EXHIBIT 2
   Report
    of Independent Registered Chartered Accountants and Consolidated
    Financial Statements of
  IVANHOE
    MINES LTD.
  December 31,
    2008 and 2007




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##### 



Deloitte & Touche LLP
 2800  1055 Dunsmuir
    Street
 4 Bentall Centre
 P.O. Box 49279
 Vancouver BC V7X 1P4
 Canada
  Tel:
    604-669-4466
 Fax:
    604-685-0395
 www.deloitte.ca
  Report of
    Independent Registered Chartered Accountants
   Ivanhoe Mines
    Ltd.
        Internal Control  Integrated Framework
      1




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##### 



Comments
    by Independent Registered Chartered Accountants on
    Canada-United
    States
 of America Reporting
    Difference
        2




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##### 



Deloitte & Touche LLP
 2800  1055 Dunsmuir
    Street
 4 Bentall Centre
 P.O. Box 49279
 Vancouver BC V7X 1P4
 Canada
  Tel:
    604-669-4466
 Fax:
    604-685-0395
 www.deloitte.ca
  Report of
    Independent Registered Chartered Accountants
   Ivanhoe Mines
    Ltd.
  Internal
    Control  Integrated Framework
        Internal Control  Integrated Framework
 3




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##### 



Canada-United
      4




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##### 



IVANHOE
    MINES LTD.
  Consolidated
    Balance Sheets
  December 31,2008


2007(Stated in thousands of U.S. dollars)ASSETSCURRENTCash and cash equivalents (Note 6)

$
384,110


$
145,694Accounts receivable (Note 7)


47,520



37,076Inventories (Note 8)


16,136



1,996Prepaid expenses


11,160



7,183Other current assets


144



144TOTAL CURRENT ASSETS


459,070



192,093LONG-TERM INVESTMENTS (Note 9)


55,945



52,010OTHER LONG-TERM INVESTMENTS (Note 10)


22,301



47,132NOTE RECEIVABLE FROM RELATED PARTY (Note 11)






7,512PROPERTY, PLANT AND EQUIPMENT (Note 12)


199,281



225,623DEFERRED INCOME TAXES (Note 18)






770OTHER ASSETS


5,605



5,030TOTAL ASSETS

$
742,202


$
530,170LIABILITIESCURRENTAccounts payable and accrued liabilities (Note 13)

$
41,103


$
109,310Amounts due under credit facilities (Note 14)


15,963



17,050TOTAL CURRENT LIABILITIES


57,066



126,360CONVERTIBLE CREDIT FACILITY (Note 15)


349,128



137,854LOANS PAYABLE TO RELATED PARTIES (Note 16)






5,088DERIVATIVE CONTRACT (Note 17)


5,320



DEFERRED INCOME TAXES (Note 18)


9,512



1,511ASSET RETIREMENT OBLIGATIONS (Note 19)


3,922



9,160TOTAL LIABILITIES


424,948



279,973COMMITMENTS AND CONTINGENCIES (Note 27)MINORITY INTERESTS (Note 20)


20,692



SHAREHOLDERS EQUITYSHARE CAPITAL (Note 21)AuthorizedUnlimited number of preferred shares without par valueUnlimited number of common shares without par valueIssued and outstanding 
    378,046,013 (2007  375,073,433) common shares


1,485,864



1,477,457SHARE PURCHASE WARRANTS AND SHARE ISSUANCE COMMITMENT
    (Note 21(b) and(c))


32,560



26,619BENEFICIAL CONVERSION FEATURE (Note 15)


28,883



11,869ADDITIONAL PAID-IN CAPITAL


293,485



52,649ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (Note 22)


(24,222
)


17,498DEFICIT


(1,520,008
)


(1,335,895
)TOTAL SHAREHOLDERS EQUITY


296,562



250,197TOTAL LIABILITIES, MINORITY INTERESTS AND SHAREHOLDERS
    EQUITY

$
742,202


$
530,170APPROVED BY THE BOARD:   /s/  D.
    KorbinD.
    Korbin, Director

/s/  K.
    ThygesenK.
    Thygesen, Director    5




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##### 



IVANHOE
    MINES LTD.
  Consolidated
    Statements of Operations
  Year Ended December 31,2008


2007(Stated in thousands of U.S. dollars, except for share
    and per share amounts)REVENUE

$
3,126


$
COST OF SALESProduction and delivery


(1,931
)


Depreciation and depletion


(314
)


COST OF SALES


(2,245
)


EXPENSESExploration (Note 3 and 21(a))


(260,281
)


(304,024
)General and administrative (Note 21(a))


(27,453
)


(27,074
)Depreciation


(4,957
)


(4,222
)Mining property care and maintenance


(10,342
)


(6,533
)Accretion of convertible credit facility (Note 15)


(9,658
)


(901
)Accretion of asset retirement obligations (Note 19)


(429
)


(698
)Write-down of carrying values of property, plant and equipment


(515
)


(1,078
)TOTAL EXPENSES


(315,880
)


(344,530
)OPERATING LOSS


(312,754
)


(344,530
)OTHER INCOME (EXPENSES)Interest income


13,182



12,936Interest expense


(17,599
)


(2,547
)Foreign exchange (losses) gains


(62,946
)


11,891Share of income from investment held for sale (Note 5)






427Write-down of carrying value of investment held for sale
    (Note 5)






(134,309
)Write-down of carrying value of long-term investments
    (Note 9)


(7,103
)


Write-down of carrying value of other long-term investments
    (Note 10)


(18,009
)


(24,541
)Gain on sale of long-term investment and note receivable
    (Note 9)


201,428



1,018Other (expense) income (Note 23)


(14,171
)


LOSS BEFORE INCOME TAXES AND OTHER ITEMS


(217,972
)


(479,655
)Provision for income taxes (Note 18)


(4,314
)


(795
)Share of loss of significantly influenced investees (Note 9)


(10,092
)


(9,165
)Minority interests (Note 20)


14,270



NET LOSS FROM CONTINUING OPERATIONS


(218,108
)


