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Exhibit
99.3
  
  INTRODUCTION
 www.sedar.com
    OVERVIEW
 IVANHOE MINES ANNOUNCES 2010 FINANCIAL RESULTS
AND REVIEW OF OPERATIONS
 HIGHLIGHTS
 
    
    Full-scale construction of the first phase of the Oyu Tolgoi copper-gold project in
southern Mongolia is advancing toward the scheduled start of commercial production in the
first half of 2013.
 
    
    Key elements of the Oyu Tolgoi project, including the concentrator complex, are ahead of
schedule at the end of Q111, in what will be the peak year of construction activity at the
site.
 
    
    The number of workers assigned to the Oyu Tolgoi site recently surpassed 7,000 for the
first time. On-site jobs at Oyu Tolgoi are expected to peak at almost 14,000 in mid-2011,
with an additional 3,700 Mongolians receiving skills training sponsored by Oyu Tolgoi.
 
    
    The approved 2011 capital budget for Oyu Tolgoi is estimated at $2.3 billion. Principal
components of the 2011 construction program include $561 million for the
100,000-tonne-per-day concentrator complex; $186 million for the initial mining fleet and
to start pre-stripping of the Southern Oyu open-pit mine; and $713 million for project
infrastructure, electrical power and completion of the process-water supply.
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
    
    On December 8, 2010, Ivanhoe Mines and its strategic partner Rio Tinto reached a
comprehensive agreement to provide funding for construction of the first phase of the Oyu
Tolgoi mining complex. The full series of funding measures, including an interim funding
facility from Rio Tinto and cash on hand available to Ivanhoe Mines, could increase to $6.5
billion the pool of development capital available to Ivanhoe Mines to bring Oyu Tolgoi into
production and also to finance associated investments.
 
    
    By the end of 2010, capital totalling $1.4 billion had been invested in
developing Oyu Tolgoi. The Ivanhoe Mines-Rio Tinto Technical Committee has estimated
that a further $4.5 billion in capital will be required from the beginning of 2011
through to the start of commercial production in 2013.
 
    
    On February 3, 2011, Ivanhoe Mines successfully completed its strategic
rights offering to shareholders, that generated gross proceeds of $1.18 billion to
be used primarily to advance development of Oyu Tolgoi.
 
    
    Ivanhoe Mines and Rio Tinto are working together to achieve a
comprehensive project-finance package for Oyu Tolgoi of up to $3.6 billion, which
the companies are targeting to have in place by the second half of 2011. The package
is being considered by a core lending group comprised of the European Bank for
Reconstruction and Development, the International Finance Corporation, Export
Development Canada, BNP Paribas and Standard Chartered. Other government credit
agencies and commercial banks are expected to be added to the core group of lenders.
 
    
    Rio Tinto has committed to provide Ivanhoe Mines with an initial,
non-revolving interim funding facility of $1.8 billion to sustain Oyu Tolgoi
construction while the project-finance package is being negotiated.
 
    
    In exchange for its capital and commitments, Rio Tinto will have the
right to a maximum ownership stake in Ivanhoe Mines of up to 49.0% until January 18,
2012. Rio Tintos current ownership in Ivanhoe Mines is approximately 42.1%.
 
    
    On March 14, 2011, Ivanhoe Mines and BHP Billiton Ltd. announced that their joint
venture has discovered a zone of shallow copper-molybdenum-gold mineralization
approximately 10 kilometres north of Oyu Tolgoi. The discovery, known as Ulaan Khud North,
extends the known strike length of the Oyu Tolgoi mineralized system by an additional three
kilometres to the north, to a total of more than 23 kilometres. The Mongolian government
has issued a three-year pre-mining agreement for the Ivanhoe Mines-BHP Billiton joint
venture.
 
    
    On October 18, 2010, Ivanhoe Mines announced that Executive Chairman Robert Friedland
was re-assuming the duties and title of Chief Executive Officer in a series of
organizational changes, which included the establishment of the Office of the Chairman as
part of an ongoing commitment to maximize shareholder value.
 
