation of confidence
limits in predicting planned annual production. A two-hole rule was used where blocks containing
an estimate resulting from two or more samples from different holes. For the Southwest deposit the
two holes needed to be within 75 m with at least one hole within 55 m. For the remaining deposits,
both holes needed to be within 65 m with at least one hole within 45 m to be classified as
Indicated Mineral Resources. All interpolated blocks that did not meet the criteria for either Measured or Indicated Mineral
Resources were assigned as Inferred Mineral Resources if they fell within 150 m of a drill hole
composite. The cut-off date for calculation of data in the resource estimate of the Southern Oyu Deposits was
August 2004. The mineral resource estimate summary has been split into resources lying above and
below a depth of 560 m below surface (an elevation of 600 m above sea level), which ongoing mine
planning work has identified to be a conservative depth for a large-scale, open-pit mining
operation. The resources above the depth of 560 m from surface have been estimated using a 0.30%
copper equivalent cutoff grade. Resources lying below a depth of 560 m from surface (more likely
to be mined using underground bulk mining methods) were estimated using a 0.60% copper equivalent
cutoff grade. 34




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##### 



The Southern Oyu deposits encompass the three main deposits of Southwest Oyu, South Oyu and Central
Oyu as well as four smaller, satellite deposits called Far Southwest, Bridge, Wedge and South
Sliver. Southern Oyu Deposits  Mineral Resources(1)
(Central, Southwest and South Oyu, plus satellite deposits) Grades
    
    
    Contained Metal(3)Copper
    
    
    Gold
    
    
    CuEq.(2)
    
    
    Copper
    
    
    GoldMineral Resource Category
    
    Tonnes
    
    
    (%)
    
    
    (g/t)
    
    
    (%)
    
    
    (000s lb)
    
    
    (oz)Above a depth of 560 m from surface (600 m elevation), 0.30% Copper Equivalent Cut-offMeasured
    
    
    108,360,000
    
    
    
    0.58
    
    
    
    0.85
    
    
    
    1.13
    
    
    
    1,386,000
    
    
    
    2,961,000Indicated
    
    
    882,070,000
    
    
    
    0.47
    
    
    
    0.25
    
    
    
    0.62
    
    
    
    9,140,000
    
    
    
    7,090,000Measured+Indicated
    
    
    990,430,000
    
    
    
    0.48
    
    
    
    0.31
    
    
    
    0.68
    
    
    
    10,481,000
    
    
    
    9,871,000Inferred
    
    
    259,060,000
    
    
    
    0.35
    
    
    
    0.20
    
    
    
    0.47
    
    
    
    1,999,000
    
    
    
    1,666,000Below a depth of 560 m from surface (600 m elevation), 0.60% Copper Equivalent Cut-offMeasured
    
    
    5,280,000
    
    
    
    0.76
    
    
    
    2.12
    
    
    
    2.11
    
    
    
    88,000
    
    
    
    360,000Indicated
    
    
    65,620,000
    
    
    
    0.44
    
    
    
    0.99
    
    
    
    1.08
    
    
    
    637,000
    
    
    
    2,089,000Measured+Indicated
    
    
    70,900,000
    
    
    
    0.47
    
    
    
    1.08
    
    
    
    1.15
    
    
    
    735,000
    
    
    
    2,462,000Inferred
    
    
    26,200,000
    
    
    
    0.41
    
    
    
    0.55
    
    
    
    0.76
    
    
    
    237,000
    
    
    
    463,000
   Notes:(1)
    
    Mineral resources are not mineral reserves until they have demonstrated economic
viability based on a feasibility study or pre-feasibility study.(2)
    
    CuEq has been calculated using assumed metal prices ($0.80/lb. for copper and
U.S.$350/oz for gold); %CuEq. = % Cu + Au (g/t) x (11.25/17.64).(3)
    
    The contained gold and copper represent estimated contained metal in the ground and
have not been adjusted for the metallurgical recoveries of gold and copper. The
determination of an adjustment factor to account for differences in relative metallurgical
recoveries between gold and copper will depend upon the completion of definitive
metallurgical testing. Hugo Dummett Mineral Resources For the Hugo Dummett Deposits resource estimate, IVN created three-dimensional mineralized shells
or envelopes based on copper grades of 0.6%, 1.0%, and 2.0%. Two additional mineralized shells
based on a 0.3 g/t gold threshold were constructed in Hugo North. AMEC checked the shapes for
interpretational consistency in section and plan, and found them to have been properly constructed.
These shells were used as interpolation domains. Copper grades for blocks within the three copper
grade shells in each deposit or zone were estimated with a hard boundary between the shells. Gold
grades for blocks within the gold zone in Hugo North were also estimated with a hard boundary. The
background estimation domain used all composites outside of the grade shells. The estimate was based on 3D block models utilizing commercial mine planning software (Gemcom®).
Industry-accepted methods were used to create interpolation domains based on mineralized geology
and to 35




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##### 



perform grade estimation with ordinary kriging. The assays were composited into 5 m down-hole
composites that honoured the domain boundaries. The estimation plans, or sets of parameters used
for estimating blocks, were designed using a philosophy of restricting the number of samples for
local estimation. AMEC has found this to be an effective method of reducing smoothing and
producing estimates that match the Discrete Gaussian change-of-support model and ultimately the
actual recovered grade-tonnage distributions. Reasonableness of grade interpolation was reviewed
by visual inspection of sections and plans displaying block model grades, drill hole composites,
and geology. Global and local bias checks in block models, using nearest-neighbour estimated
values versus the ordinary kriged values, found no evidence of bias. In the Hugo Dummett Technical Report, AMEC reported that the Hugo South deposit could be mined by
either (or both) open pit or underground bulk methods. Hugo North could be mined by underground
bulk mining, but because of the depth of the mineralization, it is probably not amenable to open
pit mining methods. The current mineral resource model will need to incorporate additional
dilution and allowances for mining recovery for any underground scenario prior to conversion to
mineral reserves. All interpolated blocks within 150 m of a drill composite were assigned to an
Inferred Mineral Resource category. All other blocks were not included in the resource estimate. Hugo North deposit  Mineral Resources(1)(Inferred) Cutoff Grade
    
    Tonnes
    
    
    CuEq(2)
    
    
    Cu
    
    
    Au
    
    
    Cu(3)
    
    
    Au(3)(CuEq(2)%)
    
    (t)
    
    
    (%)
    
    
    (%)
    
    
    (g/t)
    
    
    (000s lb)
    
    
    (oz)>=3.00
    
    
    100,400,000
    
    
    
    3.88
    
    
    
    3.45
    
    
    
    0.68
    
    
    
    7,640,000
    
    
    
    2,200,000>=2.00
    
    
    178,000,000
    
    
    
    3.26
    
    
    
    2.89
    
    
    
    0.59
    
    
    
    11,340,000
    
    
    
    3,380,000>=1.00
    
    
    460,700,000
    
    
    
    2.08
    
    
    
    1.82
    
    
    
    0.41
    
    
    
    18,480,000
    
    
    
    6,070,000>=0.60
    
    
    665,700,000
    
    
    
    1.68
    
    
    
    1.46
    
    
    
    0.34
    
    
    
    21,420,000
    
    
    
    7,280,000>=0.30
    
    
    722,800,000
    
    
    
    1.58
    
    
    
    1.38
    
    
    
    0.32
    
    
    
    21,980,000
    
    
    
    7,440,000
 Hugo South deposit  Mineral Resources(1)(Inferred) Cutoff Grade
    
    Tonnes
    
    
    CuEq(2)
    
    
    Cu
    
    
    Au
    
    
    Cu(3)
    
    
    Au(3)(CuEq(2)%)
    
    (t)
    
    
    (%)
    
    
    (%)
    
    
    (g/t)
    
    
    (000s lbs)
    
    
    (oz)>=3.00
    
    
    12,000,000
    
    
    
    3.52
    
    
    
    3.38
    
    
    
    0.21
    
    
    
    890,000
    
    
    
    80,000>=2.00
    
    
    39,200,000
    
    
    
    2.77
    
    
    
    2.67
    
    
    
    0.15
    
    
    
    2,310,000
    
    
    
    190,000>=1.00
    
    
    213,200,000
    
    
    
    1.58
    
    
    
    1.52
    
    
    
    0.09
    
    
    
    7,140,000
    
    
    
    620,000>=0.60
    
    
    494,100,000
    
    
    
    1.11
    
    
    
    1.06
    
    
    
    0.08
    
    
    
    11,540,000
    
    
    
    1,270,000>=0.30
    
    
    1,110,600,000
    
    
    
    0.72
    
    
    
    0.68
    
    
    
    0.07
    
    
    
    16,650,000
    
    
    
    2,500,000
 36




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##### 



Combined Hugo Dummett Deposits  Mineral Resources(1)(Inferred) Cutoff Grade
    
    Tonnes
    
    
    CuEq(2)
    
    
    Cu
    
    
    Au
    
    
    Cu(3)
    
    
    Au(3)(CuEq(2) %)
    
    (t)
    
    
    (%)
    
    
    (%)
    
    
    (g/t)
    
    
    (000s lb)
    
    
    (oz)>=3.00
    
    
    112,400,000
    
    
    
    3.84
    
    
    
    3.44
    
    
    
    0.63
    
    
    
    8,520,000
    
    
    
    2,280,000>=2.00
    
    
    217,300,000
    
    
    
    3.17
    
    
    
    2.85
    
    
    
    0.51
    
    
    
    13,650,000
    
    
    
    3,560,000>=1.00
    
    
    673,900,000
    
    
    
    1.92
    
    
    
    1.73
    
    
    
    0.31
    
    
    
    25,700,000
    
    
    
    6,720,000>=0.60
    
    
    1,159,800,000
    
    
    
    1.44
    
    
    
    1.29
    
    
    
    0.23
    
    
    
    32,970,000
    
    
    
    8,580,000>=0.30
    
    
    1,833,400,000
    
    
    
    1.06
    
    
    
    0.96
    
    
    
    0.17
    
    
    
    38,790,000
    
    
    
    10,020,000
   Notes:(1)
    
    Mineral resources are not mineral reserves until they have demonstrated economic
viability based on a feasibility study or pre-feasibility study.(2)
    
    CuEq has been calculated using assumed metal prices ($0.80/lb. for copper and
U.S.$350/oz for gold); %CuEq. = % Cu + Au (g/t) x (11.25/17.64).(3)
    
    The contained gold and copper represent estimated contained metal in the ground and
have not been adjusted for the metallurgical recoveries of gold and copper. The
determination of an adjustment factor to account for differences in relative metallurgical
recoveries between gold and copper will depend upon the completion of definitive
metallurgical testing. Resource Estimation Parameters Each of the deposits was assigned mineralized domains based on geological criteria and marked
changes in mineralization intensity. AMEC checked the shapes for interpretational consistency in
section and plan, and found them to have been properly constructed. These mineralized domains were
then critically reviewed to determine appropriate estimation or grade interpolation domains.
Several different procedures were applied to the data to discover whether statistically distinct
domains could be constructed using the available geological variables. The results were then used
to guide the construction of a block model and the development of estimation plans. AMEC also
prepared contact profiles for copper, gold and molybdenum across the various mineralized domains in
each deposit. The data analyses demonstrated that most of the domains in the main mineralized zones should be
treated as separate domains with respect to copper, gold and molybdenum. The exception to this is
an ignimbrite-augite basalt boundary in Hugo Dummett. This boundary shows transitional
characteristics and was treated as a soft boundary during grade interpolation. AMEC also conducted variography analysis (the study of the spatial variability of an attribute) of
copper and gold in the main mineralized domains in each zone by constructing correlograms. AMEC composited the assays into 5 m down-hole composites. The compositing followed the domain zone
by breaking the composites on the domain code values. Capping limits were applied to the assay
data prior to compositing. AMEC reviewed the compositing process and found it to have been
performed correctly, after adjusting assay data for biases contained in pre-OTD231 drill holes
prior to capping. Bulk density data were assigned to a unique MineSight assay database file. These data were
composited into 15 m fixed-length down-hole values to reflect the block model bench height. Bulk
density values were estimated into the resource model by an averaging of composites. Various coding was done on the block model in preparation for grade interpolation. The block model
was coded according to zone and domain. Percent below topography was also calculated into the
model blocks. Post-mineral dykes were assumed to represent zero grade waste cutting the
mineralized rock. The shapes were used to calculate an ore-remaining percent for each block by
subtracting the volume percent dyke that 37




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##### 



intersects a block from 100. This percentage was used in the resource tabulation procedures to
properly account for mineralized material. The Oyu Tolgoi estimation plans were designed using a philosophy of restricting the number of
samples for local estimation. While local predictions based on the small number of samples are
uncertain, this method can produce reliable estimates of the recovered tonnage and grade over the
entire deposit because the global grade-tonnage curves from the estimations tend to be accurate
predictors of the actual grade-tonnage curves. Modelling consisted of grade interpolation by ordinary kriging. Inverse distance weighting to the
second power was used to interpolate molybdenum grades in Southwest Oyu and Central Oyu. Also, the
chalcocite blanket in Central Oyu was interpolated by grade averaging because of the small data
population in this domain. Only capped grades were interpolated. AMEC completed a detailed visual validation of the Oyu Tolgoi resource block models. This included
an independent check on the smoothing in the estimates using the Discrete Gaussian or Hermitian
polynominal change-of-support method. AMEC checked the block model estimates for global bias by comparing the average metal grades from
the model with means from nearest-neighbour estimates. The results displayed no evidence of bias. AMEC also checked for local trends in the grade estimates. This was done by plotting the mean
values from the nearest-neighbour estimate versus the kriged results benches, northings and
eastings. The trends for copper and gold behave as predicted. Histograms were constructed to show the frequency of sample grades within the mineralized domains.
Both kriged and nearest-neighbour plots were made for copper, gold and molybdenum. The
nearest-neighbour plots mimic the respective composite value distribution. The kriged results show
the formation of a more symmetric distribution because of the smoothing effect caused by using
multiple values from multiple drill holes to interpolate a model block value. Mining Operations In February 2004, AMEC prepared the Preliminary Assessment Report for development of the Oyu Tolgoi
Project. The report considered mine development options ranging from a 20 year mine life to a 40
year mine life, with all deposits except Hugo North being mined by open pit and Hugo North being
mined by block caving. AMEC relied on inferred mineral resource estimates for substantially all of
the minerals in the report. Subsequent to the preparation of that report, IVN adjusted certain aspects of the mine plan and
determined to produce a new economic assessment of the project at the feasibility study level for
the Southern Oyu Deposits and at the pre-feasibility study level for
the Hugo North deposit. In
light of recent increases to the size of resources on the property and ongoing developments in
mine planning, the Corporation feels that the original Preliminary Assessment Report no longer
represents a relevant economic analysis of the Oyu Tolgoi Project. The Southern Oyu feasibility study work focused on a detailed baseline evaluation of initial
facilities required to mine and process material from the open pittable resources contained in the Southern
Oyu Deposits at a nominal rate of 70,000 tonnes per day, and incremental throughput tonnages
above this base. In the second half of 2004, the preliminary design of the processing facility was
sufficiently developed to enable equipment pricing to be obtained and to provide material
take-offs for estimating purposes. At the end of 2004, the Corporation had completed the preliminary design of
infrastructure, including the design of the water supply system, the design of tailings storage facilities
and the design of on-site support facilities, such as offices, accommodations and workshops. Various
studies aimed at optimizing the process flow sheet and site layout were undertaken. The work on the pre-feasibility study of Hugo North mainly
focused on engineering and cost analysis related to the underground block-cave mining of higher-grade sections
of the Hugo North deposit at rates of up to 85,000 tonnes per day. Drilling during the second half of 2004
focused on infill drilling of the initial production zone at Hugo North. Several mine planning factors required to complete the feasibility study and pre-feasibility study were to be
determined by reference to the terms of the Stability Agreement,
which IVN had expected to conclude in 2004. Rather than wait on the
approval of the Stability Agreement, the Corporation now intends to
release a revised scoping study (updated preliminary assessment
report), called  the Integrated Development Plan, late in the second
quarter of 2005. The study will integrate and combine results from the
ongoing open pit feasibility study and the underground
pre-feasibility study on the underground block caving operation at
the Hugo North deposit. The plan will also incorporate the results of
a soon to be released independent resource estimate that includes
indicated resources at Hugo North and updated inferred resources at
Hugo North and Hugo South. IVN believes the Integrated Development
Plan will present a more informative overall picture of the future development of the
Oyu Tolgoi Project, especially given the recent exploration success
in Hugo North and the expected 40 year mine life under the current
plan.  The current development strategy contemplates production from open-pit operations located within the Southern Oyu Deposits and concurrently developing Hugo Dummetts underground resources in order to commence underground operations as
soon as possible. Completion of a feasibility
study on the Hugo North deposit is expected in late 2008, as it will
require a planned 1,200 m underground shaft to be completed
along with a certain amount of drifting from that shaft. Assuming
timely completion of an open pit feasibility study,
positive results from that study and the availability of project financing, IVN expects that initial commercial
production from the Southern Oyu Deposits could commence in mid-2007, with some underground ore being milled in 2008 from Hugo Norths development activity. Current estimates suggest that the development of the shallower Hugo South deposit
will lag that of Hugo North. These plans remain subject to change based on unforeseen circumstances. 38