(489,615
)INCOME FROM DISCONTINUED OPERATIONS (Note 4)


33,995



31,902NET LOSS

$
(184,113
)

$
(457,713
)BASIC AND DILUTED (LOSS) EARNINGS PER SHARE FROMCONTINUING OPERATIONS

$
(0.58
)

$
(1.31
)DISCONTINUED OPERATIONS


0.09



0.09$
(0.49
)

$
(1.22
)WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING (000s)


375,801



374,504    6




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##### 



IVANHOE
    MINES LTD.
  Consolidated
    Statements of Shareholders Equity
  Share Purchase








AccumulatedShare Capital


Warrants and


Beneficial


Additional


OtherNumber





Share Issuance


Conversion


Paid-In


Comprehensiveof Shares


Amount


Commitment


Feature


Capital


(Loss) Income


Deficit


Total(Stated in thousands of U.S. dollars, except for share
    amounts)Balances, December 31, 2006


373,463,637


$
1,462,039


$
23,062


$



$
33,705


$
13,233


$
(878,182
)

$
653,857Net loss


























(457,713
)


(457,713
)Other comprehensive income (Note 22)






















4,265







4,265Comprehensive loss






























(453,448
)Shares issued for:Exercise of stock options


1,520,634



14,232











(4,372
)










9,860Bonus shares


57,741



830























830Share purchase plan


28,561



331























331Share purchase warrants


2,860



25























25Convertible credit facility and share purchase warrants
    (Notes 15 and 21(c))










3,557



11,869















15,426Dilution gains


















6,073











6,073Stock compensation charged to operations


















17,243











17,243Balances, December 31, 2007


375,073,433


$
1,477,457


$
26,619


$
11,869


$
52,649


$
17,498


$
(1,335,895
)

$
250,197Net loss


























(184,113
)


(184,113
)Other comprehensive loss (Note 22)






















(41,720
)






(41,720
)Comprehensive loss






























(225,833
)Shares issued for:Acquisition of investment (Note 9(d)(v)), net of issue
    costs of $31


2,224,698



4,339























4,339Exercise of stock options


463,127



3,022











(1,663
)










1,359Private placement (Note 21(b))


243,772



612























612Share purchase plan


40,983



434























434Share purchase warrants (Note 21(b))










94



















94Convertible credit facility and share purchase warrants
    (Notes 15 and 21(c))










5,847



17,014















22,861Dilution gains


















213,285











213,285Stock compensation charged to operations


















29,214











29,214Balances, December 31, 2008


378,046,013


$
1,485,864


$
32,560


$
28,883


$
293,485


$
(24,222
)

$
(1,520,008
)

$
296,562    7




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IVANHOE
    MINES LTD.
  Consolidated
    Statements of Cash Flows
  Year Ended December 31,2008


2007(Stated in thousands of U.S. dollars)OPERATING ACTIVITIESCash used in operating activities (Note 24(a))

$
(318,749
)

$
(238,791
)INVESTING ACTIVITIESProceeds from sale of discontinued operations


29,230



20,314Reclassification of other long-term investments (Note 10)






(70,691
)Purchase of long-term investments


(39,497
)


(16,523
)Loan to related party (Note 11)






(7,014
)Proceeds from sale of long-term investments and note receivable
    (Note 9)


216,730



1,163Cash reduction on commencement of equity accounting
    (Note 9(a))


(2,865
)


Expenditures on property, plant and equipment


(143,897
)


(93,581
)Proceeds from sale of property, plant and equipment
    (Note 12(f))


121,498



Expenditures on other assets


(1,113
)


(1,106
)Cash provided by (used in) investing activities


180,086



(167,438
)FINANCING ACTIVITIESProceeds from convertible credit facility (Note 15)


200,000



150,000Proceeds from credit facilities (Note 14)






17,243Issue of share capital


2,374



10,216Repayment of loan payable to related party (Note 16)


(4,250
)


Minority interests investment in subsidiaries


246,293



2,399Cash provided by financing activities


444,417



179,858EFFECT OF EXCHANGE RATE CHANGES ON CASH


(67,338
)


8,493NET CASH INFLOW (OUTFLOW)


238,416



(217,878
)CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR


145,694



363,572CASH AND CASH EQUIVALENTS, END OF YEAR

$
384,110


$
145,694CASH AND CASH EQUIVALENTS IS COMPRISED OF:Cash on hand and demand deposits

$
119,458


$
29,427Short-term money market instruments


264,652



116,267$
384,110


$
145,694Supplementary cash flow information (Note 24)    8




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##### 



IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
  1.
    NATURE OF
    OPERATIONS    2.
    SIGNIFICANT
    ACCOUNTING POLICIES    (a)
    Principles
    of consolidation          and/or
  (b)
    Measurement
    uncertainties     9




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IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
  (c)
    Foreign
    currencies      (d)
    Revenue
    recognition    (e)
    Cash
    and cash equivalents    (f)
    Inventories      (g)
    Long-term
    investments      (h)
    Exploration
    and development   10




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IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
      (i)
    Property,
    plant and equipment            (j)
    Stripping
    costs    (k)
    Asset
    retirement obligations   11




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IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
  (l)
    Stock-based
    compensation    (m)
    Deferred
    income taxes        (n)
    Loss
    per share      December 31,2008


2007Options


18,810,470



14,563,900Share purchase warrants


128,493,450



127,053,044Convertible credit facility


37,416,459



15,237,788Total potentially dilutive shares


184,720,379



156,854,732   (o)
    Segmented
    reporting   12




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IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
  (p)
    Accounting
    changes  
    Effective January 1, 2008, the Company adopted SFAS
    No. 157, Fair Value Measurements
    (FAS 157). In February 2008, the FASB issued a
    staff position that delays the effective date of FAS 157
    for all nonfinancial assets and liabilities except those
    recognized or disclosed at least annually. Therefore, the
    Company has adopted the provision of FAS 157 with respect
    to its financial assets and liabilities only. FAS 157
    defines fair value, establishes a framework for measuring fair
    value and expands disclosures about fair value measurements.
    Fair value is defined under FAS 157 as the exchange price
    that would be received for an asset or paid to transfer a
    liability (an exit price) in the principal or most advantageous
    market for the asset or liability in an orderly transaction
    between market participants on the measurement date.  SFAS No. 157-3, FAS 157-3), FAS 157-3 states FAS 157-3 FAS 157-3
    Level 1:
  Level 2:
  Level 3:
    Fair Value at December 31, 2008Total