    
    During 2010, Ivanhoe Mines 57%-owned subsidiary, SouthGobi Resources (SGQ:TSX,
1878:HK), shipped approximately 2.5 million tonnes of coal from its Ovoot Tolgoi Mine in
southern Mongolia at an average realized selling price of approximately $35 per tonne. This
was a major improvement over the 1.3 million tonnes of coal shipped in 2009 at an average
realized selling price of $29 per tonne  and resulted in $79.8 million of revenue being recognized
in 2010, compared to $36.0 million in 2009.
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
    
    On September 30, 2010, Ivanhoe Mines 62%-owned subsidiary, Ivanhoe Australia (IVA: ASX,
TSX), completed the acquisition of the Osborne Mine Complex, which includes a
two-million-tonne per annum concentrator, infrastructure and tenements. Integration of the
Osborne operation is expected to enable Ivanhoe Australia to commence production of
molybdenum and rhenium from its Merlin Deposit, and copper and gold from other deposits, in
2012.
 
    
    Ivanhoe Mines, through its 50% interest in Altynalmas Gold Ltd., is advancing the Kyzyl
Gold Project in Kazakhstan, one of the worlds largest undeveloped gold projects. A
definitive feasibility study is expected to be completed in Q211. Construction of a
1.5-million-tonne per year fluidized-bed roasting plant to process the projects refractory
ores is expected to begin later this year.
 
    
    In 2010, Ivanhoe Mines recorded a net loss of $211.5 million ($0.42 per share) compared
to a net loss of $280.2 million ($0.69 per share) in 2009, representing a decrease of $68.7
million. Results for 2010 mainly were affected by $218.6 million in exploration expenses,
$94.8 million in cost of sales, $84.4 million in general and administrative expenses, $32.8
million in interest expense, $154.3 million in loss on conversion of convertible credit
facility and $42.7 million in share of loss of significantly influenced investees. These
amounts were offset by coal revenue of $79.8 million, $16.6 million in interest income,
$8.7 million in mainly unrealized foreign exchange gains, a $135.7 million change in the
fair value of a derivative and a $100.6 million change in the fair value of embedded
derivatives.
 
    
    As at March 28, 2011, Ivanhoe Mines consolidated cash position was approximately $1.9
billion.
  3




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##### 



INDEX
  1. Selected Annual Financial Information
    
    
    52. Review of Operations
    
    
    6A. Core Interests and Activities
    
    
    7i. Mongolia
    
    
    7ii. Australia
    
    
    22iii. Kazakhstan
    
    
    25iv. Other Exploration
    
    
    26v. Other Developments
    
    
    26B. Discontinued Operations
    
    
    31C. Administrative and Other
    
    
    313. Selected Quarterly Data
    
    
    334. Fourth Quarter
    
    
    345. Liquidity and Capital Resources
    
    
    356. Share Capital
    
    
    407. Outlook
    
    
    408. Off-Balance-Sheet Arrangements
    
    
    439. Contractual Obligations
    
    
    4310. Changes in Accounting Policies
    
    
    4411. Critical Accounting Estimates
    
    
    4412. Recent Accounting Pronouncements
    
    
    4713. International Financial Reporting Standards
    
    
    4714. Risks and Uncertainties
    
    
    4715. Related-Party Transactions
    
    
    6416. Disclosure Controls and Procedures
    
    
    6617. Managements Report on Internal Control over Financial Reporting
    
    
    6718. Oversight Role of the Audit Committee
    
    
    6719. Qualified Persons
    
    
    6720. Cautionary Statements
    
    
    6821. Forward-Looking Statements
    
    
    6922. Managements Report to Shareholders
    
    
    71
  
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SELECTED ANNUAL FINANCIAL INFORMATION
  Years ended December 31,($ in millions of U.S. dollars, except per share information)
    
    2010
    
    
    2009
    
    
    2008Revenue
    
    $
    79.8
    
    
    $
    36.0
    
    
    $
    3.1Exploration expenses
    
    
    (218.6
    )
    
    
    (177.1
    )
    
    
    (250.6
    )General and administrative
    
    
    (84.4
    )
    
    
    (45.8
    )
    
    
    (27.5
    )Foreign exchange gains (losses)
    
    
    8.7
    
    
    
    34.1
    
    
    
    (62.9
    )Gain on sale of long-term investment and note receivable
    
    
    
    
    
    
    1.4
    
    
    
    201.4Change in fair value of derivative
    
    
    135.7
    
    
    
    
    
    
    
    Change in fair value of embedded derivatives
    
    
    100.6
    
    
    