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Monywa Copper Project, Myanmar Project Description and Location The Monywa Copper Project is located in west central Myanmar, approximately 5 km west of the town
of Monywa. The site is approximately 110 km west of Mandalay and 832 km by road north of the
capital city of Yangon, and is situated on the west bank of the Chindwin River, near its confluence
with Yama Stream. The Monywa Copper Project comprises four mineralized deposits: Sabetaung, Sabetaung South,
Kyisintaung and Letpadaung. The two Sabetaung deposits and Kyisintaung are adjacent to each other
and have been developed as the S&K Mine, the first phase of the Monywa Copper Project. The fourth
deposit, Letpadaung, is approximately seven km southeast of the S&K Mine site and is to be the
subject of the second future development phase of the Monywa Copper Project. The S&K Mine site
property covers approximately 3,059 hectares and the Letpadaung deposit covers approximately 3,269
hectares. The Monywa Copper Project is a joint venture between IVNs wholly-owned subsidiary, Ivanhoe Myanmar
Holdings Ltd., and Mining Enterprise No. 1, an entity wholly-owned by the Government of Myanmar.
IVN holds a 50% interest in the joint venture, which operates through Monywa JVCo, a company
incorporated under the laws of Myanmar. Monywa JVCo operates the S&K Mine, an open-pit mine using
heap leach SX-EW technology designed to produce LME Grade A cathode copper. Monywa JVCo also plans
to develop copper mining operations on the Letpadaung deposit. For the first five years of production, Monywa JVCo paid royalties to the Myanmar Ministry of Mines
in respect of cathode copper sold by the Monywa joint venture at a rate of 2% of the value of
cathode copper sold. Commencing in 2004, the royalty rate increased to 4% plus an amount equal to
2% of the value of cathode copper sold during the first five years of commercial production,
amortized and payable in equal instalments over the following five years. Monywa JVCo must pay all
such royalties in cash or in kind at the option of the Myanmar Ministry of Mines. Monywa JVCo must
also pay rent to the Myanmar Ministry of Mines at an annual rate of $500 per km2. Accessibility, Climate, Local Resources, Infrastructure and Physiography The Monywa Copper Project is located approximately 110 km west of Mandalay, Myanmars second
largest city. Several villages are located in and near the mine site. The mine townsite,
Nyaungbingyi on the west bank of the Chindwin River and Monywa on the east bank are the nearest
population centres. Monywa, which is the main supply centre in the area, has a population of
approximately 500,000. The mine site is situated on the west bank of the Chindwin River to the east of the Chin Hills,
within Myanmars flat central plains. Elevations range from 75 m above sea level on the banks of
the Chindwin River, to about 330 m above sea level at the crest of the Letpadaung Hills. The area
is characterized by dry zone vegetation consisting mostly of low growing shrubs and grasses
together with cultivated fields. The area has a dry, continental monsoon type climate. Winters
are warm and very dry, while summers can be extremely hot with thunderstorm activity and localized
flooding. Yangon is the major entry point for Myanmar with regular air service from Yangon to Mandalay and an
unscheduled service to Monywa. The mine site is accessible by paved road from Mandalay. The drive
takes about three hours and the mine can be accessed by crossing a bridge over the Chindwin River.
The mine site can also be reached from the town of Pakokku on the Irrawaddy River by way of an
unimproved road on the western bank of the Chindwin River. The town of Monywa is also linked by
rail to Mandalay and Yangon. The Irrawaddy and Chindwin Rivers also provide a viable shipment route
for copper, bulk supplies and heavy equipment to and from Yangon and the mine site. 39




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History The existence of copper mineralization in the Monywa area has been known for centuries. Ancient
copper extraction from shallow oxidised ores is evidenced by slag remnants in some of the villages
surrounding Sabetaung. In the early 1900s, a British company registered gold and copper claims in the Letpadaung area.
Several existing small adits were probably excavated around that time. During the 1930s, attempts
were made to extract copper from malachite and other minerals which occur locally within the
Letpadaung deposit. Extensive workings were opened, but soon abandoned, as the attempts were
unsuccessful. In the mid-1950s, the Burma Geological Department and a survey team from Yugoslavia visited the
area as part of a regional reconnaissance and recommended further study. Between 1957 and 1960,
the Burma Geological Department, using a foreign contractor, undertook an economic survey of the
Monywa copper region. This work was followed up with additional drilling by the Burma Geological
Department. From 1972 until 1976, the Japanese Overseas Technical Co-operation Agency financed a programme of
exploration and pilot plant studies leading to a feasibility study for the Sabetaung and
Kyisintaung deposits. The programme included underground exploration at Sabetaung. A number of
holes were drilled in the Sabetaung and Kyisintaung deposits. The Japanese built and operated a 50
tonne per day pilot plant and planned a mill and smelter project that was never implemented. In June 1978, an agreement for development of the Sabetaung and Kyisintaung deposits was signed
between Mining Enterprise No. 1 and Bor Copper Institute of Yugoslavia. The government of
Yugoslavia provided part of the funding for the programme. Bor Copper Institute prepared a full
feasibility study and mine plan which served as the basis for construction of a concentrator
complex to process 8,000 tonnes per day of ore from Sabetaung, Sabetaung South and Kyisintaung and
to produce copper concentrates for export. During the mid-1980s the parties mined feed ore from
the Sabetaung pit only, although they also carried out limited stripping at Kyisintaung. IVN and Mining Enterprise No. 1 entered into an agreement in March 1994 to carry out feasibility
studies on the Sabetaung and Kyisintaung deposits, to construct a pilot plant to test the use of an
SX/EW process on Sabetaung ores and, subject to feasibility, to enter into a joint venture to
develop the Monywa Copper Project. The parties also agreed to carry out additional feasibility
studies on the Letpadaung deposit. In April 1996, IVN and Mining Enterprise No. 1 formed Monywa JVCo and entered into a joint venture
agreement to develop the S&K Mine. In September 1997, Monywa JVCo entered into project financing,
construction and marketing agreements with Marubeni U.K. P.L.C. and Nissho Iwai Europe P.L.C., a
syndicate of Japanese trading houses, for a $90 million project loan facility to finance
construction of the S&K Mine. During 1998 and 1999, the project loan facility was used, in part, to
pay a $75 million lump sum engineering, procurement and construction contract that was awarded to a
consortium of Marubeni Corporation and Chiyoda Corporation, a Japanese engineering and construction
concern. Monywa JVCo also entered into a long-term sales agreement with Marubeni Corporation in
which Marubeni Corporation agreed to purchase copper cathode produced by the S&K mine during the
first seven years of operation. Monywa JVCo completed construction of the S&K Mine mining and
processing facilities in 1998 and the project achieved full commercial production at a rate of
25,000 tonnes of copper cathode per annum by the end of 1998. 40




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Geological Setting and Mineralization Regional Geology The Monywa copper district is located along the generally north-trending Inner Volcanic Arc which
bisects the Inner Burman Tertiary Basin tectonic province. That province coincides with the
Central Lowlands physiographic province. Elevations in the district range from about 70 to 330 m.
There are four known copper deposits within the district: Sabetaung, Sabetaung South, Kyisintaung,
and Letpadaung, all of which occur in andesitic intrusive plugs of late Tertiary age and associated
older Tertiary pyroclastics and sediments. The plugs form hills above a generally flat plain. Pyrite and primary and secondary copper sulfide minerals, mainly chalcocite, occur in hydrothermal
breccias, as fracture fillings, and as disseminations in a supergene enriched zone, in a mixed
secondary and primary zone, and in a primary zone below an oxidized leached cap that contains
essentially no copper values. The hydrothermal breccias are controlled primarily by fractures, and
the primary copper mineralization occurs predominantly in and associated with the breccias and in
fractures. Local and Property Geology The Sabetaung deposit is currently being mined by open pit methods. The dimensions of the
mineralized zone are approximately 500 m by 500 m and the deposit has been tested by drilling to
depths of 300 m. Copper mineralization in the zone occurs as subparallel narrow chalcocite-pyrite
veinlets, fracture fillings and irregular hydrothermal breccia bodies hosted in intermediate
volcanic rocks, dacite porphyries and possibly tuffs. Chalcocite appears to be replacing pyrite to
varying degrees and some veinlets up to 10 centimetres wide contained better than 50% chalcocite. The Sabetaung South deposit is located some 500 m southeast of the Sabetaung pit. The host rock is
comprised of hydrothermal breccias which typically display rounded and mixed clasts of either
sediment fragments or tuffs in a matrix comprised of rock, flour-silica and iron oxides after
sulphides. The surface dimensions of the brecciated zone are approximately 200 m by 250 m.
Drillhole data indicates that leaching extends to a depth of 40 m, and that a chalcocite-bearing
zone is developed over a depth of more than 100 m below the leached zone. The Kyisintaung deposit is an area of widespread intense acid sulphate leaching developed over
dacite porphyry-hosted fracture and breccia-related chalcocite mineralization. Silicification
predominates, with minor kaolinite being developed in the argillized periphery of the deposit.
Drilling indicates that the thickness of the intensely leached cap is up to 200 m and that it is
underlain by a major zone of chalcocite enrichment. Chalcocite occurs predominately as thin
coatings on pyrite which occurs as disseminations and fracture fillings in the host rock.
Mineralized hydrothermal breccias often contain greater than 2% total copper and appear to be the
primary mineralization within the deposit. The Letpadaung deposit encompasses approximately five square km and crops out as a cluster of fault
bounded hills above a generally flat plain. The Letpadaung deposit is bounded on the north by the
Chindwin Basin Fault and approximately 1,000 m to the south by the subparallel Monastery Fault
Zone. The block bounded by the Chindwin and the Monastery faults hosts the majority of the
Letpadaung ore body. Within this fault bounded block is a complex system of northeast and
northwest faults. Episodic hydrothermal brecciation is the most striking geologic feature related
to mineralization at the Letpadaung deposit. Hydrothermal breccia occurs within northwest and
northeast trending, lozenge shaped breccia dikes which pinch and swell in all directions.
Individual breccia dikes range from a few centimetres to over five m in thickness. The breccias
are the main control of high-grade copper mineralization and are preferentially developed in the
more brittle, silicified alteration zones. These northeast trending zones and swarms were 41




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considered to be the dominant control on mineralization, but the recently recognised northwest
trending zones and swarms are now known to exert a strong control on the location and orientation
of mineralization along the Monastery and northwest faults. Mineralization Chalcocite is the predominant copper sulfide mineral in the Monywa deposits. The chalcocite is
believed to be mostly secondary and occurs as thin coatings on pyrite. Pyrite occurs in fracture
fillings (veins), breccias and vugs, and is disseminated in the groundmass of the rock. Primary
chalcocite also occurs in crystalline form in vugs, fractures, and breccias and as graphic
intergrowths in pyrite. The deposits can be classified as belonging to the acid-sulfate
(high-sulfidation) type. Exploration, Drilling, Sampling and Analysis Drilling was carried out by Monywa JVCo on the Sabetaung, Sabetaung South and Kyisintaung deposits
consisting of exploration holes and holes for condemnation, continuity studies, water and
geotechnical studies. Monywa JVCo has information on 269 historical core holes totalling about 52,000 m drilled by third
parties in the Kyisintaung, Sabetaung, and Sabetaung South deposits from 1958 to 1983. All of
these holes have been included in the Monywa JVCo computer database. All but six of these holes
are vertical. In 1994 and 1995, Monywa JVCo drilled 101 exploration-development core holes
totalling about 18,000 m, 18 core holes totalling about 2,000 m for metallurgical test samples, and
24 reverse circulation holes for a grade continuity study in the Sabetaung pit, totalling 730 m,
for a total of 143 holes and about 21,000 m. Sixty-three of the exploration-development holes are
angle holes and 38 are vertical holes. Monywa JVCo has also established a computer database in respect of the Letpadaung deposit based on
information received from a total of 533 drill holes, of which 304 are exploration drill holes
totalling 92,575 m of diamond drill core which were drilled, sampled and assayed under Monywa JVCo
supervision between 1994 and 1996. The remaining drill holes were completed for hydrological,
metallurgical or condemnation purposes. Monywa JVCo also recovered information and compiled an electronic database for 143 drill holes
totalling 31,286 m which were drilled between 1957 and 1986 under the direction of a number of
Burmese and Myanmar governmental agencies. Due to data inaccuracies, including unreliable drill
hole location, poor core recovery, unsatisfactory assay reliability and potentially inadequate
drilling direction, Monywa JVCo disregarded these drilling results for resource evaluation
purposes. However, Monywa JVCo used the data from these holes for statistical comparison with its
own database. All drill core from the Monywa JVCo drilling was logged systematically by IVN Group geologists for
geotechnical and geological information. The core was photographed and sampled, generally in two-m
intervals. Sampling was done by sawing the core in half. One half is stored at the Monywa Copper Project
site. The other half was sent to the joint ventures analytical laboratory, where it was crushed
and pulverised. The coarse rejects and a sub-sample of the pulverised core are stored at the
laboratory. An identical sub-sample was sent to Inchcape Testing Services of Jakarta, Indonesia,
for total copper analysis. Monywa JVCo also analysed onsite most copper-mineralised samples for
total copper by atomic absorption analysis. Partial copper analyses, (acid-soluble and cyanide-soluble copper) were performed on part of the
database. Cyanide-soluble copper assay results were then used to establish numerical relationships
between total copper and cyanide-soluble copper. 42




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Quality control procedures were followed for the Monywa JVCo sample preparation and all analytical
processes. An electronic database was created at the Monywa mine site office and contains all the
geological and related exploration data, including analytical data. All original hard copy
documentation is kept at that office. In 2004, Monywa JVCo commenced an in-fill diamond drilling programme at the Sabetaung deposit. The
first phase of drilling, completed at the start of December 2004, consisted of 39 holes totalling
3,864 m. The program focussed on five separate target areas. Based on that program, JVCo has been
able to extend the area of known mineralization, and has identified a new area of high grade
mineralization in the stage 3 pit of the deposit. JVCo has established a program for a second
phase of drilling that targets areas of interest identified in phase one drilling and resource
modelling studies. The objective of both the phase one and phase two drill program are to extend the current mine life
by completing an infill development drilling programme of the Sabetaung ore body. The programs aim
to increase ore reserves by upgrading some or all of the considerable inferred resources through
drilling and comprehensive geological studies, develop a new resource model for optimisation, and
identify potential target areas for any further drilling phases in the Sabetaung Pit area. Mineral Resources and Reserves Estimates of copper reserves and resources at the Sabetaung, Kyisintaung and Letpadaung deposits
are as of December 31, 2004. Reserves and resources are categorized in accordance with the JORC
Code. The principles and procedures of the JORC Code and CIM Standards are closely aligned and
mineralization categorized as measured, indicated and inferred resources and as proved and probable
reserves under the JORC Code would be reported under identical categories pursuant to CIM
Standards. Estimated measured and indicated mineral resources include those mineral resources
modified to produce estimated ore reserves. Resources which are not reserves do not have
demonstrated economic viability. Reserve and resource estimates reflect 100% of the deposit.
IVNs share is 50%. Mineral ResourcesDecember 31, 2004 Deposit
    
    Measured
    
    
    Indicated
    
    
    Total
    
    
    InferredTonnes
    
    
    Grade(1)
    
    
    Tonnes
    
    
    Grade(1)
    
    
    Tonnes
    
    
    Grade(1)
    
    
    Tonnes
    
    
    Grade(1)(millions)
    
    
    (%)
    
    
    (millions)
    
    
    (%)
    