Level 1


Level 2


Level 3Assets:Long-term investments

$
20,430


$
15,017


$
5,413


$
Other long-term investments


22,301











22,301$
42,731


$
15,017


$
5,413


$
22,301Liabilities:Derivative contract

$
5,320


$



$
5,320


$
$
5,320


$



$
5,320


$
  13




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IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
          Balance at beginning of year

$
47,132Foreign exchange losses


(6,822
)Write-down of carrying value of other long-term investments


(18,009
)Balance at end of year

$
22,301   
    Effective January 1, 2008, the Company adopted FAS
    No. 159, The Fair Value Option for Financial Assets
    and Financial Liabilities (FAS 159) which
    permits entities to choose to measure many financial instruments
    and certain other items at fair value that are not currently
    required to be measured at fair value. The Company did not elect
    to apply the fair value option under this Statement to any
    instruments.  (q)
    Recent
    accounting pronouncements  
    In December 2007, the FASB issued Statement of Financial
    Accounting Standards No. 141 (revised 2007), Business
    Combinations (SFAS 141(R)).
    SFAS 141(R) changes accounting for acquisitions that close
    beginning in 2009. More transactions and events will qualify as
    business combinations and will be accounted for at fair value
    under the new standard. SFAS 141(R) promotes greater use of
    fair values in financial reporting. Some of the changes will
    introduce more volatility into earnings. SFAS 141(R) is
    effective for fiscal years beginning on or after
    December 15, 2008. The Company is currently assessing the
    impact that SFAS 141(R) may have on its financial position,
    results of operations, and cash flows.
    In December 2007, the FASB issued Statement of Financial
    Accounting Standards No. 160, Noncontrolling
    Interests in Consolidated Financial Statements  an
    amendment of ARB No. 51 (SFAS 160).
    SFAS 160 establishes accounting and reporting standards
    pertaining to (i) the nature and classification of the
    noncontrolling interest in the Consolidated Statement of
    Financial Position, (ii) attributing net income and
    comprehensive income to the parent and the noncontrolling
    interest, (iii) changes in a parents ownership
    interest in a subsidiary, and (iv) the deconsolidation of
    subsidiary. SFAS 160 is effective for fiscal years
    beginning on or after December 15, 2008. SFAS 160
    requires retroactive adoption of the presentation and disclosure
    requirements for existing minority interests. SFAS 160
    requires the classification of the noncontrolling interest as a
    separate component of stockholders equity. The Company is
    currently assessing the impact that SFAS 160 may have on
    the financial position, results of operations, and cash flows.
    In November 2008, the Emerging Issues Task Force
    (EITF) reached a consensus on Issue
    No. 08-6,
    Equity Method Investment Accounting Considerations
    (EITF 08-6),
    which clarifies the accounting for certain transactions and
    impairment considerations involving equity method investments.
    EITF 08-6
    provides guidance on a number of factors, including,
    determination of the initial carrying value of an equity method
    investment, performing an impairment assessment of an underlying
    indefinite-lived intangible asset of an equity method
    investment, accounting for an equity method investees
    issuance of shares, 14




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IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
  and accounting for a change in an investment from the equity
    method to the cost method.
    EITF 08-6
    is effective for fiscal years beginning on or after
    December 15, 2008. The Company is currently assessing the
    impact
    EITF 08-6
    may have on its financial position, results of operations and
    cash flows.  
    In May 2008, the FASB issued FASB Staff Position
    (FSP) No. APB
    14-1,
    Accounting for Convertible Debt Instruments That May be
    Settled in Cash upon Conversion (Including Partial Cash
    Settlement) (FSP APB
    14-1).
    FSP APB 14-1
    applies to convertible debt instruments that, by their stated
    terms, may be settled in cash (or other assets) upon conversion,
    including partial cash settlement, unless embedded conversion
    option is required to be separately accounted for as a
    derivative under FAS 133. Convertible debt instruments
    within the scope of FSP APB
    14-1 are not
    addressed by the existing APB
    14-1. FSP
    APB 14-1
    requires that the liability and equity components of convertible
    debt instruments within the scope of FSP APB
    14-1 be
    separately accounting for in a manner that reflects the
    entitys nonconvertible borrowing rate. This requires an
    allocation of the convertible debt proceeds between the
    liability component and the embedded conversion option (i.e.,
    the equity component). The difference between the principal
    amount of the debt and the amount of the proceeds allocated to
    the liability component will be reported as a debt discount and
    subsequently amortized to earnings over the instruments
    expected life using the effective interest method. FSP APB
    14-1 is
    effective for fiscal years beginning on or after
    December 15, 2008 and will be applied retrospectively to
    all periods presented. The Company is currently assessing the
    impact of FSP APB
    14-1 may
    have on its financial position, result of operations and cash
    flows.  3.
    EXPLORATION
    EXPENSES      Years Ended December 31,2008


2007MongoliaOyu Tolgoi

$
155,999


$
245,520Coal Division


44,696



14,760Other Mongolia Exploration


6,560



14,595207,255



274,875Australia


46,457



22,096Indonesia


4,547



3,669Other


2,022



3,384$
260,281


$
304,024   4.
    DISCONTINUED
    OPERATIONS   15




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IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
      5.
    INVESTMENT
    HELD FOR SALE        6.
    CASH AND
    CASH EQUIVALENTS    7.
    ACCOUNTS
    RECEIVABLE  December 31,2008


2007Contingent income (Note 4)

$
28,045


$
23,280Trade receivables


1,743



Refundable taxes


13,988



12,537Related parties (Note 25)


142



248Accrued interest


3,090



361Other


512



650$
47,520


$
37,076  16




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##### 



IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
  8.
    INVENTORIES  December 31,2008