    (45.0
    )
    
    
    Loss on conversion of convertible credit facility
    
    
    (154.3
    )
    
    
    
    
    
    
    Write-down of carrying value of long-term investments
    
    
    (0.5
    )
    
    
    
    
    
    
    (7.1
    )Write-down of carrying value of other long-term investments
    
    
    
    
    
    
    
    
    
    
    (18.0
    )Net loss from continuing operations
    
    $
    (218.1
    )
    
    $
    (276.6
    )
    
    $
    (208.4
    )Net (loss) income from discontinued operations
    
    
    6.6
    
    
    
    (3.6
    )
    
    
    24.3Net loss
    
    $
    (211.5
    )
    
    $
    (280.2
    )
    
    $
    (184.1
    )Net loss per share from continuing operations
    
    $
    (0.43
    )
    
    $
    (0.68
    )
    
    $
    (0.52
    )Net income (loss) per share from discontinued operations
    
    
    0.01
    
    
    
    (0.01
    )
    
    
    0.06Net loss per share
    
    $
    (0.42
    )
    
    $
    (0.69
    )
    
    $
    (0.46
    )Total assets
    
    $
    3,218.4
    
    
    $
    1,534.7
    
    
    $
    742.2Total long-term financial liabilities
    
    $
    302.4
    
    
    $
    583.0
    
    
    $
    354.4
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REVIEW OF OPERATIONS
  
    
    A 100% interest in Ivanhoe Oyu Tolgoi (BVI) Ltd. that, together with a related company,
holds a 66% interest in Oyu Tolgoi LLC, whose principal asset is the Oyu Tolgoi copper and
gold project now under construction in southern Mongolia.
 
    
    A 57% interest in SouthGobi Resources, which is selling coal produced at its Ovoot Tolgoi
mine in southern Mongolia to customers in China and is conducting ongoing exploration and
development programs at several other Mongolian coal prospects.
 
    
    A 62% interest in Ivanhoe Australia, which is developing its copper-gold discoveries in
the Cloncurry region of Queensland, Australia, and also is planning the development of its
wholly-owned Merlin Project, a high-grade molybdenum and rhenium deposit.
 
    
    A 50% interest in Altynalmas Gold, which owns the Kyzyl Gold Project that hosts the
Bakyrchik and Bolshevik gold deposits in Kazakhstan.
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A. CORE INTERESTS AND ACTIVITIES
    Year EndedDecember 31,(Stated in $000s of dollars)
    
    2010
    
    
    2009MongoliaOyu Tolgoi (1)
    
    $
    83,358
    
    
    $
    107,381Coal Division
    
    
    49,175
    
    
    
    21,499Other Mongolia Exploration
    
    
    2,007
    
    
    
    2,004134,540
    
    
    
    130,884Australia
    
    
    73,844
    
    
    
    41,465Indonesia
    
    
    4,594
    
    
    
    3,145Other
    
    
    5,648
    
    
    
    1,568$
    218,626
    
    
    $
    177,062
 (1)
    
    Until March 31, 2010, exploration costs charged to operations
included development costs associated with the Oyu Tolgoi Project. On April 1, 2010,
Ivanhoe Mines commenced capitalizing Oyu Tolgoi Project development costs. As of this
date, reserve estimates for the Oyu Tolgoi Project had been announced and the procedural
and administrative conditions contained in the Investment Agreement among Ivanhoe Mines,
Rio Tinto and the Government of Mongolia were satisfied. During 2010, additions to
property, plant and equipment for the Oyu Tolgoi Project totalled $911.0 million, which
included development costs. 
 MONGOLIA
 OYU TOLGOI COPPER-GOLD PROJECT (66% owned)
   7




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Construction of Oyu Tolgoi copper-gold complex progressing toward start of commercial production in the first half of 2013.
     
    
    Advancing contract negotiations for the supply and sale of copper-gold-silver
concentrate to be produced from the project. Most of the concentrate initially is expected
to go to major Chinese smelters.
 
    
    The awarding of contracts to construct a 220-kilovolt electrical power line from Oyu
Tolgoi to the Mongolia-China border. The plan is to initially import electrical power for
the Oyu Tolgoi Project from Inner Mongolia, China, while an alternative electrical power
source is developed within Mongolia, in accordance with terms of the Investment Agreement.
 