    
    (millions)
    
    
    (%)
    
    
    (millions)
    
    
    (%)Sabetaung
    
    
    0
    
    
    
    0.00
    
    
    
    98
    
    
    
    0.34
    
    
    
    98
    
    
    
    0.34
    
    
    
    93
    
    
    
    0.28Kyisintaung
    
    
    0
    
    
    
    0.00
    
    
    
    282
    
    
    
    0.33
    
    
    
    282
    
    
    
    0.33
    
    
    
    108
    
    
    
    0.26Letpadaung
    
    
    577
    
    
    
    0.44
    
    
    
    492
    
    
    
    0.36
    
    
    
    1,069
    
    
    
    0.39
    
    
    
    409
    
    
    
    0.31
   (1)
    
    Cutoff grades are 0.15% for Sabetaung, 0.15% for Kyisintaung and 0.10% for Letpadaung. 43




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Ore ReservesDecember 31, 2004 Deposit
    
    Proven
    
    
    Probable
    
    
    TotalTonnes
    
    
    Grade(1)
    
    
    Tonnes
    
    
    Grade(1)
    
    
    Tonnes
    
    
    Grade(1)(millions)
    
    
    (%)
    
    
    (millions)
    
    
    (%)
    
    
    (millions)
    
    
    (%)Sabetaung
    
    
    0
    
    
    
    0.00
    
    
    
    57
    
    
    
    0.39
    
    
    
    57
    
    
    
    0.39Kyisintaung
    
    
    182
    
    
    
    0.37
    
    
    
    8
    
    
    
    0.27
    
    
    
    191
    
    
    
    0.36Letpadaung
    
    
    506
    
    
    
    0.45
    
    
    
    298
    
    
    
    0.40
    
    
    
    803
    
    
    
    0.43
   (1)
    
    Cutoff grades are 0.14% for Sabetaung, 0.15% for Kyisintaung and 0.10% for Letpadaung. The Sabetaung and Kyisintaung resource models were estimated using the technique of ordinary
kriging, while the Letpadaung deposit was estimated using the technique of multiple indicator
kriging. Ore reserves were estimated using the Whittle Pit Optimization computer software to
determine the economic ultimate pit limits. Mining Operations The S&K Mine was
originally designed to produce 25,000 tpy  of cathode copper using
heap-leach, SX/EW extraction technology. Construction commenced in September, 1997 and Monywa JVCo
produced its first copper from the mine on November 1, 1998. Monywa JVCos capital cost of the S&K
Mine was approximately $150 million of which $90 million was provided under a credit facility
agreement with Marubeni U.K., PLC and Nissho Iwai Europe, PLC. In August 1999, Monywa JVCo
completed construction of the S&K Mine, at which time the project loan, previously non-recourse
only to Mining Enterprise No. 1, also became non-recourse to
IVN. To date, Monywa
JVCo has repaid approximately $82.5 million in principal against the credit facility and all
accrued interest. The final payment of $7.5 million plus interest is due in August 2005. The S&K Mine consists of an ore plant and processing related facilities and mining operations on
the Sabetaung, Kyisintaung and Sabetaung South deposits. Monywa JVCo uses heap leach pads to
process the ore. Monywa JVCo is currently concentrating mining efforts on Stage 3 located in the
north east of the Sabetaung pit and in the adjacent Sabetaung South pit. Ore grades in these areas
have been consistently higher than expected and during the quarter ended December 31, 2004 ore
grade averaged 0.7% copper. In recent years Monywa JVCo has encountered ore zones with a high proportion of clay. The clay
material increases the proportion of fine material in processing, which reduces the efficiency of
leach kinetics and copper extraction. In 2001, all Sabetaung, Sabetaung South and Kyisintaung
exploration drill core was re-logged to determine clay content in order to address an increase in
clay content in the ores. The clay content information was incorporated into a computer database,
allowing Monywa JVCo to generate mine plans, and thereby ensure that clay ores are blended with
harder ores so as to ensure maximum percolation of solutions through the heap. During 2002, Monywa
JVCo constructed and operated a pilot fines material removal plant. Based on the success of the
pilot plant, a commercial sized fines removal plant was constructed in late 2004 as an addition to
the crushing circuit and this is expected to remove a sufficient amount of fines to permit
satisfactory copper leach extraction. Monywa JVCo has increasingly relied on run of mine (ROM), stacking of heaps and now sees this
method of ore management as the mainstay of the operation supported by crushing, fines removal,
agglomeration and stacking for the less competent materials. The more competent ore types that are
ROM stacked are by nature more suited to improved natural aeration and provide more pathways for
the leachant to pass down through 44




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the cell than the finer less competent ore types. The less competent ore types suffer because the
solution pathways become blocked by the migration of fines down through the heap and because they
are more prone to contain clay types that decrepitate and/or create swelling within the heap. Ore
characterization tests carried out on drill chips collected prior to blasting and the ore being
delivered to the Process Department, combined with Quality Control Inspectors and advanced cell
stacking and re-handling practices has led to a steady increase in the ultimate recovery of copper
from the heaps. In the last 3 years, the average recovery from all cells stacked has increased by
20%. Monywa JVCos production at the S&K Mine has consistently exceeded the annual target capacity for
production of 25,000 tonnes of cathode copper, producing 25,911 tonnes of cathode copper in the
calendar year 2001 and 27,543 tonnes in 2002. In 2002, Monywa JVCo began to increase processing
capability through a program of expanding electrowinning capacity. In addition to adding
electrowinning cells at the S&K Mine, Monywa JVCo increased the leach pad area of the mine to
maintain the increased cathode production and has increasingly utilised ROM dumps to supplement
crusher capacity and effectively improve copper recoveries. Monywa JVCo produced 31,756 tonnes of
cathode copper in 2004 and by January of 2005, the annualized rate of cathode copper production was
38,650. Monywa JVco is now capable of consistently producing copper cathode from the S&K Mine at a
rate of approximately 39,000 tpy. Monywa JVCos mine gate cash costs for the S&K Mine during 2004 averaged $0.44 per pound of copper
compared to $0.43 per pound of copper in 2003. Average sales price for cathode copper produced
from the mine in 2004 was $1.34 per pound, compared to $0.79 per pound in 2003. Monywa JVCo has developed and implemented an environmental management plan for the S&K Mine. Under
the plan, Monywa JVCo will perform reclamation procedures during and subsequent to the mines
operating life. Reclamation will be funded by ongoing operating and capital allowances. This plan
has been reviewed and accepted by an independent engineer and adopted by the Monywa JVCo Board of
Directors. Monywa JVCo has documented an Environmental Management Plan and implemented the programs and
systems necessary to have been awarded AS/NZS ISO14001 environmental certification for the S&K mine
in 2001. In 2003 Monywa JVCo was awarded AS/NZS ISO9001, the Quality Management System, and
AS/NZS4801, the Occupational Health & Safety Management System in recognition of its Safety and
Quality Management Systems. Marketing Arrangements Monywa JVCo is a party to a copper sales agreement dated September 23, 1997 with Marubeni
Corporation, whereunder Monywa JVCo has agreed to sell, and Marubeni Corporation has agreed to
purchase, 25,000 tpy of cathode copper from the S&K Mine. Sale prices are negotiated from year to
year based on the market price of LME Grade A cathode copper. Shipping rates and insurance costs
are adjusted annually to reflect actual costs. Marubeni Corporation receives a sales commission of
one percent (1%) of the negotiated sale price. Throughout the term of the copper sales agreement,
Marubeni Corporation has the exclusive right to market copper produced from the Monywa Copper
Project throughout the world. The copper sales agreement is scheduled to expire on December 31,
2005. In December, 2001, LME registered the cathode copper produced from S&K. LME registration certifies
that copper produced from the mine meets LME standards for purity, shape and weight as specified by
its special contract rules. LME registration means that S&K produced copper cathode can be sold at
premium prices. 45




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Planned Development Activities Expansion of Mining Operations IVN originally planned to obtain project financing to develop a mining operation capable of
producing between 50,000 and 125,000 tpy of cathode copper at the Letpadaung deposit as the second
phase of the Monywa Copper Project. Due to an inability to arrange project financing on favourable
terms, IVN has developed plans to expand mining operations using internal cash flow from the S&K
Mine and a limited capital injection. An expansion plan was originally prepared by an independent
contractor in 2003, which involved an initial increase in production capacity at the S&K Mine
followed by a scaled increase in production at the Letpadaung deposit. Monywa JVCo has refined
this plan since 2003, and now expects to implement a revised expansion program based on a report
prepared by GRD Minproc Limited. The report is still in the process of being finalized, with a
completion date expected in the second quarter of 2005. The revised expansion plan
will be modelled on Monywa JVCo incrementally increasing
production capacity through a series of increases in infrastructure. GRD Minproc Limited
contemplates a staged process, which would extend over five years. As the stages advance, Monywa
JVCo would install an increasing amount of infrastructure both at the S&K processing facility and
at the Letpadaung deposit site. By Stage 4 (2010), Monywa JVCo would be capable of processing
approximately 150,000 tpy of copper cathode from the Letpadaung Deposit and approximately 50,000
tpy from the S&K Mine deposits. The activities contemplated in the four stages are as follows: TotalStage
    
    Production (tpy)
    
    Description1
    
    
    
    50,000
    
    
    Construct 10,000 tpy expansion to the S & K
mine tank house. Completion in the first half
of 2006.2
    
    
    
    100,000
    
    
    Construct 50,0000 tpy SX-EW module, expand
power supply and construct leach pads and
solutions handling pond no. 3 at Letpadaung.
Completion in 2007.3
    
    
    
    150,000
    
    
    Construct 50,000 tpy SX-EW module, crushed ore
leach pads, tailings dam facilities at
Letpadaung. Completion in 2008.4
    
    
    
    200,000
    
    
    Construct 50,000 tpy SX-EW module, crushed ore
leach pads, tailings dam facilities at
Letpadaung. Completion in 2009.
 Letpadaung mining would commence in 2007. The life of the project is estimated to be 20 years.
There are a number of variables that are included in the planning estimates for the expansion
program. The IVN Group anticipates that one of the most significant
factors that will affect the
expansion will be the availability of power. Stage 1 is subject to an
upgrade of power supply to 40 megawatts, which is currently planned
for completion in 2006. Assuming that this upgrade is effected, Monywa JVCo anticipates few impediments to stage 1 of the
expansion. Monywa JVCo will need to secure additional sources of power in order to operate the
Letpadaung portions of the project, with full expansion requiring a power supply of between 60 and
80 megawatts. The expansion proposal will also require approval from applicable government
authorities of Myanmar. Monywa JVCo has engaged in
discussions with and received written expressions of interest from Chinese, Korean and Japanese companies to provide financial assistance to fast-track the
development of the expansion program. These discussions are on-going, although there can be no
assurances that satisfactory negotiations will be concluded. 46




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Development of Power Sources Myanmar Electric Power Enterprise is responsible for supplying power to the project. The total
estimated average power requirement for the project is estimated to be 70 megavolt amperes. The
expansion program contemplates the installation of a 215 km, 230 kilovolt, 90 megavolt ampere
overhead transmission line from Thazi to Letpadaung. Thazi is located south of Mandalay on the main
national electricity distribution grid. This connection was chosen after extensive study of power
supply options by Monywa JVCos advisors in consultation with Myanmar Electric Power Enterprise. As an alternate source of power, Monywa JVCo has encouraged several interested parties to study the
possibility of building a natural gas or coal-fired power plant in the Monywa area. A Japanese
group has funded a study which would involve using local coal from deposits north of Monywa.
Several companies are also reviewing the use of domestic sources of natural gas as a fuel source. Savage River Iron Ore Project, Tasmania, Australia Property Description and Location Until February 2005, the IVN Group operated an iron ore (magnetite) mine and produced iron ore
pellets and magnetite concentrate at integrated Savage River and Port Latta facilities in Tasmania,
Australia through its wholly-owned subsidiary, Goldamere. As at February 28, 2005, IVN sold its
interest in Goldamere and the rest of the project to Stemcor. See General Development of the
Business: Three Year History. The Savage River iron ore mining operation is situated on approximately 2,400 hectares of leasehold
land, 110 km by paved all-weather road from the City of Burnie on the northwest coast of Tasmania.
Goldamere uses an 83 km pipeline to transport concentrate, in the form of slurry, from Savage River
to Port Latta. At Port Latta, Goldamere processes the bulk of the concentrate into iron ore pellets
which are stockpiled and loaded onto ships for delivery to Goldamere customers. The Savage River magnetite deposit is located on the northwest coast of Tasmania, within the
municipality of Wynyard-Waratah, at an elevation of 229 m. The regional terrain is rugged and
mountainous, and covered with dense rain forest. Local vegetation includes undisturbed rain forest
but in the area of the mine it is mainly wet eucalyptus and acacia with open heathland. The mine
and concentrating plant are both in the Savage River valley, with the Savage River flowing through
the mine site and ultimately discharging into the Pieman River, which then flows westward to the
coast. The Port Latta pelletising and shiploading facility is located on Sawyer Bay, on Tasmanias
northwestern coast approximately 20 km east of Stanley and 50 km west of Burnie. The pelletising
plant is situated on a narrow strip of relatively flat coastal land. In September 1996, Goldamere entered into an agreement with the State Government of Tasmania (the
State of Tasmania) pursuant to which Goldamere agreed to carry out a feasibility study respecting
the possible redevelopment of mining operations at the Savage River mining site. In December 1996,
Goldamere and the State of Tasmania entered into an asset purchase agreement whereby Goldamere
agreed to purchase from the State of Tasmania the assets relating to the Savage River mining
operation and the Port Latta pelletising and shiploading facilities for a deferred payment of
Aus$13 million. The government further agreed to indemnify Goldamere against liability resulting
from any pre-existing or on-going environmental pollution or contamination caused by past
operations. In May 1997, Goldamere and the State of Tasmania entered into a mining lease for a term of 30
years, whereby Goldamere leased the Savage River iron ore mine site for the purpose of carrying on
mining 47




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operations. Goldamere agreed to pay annual rent in the form of royalties. The royalty rate
comprises an ad valorem royalty of 1.6% of net sales plus an annual profit royalty of a maximum of
40% of the profit margin for the immediately preceding year. The sum of both royalty payments is
limited to a maximum of 5% of net sales. Accessibility, Climate, Local Resources, Infrastructure and Physiography Accessibility The Savage River iron ore mine is relatively isolated, being situated 43 km off the Murchison
Highway which links the northwest and western coasts of Tasmania. The nearest major town by road is
Burnie (population 20,000) located about 98 km from the mine site. The Port Latta pelletising and shiploading facilities are located on Sawyer Bay, on Tasmanias
northwestern coast approximately 144 km north (by road) of the mine site. The nearest towns are
Stanley (population 576), 21 km to the northwest (by road), Smithton (population 3,495), 29 km to
the west and Wynyard/Burnie, which lies 59 km to the southeast on the north coast. Climate There are no climatic extremes experienced at the Savage River mine site or the Port Latta
facilities and few conditions which affect production operations. Mine haulage can be affected by
high rainfall and shiploading operations may be delayed by winds above 30 knots. Rainfall
distribution in western Tasmania is generally high throughout the year, with June to September
being the wettest months and December to March the driest. Drought conditions are rare. Average
annual rainfall at the Savage River mine site is 1,953.9 millimetres while average annual rainfall
at Stanley and Port Latta are 935.8 millimetres and 940.4 millimetres, respectively. At Savage River, mean monthly minimum and maximum temperatures range from between 3.5 and 9.3°C in
July to between 9.9 and 20.1°C in February. Mean monthly minimum and maximum temperatures at
Stanley range from between 6.5 and 12.0°C in July to between 12.9 and 20.6°C in February, and at
Port Latta from between 4.8 and 12.5°C in July to between 12.4 and 21.4°C in January. Although not
exposed to extreme and persistent winter conditions, the Savage River mine area is subject to an
average of 24.6 days of frost and 5.5 days of snow per year. The coastal setting at Stanley
experiences an average of 11.3 days of frost per year and no snow. Local Resources and Infrastructure All surface rights necessary to carry on mining operations at the Savage River mine site are held
on a leasehold basis. The initial mining lease (11M/97), entered into in 1997, has a term of 30
years. Goldamere applied for 4 additional leasehold areas contiguous with its existing leasehold to
accommodate all foreseen extensions of the pit on the south ore body and for tailings and waste
dump purposes. Mining Lease 2M/2001 was granted on November 7, 2001 for thirty (30) years, to
replace 11M/97 and incorporates the additional lease areas into a single mining lease over the
operation. Infrastructure is well established from previous operations and Goldamere has undertaken extensive
refurbishment of facilities. Maintenance buildings and offices are appropriate to the needs of the
operation. The workforce is generally drawn from local towns in the immediate area, with on-site
single status accommodation provided at Savage River on a weekly basis for most employees. Experienced plant operators, backed by technical and professional staff, run the Savage River
processing and plant operations. Activities carried on by previous operators ran continuously for
30 years from 1967. This 48