2007Stockpiles

$
13,158


$
Materials and supplies


2,978



1,996$
16,136


$
1,996   9.
    LONG-TERM
    INVESTMENTS  December 31,2008


2007Investments in Companies subject to significant influence:Altynalmas Gold Ltd.(a)

$
31,290


$
Exco Resources N.L.(b)


6,785



Jinshan Gold Mines Inc.(c)






5,354Investments available for sale(d)


17,870



46,656$
55,945


$
52,010     (a)
    
    On October 3, 2008, Ivanhoe Mines closed an agreement with
    several strategic partners whereby Altynalmas issued shares to
    acquire a 100% participating interest in BMV and a 100%
    participating interest in Intergold Capital LLP
    (IGC). Both IGC and BMV are limited liability
    partnerships established under the laws of Kazakhstan that are
    engaged in the exploration and development of minerals in
    Kazakhstan. As a result of this transaction, Ivanhoe Mines
    investment in Altynalmas was diluted to 49%. Ivanhoe Mines
    ceased consolidating Altynalmas on October 3, 2008 and
    commenced equity accounting for its investment.  December 31,2008Amount due from Altynalmas on commencement of equity accounting

$
51,112Advances and accrued interest


6,885Amount due from Altynalmas


57,997Carrying amount of equity method investment on commencement of
    equity accounting


(20,438
)Equity losses


(6,269
)(26,707
)Net investment in Altynalmas

$
31,290     (b)
    
    During 2007, Ivanhoe Mines purchased 26.4 million common
    shares of Exco Resources N.L. (Exco) and
    21.1 million Exco share purchase options for a total cost
    of $6,726,000 (Aud$7,920,000). Each Exco share purchase option
    was exercisable until June 1, 2008 to purchase an
    additional Exco common share at a price of Aud$0.35.During May 2008, Ivanhoe Mines exercised its full option
    entitlement of 21.1 million Exco share purchase options to
    acquire 21.1 million shares of Exco at a cost of $6,926,000
    (Aud$7,392,000). Also during June 2008, 17




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##### 



IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
  Ivanhoe Mines acquired an additional 3.0 million shares of
    Exco at a cost of $990,000 (Aud$1,050,000). As a result of these
    purchases and the subsequent appointment of an Ivanhoe
    Mines representative to the Board of Directors of Exco,
    Ivanhoe Mines commenced equity accounting for its investment in
    Exco on July 1, 2008.During 2008, Ivanhoe Mines recorded a $3,015,000 (Aud$4,291,000)
    equity loss on this investment. At December 31, 2008 the
    carrying value of Ivanhoe Mines investment in Exco was
    greater than its share of the underlying book value of
    Excos net assets by approximately $1,662,000
    (Aud$2,572,000). This difference has resulted in an
    other-than-temporary impairment charge on Ivanhoe Mines
    investment in Exco of $1,662,000.At December 31, 2008, the market value of Ivanhoe
    Mines 19.9% investment in Exco was $2,560,000
    (Aud$3,643,000).(c)
    
    During May 2008, Ivanhoe Mines completed the sale of
    67.5 million shares of Jinshan Gold Mines Inc.
    (Jinshan) and the Jinshan note receivable
    (Note 11) for total proceeds of $216,730,000
    (Cdn$217,662,000). This transaction resulted in a gain on sale
    of $201,428,000 being recognized.During 2008, Ivanhoe Mines recorded a $809,000 (2007 
    $9,165,000) equity loss on its investment in Jinshan.(d)
    
    Investments available for sale  December 31, 2008


December 31, 2007Equity


Cost


Unrealized


Fair


Equity


Cost


Unrealized


FairInterest


Basis


Loss


Value


Interest


Basis


Gain


ValueEntrée Gold Inc.(i)


14.6
%

$
19,957


$
(8,635
)

$
11,322



14.8
%

$
19,957


$
13,354


$
33,311Exco Resources N.L. (Note 9(b))


















12.0
%


6,726



2,075



8,801Jinshan Gold Mines Inc.(ii)


0.9
%


554







554















Intec Ltd. (iii)


6.1
%


521







521



6.1
%


916



1,726



2,642GoviEx Gold Inc.(iv)


1.5
%


1,043







1,043















Ivanhoe Nickel & Platinum Ltd.(v)


1.9
%


4,370







4,370















Other(vi)






60







60







1,559



343



1,902$
26,505


$
(8,635
)

$
17,870






$
29,158


$
17,498


$
46,656
     (i)
    
    During 2007, Ivanhoe Mines exercised 2.5 million share
    purchase warrants of Entrée Gold Inc.
    (Entrée) to acquire 1.2 million shares of
    Entrée at a cost of $3,340,000 (Cdn$3,552,000).Also during 2007 Ivanhoe Mines acquired an additional
    2.1 million shares of Entreé at a total cost of
    $6,460,000 (Cdn$6,385,000).(ii)
    
    During 2008, Ivanhoe Mines exercised its full warrant
    entitlement of 1.5 million Jinshan warrants to acquire
    1.5 million shares of Jinshan at a cost of $3,776,000
    (Cdn$3,750,000).Also during 2008, Ivanhoe Mines recorded an other-than-temporary
    impairment of $3,223,000 against this investment based on an
    assessment of the fair value of Jinshan.(iii)
    
    During 2008, Ivanhoe Mines acquired 6.9 million shares of
    Intec Ltd. (Intec) at a cost of $328,000
    (Aud$343,000).Also during 2008, Ivanhoe Mines recorded an other-than-temporary
    impairment of $724,000 against this investment based on an
    assessment of the fair value of Intec.During 2007, Ivanhoe Mines sold 5.4 million shares of Intec
    for $1,163,000. These transactions resulted in a gain on sale of
    $1,018,000 being recognized.(iv)
    
    During 2008, Ivanhoe Mines acquired 1.0 million shares of
    GoviEx Gold Inc. (GoviEx) in exchange for a
    geophysics exploration team and certain mineral exploration
    equipment.Also during 2008, Ivanhoe Mines acquired an additional
    42,500 shares of GoviEx at a cost of $43,000. 18