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has resulted in a large pool of experienced operations and maintenance personnel who live in the
local area. Tasmania is considered to be a highly liveable location and Goldamere has had no
difficulty in recruiting suitably trained and experienced personnel. Heavy parts and bulk materials are transported from the mainland by sea to the local port of
Burnie. Road access to the mine site is via the all-weather Murchison Highway south from Burnie
and thence west to the mine site on a sealed road. Burnie is served by commercial commuter air
service from Melbourne several times daily. Concentrate from the mine is transported in slurry form via an 83 km pipeline to the pelletising
plant at Port Latta. Final product pellet shipments are loaded onto bulk carriers at the
purpose-built jetty, which can accommodate vessels of up to 125,000 tonnes capacity. The jetty,
adjacent to the pellet plant, is equipped with bulk loading facilities and is serviced by tugboats
to assist in the berthing of bulk carriers. Both sites are connected to the Tasmanian power grid and electricity is purchased from Aurora
Energy, the Tasmanian power retailer. Available power is sufficient for the project and future
expansion. Water supplies to the concentrator operation are plentiful through local established
storage dams and reclamation from tailings. Water at Port Latta is reclaimed from the concentrate
slurry and is supplemented by a local borefield. In March 2001 Goldamere signed a 10 year gas supply agreement with Duke Energy International to
supply natural gas to Goldamere at the Port Latta pellet plant, enabling Goldamere to convert its
fuel oil furnaces to natural gas. This contract was later reduced through a Deed of Variation to a
five year contract with a schedule of contractual repayments but with an option to revert to the 10
year contract should mine life extend beyond 2007. The gas is supplied by marine pipeline across
the Bass Strait from Longford in Victoria to Bell Bay in northern Tasmania, with a branch line
extending to Port Latta in northwestern Tasmania. Goldamere completed the conversion to natural
gas in 2003. Physiography The Savage River mine site is located in a steep valley incising the easternmost extension of the
Western Ranges physiographic region of central west Tasmania. The mine site lies at an elevation of
between 200 and 350 m in the Savage River valley. The immediate surroundings consist of a series of
sub-parallel ridges to the northwest and southeast. Further to the northwest and southeast, the
ridges give way to more mountainous terrain with peaks of 700 to 800 m. Mount Bertha, which peaks
at 703 m and is the highest mountain in the northwest of Tasmania, is located north of the mine
site. The slurry pipeline to Port Latta traverses east of Mount Bertha, climbing from the Savage River
mine site for 25 km to an altitude of approximately 520 m. It then descends over 56 km to the
northwestern coastline, crossing the Rapid, Arthur and Black rivers en route. Port Latta itself is
located on the foreshore of Sawyer Bay, which is an open, 25 km stretch of coast, protected to the
northwest by a headland leading out to North Point and to the east by Rocky Cape. History Magnetite mineralization was discovered at Savage River in 1877. For many years, interest in the
deposit centred on the copper and gold potential of the area. Adits were developed in the
hillsides but no significant base or precious metal mineralization was identified. Exploration of
the prospect was carried out by the Bureau of Mineral Resources in 1956, including ground and air
magnetometer surveys. In 1957 and 1959, diamond drilling was undertaken. 49




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In 1965, Savage River Mines Limited, a joint venture of Australian, Japanese and United States
interests, was formed to develop the Savage River deposit. Open cut mining commenced in 1967 and
continued until 1996. A magnetite concentrate was produced and exported, principally to Japan.
Between four and six million tonnes of ore were mined per annum producing approximately 1.5 to 2.3
million tonnes of concentrate averaging 67% iron in grade. Over a 30 year period 137 million
tonnes of ore was mined and processed and 58 million tonnes of magnetite concentrate was produced,
pelletised and exported. In 1995, Savage River Mines Limited decided to close the operation and mining ceased in April 1996.
However, in October 1995, Goldamere commenced discussions with the Tasmanian government to take
over the Savage River mine site and continue the mining, production and export of pellets. Plans
were based on a cut back and expansion of the open pits, a river diversion to provide access to
high grade ore, and changes to the mining and ore haulage methods. After various discussions and
proposals, Goldamere was granted an Authority to Prospect and commenced an infill and confirmatory
drilling programme. During 1996, Goldamere carried out feasibility studies and entered into a series of agreements with
the Tasmanian government to acquire and operate the Savage River mine. See Property Description
and Location. Goldamere commenced site construction work in 1997. A third party contractor was
retained to undertake mining and to operate and maintain the conveyor, concentrator, slurry
pipeline system, pelletising plant and shiploading facilities. Waste stripping commenced in
September 1997 and mining and milling began the following month. Goldamere began replacing the
third party contractors personnel with its own staff and eventually assumed full control of
operations in May 1999. In December 2000, the Corporation acquired all of the issued and outstanding shares of Goldameres
parent, ABM in exchange for Common Shares of the Corporation. Geological Setting and Mineralization Regional Geology The Savage River magnetite deposit lies within and near the eastern margin of the Proterozoic
Arthur Metamorphic Complex in northwestern Tasmania. This complex is exposed along a
northeast-southwest trending structural corridor, the Arthur Lineament, which separates Proterozoic
sedimentary rocks to the northwest from a variety of Palaeozoic rocks to the southeast. The Arthur
Metamorphic Complex in the vicinity of Savage River is dominated by the Whyte Schist that is
subdivided into an eastern and western sequence. The eastern sequence consists predominantly of
quartz-mica rocks including thin micaceous quartzite beds, schist and phyllite. The western
sequence is characterised by amphibolite, chlorite and albite schist or quartz-muscovite schist.
The grade of metamorphism has been interpreted to range from upper greenschist to amphibolite
facies metamorphism. Local and Property Geology The magnetite deposits at the Savage River mine site represent the largest of a series of
discontinuous lenses that extend in a narrow belt for some 25 km south of what was formerly the
Savage River township. The deposit is subdivided into sections on the basis of areas that have been
mined. These areas are referred to as Centre Pit, South Lens and North Pit and South Deposit. The magnetite ore bodies developed at Savage River are enclosed within a highly sheared and
strike-faulted belt of mafic and ultramafic schist and mylonite. The belt is approximately 500 m in
width and strikes north-northeast to south-southwest. 50




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The magnetite ore, which is almost entirely enclosed within ultramafic rocks, specifically
serpentinite and talc-carbonate schist, ranges in thickness from 40 to 150 m in width in what is
known as the main ore zone. The main ore zone has a known strike length of 4 km and can occur as
two or more thinner lenses. Down dip continuity is indicated to depths of up to 600 m. Mineralization The Savage River deposits are all relatively similar, comprising sub-vertical north-south striking
magnetite lodes within a schist-serpentinite sequence. The mineral occurrence is subdivided into
several deposits, based largely on structural breaks in the ore sequence which are reflected in the
pit designs. The ore may be massive, layered or disseminated and range from being fine-grained to
coarsely crystalline. The magnetite ores comprise three volumetrically important groups: pyritic ores, serpentinitic ores
and talc-carbonate ores. Pyrite and serpentinite are ubiquitous. Talc, tremolite, actinolite,
chlorite, epidote and apatite occur in varying amounts. Massive magnetite is generally defined as having greater than 29% iron (40% DTR). A lower cut-off
of 11% iron (15% DTR) is used to define ore. Below this cut-off the rocks are considered waste. Exploration, Drilling, Sampling and Analysis Goldamere carried out limited infill drilling between 1998 and 2001. Infill diamond drilling was
completed during 2001 in the Centre Pit and South Lens pit areas. Nine diamond drill holes for a
total advance of 2,475 m were completed. A drilling program comprising thirty-eight diamond holes,
for a total advance of 7,314m was completed between 2000 and 2002 to delineate ore lenses of the
South Deposit. Goldamere conducted additional infill drilling in the Centre Pit south area in 2003. Eleven
diamond drill holes were completed for a total advance of 2,369 m. A further 3 diamond drill holes
for an advance of 746 m and 5 reverse circulation holes for an advance of 430 m were drilled in
2004. This program was designed to improve the geological confidence and upgrade existing resources
and reserves previously defined in the area. Mineralized core samples were cut by diamond saw and half the core sent for analysis. Goldamere
sampled principally in 2 m intervals and the core was crushed and split at the Savage River
laboratory and analysed for DTR. These samples were then sent to Port Latta for further chemical
analysis. Blast hole cuttings are analysed in situ in the pit using a magnetic susceptibility
meter, with some samples collected and assayed to maintain the correct calibration of the meter. The susceptibility m values provide a general crosscheck on the DTR results. Scatter plots of the
two sets of values show a good correlation. Routine cross checks of DTR values between laboratories
have been undertaken and, historically, product grades and production reconciliation figures have
given confirmation that the sampling and DTR values are generally satisfactory. Data quality is reasonable. The primary data comprises DTR factors based on diamond drill samples.
The DTR values are a measure of the percentage of recoverable magnetite that can be achieved in
the magnetite concentration plant. A 95% efficiency factor is applied by the mill to the mine
DTR estimates. The database includes holes drilled by Savage River Mines Limited and more recent
holes drilled by Goldamere. DTR values are from different source laboratories. Limited
cross-checking has been undertaken but available evidence suggests the data is comparable and
satisfactory. Prior operators carried out a number of density determinations in 1977 and a regression curve was
defined based on the DTR value. Goldamere determined density values on all new diamond drill core
to more 51




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accurately define the density/DTR relationships in the different areas of the deposit. Waste
density is taken as 2.81 tonnes per cubic m. Ore density ranges from approximately 3 tonnes per
cubic m (20% DTR) to 4 tonnes per cubic m (70% DTR) and averages approximately 3.5 tonnes per cubic
m (50% DTR). Mineral Resources and Reserves Estimates of reserves and resources at the Savage River iron ore mine are as of December 31, 2004.
Resources and reserves are categorized in accordance with the JORC Code. The principles and
procedures of the JORC Code and the CIM Standards are closely aligned and mineralization
categorized as measured, indicated and inferred resources and as proved and probable reserves under
the JORC Code would be reported under identical categories pursuant to CIM Standards. Estimated
measured and indicated mineral resources include those mineral resources modified to produce the
estimated ore reserves. Resources which are not reserves do not have demonstrated economic
viability. Ore ReservesDecember 31, 2004 Deposit
    
    Proved
    
    Probable
    
    TotalTonnes
    
    Grade
    
    Tonnes
    
    Grade
    
    Tonnes
    
    Grade(millions)
    
    (DTR %)(3)
    
    (millions)
    
    (DTR %)(3)
    
    (millions)
    
    (DTR %)(3)Savage River (1)
    
    
    19
    
    
    
    49.4
    
    
    
    3
    
    
    
    46.9
    
    
    
    21
    
    
    
    49.1
   (1)
    
    Includes North Pit and Centre Pit Mineral ResourcesDecember 31, 2004 Deposit
    
    Measured
    
    
    Indicated
    
    
    Total(1)
    
    
    InferredTonnes
    
    
    Grade
    
    
    Tonnes
    
    
    Grade
    
    
    Tonnes
    
    
    Grade
    
    
    Tonnes
    
    
    Grade(millions)
    
    

(DTR
%)(3)
    
    
    (millions)
    
    
    (DTR %)(3)
    
    
    (millions)
    
    
    (DTR %)(3)
    
    
    (millions)
    
    
    (DTR %)(3)Savage River
(2)
    
    
    107
    
    
    
    52.2
    
    
    
    85
    
    
    
    49.7
    
    
    
    192
    
    
    
    51.1
    
    
    
    58
    
    
    
    43.3
   (1)
    
    Represents aggregate measured and indicated resources excluding inferred resources.(2)
    
    Includes North Pit, Centre Pit and the South Deposit.(3)
    
    The iron percentage is obtained by multiplying DTR% by 0.72 Historically, Savage River Mines Limited estimated the resource using a sectional estimation
method. The initial Goldamere resource estimate was derived by block modelling using an inverse
distance cubed grade interpolation algorithm. More recently, the results from geostatistical
analysis have been applied to the inverse distance interpolation. The blocks of the main ore zone
fall within a wire-frame which has been geologically constrained. Mineralised blocks have been
categorised as measured, indicated and inferred resources or proved and probable reserves based
primarily on the distance from the nearest drill hole. 52




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The reserve represents that part of the resource which is planned to be mined taking into account
economic factors. The reserve at Savage River has been estimated by the conventional process of
pit optimization followed by the development of a practical pit design. The optimization stage
incorporates prevailing economic factors, such as mining cost and its variation with depth, the
grade, processing costs and selling price. The overall slope of the pit walls based on operational
geotechnical experience are also entered into the optimizer which generates a series of pit
envelopes used as the basis of the pit designs. Selected pit envelopes are next turned into practical designs that incorporate haulage ramps, ramp
grades, mining widths, berm widths, batter angles and other practical operational and scheduling
considerations. Measured and indicated resources which fall within the final designed pit envelope
are categorized as proved and probable reserves and represent that part of the resource planned to
be mined. The reserves incorporate expected mining recovery and dilution. Factors, equivalent to approximately 11% dilution and 95% mining recovery, have been applied to the
resource tonnes and DTR. In areas of broad continuous mineralization, losses and dilution may be
minimal but will be more significant where zones are thinner or cross-cutting intrusives are
common. The factors applied by Goldamere are consistent with historical data from the Savage River
deposit. Mining Operations Mining activities in the open pit involve the use of conventional off-highway rear-dump trucks of
100 to 150 tonnes capacity and hydraulic excavators, with contract drilling and blasting being used
to prepare the ground ahead of mining. Ore processing operations at Savage River comprise primary crushing and stockpiling of crushed ore,
followed by autogenous milling, rougher magnetic concentration of magnetite, regrinding of the
rougher magnetic concentrate, hydroseparation to remove fine gangue minerals and finisher magnetic
separation to produce a final magnetite concentrate which is stored in agitated tanks prior to
being pumped to the pellet plant at Port Latta. The pipeline pump station is located at the
concentrator. Tailings are thickened prior to pumping to the tailings dam. Goldameres production is controlled by the concentrator capacity. The concentrate slurry pipeline
is approximately 83 km in length and has an internal diameter of
229 millimetres. Buried sections
of the pipe are wrapped and cathodically protected against corrosion. A corrosion inhibitor, pH
control and an oxygen scavenger are used to control internal corrosion. Regular surveys in recent
years have shown that the rate of wear and corrosion in the line has been reduced to negligible
levels. The Port Latta pellet plant receives the concentrate slurry from the pipeline, thickens and filters
it prior to agglomeration into green balls and induration of the balls into fired pellets. The
pellets are screened to remove fine chips and coarse pellet clusters and then stored in a yard
pending shipment by sea. In the last two years, Goldamere has revised its mine plan and made adjustments to its processing
facilities to account for a slope failure at Extension 3 of the North Pit that occurred in 2002 and
nickel impurities from the South Deposit. Both the slope failure and the nickel impurity problems
have been addressed. The South Deposit, which was the main ore source for most of 2003, was exhausted in 2004. As the
pit deepened ore reconciliation and grades improved with depth and concentrate losses which had
been occurring in 2002 and early 2003 were made up by the end of the year. In 2005 and beyond ore
supply will be coming from both North Pit Extension 3 and Center Pit south. 53




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Mine life of the Open Pit is currently projected out to 2007 with the processing of stockpiled ore
continuing until the beginning of 2009. Goldamere is evaluating data and conducting analysis with
respect to potential increases in mineable reserves and resources in order to extend mine life. Marketing Arrangements On July 1, 2002, Goldamere entered into a five-year supply contract with BlueScope Steel (AIS) Pty.
Ltd. to supply between one million and one and a quarter million dry metric tonnes of iron ore
pellets per year. Goldamere also has a three-year supply contract with the South Korean steelmaker
POSCO to supply between 290,000 dry metric tonnes of iron ore pellets per year which commenced in
April 2003. Goldamere has also delivered tonnage to Chinese customers such as Baosteel and Shaoguan Iron and
Steel and Greathill Limited. All payments under sales agreements and supply contracts are made in U.S. dollars. Price
adjustments are provided depending on the quality and content of the iron ore pellets. Other Projects Mongolia In addition to the Oyu Tolgoi Project, the IVN Group operates an extensive mineral exploration
program in Mongolia. The field program is conducted by IMMI from base camps at Manlai and
Kharmagtai in the Gobi desert. IMMIs exploration properties are predominantly located throughout southeastern, southern and
central Mongolia. These include the South Gobi, Saran Uul, Bayan Uul and Chandman Uul licence
blocks. In total, IMMI holds 111 MELs totalling 8,381,473 hectares and has applied to OGMC for 7
more MELs totalling 498,320 hectares. IVN holds an interest in 3 additional MELs, totalling 25,936
hectares, pursuant to agreements with QGX Ltd. A further 60 MELs are held by IVNs 51.08% owned
subsidiary, ASG. Gold and Copper Exploration IMMIs Mongolian exploration program commenced in 2001. Initial reconnaissance consisted of
satellite imaging and helicopter reconnaissance surveys on most of its MELs. IMMI has developed a
detailed and extensive country-wide database that incorporates the information gathered from
reconnaissance and other sources. Using this database, IMMI has conducted more comprehensive field
reconnaissance at numerous prospective sites, including rock chip samples, mapping and ground
magnetics. In each field season since 2001 IMMI has expanded on these exploration efforts. Advanced exploration, including trenching and diamond drilling, has been carried out by IMMI at
several areas with prospective mineralization. The Kharmagtai property is the most advanced of
these properties. It comprises a group of three MELs located approximately 120 km northwest of the
Oyu Tolgoi Project. QGX Ltd. is entitled to a 10% interest in one of the Kharmagtai MELs and a 20%
interest in the other two MELs. Work to date includes extensive IP, ground magnetics, excavator
trenching, reverse circulation drilling (208 holes totalling 27,746 m) and diamond drilling (156
holes totalling 49,487 m). IMMI has carried out diamond drilling at seven copper and gold porphyry
targets at Kharmagtai, including the third stage drilling in 2004 at the Gold Hill prospect. This
prospect contains porphyry copper and gold mineralization in two pipe-like stockwork zones 100 m
apart. The mineralisation extends from surface to depths over 600 m, is gold-rich and open on
strike and at depth. Mineralization in the southern stockwork zone is approximately 550 m long, 70 54




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m wide and 600 m deep, whilst mineralization in the northern stockwork zone is approximately 250 m
long, 150 m wide and 350 m deep. Exploration work during 2004 included three diamond drill holes
on the Duck prospect, trenching on the Southeast Zesen Uul prospect, and more detailed ground
magnetics and IP studies over the Gold Hill and Duck prospects. Rock chip sampling was also carried
out on various low sulphidation epithermal targets, including Tsagaan Mogoi, to the west of the
Kharmagtai Property on ground controlled 100% by IMMI. Other advanced exploration by IMMI includes that conducted on the Chandman Uul and Oyut Ulaan
properties in southern Mongolia, and at Saran Uul in central Mongolia. Work included IP, ground
magnetics and diamond drilling. Each of these prospects contains copper and gold mineralization
that warrant further exploration to define the size and scope of zones of previously identified
mineralization and to further test the IP and ground magnetic anomalies. Diamond drilling by IMMI
in 2004 at the Chandman Uul property targeted iron occurrences; no further drilling is currently
planned on the iron occurrence but there are gold and copper occurrences at which further
prospecting is planned for 2005. An IP survey is planned at the Yellow Hills project in the Saran
Uul licence block, which is a high sulphidation copper-gold target identified as an area of
interest in 2004. The Bronze Fox District was discovered in mid-2004. The district is 14 km long and located between
the Shuteen and Narin Hudag projects in southern Mongolia. Four gold and copper porphyry targets
have been defined to date. Work has included the collection of 6,000 rock chip samples and a ground
magnetics survey. Rock chip assays include highly anomalous gold, copper, molybdenum and lead. An
IP survey and diamond drilling are planned for 2005. IMMI also intends to perform ground magnetic
surveys, detailed mapping and rock chip sampling at the neighbouring Narin Hudag and Mandak
property in 2005. Copper and gold mineralization has also been defined at the Bayan Uul and Unegti property in
central Mongolia. Work to date includes rock chip sampling and geophysical studies. Trenching is
included in the 2005 work program. Coal Projects In 2004, IVN began to actively explore for and seek out interests in coal deposits in Mongolia.
IVN has delineated three coal-bearing basins in southern Mongolia on lands controlled by the IVN
Group. IMMI has conducted diamond drilling at the Tsagaan Tolgoi and Nariin Sukhait prospects.
Nariin Sukhait is held by ASG, but is in the process of being
transferred to IVN pursuant to a
pre-existing right of IVN to all coal deposits on certain ASG MELs. The Nariin Sukhait prospect
lies immediately to the south of an operating open-pit coal mine at which mining has marginally
extended onto the ASG held licence. In late 2004, IVN confirmed that a thick seam of coal had been
discovered on its licensed property immediately adjacent to Nariin Sukhait. This seam is believed
to have a thickness of up to 60 m and has been traced onto licenses in both strike directions.
The seam has been mapped in outcrop and subcrop throughout a major
coal basin that stretches approximately 120 km on ground
controlled by the Corporation. IMMI has commenced drill testing on the seam with a view to establishing an initial resource
estimate for the deposit. Regional coal exploration and assessment continues to be carried out across several coal basins in
the southern and western Gobi. IVN is also in varying stages of discussions with existing holders
of coal deposits regarding potential access or involvement in their coal resources. The
Corporation has retained Citibank as its advisor in broad-ranging discussions with various parties
about future participation in the Tavan Tolgoi coal deposit, located approximately 140 km north of
the Oyu Tolgoi Project. ASG Exploration Licenses ASG owns 60 MELs, including 29 MELs which were transferred to ASG by IVN in connection with a July
2003 transaction between the parties. The largest block of MELs consists of 42 MELs located in the
Gobi 55




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desert called the Western Gobi Property. An additional 6 MELs form the Oyut Ovoo Property. Eight
MELs form the Dornod Project in northeastern Mongolia and three MELs form the Khuvsgul Project in
northern Mongolia. One MEL is held in Khuvd province. ASG has conducted exploration programs on its mineral exploration properties from 2002 to 2004,
including geophysics, rock-chip samples, trenching and diamond drilling. ASG continues to identify
prospects for follow-up exploration, and has identified a number of targets for the 2005
exploration season. China Jinshan Project Participation Arrangements IVN is a party to a series of agreements with Jinshan, pursuant to which IVN and Jinshan
participate in a number of mineral resource exploration projects in China. IVN and Jinshan
participate equally in the 217 gold project in Inner Mongolia (the 217 Project), the JBS
platinum-nickel-palladium project in Yunnan Province (the JBS Project) and the Dandong gold
project in Liaoning Province (the Dandong Project). Each of these projects is joint venture
between a single purpose company owned equally by IVN and Jinshan (an IVN/Jinshan Participant)
and an entity controlled by the Chinese government. Jinshan is entitled to act as the operator of
each of the projects. If either IVN or Jinshan fails to fund its proportionate share of project
expenditures, its interest in the relevant IVN/Jinshan Participant will be diluted. If Jinshans
participating interest is diluted below 10% it will be converted into a 10% net profits interest.
If IVNs participating interest is diluted below 5% it will be forfeited to Jinshan. IVN and
Jinshan have also agreed to observe a twenty-five km joint venture area of interest around each
project. IVN and Jinshan derive their mutual interest in the 217 Project through a cooperative joint venture
contract between an IVN/Jinshan Participant and Brigade 217, a Chinese government-owned entity.
Under the terms of the contract, the IVN/Jinshan Participant contributed $250,000 to earn a 55%
interest in the 217 Project and has the right to increase its interest to 96.5% by paying an
additional $2,750,000 to Brigade 217. Such additional payments include $750,000 in staged payments
over a three year period. In addition, the IVN/Jinshan Participant must pay $1 million to Brigade
217 within 30 days of the decision to commence construction of a commercial mining operation within
the permit area and an additional $1 million within 30 days of the commencement of commercial
mining within the permit area. IVN and Jinshan derive their mutual interest in the JBS Project through a cooperative joint venture
agreement between an IVN/Jinshan Participant and Yunnan Geology & Mineral Resources Exploration
Corp. (Group), a Chinese government-owned entity. Under the terms of the contract, the IVN/Jinshan
Participant has the right to earn a 70% interest in the JBS Project by making cash capital
contributions totalling $14,000,000 over five years. IVN and Jinshan derive their mutual interest in the Dandong Project through a cooperative agreement
between an IVN/Jinshan Participant and Liaoning Non-Ferrous Geological Institute, a Chinese
government-owned entity. Under the terms of the contract, the IVN/Jinshan Participant has the
right to earn an interest of up to 80% in the Dandong Project by making cash capital contributions
totalling $20,000,000 over five years. Information of a scientific or technical nature concerning the 217 Project, the JBS Project and the
Dandong Project is disclosed by Jinshan in its publicly filed continuous disclosure documents,
which can be accessed at http://www.sedar.com/. Such information is not incorporated by reference
in this Annual Information Form and IVN makes no representation as to its accuracy, and accepts no
responsibility therefor. IVN and Jinshan are also parties to a new project participation agreement which requires Jinshan to
offer to Ivanhoe the right to participate in each new project in China (other than projects in
Anhui Province or 56




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Liaoning Province) in which Jinshan acquires an interest until May 2012. In respect of each such
new project, IVN has the right to acquire 50% of Jinshans interest in the project. IVN can
subsequently elect to increase its participating interest to 75% by funding the costs of a
feasibility study and to 80% by arranging the financing necessary to take the project to commercial
production. To date, IVN has elected to participate in the Huize-Xuanwei Joint Venture in southern
Yunnan Province, the Zhaotong Joint Venture in northern Yunnan Province, the Guizhou Joint Venture
in Guizhou Province, and the JBS Regional platinum and palladium project in Yunnan Province. Except
for its interests in the 217 Project, Jinshan has agreed that it will not acquire any interest in
any mineral property in the Inner Mongolia region and will immediately refer to IVN any
opportunities that become available to Jinshan to acquire any mineral property interests in Inner
Mongolia. IVN will make available to Jinshan any new mineral project opportunities in Inner
Mongolia that IVN elects not to pursue. Except for its interests in the Dandong Project, IVN has
agreed that it will not acquire any interest in any mineral property in Liaoning Province or Anhui
Province and will immediately refer to Jinshan any opportunities that become available to IVN to
acquire any mineral property interests in Liaoning Province or Anhui Province. Jinshan will make
available to IVN any new mineral project opportunities in Liaoning Province or Anhui Province that
Jinshan elects not to pursue. Yahao Joint Venture  Inner Mongolia In August 2003, a subsidiary of IVN entered into a Joint Venture Agreement with the China Geology
and Mining Inner Mongolia Company, a subsidiary of Inner Mongolia Bureau of Geology and Minerals
Exploration and Development (the Bureau). The Joint Venture Agreement provided that IVN has the
right to earn an 80% interest, and may earn a 90% interest under certain circumstances, in the
Yahao Joint Venture Co., which has been established under the laws of China to explore, develop,
mine and process minerals within China. The initial properties of the joint venture cover 282 km2 within Inner Mongolia and
consist of three exploration projects including six exploration licenses and a mining license.
These properties have all been approved for transfer into the Joint Venture by both the Beijing and
Inner Mongolia departments of the Chinese Ministry of Land & Resources. The Yahao joint venture has completed first round diamond drilling at two of its projects, Whu Zhu
Er Ga Shun and Siwumuchang, and has completed geophysical and geological work sufficient to permit
the Joint Venture to commence drill testing at another, called Ba Ri Tu Nan. Whu Zhu Er Ga Shun is a large porphyry system, characterized by multiple phase porphyry intrusives,
extensive zones of hydrothermal alteration, and well developed, mineralised porphyry stockworking.
3,590 m of diamond drilling were completed on the project in 2004. This drilling programme
confirmed the presence of anomalous copper-gold mineralization over an area of approximately six
km. A 3,200 m drilling programme is planned to test further targets in 2005. At Siwumuchang, the joint venture has identified a dome-diatreme hosted epithermal
gold-silver-copper deposit using IP geophysical surveys, mapping, soil sampling and initial diamond
drilling (1,480 metres) in 2004. Semi-continuous coincident geophysical and geochemical anomalies
have been identified over a strike length of at least five km. Approximately 3,600 m of diamond
drilling is planned to test these targets in 2005. An initial 2,000 m diamond drilling programme is planned for the Ba Ri Tu Nan epithermal
gold-silver deposit in 2005. Detailed geological mapping, rock chip sampling and IP resistivity
surveys have identified a four km long resistor that corresponds to gold-silver anomalous
epithermal alteration and quartz veining, and this zone will be the focus of initial drilling. 57




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Huayu Joint Venture  Inner Mongolia In April 2003, a subsidiary of Ivanhoe Mines entered into a Joint Venture Agreement with the Inner
Mongolia Huayu Geology and Minerals Exploration Co. Ltd (Huayu). The Joint Venture Agreement
provided that IVN has the right to earn an 80% interest, and may earn a 90% interest under certain
circumstances, in the Oblaga Joint Venture Company, which has been established under the laws of
China to explore, development, mine and process minerals within China. The initial properties of the Oblaga joint venture consist of one exploration project covering 400
km2 in Inner Mongolia, including several exploration licenses and a mining license. The
joint venture company has submitted these licenses for approval for transfer into the Joint
Venture. An initial diamond drilling program of 2,690 m was completed at Oblaga in 2004, targeting
copper-gold mineralised skarns and potential porphyry copper-gold mineralization below them,
moderate copper-gold and gold, breccia, skarn and intrusive-hosted mineralization was intercepted
in all holes. This programme clarified the geological setting of the mine area and confirmed that
intrusive rock compositions, apparent volatile-metal contents and the structural setting of
mineralization is conducive for the formation of gold rich porphyry and related deposits. Four
major combined geological-geophysical targets remain to be drill tested within the Oblaga license
blocks and a 3,800 m programme is planned for 2005. Kazakhstan The Corporations subsidiary Central Asian Mining Limited (CAML) holds a 70% interest in the
Bakyrchik Mining Venture (BMV), a joint venture with the government of Kazakhstan in respect of
the Bakyrchik gold project in north-eastern Kazakhstan. The Bakyrchik property is located in the village of Auezov in north-eastern Kazakhstan, approximate
1,100 km north-east of Almaty, the countrys largest city and about 100 km from Ust Kamenogorsk
which is considered the industrial center of East Kazakhstan. The property hosts the Bakyrchik
gold mine, which originally commenced production in 1956 to provide gold bearing flux to copper
smelters in Ust-Kamenogorsk and later to smelting facilities in Russia. The mine consists of a
number of mine shafts and associated facilities, process plant, workshops, warehouses,
administration buildings and accommodations. A total of five shafts were sunk on the Bakyrchik
deposit, and the underground has been explored and developed for mining from a series of
development drifts driven at 40 m vertical intervals. BMV holds its rights in the Bakyrchik property through a Sub-soil Use Contract with the government
of Kazakhstan and through a combined Mining and Exploration license. The Sub-soil Use Contract
entitles BMV to extract ore, use the Bakyrchik mine facilities, export concentrate for sale and
establishes a framework for the taxation and regulation of BMVs operations in Kazakhstan. The
mining portion of the combined Mining and Exploration license entitles BMV to mine for a term of 25
years, with extension rights. It covers the area surrounding the Bakyrchik gold mine and the
resources identified from previous exploration. The exploration portion of the license surrounds the mining portion. The original term of the
exploration portion expired in 2001. It was renewed at the time for 2 years and renewed a second
time in 2003. Each renewal has resulted in a loss of 50% of land value, and the property is now
approximately 21 km 2 in size. No further renewals of the exploration license are permitted, and
the exploration portion of the license expires in April 2005. As per the terms of the Subsoil Use
Contract and the Sale and Purchase Agreement, an eight-year extension was requested from the
Ministry of Energy and Minerals Resources to evaluate all commercial discoveries in BMV exploration
territory. This issue has not yet been resolved, however, the work program, requested by the
Ministry of Energy and Mineral Resources, has been prepared and filed. 58