---



##### 



IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
   (v)
    
    During 2008, Ivanhoe Mines acquired 1.0 million common
    shares of Ivanhoe Nickel and Platinum Ltd.
    (Ivanplats) and 3.4 million Ivanplats special
    warrants in exchange for 2.2 million common shares of
    Ivanhoe Mines.(vi)
    
    During 2008, Ivanhoe Mines recorded an other-than-temporary
    impairment of $1,451,000 against the investment in Redox
    Diamonds Ltd. (Redox) based on an assessment of the
    underlying fair value of Redoxs net assets.Also during 2008, Ivanhoe Mines recorded an other-than-temporary
    impairment of $43,000 against other investments based on an
    assessment of their fair values.  10.
    OTHER
    LONG-TERM INVESTMENTS          
    $22.7 million of MAV2
    Class A-1
    Notes;
    $22.7 million of MAV2
    Class A-2
    Notes;
    $4.1 million of MAV2 Class B Notes;
    $1.5 million of MAV2 Class C Notes;
    $1.3 million of MAV2 IA Class 1 Notes;
    $1.0 million of MAV2 IA Class 2 Notes;
    $0.9 million of MAV2 IA Class 3 Notes;
    $1.2 million of MAV2 IA Class 13 Notes; 19




---



##### 



IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
   
    $1.6 million of MAV3 TA Class 14 Notes; and
    $3.2 million of MAV3 TA Class 25 Notes.      Accrued Interest from August 2007:

$2.7 millionBankers Acceptance Rate:

1.5%Discount Rates:

9% to 25%Maturity Dates:

7.92 yearsExpected Return of Principal:A-1 Notes

100%A-2 Notes

100%B Notes

10%C Notes

0%IA Notes

0%TA Notes

100%       11.
    NOTE RECEIVABLE  FROM
    RELATED PARTY     20




---



##### 



IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
  12.
    PROPERTY,
    PLANT AND EQUIPMENT  December 31,2008


2007Accumulated








AccumulatedDepletion and








Depletion andDepreciation,








Depreciation,Including


Net Book





Including


Net BookCost


Write-downs


Value


Cost


Write-downs


ValueMining propertiesBakyrchik Mining Venture, Kazakhstan(a)

$



$



$



$
87,541


$
(87,541
)

$
Mining plant and equipmentBakyrchik Mining Venture, Kazakhstan(a)

$



$



$



$
3,107


$
(3,107
)

$
Other mineral property interestsOyu Tolgoi, Mongolia(b)

$
43,860


$
(6,274
)

$
37,586


$
43,740


$
(6,255
)

$
37,485Ovoot Tolgoi, Mongolia(c)


13,969



(64
)


13,905



416



(53
)


363Cloncurry, Australia(d)


20,291



(126
)


20,165



6,293



(126
)


6,167Mamahak, Indonesia(e)


13,182







13,182











Other exploration projects


1,270



(62
)


1,208



1,271



(62
)


1,209$
92,572


$
(6,526
)

$
86,046


$
51,720


$
(6,496
)

$
45,224Other capital assetsOyu Tolgoi, Mongolia(b)

$
17,925


$
(10,736
)

$
7,189


$
23,614


$
(9,634
)

$
13,980Ovoot Tolgoi, Mongolia(c)


42,833



(437
)


42,396



1,393



(269
)


1,124Cloncurry, Australia(d)


3,364



(706
)


2,658



2,745



(400
)


2,345Other exploration projects


6,547



(5,825
)


722



2,187



(1,793
)


394$
70,669


$
(17,704
)

$
52,965


$
29,939


$
(12,096
)

$
17,843Capital works in progressOyu Tolgoi, Mongolia(b)(f)

$
53,466


$



$
53,466


$
144,878


$



$
144,878Ovoot Tolgoi, Mongolia(c)


6,804







6,804











Bakyrchik Mining Venture, Kazakhstan(a)














17,678







17,678$
60,270


$



$
60,270


$
162,556


$



$
162,556$
223,511


$
(24,230
)

$
199,281


$
334,863


$
(109,240
)

$
225,623     (a)
    
    Ivanhoe Mines placed the Bakyrchik Mining Venture on a care and
    maintenance basis in 1998. As a result of the transaction
    described in Note 9 (a), the Bakyrchik Mining Venture
    ceased being consolidated on October 3, 2008.(b)
    
    Ivanhoe Mines has a 100% interest in the Oyu Tolgoi copper-gold
    project located in Mongolia. In 2007, the projects four
    mining licenses were re-issued as Special Permits for Mining,
    which are each valid for 30 years and may be extended two
    times for 20 years per extension.Capital works in progress at December 31, 2008 consisted
    mainly of surface assets being constructed at Oyu Tolgoi for
    Shaft No. 1, Shaft No. 2, and the concentrator. 21




---



##### 



IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
   A significant portion of exploration expenses incurred during
    the year relate directly to the development of Oyu Tolgoi.
    Included in exploration expenses are shaft sinking, engineering,
    and development costs that have been expensed and not
    capitalized (Note 3).(c)
    
    Ivanhoe Mines, through its majority owned subsidiary,
    SouthGobi, holds a 100% interest in the Ovoot Tolgoi coal
    project located in Mongolia. In 2007, the Ovoot Tolgoi coal
    projects mining license was granted for its open-pit coal
    mine, which is valid for 30 years. In 2008, SouthGobi
    received its permit to mine for the Ovoot Tolgoi open pit
    operations.(d)
    
    Ivanhoe Mines through its majority owned subsidiary,
    Ivanhoe Australia, owns certain copper-gold and uranium mining
    and exploration leases in Queensland, Australia.(e)
    
    Ivanhoe Mines, through its majority owned subsidiary,
    SouthGobi, holds a 85% working interest in the Mamahak coal
    project located in Indonesia.(f)
    