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The gold deposits at Bakyrchik consist of a series of mineralized lenses or lodes lying within a
large shear zone, which is 11.5 km in length. Gold mineralization is hosted within sheared
carbonaceous sediments of the fault zones, and is principally contained within sulfide
mineralization occurring in association with quartz stockworks, which crosscuts and parallels the
foliation of the sediments. Mineralogical studies indicate that the majority of the gold is
encapsulated by arsenopyrite and, to a lesser extent, pyrite. As the associated sediments contain
up to 4% carbon, the deposit is said to be double refractory in nature, which makes processing
very difficult. Engineering studies commissioned by the IVN Group in 1996 and 1997 recommended development of a
mining operation capable of producing between 500,000 and 1,000,000 tpy at a capital cost ranging
from $100 million to $222 million. However, a precipitous decline in the price of gold at the end
of 1997 dramatically changed the economic assumptions upon which these engineering studies were
based and the IVN Groups development plans for the Bakyrchik gold project were indefinitely
postponed. In January 1998, the IVN Group placed the Bakyrchik gold project on care and
maintenance status. Since 2001, BMV has processed limited quantities of existing stockpiles of ore
on an intermittent basis. Recoveries have generally been below expectations. BMV has undertaken numerous studies to find a way to more efficiently process the double-refractory
sulphide ore on the property. BMV has determined that roasting Bakyrchik sulphide ore using rotary
kilns and production of Doré Alloy using chemical treatment of the calcine before carbon in leach
(CIL) technology, is the best option. The company commissioned independent consultants to
produce a development proposal for the project based on this process. BMV has started to carry out
the development proposed in the consulting report, which recommends construction and operation of a
200,000 tpy commercial demonstration roasting plant at the Bakyrchik mine using the roasting
technology. In 2004, BMV began to
implement the development proposal. This included engineering of the
roasting plant which was completed and submitted to the controlling agencies of the Republic of
Kazakhstan for approval in August 2004, the acquisition of  material
for the new processing operation and further metallurgical testing.
BMV has installed a used 40 m rotary kiln, began site preparation and foundation work for the discharge section of the rotary
kiln, entered into agreements with a specialized contractor for the fabrication of non-standard gas
handling equipment and purchased a near-new crusher capable of crushing the ore to the recommended
size of 1 mm. The commercial demonstration roasting plant is scheduled for commissioning during
the third quarter of 2005. Before full-scale development can commence,
BMV will need to arrange third party financing. During 2004, operation of a
pilot-sized rotary kiln roaster continued, which confirmed that the technology can be applied to roast whole ores, concentrates and technogenics
(man-made materials) in an environmentally safe manner. Recoveries exceeding 90% are consistently
being achieved by CIL. To confirm the pilot plant results, a series of
confirmatory and process optimization roasting tests were planned in the fully instrumented pilot
scale direct fired rotary kiln. The initial battery of tests confirmed that in the rotary kiln the
levels of arsenic and sulphur in Bakyrchik ore can be reduced to equal or lower levels than
previously obtained in a circulating fluidized bed pilot plant. Currently, calcines are being
chemically treated ahead of CIL and again, an improvement in the overall gold recovery is being
experienced. The next iteration is a series of continuous pilot plant tests to further optimize
the process and to develop the process control philosophy. During the first quarter of 2004, the existing flotation plant processed previously mined sulfide
ore to produce flotation and gravity concentrates for sale. The sulfide ore that was processed has
been stored in open stockpiles for 7 years and due to weathering, including oxidation and physical
degradation, the gold recovery 59




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was poor. The carbonatious shales also impacted the flotation process. In total during the first
quarter of 2004, 9,236 tonnes of sulfide ore averaging 6.77 g/t were processed producing 785 tonnes
of flotation concentrate of an average grade of 32.83 g/t, 13.8 tonnes of gravity concentrate
averaging 166.4 g/t; and 21.8 tonnes of carbon and slime concentrate averaging 6.88 g/t
Furthermore, 159.9 tonnes of flotation concentrate averaging 30 g/t were processed through the
cleaner flotation section of the plant producing 9.9 tonnes of gravity concentrate of an average
grade of 73.62 g/t. In April 2004, due to the low gold recovery from stored sulfide ore, the plant started processing
tailings from the tailings dam through a gravity concentration circuit to produce gravity
concentrates. For this operation, 11 used concentration tables were purchased and installed, two
of which work as cleaners. The tails are reclaimed using a drag line and transported from the
tailings dam to the plant. By the end of the year, 38,787 tonnes of tails averaging 4.13 g/t gold
were processed producing 821.11 tonnes of gravity concentrate of an average grade of 44.85 g/t
gold. BMV and an independent consultant have conducted an assessment of the potential to mine
approximately one million ounces of gold (grading an average of 8.00 g/t) by extending Open Pit No.
4. This option reduces the start up risk of the mining part of the project by starting the
commercial mining operation from the surface, rather than from underground. BMV is conducting
further internal assessments as to the viability of such an operation. Australia In September 2003, the IVN Group acquired a series of mining and exploration tenements in Australia
from the receivers of Selwyn Mines Limited (Selwyn) for Aus$6 million. These tenements cover an
area of more than 1,450 km2 situated approximately 160 km southeast of Mount Isa in
northwestern Queensland. The Selwyn area, which is located within the Eastern Sequence, Cloncurry Complex, of the Mount Isa
Inlier, has been subject to exploration and mining activity by a number of companies over the last
100 years. In 1978 a major gold exploration program began along the Selwyn ironstones, and mining
of the gold rich near surface oxide deposits commenced along the Selwyn Line in 1989. Subsequently
a transition was made to producing copper/gold concentrate from sulphide ore. Some twenty km to the
north at Mount Elliott, underground production began in 1993. The operations were temporarily
closed in 1999. Selwyn purchased the mine in 1999, re-commencing operations during 2000. In 2002, Selwyn undertook
an expansion program but production problems forced Selwyn into receivership at the end of 2002.
The receivers placed the mine on care and maintenance during April 2003 pending a sale. IVN has commenced an exploration program aimed at testing for extensions of the known copper and
gold mineralization in and around the Selwyn mine area and exploring new targets that are believed
to have the potential to host near-surface oxide copper deposits. In 2004, at 17 hole, 3,549m
drill program was completed at Mt. Doré. In 2005, the Corporations Australian subsidiary also completed a
smaller diamond drilling program at the Swan prospect, located 600 m southwest of the former Mount
Elliot gold and copper mine, in which the company had identified a 300 m by 400 m magnetic anomaly.
Six of the drill holes, one of which reached a depth of at least
350 m, intersected high-grade intervals of iron oxide, copper and gold. The intercepts varied from approximately 20 m to 115 m, with grades ranging
from 0.21% copper to 1.2% copper and from 0.21 g/t gold to 0.99 g/t gold. Most of the mineralized
intervals start at depths of between approximately 50 m and 180 m. The mineralization is
breccia-hosted, supergene and hypogene chalcocite and gold mineralization. The IVN Group has also confirmed the existence at Swan of a supergene copper and gold blanket of
oxidized, clay-altered material overlying the breccia-hosted mineralization. IVN believes that
below this blanket, calc-silicate-altered sediments and metabasalt rocks host a large, gold-bearing
vein or breccia system composed of 60




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chalcocite, bornite and magnetite. This zone has been drilled by 12 holes, eight of which have
intercepted iron ore, copper and gold mineralization. The IVN Group intends to follow-up with additional exploration, including additional diamond
drilling, on the Swan prospect and other nearby prospects in order to better define the extent and
grade of mineralization in the area. Myanmar Ivanhoe Myanmar Holdings Limited (IVN Myanmar) continues an exploration program of the Block 10
area of central Myanmar, where the main target is a series of high-grade narrow, mesothermal
quartz-gold veins, centred on the 1300 m elevation Modi Taung vein. The company holds its rights to
explore this property through an exploration permit of Block 10 that it held for several years.
The permit expires in August 2005. A joint venture proposal with the Myanmar Mines Ministry for the development and mining of Modi
Taung, submitted to government in August 2004, was revised and re-negotiated following a change in
the Myanmar tax regime. The proposal is currently being assessed by the Myanmar Investment
Commission. The proposed joint venture equity ratio is 25% to Myanmar Mines Ministry to and 75% to
IVN Myanmar. IVN Myanmar has traced several veins throughout the exploration block, and continues to expand a
number of vein systems. The principal exploration method has been trenching and diamond drilling. Metallurgical tests on 50 kg samples supported earlier results with 94% to 96% recovery using
gravity and flotation, similar to recoveries using cyanidation. Disposal of tailings in geotextile
tubes was assessed and found to be the most desirable disposal method for the limited tonnage (75
tonnes per day) to be milled. Recent statistical treatment of data on the Htongyi Taung vein 1 indicates an average vein width of
30 cm, and increasing gold grade with vein width. Other veins at Htongyi Taung, and the veins in the 4.7 km of adits at Shwezin, will be processed as
soon as the on-going theodolite survey is completed. Other Exploration Projects IVNs exploration team is active in a number of jurisdictions, looking for new prospective mineral
exploration projects. These projects are not exclusive to Asia, as IVN is in advanced stages with
respect to acquiring an interest in mineral projects in Bulgaria, Serbia and other jurisdictions. Equity Investments IVN currently holds 18,697,112 common shares in the capital of Jinshan, representing approximately
38.51% of Jinshans currently outstanding common shares. Jinshan is listed on the TSX Venture
Exchange. IVN holds 19,123,513 common shares of Olympus Pacific Minerals Inc. (Olympus), representing
approximately 19.56% of the issued and outstanding common shares of Olympus. IVN acquired
approximately 10,000,000 of the shares in connection with a reorganization of the joint venture
interests of Olympus, IVN and another company governing the Phuoc Son Joint Venture, one of
Olympus principal projects in Vietnam, in which IVN sold its entire joint venture interest in
consideration for such common shares. Olympus common shares are listed on the TSX Venture
Exchange. 61




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IVN owns 7,469,201 common shares of ASG representing approximately 51.08% of ASGs issued and
outstanding share capital. ASGs common shares are listed on the TSX Venture Exchange. IVN owns 54,141,586 ordinary shares in the capital of Intec Limited, representing approximately
12.81% of its issued and outstanding share capital. Intec Limited is listed on the Australian
Stock Exchange. During 2004, IVN purchased 4.6 million units of Entrée at a cost of Cdn.$4.6 million. Each unit
consisted of one common share and one purchase warrant exercisable until October 2006 to purchase
one additional common share of Entrée at a price of Cdn.$1.10. As at December 31, 2004, IVN owned
approximately 9.04% of Entrées issued and outstanding
share capital. Entrées common shares are listed on the TSX
Venture Exchange. The following table outlines the equity investments held by the IVN Group and their quoted market
value as at December 31, 2004: ValueCompany
    
    Number of Shares
    
    
    (US$)Asia Gold Corp.
    
    
    7,469,201
    
    
    
    5,282,000Entrée Gold Inc.
    
    
    4,600,000
    
    
    
    5,550,000Jinshan Gold Mines Inc.
    
    
    18,697,112
    
    
    
    10,267,000Olympus Pacific Minerals Inc.
    
    
    19,123,513
    
    
    
    5,569,000Intec Limited
    
    
    54,141,586
    
    
    
    2,915,000
 Exploration Expenditures Total exploration and related expenses, categorized by country, for the years 2004 and 2003 were as
follows: 2004
    
    
    2003Country
    
    (US$ Million)
    
    
    (US$ Million)Mongolia
    
    
    85.5
    
    
    
    60.4China
    
    
    3.0
    
    
    
    3.7Myanmar
    
    
    3.3
    
    
    
    2.6Australia
    
    
    4.8
    
    
    
    0.0Bulgaria
    
    
    1.0
    
    
    
    0.0South Korea
    
    
    (0.3
    )(1)
    
    
    2.3Other
    
    
    0.9
    
    
    
    0.5TOTAL
    
    
    98.2
    
    
    
    69.5
   (1)
    
    The figure represents exploration and operating costs as against proceeds from the sale of
concentrate from pilot-scale mining on the property. IVNs interest in South Korea was held by its
subsidiary ASG. ASG sold the South Korean property in 2004. 62




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Human Resources At December 31, 2004 the IVN Group had 2,471 employees working at various locations. Total
employees were allocated as follows: Total employees
    
    
    Total employees atSite
    
    at December 2004
    
    
    December 2003Monywa Copper Project (50% owned
by IVN)
    
    
    889
    
    
    
    867Savage River Project(1)
    
    
    272
    
    
    
    281Mongolia
    
    
    553
    
    
    
    454South Korea
    
    
    
    
    
    
    70Myanmar Exploration
    
    
    280
    
    
    
    388Bakyrchik (70% owned by IVN)
    
    
    339
    
    
    
    349Singapore
    
    
    7
    
    
    
    0Inner Mongolia
    
    
    42
    
    
    
    15Exploration
    
    
    39
    
    
    
    26Head office (includes ASG)
    
    
    50
    
    
    
    35Total
    
    
    2,471
    
    
    
    2,485
   (1)
    
    IVN sold its interest in the Savage River Project in February 2005. See General
Development of the Business. ITEM 5: DIVIDENDS The Corporation has not paid any dividends on its outstanding Common Shares since its inception and
does not anticipate that it will do so in the foreseeable future. The declaration of dividends on
the Common Shares of the Corporation is within the discretion of the Corporations Board of
Directors and will depend upon their assessment of, among other factors, earnings, capital
requirements and the operating and financial condition of the Corporation. At the present time,
the Corporations anticipated capital requirements are such that it intends to follow a policy of
retaining earnings in order to finance further development of its business. The Corporation is
restricted in its ability to pay dividends on its Common Shares by limitations under the Business
Corporations Act(Yukon) relating to the sufficiency of profits from which dividends may be paid. ITEM 6: DESCRIPTION OF CAPITAL STRUCTURE The authorized share capital of IVN consists of an unlimited number of Common Shares without par
value and an unlimited number of Preferred Shares. As at
March 29, 2005 there were 293,767,721 Common Shares
and no preferred Shares issued and outstanding. Rights and restrictions in respect of the Common
Shares and the Preferred Shares are set out in IVNs articles of continuance, IVNs by-laws and in
the Business Corporations Act (Yukon), and its regulations. Common Shares The holders of Common Shares are entitled to one vote per Common Share at all meetings of
shareholders except meetings at which only holders of another specified class or series of shares
of the Corporation are entitled to vote separately as a class or series. Subject to the prior
rights of the holders of Preferred Shares, the holders of Common Shares are entitled to receive
dividends as and when declared by the directors, and to receive a pro rata share of the remaining
property and assets of the Corporation in the event of liquidation, dissolution or winding up of
the Corporation. The Common Shares have no pre-emptive, redemption, purchase or conversion rights.
Neither the Business Corporations Act (Yukon) nor the constating documents of the Corporation impose
restrictions on the transfer of Common Shares on the register of the Corporation, provided that the
Corporation receives the certificate representing the Common Shares to be transferred together with
a duly endorsed instrument of transfer and payment of any fees and taxes which may be prescribed by
the Board of Directors from time to time. There are no sinking fund provisions in relation to the 63




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Common Shares and they are not liable to further calls or to assessment by the Corporation. The
Business Corporations Act (Yukon) provides that the rights and provisions attached to any class of
shares may not be modified, amended or varied unless consented to by special resolution passed by a
majority of not less than two-thirds of the votes cast in person or by proxy by holders of shares
of that class. Preferred Shares The Preferred Shares are issuable in one or more series, each consisting of such number of
Preferred Shares as may be fixed by the Corporations directors. The Corporations directors may
from time to time, by resolution passed before the issue of any Preferred Shares of any particular
series, alter the constating documents of the Corporation to determine the designation of the
Preferred Shares of that series and to fix the number of Preferred Shares therein and alter the
constating documents to create, define and attach special rights and restrictions to the shares of
that series, including, without limitation, the following: (i) the nature, rate or amount of
dividends and the dates, places and currencies of payment thereof; (ii) the consideration for, and
the terms and conditions of, any purchase of the Preferred Shares for cancellation or redemption;
(iii) conversion or exchange rights; (iv) the terms and conditions of any share purchase plan or
sinking fund; and (v) voting rights and restrictions. Registered holders of both the Preferred Shares and Common Shares are entitled, at their option, to
a certificate representing their shares of the Corporation. Share Purchase Warrants In 2003, IVN issued 7,150,000
share purchase warrants of which 7,125,000 are currently outstanding. Each warrant entitles the holder to
purchase one common share at an exercise price of Cdn.$12.50. The warrants are listed on the TSX,
and expire in December 2005. In 2004, IVN issued 5,760,000 share purchase warrants. Each 10 warrants entitle the holder on
exercise to purchase one Common Share at a price of $8.68. The warrants expire in February 2006. ITEM 7: MARKET FOR SECURITIES The Common Shares of the Corporation are traded in Canada on the TSX, and in the United States on
the New York Stock Exchange. IVNs Common Shares are also currently listed on the Australian Stock
Exchange, but the Corporation is in the process of delisting its
Common Shares from that exchange, which is expected to occur in the
second quarter of 2005. The closing
price of the Corporations Common Shares on the TSX on
March 29, 2005 was Cdn$8.35. The following sets forth the high and low market prices and the volume of the common shares traded
on the TSX during the periods indicated: (stated in Canadian dollars)PERIOD
    
    HIGH
    
    
    LOW
    
    
    VOLUMEJanuary 2004
    
    
    11.30
    
    
    
    9.15
    
    
    
    19,465,268February 2004
    
    
    9.74
    
    
    
    7.21
    
    
    
    31,916,141March 2004
    
    
    8.20
    
    
    
    6.15
    
    
    
    19,793,460April 2004
    
    
    9.30
    
    
    
    7.42
    
    
    
    24,711,698May 2004
    
    
    9.15
    
    
    
    7.88
    
    
    
    16,491,220June 2004
    
    
    9.65
    
    
    
    6.98
    
    
    
    10,416,544July 2004
    
    
    7.29
    
    
    
    6.30
    
    
    
    12,716,017August 2004
    
    
    6.15
    
    
    
    4.85
    
    
    
    11,095,295September 2004
    
    
    7.25
    
    
    
    5.20
    
    
    
    12,557,420October 2004
    
    
    7.86
    
    
    
    6.82
    
    
    
    22,395,785November 2004
    
    
    9.20
    
    
    
    6.85
    
    
    
    23,173,476December 2004
    
    
    9.50
    
    
    
    7.92
    
    
    
    12,547,050
 64




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ITEM 8: DIRECTORS AND OFFICERS The name, municipality of residence and position with the Corporation of each director and
executive officer of the Corporation, and the principal business or occupation in which each
director or executive officer has been engaged during the immediately preceding five years is as
follows: Name and Municipality of
    
    
    
    Principal OccupationResidence
    
    Position with Corporation
    
    During Past Five YearsROBERT M. FRIEDLAND
Hong Kong
    
    Chairman, Director and Chief
Executive Officer
(Director since March 1994)
    
    Chairman of the
Corporation (March
1994 to present);
Chairman and
President, Ivanhoe
Capital Corporation (a venture capital company) (1988 to present)R. EDWARD FLOOD
Ketchum, Idaho
    
    Deputy Chairman and Director
(Director since March 1994)
    
    Deputy Chairman of
the Corporation (May
1999 to present);
Senior Mining
Analyst, Haywood
Securities Inc. (securities dealer and investment bank) (May
1999 to November
2001); President of the Corporation (1995 to
1999)JOHN MACKEN
Termonfeckin, Co.
Louth,
Ireland
    
    Director, President
(Director since January 2004)
    
    President of the Corporation (January
2004 to present);
Senior Vice President
of Freeport McMoran
Copper & Gold (a mining company) (1996
to 2000)DAVID HUBERMAN
Vancouver, B.C.
    
    Director
(Director since September 2003)
    
    President, Coda
Consulting Corp. (business consulting firm) (1993 to present)JOHN WEATHERALL
Toronto, Ontario
    
    Director
(Director since June 1996)
    
    President of
Scarthingmoor Assets
Management Inc. (an asset management company) (1996
to present)KJELD THYGESEN
London, England
    
    Director
(Director since February 2001)
    
    Managing Director,
Lion Resources
Management (investment firm and fund manager) (1989 to
present)HON. ROBERT HANSON
London, England
    
    Director
(Director since February 2001)
    
    Chairman, Hanson
Capital Limited (investment and finance company) (1998
to present);
Chairman, Hanson
Transport Group (1990
to present)MARKUS FABER
Hong Kong
    
    Director
(Director since February 2002)
    
    Managing Director,
Marc Faber Limited (investment advisory firm and fund manager) (1990 to present)
 65




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Name and Municipality of
    
    
    
    Principal OccupationResidence
    
    Position with Corporation
    
    During Past Five YearsJOHN BRUK
Vancouver, B.C.
    
    Director
(Director since August 2004)
    
    Chairman, Pacific
Endeavours
Corporation (private
investment and
consulting company) (1986 to present)HOWARD BALLOCH
Beijing, China
    
    Director
(Director since March 2005)
    
    President, The
Balloch Group (investment and consulting company) (July
2001 to present);
President,
China-Canada Business
Council (July 2001 to
present); Canadian
Ambassador to China,
Mongolia and
Democratic Republic
of Korea (April 1996
to July 2001)PETER G. MEREDITH
Vancouver, B.C.
    
    Director,
Chief Financial Officer
(Director since March 2005)
    
    Chief Financial
Officer of the Corporation
(June 1999 to
November 2001 & May
2004 to present);
Chief Financial
Officer, Ivanhoe
Capital Corporation (a venture capital company) (1996 to present)PIERRE MASSE
West Vancouver, B.C.
    
    Treasurer, Vice President
    
    Treasurer and Vice
President of the
Corporation (May 2004
to present); Chief
Financial Officer of
the Corporation
(November 2001 to May
2004); Controller of
the Corporation
(October 1998 to
November 2001).DOUGLAS KIRWIN
Townsville, Australia
    
    Executive Vice-President,
Exploration
    
    Executive
Vice-President,
Exploration of the
Corporation (September 1995 to present)PAUL CHARE
Perth, Australia
    
    Executive Vice-President,
Operations
    
    Executive
Vice-President of
Operations of the
Corporation (May 2002
to present); Managing
Director, Mines of
Sardinia (a mining company) (2001 to May
2002); General
Manager, Monywa JVCo
(August 1997 to
2001).BEVERLY A. BARTLETT
New Westminster, B.C.
    
    Corporate Secretary
    
    Corporate Secretary
of the Corporation
(June 2001 to
present); Corporate
Secretary, Asia Gold
Corp. (August 2003 to
present); Corporate
Secretary, Jinshan
Gold Mines Inc. (May
2003 to present);
Corporate Secretary,
Ivanhoe Energy Inc.
(oil and gas company)
(June 2001 to
present); Assistant
Secretary, Ivanhoe
Energy Inc. (1999 
2001)
 Each directors term of office expires at the next annual general meeting of the Corporation. Shareholdings of Directors and Senior Officers As at March 29, 2005, the directors and executive officers, as a group, beneficially owned,
directly or indirectly, or exercised control or direction over,
101,470,255 Common Shares of the Corporation
representing approximately 34.54% of the outstanding Common Shares of the Corporation. 66




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Committees of the Board The committees of the Board of Directors of the Corporation consist of an Audit Committee, a
Compensation and Benefits Committee, a Nominating and Corporate Governance Committee, and,
effective March 11, 2005, an Executive Committee. The members of the Audit Committee are John
Weatherall, Kjeld Thygesen and Markus Faber. The members of the Compensation and Benefits Committee
are Kjeld Thygesen, Robert Hanson, David Huberman and John Bruk. The members of the Nominating and
Corporate Governance Committee are John Weatherall, Kjeld Thygesen, Robert Hanson, Markus Faber,
David Huberman and John Bruk. The members of the Executive Committee are Robert Friedland, John
Macken and David Huberman. Conflicts of Interest Certain directors of the Corporation and its subsidiaries are associated with other reporting
issuers or other corporations which may give rise to conflicts of interest. In accordance with the
Yukon Business Corporations Act, directors and officers of the Corporation are required to disclose
to the Corporation the nature and extent of any interest that they have in a material contract or
material transaction, whether made or proposed, with the Corporation, if the director or officer
is: (a) a party to the contract or transaction; (b) is a director or an officer, or an individual
acting in a similar capacity, of a party to the contract or transaction; or (c) has a material
interest in a party to the contract or transaction. IVN has adopted a Code of Business Conduct and Ethics (the Ethics Policy) that applies to all
directors, officers and employees of IVN and its subsidiaries. As required by the Ethics Policy,
individuals representing IVN must not enter into outside activities, including business interests
or other employment, that might interfere with or be perceived to interfere with their performance
at IVN. Audit Committee Information Information Concerning the Audit Committee of the Corporation, as required by Multilateral
Instrument 52-110, is provided in Schedule A to this Annual Information Form. ITEM 9: INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS Other than as disclosed below or elsewhere in this Annual Information Form, no insider, director
nominee or associate or affiliate of any such insider or director nominee, has any material
interest, direct or indirect, in any material transaction since the commencement of the
Corporations last financial year or in any proposed transaction, which, in either case, has
materially affected or would materially affect the Corporation. At the end of 2004 and 2003, subsidiaries of the Corporation holding the Savage River Project owed
approximately $5.1 million to Mr. Robert M. Friedland, Chairman and Chief Executive Officer of the
Corporation, which indebtedness originated as a result of the December 2000 acquisition by the
Corporation of the Savage River project. Following the sale of the Savage River operations in
February 2005, repayment of this balance is contingent upon the Corporation receiving proceeds in
excess of approximately $111 million from the sale of the Savage River Project. The Corporation is a party to cost sharing agreements with other companies in which Robert M.
Friedland has a material direct or indirect beneficial interest. Through these agreements, the
Corporation shares, on a cost-recovery basis, office space, furnishings, equipment and
communications facilities in Vancouver, Singapore, Beijing and London, and an aircraft. The
Corporation also shares the costs of employing administrative and non-executive management
personnel in these offices. During the year ended December 31, 2004, the Corporations 67




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share of these costs was $9,963,000. The companies with which the Corporation is a party to the
cost sharing agreements, and Mr. Friedlands ownership interest in each of them, are as follows: R.M. FriedlandCorporation Name
    
    Ownership InterestIvanhoe Energy Inc.
    
    
    27.47
    %Ivanhoe Capital Corporation
    
    
    100
    %Ivanhoe Nickel & Platinum Ltd.
    
    
    50.06
    %Jinshan Gold Mines Inc.
    
    
    (1)Asia Gold Corp.
    
    
    (1)
   (1)
    
    Mr. Friedland owns 34.33% of the Common Shares of the Corporation, which
owns 38.51% of the common shares of Jinshan Gold Mines Inc. and 51.08% of the common shares of
Asia Gold Corp. The shared and other expenditures for the last two years were as follows: $(000)Years ended December 31,2004
    
    
    2003Exploration
    
    
    2,198
    
    
    
    1,768Legal
    
    
    468
    
    
    
    Office and administrative
    
    
    2,057
    
    
    
    1,834Salaries and benefits
    
    
    2,239
    
    
    
    1,372Travel (including aircraft rental)
    
    
    3,001
    
    
    
    2,6369,963
    
    
    
    7,610
 ITEM 10: TRANSFER AGENTS AND REGISTRARS The registrar and transfer agent for the Common Shares in Canada is CIBC Mellon Trust Company at
its principal offices in Vancouver and Toronto. ITEM 11: MATERIAL CONTRACTS Reference is made to the material contracts that the Corporation has filed with Canadian securities
regulatory authorities, coincident with the filing of this Annual Information Form, on the SEDAR
website at www.sedar.com. Below are the particulars of each contract, other than those entered into in the ordinary course of
business, that is material to the Corporation and was entered into between January 2004 and
December 2004 or was entered into before that date but is still in effect. No disclosure is made
regarding any contract that was entered into prior to January 1, 2002. 68




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1.

Employment Agreement dated November 1, 2003 between IVN and John Macken. The term of the
agreement commenced on January 1, 2004 and employs Mr. Macken as President of IVN on a
continuous basis in consideration for payment to Mr. Macken of a base salary and benefits.2.

Equity Participation and Earn-in Agreement dated October 15, 2004 between IVN and Entrée Gold
Inc., as amended November 9, 2004. See the discussion of
the earn-in with Entrée in General Development of the
Business for further
details.3.

Head Agreement dated February 4, 2005 among IVN, Stemcor, Dominant Holdings AG and Stemcor
Holdings Limited, setting forth the terms and conditions of the sale of the Savage River
Project by the Corporation to Stemcor. See the discussion of
the sale of the Savage River Project in General Development of
the Business for further
details.4.

Share Sale Agreement dated February 4, 2005 between IVN and Stemcor, setting forth the terms
and conditions of the sale of Beviron Pty. Ltd., as parent company of the Savage River Project
operating companies and effecting part of the transactions contemplated in the Head Agreement
described in paragraph 3 above.5.

Share Sale Agreement dated February 4, 2005 between IVN and Dominant Holdings AG, setting
forth the terms and conditions of the sale of Arbutus Holdings Ltd., as the holder of loans
owed by the Savage River Project and effecting part of the transactions contemplated in the
Head Agreement described in paragraph 3 above.6.

Coal Rights Retention Agreement dated July 31, 2003 as amended and restated as of January 31,
2005 between IVN and ASG. Pursuant to this Agreement, IVN retains all
right and interest in all coal and
coal related products on a series of MELs that IVN sold to ASG on July 31, 2003. ITEM 12: INTERESTS OF EXPERTS IVNs auditor is Deloitte & Touche LLP, Chartered Accountants, in Vancouver, B.C. The
Corporations audited consolidated financial statements as at and for the years ended December 31,
2004 and 2003 have been filed under National Instrument 51-102 in reliance on the report of
Deloitte & Touche LLP, independent registered chartered accountants, given on their authority as
experts in auditing and accounting. 69




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AMEC, through its employee Stephen Juras, has prepared the Hugo Dummett Technical Report and the
Southern Oyu Technical Report that form the basis of the scientific and technical disclosure
regarding the Oyu Tolgoi Project, both of which are available on SEDAR at www.sedar.com. To the
knowledge of the Corporation, AMEC and the principals of AMEC, including Stephen Juras, as a group
beneficially own, directly or indirectly, less than one percent of the outstanding Common Shares. ITEM 13: ADDITIONAL INFORMATION Additional information, including directors and officers remuneration and indebtedness, principal
holders of the Corporations securities, options to purchase the Corporations Common Shares and
interests of insiders in material transactions is contained in the management information circular
for the annual general meeting of the Corporation to be held on
May 10, 2005, which will be made available on SEDAR concurrent with
the delivery of the document to the Corporations shareholders. Additional financial
information is contained in the Corporations comparative financial statements and MD&A as at and for the
years ended December 31, 2004 and 2003. Copies of the
information circular (when filed), financial statements and MD&A
are available on SEDAR, and may also be obtained upon request from the Corporation at 654  999
Canada Place, Vancouver, British Columbia, V6C 3E1. Additional information relating to IVN may be found on SEDAR at www.sedar.com. 70




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SCHEDULE A Audit Committee Matters Composition of Audit Committee IVNs Audit Committee
consists of Messrs. John Weatherall and Kjeld Thygesen and
Dr. Markus Faber. Mr. Weatherall is the Chairman of the
Audit Committee. The Board of Directors
has determined that all members of the Audit Committee are independent and financially literate
as defined in Multilateral Instrument 52-110. In addition, in accordance with New York Stock
Exchange corporate governance listing standards, the Board of Directors has determined that John
Weatherall is an audit committee financial expert. Relevant Education and Experience John Weatherall Mr. Weatherall holds a Chartered Financial Analyst designation. He is currently the President of
Scarthingmoor Asset Management Inc. Prior thereto, he was Chairman of Toronto Dominion Asset
Management, the investment unit of a Canadian Chartered Bank and head of Institutional Equity with
responsibility for investment research at Wood Gundy Inc. and Greenshields Inc. Mr. Weatherall has
previously served on the audit committee of five publicly traded companies. Markus Faber Mr. Faber holds a PhD in economics from the University of Zurich. He has over 35 years experience
in the finance industry, including acting as manager of an investment bank in the United States in
which he routinely performed financial analysis of a range of different companies. His current
occupation is principal of Marcus Faber Limited, an investment advisory firm and fund manager. He
also acts as a director and advisor to a number of investment funds. Kjeld Thygesen Mr. Thygesen holds a bachelor of commerce, majoring in economics and accounting. He has been a
resource investment analyst and fund manager for over 30 years. He has been the Managing Director
of Lion Resources Management since 1989, and prior thereto was the Director, Natural Resources
Department and fund manager for Rothschild Asset Management. 71