    During 2008, Ivanhoe Mines received $121.5 million from Rio
    Tinto from the sale of large equipment to be used in the
    construction of the Oyu Tolgoi copper and gold mining complex in
    Mongolia under an equipment-sale agreement that was executed in
    August 2008 between Ivanhoe Mines and Rio Tinto. Rio Tinto can
    require Ivanhoe Mines to purchase the equipment that has been
    sold to Rio Tinto  and any other equipment purchased
    by Rio Tinto as part of this agreement  if an
    acceptable Investment Agreement is reached with the Government
    of Mongolia. Ivanhoe Mines also has a right of first refusal to
    repurchase the equipment if Rio Tinto deems it appropriate to
    use the equipment elsewhere.  13.
    ACCOUNTS
    PAYABLE AND ACCRUED LIABILITIES  December 31,2008


2007Accounts payable

$
24,449


$
55,349Payroll and other employee related payables


617



974Accrued construction costs


12,820



49,008Amounts payable to related parties (Note 25)


3,217



3,979$
41,103


$
109,310   14.
    AMOUNTS
    DUE UNDER CREDIT FACILITIES   22




---



##### 



IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
  15.
    CONVERTIBLE
    CREDIT FACILITY  December 31,2008


2007Principal amount of convertible credit facility

$
350,000


$
150,000Accrued interest


24,165



2,379374,165



152,379(Deduct) addBeneficial conversion feature


(28,883
)


(11,869
)Share purchase warrants


(9,403
)


(3,557
)Accretion of discount


13,249



901$
349,128


$
137,854           EITF 00-27, No. 98-5
    paid-in-kind
   23




---



##### 



IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
  16.
    LOANS
    PAYABLE TO RELATED PARTIES    17.
    DERIVATIVE
    CONTRACT    EITF 00-6,
    2008Risk-free interest rate


1.05
%Expected life


1.4 yearsExpected volatility


84
%Expected dividends

$
Nil     18.
    INCOME
    TAXES      Years Ended December 31,2008


2007Deferred income taxes

$
4,003


$
585Capital taxes


311



210$
4,314


$
795  24




---



##### 



IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
    December 31,2008


2007Deferred income tax assetsLong-term investments

$
35,375


$
3,764Loss carry-forwards


250,429



306,570Other


12,792



8,351298,596



318,685Valuation allowance


(298,596
)


(317,915
)Net deferred income tax assets






770Deferred income tax liabilitiesProperty, plant and equipment


9,512



1,230Long-term investments






2819,512



1,511Deferred income tax liabilities, net

$
9,512


$
741     Years Ended December 31,2008


2007Recovery of income taxes based on the combined Canadian federal
    and provincial statutory tax rates of 31.0% in 2008 and 34.1% in
    2007 applied to the net loss from continuing operations

$
66,276


$
166,785DeductLower foreign tax rates


(13,593
)


(9,912
)Tax benefit of losses not recognized


(57,376
)


(151,267
)Non-taxable portion of realized capital gains


24,714



Capital taxes


(311
)


(210
)Foreign exchange and other


(24,024
)


(6,191
)Provision for income and capital taxes

$
(4,314
)

$
(795
)  25




---



##### 



IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
    Local


U.S. Dollar


ExpiryCurrency


Equivalent(i)


DatesNon-capital losses:Canada

Canadian

$
147,040


$
120,644



2009 to 2028Australia

Australian

$
93,569


$
65,741




(a)Mongolia

Mongolian Tugrik


975,849,140


$
760,149




(b)Mongolia

Mongolian Tugrik


41,997,934


$
32,715



2009 to 2018Mongolia

Mongolian Tugrik


50,223,018


$
39,122



2009 to 2010Indonesia

Indonesian Rupiah


137,714,378


$
12,384



2012 to 2013Singapore

Singapore

$
3,442


$
2,406




(a)     (i)
    
    Translated using the year-end exchange rate.(a)
    
    These losses are carried forward indefinitely, subject to
    continuity of ownership and business tests.(b)
    
    These losses are carried forward until production from a mine
    commences; thereafter, they can be amortized on a straight-line
    basis over a period of ten years.          Canada


2001 to 2008Mongolia


2000 to 2008Australia


2003 to 2008Indonesia


2006 to 2008  26




---



##### 



IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
  19.
    ASSET
    RETIREMENT OBLIGATIONS  December 31,2008


2007Balance, beginning of year

$
9,160


$
6,353Increase (decrease) in obligations for:Changes in estimates


2,582



1,866Amounts incurred


(11
)


Foreign exchange


(546
)


243Accretion expense


429



698Reduction on commencement of equity accounting (Note 9(a))


(7,692
)


Balance, end of year

$
3,922


$
9,160     20.
    MINORITY
    INTERESTS    Minority InterestsSouthGobi


Ivanhoe Australia


TotalBalance, December 31, 2006 and December 31, 2007

$



$



$
Increase in minority interests arising from share issuances by
    subsidiaries


28,847



8,784



37,631Minority interests share of loss


(11,224
)


(3,046
)


(14,270
)Minority interests share of other comprehensive loss
    (Note 22)






(2,669
)


(2,669
)Balance, December 31, 2008

$
17,623


$
3,069


$
20,692   21.
    SHARE
    CAPITAL  (a)
    Equity
    Incentive Plan     27




---



##### 



IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
            2008


2007Risk-free interest rate


2.86
%


4.10
%Expected life


3.6 years



3.2 yearsExpected volatility


57
%


51
%Expected dividends

$
Nil


$
Nil  28




---



##### 



IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
    Options OutstandingOptions


Number of


WeightedAvailable


Common


Averagefor Grant


Shares


Exercise Price(Expressed inCanadian dollars)Balances, December 31, 2006


2,961,648



13,644,434


$
8.99Increase in amount authorized


5,000,000







Options granted


(2,915,500
)


2,915,500



13.45Options exercised






(1,520,634
)


7.15Options cancelled


475,400



(475,400
)


8.32Bonus shares


(57,741
)






Shares issued under share purchase plan


(28,561
)






Balances, December 31, 2007


5,435,246



14,563,900


$
10.10Options granted


(5,604,070
)


5,604,070



5.68Options exercised






(707,800
)