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Audit Fees Deloitte & Touche LLP has served as the Corporations auditing firm since January 1995. Fees
billed by Deloitte & Touche LLP and its affiliates during fiscal 2004 and fiscal 2003 were Canadian
$1,336,000 and Canadian $1,042,000, respectively. The aggregate fees
billed or expected to be billed by the auditors in
fiscal 2004 and fiscal 2003 are detailed below. (Canadian $ in 000s)
    
    2004
    
    
    2003Audit Fees (a)
    
    $
    957
    
    
    $
    897
    (d)Audit Related Fees (b)
    
    
    10
    
    
    
    10Tax Fees (c)
    
    
    369
    
    
    
    135All Other Fees
    
    
    
    
    
    
    Total
    
    $
    1,336
    
    
    $
    1,042
    (d)
  a)

Fees for audit services billed or expected to be billed relating to fiscal 2004
and 2003 consisted of:  

audit of the Corporations annual statutory financial statements

audit of the statutory financial statements of one of the
Corporationss subsidiaries

reviews of the Corporations quarterly financial statements

comfort letters, consents, and other services related to Securities and Exchange
Commission and Canadian securities regulatory authorities matters  b)

Fees for audit-related services provided during fiscal 2004 and 2003 consisted
of financial accounting and reporting consultations.c)

Fees for tax services provided during fiscal 2004 and 2003 consisted of tax
compliance, and tax planning and advice.d)

Adjusted to reflect final billings for fiscal 2003 rendered in
2004. Pre-Approval Policies and Procedures All services to be performed by the Corporations independent auditor must be approved in advance
by the Audit Committee or a designated member of the Audit Committee (Designated Member). The
Designated Member is a member of the Audit Committee who has been given the authority to grant
pre-approvals of permitted audit and non-audit services. The Audit Committee has considered whether the provision of services other than audit services is
compatible with maintaining the auditors independence and has adopted a policy governing the
provision of these services. This policy requires the pre-approval by the Audit Committee or the
Designated Member of all audit and non-audit services provided by the external auditor, other than
any de minimus non-audit services allowed by applicable law or regulation. The decisions of the
Designated Member to pre-approve a permitted service needs to be reported to the Audit Committee at
its regularly scheduled meetings. Pre-approval from the Audit Committee or Designated Member can be sought for planned engagements
based on budgeted or committed fees. No further approval is required to pay pre-approved fees.
Additional pre-approval is required for any increase in scope or in final fees. 72




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IVANHOE MINES LTD.
AUDIT COMMITTEE
CHARTER  I.

Purpose The primary objective of the Audit Committee (the Committee) of Ivanhoe Mines Ltd. (the
Company) is to act as a liaison between the Board and the Companys independent auditors (the
Auditors) and to assist the Board in fulfilling its oversight responsibilities with respect to
(a) the financial statements and other financial information provided by the Company to its
shareholders, the public and others, (b) the Companys compliance with legal and regulatory
requirements, (c) the qualification, independence and performance of the Auditors and (d) the
Companys risk management and internal financial and accounting controls, and management
information systems. Although the Committee has the powers and responsibilities set forth in this Charter, the role of
the Committee is oversight. The members of the Committee are not full-time employees of the
Company and may or may not be accountants or auditors by profession or experts in the fields of
accounting or auditing and, in any event, do not serve in such capacity. Consequently, it is not
the duty of the Committee to conduct audits or to determine that the Companys financial statements
and disclosures are complete and accurate and are in accordance with generally accepted accounting
principles and applicable rules and regulations. These are the responsibilities of management and
the Auditors. The responsibilities of a member of the Committee are in addition to such members duties as a
member of the Board.  II.

Organization The Committee shall consist of three or more directors and shall satisfy the laws governing the
Company and the independence, financial literacy, expertise and experience requirements under
applicable securities law, stock exchange and any other regulatory requirements applicable to the
Company. The members of the Committee and the Chair of the Committee shall be appointed by the Board on the
recommendation of the Nominating & Corporate Governance Committee. A majority of the members of the
Committee shall constitute a quorum. A majority of the members of the Committee shall be empowered
to act on behalf of the Committee. Matters decided by the Committee shall be decided by majority
votes. The chair of the Committee shall have an ordinary vote. Any member of the Committee may be removed or replaced at any time by the Board and shall cease to
be a member of the Committee as soon as such member ceases to be a director. The Committee may form and delegate authority to subcommittees when appropriate.  III.

Meetings The Committee shall meet as frequently as circumstances require, but not less frequently than four
times per year. The Committee shall meet at least quarterly with management, the Companys
financial and accounting officer(s) and the Auditors in separate executive sessions to discuss any
matters that the Committee or each of these groups believe should be discussed privately. The Chair of the Committee shall be an independent chair who is not Chair of the Board. In the
absence of the appointed Chair of the Committee at any meeting, the members shall elect a chair
from those in attendance at the meeting. The Chair, in consultation with the other members of the
Committee, shall set the frequency and length of each meeting and the agenda of items to be
addressed at each upcoming meeting. The Committee will appoint a Secretary who will keep minutes of all meetings. The Secretary may be
the Companys Corporate Secretary or another person who does not need to be a member of the
Committee. The Secretary for the Committee can be changed by simple notice from the Chair. 73




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The Chair shall ensure that the agenda for each upcoming meeting of the Committee is circulated to
each member of the Committee as well as the other directors in advance of the meeting. The Committee may invite, from time to time, such persons as it may see fit to attend its meetings
and to take part in discussion and consideration of the affairs of the Committee. The Companys
accounting and financial officer(s) and the Auditors shall attend any meeting when requested to do
so by the Chair of the Committee.  IV.

Authority and Responsibilities The Board, after consideration of the recommendation of the Committee, shall nominate the Auditors
for appointment by the shareholders of the Company in accordance with applicable law. The Auditors
report directly to the Audit Committee. The Auditors are ultimately accountable to the Committee
and the Board as representatives of the shareholders. The Committee shall have the following responsibilities:  (a)

Auditors  1.

Recommend to the Board the independent auditors to be nominated for appointment as Auditors
of the Company at the Companys annual meeting and the remuneration to be paid to the Auditors
for services performed during the preceding year; approve all auditing services to be provided
by the Auditors; be responsible for the oversight of the work of the Auditors, including the
resolution of disagreements between management and the Auditors regarding financial reporting;
and recommend to the Board and the shareholders the termination of the appointment of the
Auditors, if and when advisable.2.

When there is to be a change of the Auditor, review all issues related to the change,
including any notices required under applicable securities law, stock exchange or other
regulatory requirements, and the planned steps for an orderly transition.3.

Review the Auditors audit plan and discuss the Auditors scope, staffing, materiality, and
general audit approach.4.

Review on an annual basis the performance of the Auditors, including the lead audit partner.5.

Take reasonable steps to confirm the independence of the Auditors, which include: (a) Ensuring receipt from the Auditors of a formal written statement in accordance with
applicable regulatory requirements delineating all relationships between the Auditors and
the Company; (b) Considering and discussing with the Auditors any disclosed relationships or services,
including non-audit services, that may impact the objectivity and independence of the
Auditors; (c) Approving in advance any non-audit related services provided by the Auditor to the
Company, and the fees for such services, with a view to ensure independence of the Auditor,
and in accordance with applicable regulatory standards, including applicable stock exchange
requirements with respect to approval of non-audit related services performed by the
Auditors; and (d) As necessary, taking or recommending that the Board take appropriate action to oversee
the independence of the Auditors. 74




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##### 



6.

Review and approve any disclosures required to be included in periodic reports under
applicable securities law, stock exchange and other regulatory requirements with respect to
non-audit services.7.

Confirm with the Auditors and receive written confirmation at least once per year (i)
indicating that the Auditors are a member in good standing with the Canadian Public
Accountability Board (CPAB) and comparable bodies in the United States, Australia and
elsewhere to the extent required and disclosing any sanctions or restrictions imposed by the
CPAB and such other comparable bodies; and (ii) responding to any other reasonable request of
the Audit Committee for confirmation as to their qualifications to act as the Companys
Auditors.8.

Consider the tenure of the lead audit partner on the engagement in light of applicable
securities law, stock exchange or applicable regulatory requirements.9.

Review all reports required to be submitted by the Auditors to the Committee under applicable
securities laws, stock exchange or other regulatory requirements.10.

Receive all recommendations and explanations which the Auditors place before the Committee.(b)

Financial Statements and Financial Information11.

Review and discuss with management, the financial and accounting officer(s) and the Auditors,
the Companys annual audited financial statements, including disclosures made in managements
discussion and analysis, prior to filing or distribution of such statements and recommend to
the Board, if appropriate, that the Companys audited financial statements be included in the
Companys annual reports distributed and filed under applicable laws and regulatory
requirements.12.

Review and discuss with management, the financial and accounting officer(s) and the Auditors,
the Companys interim financial statements, including managements discussion and analysis,
and the Auditors review of interim financial statements, prior to filing or distribution of
such statements.13.

Review any earnings press releases of the Company before the Company publicly discloses this
information.14.

Be satisfied that adequate procedures are in place for the review of the Companys disclosure
of financial information and extracted or derived from the Companys financial statements and
periodically assess the adequacy of these procedures.15.

Discuss with the Auditor the matters required to be discussed by applicable auditing
standards requirements relating to the conduct of the audit including: (a) the adoption of, or changes to, the Companys significant auditing and accounting
principles and practices; (b) the management letter provided by the Auditor and the Companys response to that letter;
and (c) any difficulties encountered in the course of the audit work, including any restrictions
on the scope of activities or access to requested information, or personnel and any
significant disagreements with management.  16.

Discuss with management and the Auditors major issues regarding accounting principles used in
the preparation of the Companys financial statements, including any significant changes in
the 75




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##### 



Companys selection or application of accounting principles. Review and discuss analyses
prepared by management and/or the Auditors setting forth significant financial reporting
issues and judgments made in connection with the preparation of the financial statements,
including analyses of the effects of alternative approaches under generally accepted
accounting principles.  17.

Prepare any report under applicable securities law, stock exchange or other regulatory
requirements, including any reports required to be included in statutory filings, including in
the Companys annual proxy statement.(c)

Ongoing Reviews and Discussions with Management and Others18.

Obtain and review an annual report from management relating to the accounting principles used
in the preparation of the Companys financial statements, including those policies for which
management is required to exercise discretion or judgments regarding the implementation
thereof.19.

Periodically review separately with each of management, the financial and accounting
officer(s) and the Auditors; (a) any significant disagreement between management and the
Auditors in connection with the preparation of the financial statements, (b) any difficulties
encountered during the course of the audit, including any restrictions on the scope of work or
access to required information and (c) managements response to each.20.

Periodically discuss with the Auditors, without management being present, (a) their judgments
about the quality and appropriateness of the Companys accounting principles and financial
disclosure practices as applied in its financial reporting and (b) the completeness and
accuracy of the Companys financial statements.21.

Consider and approve, if appropriate, significant changes to the Companys accounting
principles and financial disclosure practices as suggested by the Auditors or management and
the resulting financial statement impact. Review with the Auditors or management the extent
to which any changes or improvements in accounting or financial practices, as approved by the
Committee, have been implemented.22.

Review and discuss with management, the Auditors and the Companys independent counsel, as
appropriate, any legal, regulatory or compliance matters that could have a significant impact
on the Companys financial statements, including applicable changes in accounting standards or
rules, or compliance with applicable laws and regulations, inquiries received from regulators
or government agencies and any pending material litigation.23.

Enquire of the Companys financial and accounting officer(s) and the Auditors on any matters
which should be brought to the attention of the Committee concerning accounting, financial and
operating practices and controls and accounting practices of the Company.24.

Review the principal control risks to the business of the Company, its subsidiaries and joint
ventures; and verify that effective control systems are in place to manage and mitigate these
risks.25.

Review and discuss with management any earnings press releases, including the use of pro
forma or adjusted non-GAAP information, as well as any financial information and earnings
guidance provided to analysts and rating agencies. Such discussions may be done generally
(i.e. discussion of the types of information to be disclosed and the types of presentations
made). 76




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26.

Review and discuss with management any material off-balance sheet transactions, arrangements,
obligations (including contingent obligations) and other relationships of the Company with
unconsolidated entities or other persons, that may have a material current or future effect on
financial condition, changes in financial condition, results of operations, liquidity, capital
resources, capital reserves or significant components of revenues or expenses. Obtain
explanations from management of all significant variances between comparative reporting
periods.27.

Review and discuss with management the Companys major risk exposures and the steps
management has taken to monitor, control and manage such exposures, including the Companys
risk assessment and risk management guidelines and policies.(d)

Risk Management and Internal Controls28.

Review, based upon the recommendation of the Auditors and management, the scope and plan of
the work to be done by the Companys financial and accounting group and the responsibilities,
budget and staffing needs of such group.29.

Ensure that management has designed and implemented effective systems of risk management and
internal controls and, at least annually, review and assess the
effectiveness of such systems.30.

Approve and recommend to the Board for adoption policies and procedures on risk oversight and
management to establish an effective system for identifying, assessing, monitoring and
managing risk.31.

In consultation with the Auditors and management, review the adequacy of the Companys
internal control structure and procedures designed to insure compliance with laws and
regulations, and discuss the responsibilities, budget and staffing needs of the Companys
financial and accounting group.32.

Establish procedures for (a) the receipt, retention and treatment of complaints received by
the Company regarding accounting, internal accounting controls or auditing matters and (b) the
confidential, anonymous submission by employees of the Company of concerns regarding
questionable accounting or auditing matters.33.

Review the internal control reports prepared by management, including managements assessment
of the effectiveness of the Companys internal control structure and procedures for financial
reporting and (ii) the Auditors attestation, and report, on the assessment made by
management.34.

Review the appointment of the chief financial officer and any key financial executives
involved in the financial reporting process and recommend to the Board any changes in such
appointment.(e)

Other Responsibilities35.

Create an agenda for the ensuing year and confirm a timetable for the Audit Committee for the
ensuing year.36.

Review and approve related-party transactions if required under applicable securities law,
stock exchange or other regulatory requirements.37.

Review and approve (a) any change or waiver in the Companys code of ethics applicable to
senior financial officers and (b) any disclosures made under applicable securities law, stock
exchange or other regulatory requirements regarding such change or waiver. 77




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38.

Establish, review and approve policies for the hiring of employees or former employees of the
Companys Auditors.39.

Review and reassess the duties and responsibilities set out in this Charter annually and
recommend to the Nominating and Corporate Governance Committee and to the Board any changes
deemed appropriate by the Committee.40.

Review its own performance annually, seeking input from management and the Board.41.

Perform any other activities consistent with this Charter, the Companys articles and by-laws
and governing law, as the Committee or the Board deems necessary or appropriate.  V.

Reporting The Committee shall report regularly to the Board and shall submit the minutes of all meetings of
the Audit Committee to the Board (which minutes shall ordinarily be included in the papers for the
next full board meeting after the relevant meeting of the Committee). The Committee shall also
report to the Board on the proceedings and deliberations of the Committee at such times and in such
manner as the Board may require. The Committee shall review with the full Board any issues that
have arisen with respect to quality or integrity of the Companys financial statements, the
Companys compliance with legal or regulatory requirements, the performance or independence of the
Auditors or the performance of the Companys financial and accounting group.  VI.

Resources and Access to Information The Committee shall have the authority to retain independent legal, accounting and other
consultants to advise the Committee. The Committee has the authority to conduct any investigation appropriate to fulfilling its
responsibilities. The Committee has direct access to anyone in the organization and may request
any officer or employee of the Company or the Companys outside counsel or the Auditors to attend a
meeting of the Committee or to meet with any members of, or consultants to, the Committee with or
without the presence of management. In the performance of any of its duties and responsibilities,
the Committee shall have access to any and all books and records of the Company necessary for the
execution of the Committees obligations. The Committee shall consider the extent of funding necessary for payment of compensation to the
Auditors for the purpose of rendering or issuing the annual audit report and recommend such
compensation to the Board for approval. The Audit Committee shall determine the funding necessary
for payment of compensation to any independent legal, accounting and other consultants retained to
advise the Committee. 78