5.70Options cancelled


649,700



(649,700
)


7.49Shares issued under share purchase plan


(40,983
)






Balances, December 31, 2008


439,893



18,810,470


$
9.04        29




---



##### 



IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
    Options Outstanding


Options ExercisableWeighted


Weighted





WeightedAverage


Average





AverageNumber


Remaining


Exercise Price


Number


Exercise PriceRange of Exercise Prices

Outstanding


Life (in years)


per Share


Exercisable


per Share(Expressed in Canadian dollars)







(Expressed in





(Expressed inCanadian





Canadiandollars)





dollars)$ 2.82 to $ 3.50


2,558,070



6.87


$
2.82






$
$ 3.51 to $ 7.69


754,500



1.65



7.23



442,700



7.38$ 7.70 to $ 8.20


1,558,000



3.96



7.87



1,345,000



7.86$ 8.21 to $ 8.99


3,183,000



4.01



8.42



590,000



8.73$ 9.00 to $10.27


6,589,700



4.10



9.73



4,470,200



9.73$10.28 to $12.70


1,712,200



4.47



12.22



1,319,600



12.28$12.71 to $16.79


2,455,000



5.35



13.52



796,500



13.5118,810,470



4.55


$
9.04



8,964,000


$
9.98         Year Ended December 31,2008

2007Exploration

$
20,542


$
11,669General and administrative


8,672



5,574$
29,214


$
17,243     Year Ended December 31,2008


2007Ivanhoe Mines Ltd.

$
13,106


$
10,416SouthGobi Energy Resources Ltd.


7,506



6,827Ivanhoe Australia Ltd.


8,602



$
29,214


$
17,243   (b)
    Rio
    Tinto Placement   30




---



##### 



IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
                              (c)
    Rio
    Tinto Financing   31




---



##### 



IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
  22.
    ACCUMULATED
    OTHER COMPREHENSIVE INCOME  December 31,2008


2007Accumulated OCI at beginning of yearInvestments, net of tax of $nil, $nil

$
17,498


$
13,233Currency translation adjustment, net of tax of $nil, $nil






Non-controlling interests






$
17,498


$
13,233Other comprehensive (loss) income for the year:Changes in fair value of investments

$
(35,703
)

$
5,235Currency translation adjustments


(18,256
)


Non-controlling interests


2,669



Less: reclassification adjustments for gains/losses recorded in
    earnings:Investments:Other than temporary impairment charges


3,990



Gains realized on sale






(970
)Less: reclassification on commencement of equity accounting:Exco Resources N.L. (Note 9(b))


5,580



Other comprehensive (loss) income, before tax


(41,720
)


4,265Income tax recovery (expense) related to OCI






Other comprehensive (loss) income, net of tax

$
(41,720
)

$
4,265Accumulated OCI at end of yearInvestments, net of tax of $nil, $nil

$
(8,635
)

$
17,498Currency translation adjustment, net of tax of $nil, $nil


(18,256
)


Non-controlling interests (Note 20)


2,669



$
(24,222
)

$
17,498   23.
    OTHER
    INCOME/EXPENSE  December 31,2008


2007Gain on sale of equipment (Note 9(d)(v))

$
911


$
Loss on sale of equipment (Note 12(f))


(5,996
)


Loss on derivative contract (Note 17)


(3,209
)


Gain on settlement of debt (Note 16)


838



Listing fees  SouthGobi


(6,715
)


Balance, end of year

$
(14,171
)

$
  32




---



##### 



IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
  24.
    CASH FLOW
    INFORMATION  (a)
    Reconciliation
    of net loss to net cash flow used in operating
    activities  Year Ended December 31,2008


2007Net loss

$
(184,113
)

$
(457,713
)Income from discontinued operations


(33,995
)


(31,902
)Items not involving use of cashStock-based compensation


29,214



17,243Accretion expense


10,087



1,599Accrued mining property care and maintenance


448



Depreciation


5,271



4,222Write-down of carrying values of property, plant and equipment


6,080



1,078Share of income from investment held for sale, net of cash
    distribution






23,428Write-down of carrying value of investment held for sale






134309Accrued interest income


(3,646
)


(982
)Accrued interest expense


17,054



2378Unrealized foreign exchange losses (gains)


57,790



(9,270
)Share of loss of significantly influenced investees


10,092



9,165Write-down of carrying value of other long-term investments


18,009



24,541Gain on sale of long-term investments


(201,428
)


(1,018
)Write-down of carrying value of long-term investments


7,103



Write-down of carrying value of loan receivable






908Loss on derivative contract


3,209



Gain on settlement of debt


(838
)


Gain on sale of equipment


(911
)


Loss on sale of equipment


5,996



Deferred income taxes


4,003



585Minority interests


(14,270
)


Bonus shares






830Net change in non-cash operating working capital items:(Increase) decrease in:Accounts receivable


(2,688
)


(749
)Inventories


(11,616
)


3317Prepaid expenses


(4,669
)


473Other current assets






142(Decrease) increase in:Accounts payable and accrued liabilities


(34,931
)


38,625Cash used in operating activities

$
(318,749
)

$
(238,791
)  33




---



##### 



IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
  (b)
    Other
    supplementary information  Years Ended December 31,2008


2007Interest paid

$
470


$
169Income taxes paid

$
311


$
210   25.
    OTHER
    RELATED PARTY TRANSACTIONS    Years Ended December 31,2008


2007Global Mining Management Corporation(a)

$
8,147


$
8,577Ivanhoe Capital Aviation LLC(b)


3,840



3,840Fognani & Faught, PLLC(c)


621



1,583Ivanhoe Capital Pte. Ltd.(d)






10Ivanhoe Capital Services Ltd.(e)


601



958Rio Tinto plc(f)


4,783



1,330$
17,992


$
16,298   Years Ended December 31,2008


2007Exploration

$
4,783


$
1,330Legal


621



1,583Office and administrative


2,451



2,756Salaries and benefits


6,297



6,789Travel (including aircraft rental)


3,840



3,840$
17,992


$
16,298        34




---



##### 



IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
           35




---



##### 



IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
  26.
    SEGMENT
    DISCLOSURES  Year Ended December 31, 2008Exploration


Coal


Corporate


ConsolidatedREVENUE

$



$
3,126


$



$
3,126COST OF SALESProduction and delivery






(1,931
)






(1,931
)Depreciation and depletion






(314
)






(314
)COST OF SALES






(2,245
)






(2,245
)EXPENSESExploration


(207,673
)


(52,608
)






(260,281
)General and administrative










(27,453
)


(27,453
)Depreciation


(4,133
)


(244
)


(580
)


(4,957
)Mining property care and maintenance










(10,342
)


(10,342
)Accretion of convertible credit facility










(9,658
)


(9,658
)Accretion of asset retirement obligations


(75
)


(10
)


(344
)


(429
)Write-down of carrying values of property, plant and equipment


(7
)


(504
)


(4
)


(515
)TOTAL EXPENSES


(211,888
)


(55,611
)


(48,381
)


(315,880
)OPERATING LOSS


(211,888
)


(52,485
)


(48,381
)


(312,754
)OTHER INCOME (EXPENSES)Interest income


1,396



1,857



9,929



13,182Interest expense










(17,599
)


(17,599
)Foreign exchange (losses) gains


(1,483
)


(4,630
)


(56,833
)


(62,946
)Share of income from investment held for sale














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














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


(1,662
)






(5,441
)


(7,103
)Write-down of carrying value of other long-term investments










(18,009
)


(18,009
)Gain on sale of long-term investment and note receivable










201,428



201,428Other (expense) income


(5,996
)


(6,715
)


(1,460
)


(14,171
)(LOSS) INCOME BEFORE INCOME TAXES AND OTHER ITEMS


(219,633
)


(61,973
)


63,634



(217,972
)Provision for income taxes


(88
)


(121
)


(4,105
)


(4,314
)Share of loss of significantly influenced investees


(3,015
)






(7,077
)


(10,092
)Minority interests


3,046







11,224



14,270NET (LOSS) INCOME FROM CONTINUING OPERATIONS


(219,690
)


(62,094
)


63,676



(218,108
)INCOME FROM DISCONTINUED OPERATIONS










33,995



33,995NET (LOSS) INCOME

$
(219,690
)

$
(62,094
)

$
97,671


$
(184,113
)CAPITAL EXPENDITURES

$
63,947


$
62,496


$
17,454


$
143,897TOTAL ASSETS

$
206,349


$
110,523


$
425,329


$
742,202     36




---



##### 



IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
  Year Ended December 31, 2007Exploration


Coal


Corporate


ConsolidatedREVENUE

$



$



$



$
COST OF SALESProduction and delivery














Depreciation and depletion














COST OF SALES














EXPENSESExploration


(280,862
)


(23,162
)






(304,024
)General and administrative










(27,074
)


(27,074
)Depreciation


(3,633
)


(64
)


(525
)


(4,222
)Mining property care and maintenance










(6,533
)


(6,533
)Accretion of convertible credit facility










(901
)


(901
)Accretion of asset retirement obligations


(417
)






(281
)


(698
)Write-down of carrying values of property, plant and equipment


(9
)






(1,069
)


(1,078
)TOTAL EXPENSES


(284,921
)


(23,226
)


(36,383
)


(344,530
)OPERATING LOSS


(284,921
)


(23,226
)


(36,383
)


(344,530
)OTHER INCOME (EXPENSES)Interest income


103



44



12,789



12,936Interest expense










(2,547
)


(2,547
)Foreign exchange (losses) gains


(5,872
)


48



17,715



11,891Share of income from investment held for sale










427



427Write-down of carrying value of investment held for sale










(134,309
)


(134,309
)Write-down of carrying value of long-term investments














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










(24,541
)


(24,541
)Gain on sale of long-term investment and note receivable










1,018



1,018Other (expense) income














(LOSS) INCOME BEFORE INCOME TAXES AND OTHER ITEMS


(290,690
)


(23,134
)


(165,831
)


(479,655
)Provision for income taxes


(166
)






(629
)


(795
)Share of loss of significantly influenced investees










(9,165
)


(9,165
)Minority interests














NET (LOSS) INCOME FROM CONTINUING OPERATIONS


(290,856
)


(23,134
)


(175,625
)


(489,615
)INCOME FROM DISCONTINUED OPERATIONS










31,902



31,902NET (LOSS) INCOME

$
(290,856
)

$
(23,134
)

$
(143,723
)

$
(457,713
)CAPITAL EXPENDITURES

$
79,146


$
1,031


$
13,404


$
93,581TOTAL ASSETS

$
261,339


$
5,565


$
263,266


$
530,170   37




---



##### 



IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
  December 31,2008


2007Property, plant and equipment at the end of the year:Mongolia

$
161,346


$
197,830Australia


22,823



8,512Indonesia


13,182



Kazakhstan






17,678Canada


341



860Other


1,589



743$
199,281


$
225,623   27.
    COMMITMENTS
    AND CONTINGENCIES    2009

$
40,0392010


2,0792011


1,7332012


1,6422013 onwards


1,368$
46,861     28.
    DISCLOSURES
    REGARDING FINANCIAL INSTRUMENTS    December 31,2008


2007Carrying


Fair


Carrying


FairAmount


Value


Amount


ValueCash

$
384,110


$
384,110


$
145,694


$
145,694Accounts receivable


47,520



47,520



37,076



37,076Other current assets


144



144



144



144Long-term investments


55,945



78,427



52,010



231,217Other long-term investments


22,301



22,301



47,132



47,132Note receivable from related party










7,512



7,512Accounts payable and accrued liabilities


41,103



41,103



109,310



109,310Amounts due under credit facilities


15,963



15,963



17,050



17,050Loans payable to related parties










5,088



4,625Derivative contract


5,320



5,320







  38




---



##### 



IVANHOE
    MINES LTD.
  Notes to
    the Consolidated Financial Statements
 (Stated
    in U.S. dollars unless otherwise noted; tabular amounts in
    thousands)
             39