    
    Conclusion of the competitive bidding process for the main infrastructure works, which
include on-site infrastructure required to support mine operations and the 70-kilometre
water pipeline to supply the concentrator.
 
    
    Preparation of bidders packages for the 97-kilometre paved road from Oyu Tolgoi to the
Mongolia-China border at Gashuun Sukhait, and the permanent domestic airport; contracts
are expected to be awarded by end of Q211.
 
    
    Ongoing work on the Shaft #2 headframe, which reached 40 metres of a total planned
height of 97 metres by late Q111. Shaft-sinking work is planned to begin in September
2011. By late in Q111 construction of the shaft and ancillary facilities had reached
24.3% completion. The staging building, mine-dry and warehouse buildings were erected; mechanical and electrical
installations will follow.
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
    
    Construction of the concentrator building shell continued to advance, with more than
5,200 tonnes of steel erected by late in Q111. Within the process, crushing, and material
handling areas, more than 86,000 cubic metres of concrete have been poured. Shells for the
SAG mills and ball mills, wrap-around motors and ball mill heads were received on site. By
late Q111, construction in the concentrator area was 23.6% complete and ahead of
schedule.
 
    
    Completion of excavations for facilities for the primary ore crusher and pouring of the
base mat in March 2011.
 
    
    Completion of excavation of the tailings-thickening ponds and pouring of initial
concrete.
 
    
    Completion of the 35-kilovolt on-site power distribution loop reached 90% by late
Q111. Commissioning began of the 12-megawatt first stage of the diesel power station,
which will provide interim construction power.
 
    
    The steady growth of the site workforce resumed in March 2011 and now exceeds 7,000 of
which approximately 5,500 are working on site each day with the balance on leave, and the
long-term operations camp is being utilized as it is commissioned.
 
    
    As of late Q111, a total of more than 10.8 million individual safe hours had been
worked at the site without a lost-time incident.
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$2.3 billion capital budget approved for ongoing construction in 2011
   
    
    $561 million for the copper-gold-silver concentrator, which will see complete enclosure of
the building, completion of steel work for the overland ore conveyor, installation of one of
four ball mills and installation of all materials-handling equipment in the pebble crusher.
 
    
    $186 million to purchase the initial mining fleet of trucks, shovels and ancillary
equipment, and to start pre-stripping of the Southern Oyu open-pit mine. The mining fleet
will include 290-tonne trucks that will help to move an estimated 112 million tonnes per year
of ore and waste  a 12% increase over an earlier plan.
 
    
    $713 million for project infrastructure and electrical power, including completion of the
central substation, completion of the process-water supply, completion of the truck
maintenance shop and completion of phases one and two of the operations camp.
 
    
    $211 million for ongoing underground mine development at the Hugo North Deposit,
construction of the headframe on Shaft #2 and further sinking of Shaft #2, which are critical
elements of the development of the block-cave mine planned to begin production in 2015.
  $3.5 billion in capital budgeted to reach start of concentrator commissioning in 2012
    10




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Oyu Tolgoi phase-one future capital requirements, 2011-2013
($ amounts have been rounded)
 Future capital requirements (direct & indirect)
    
    US$ billions2011
Includes $172 million in Value-Added Tax
and $48 million in customs duties and taxes
    
    $
    2.32012  projected initial Oyu Tolgoi production Q4, 2012
Includes $195 million in Value-Added Tax
and $54 million in customs duties and taxes
    
    $
    2.02013  projected commercial production H1, 2013
Includes $10 million in Value-Added Tax
and $2 million in customs duties and taxes
    
    $
    0.2Total future capital requirements 2011-2013
    
    $
    4.5
  2011-2013 capital estimates include almost $500 million toward development costs
for phase-two Hugo North underground mine
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Capital invested in phase-one construction to support future expansion
   Pre-stripping of open-pit mine expected to begin in August 2011
   
    
    Final selection was made of the open-pit mining fleet, with purchase orders issued to
international manufacturers. All major mining equipment has been secured in line with the
open-pit pre-stripping schedule.
 
    
    The tender for the explosives service contract was released in the fourth quarter of
2010 and a supplier was selected in Q111.
 Underground development of Hugo North Mine proceeding to schedule
     12




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Landmark funding agreement between Ivanhoe Mines and Rio Tinto a key
to full-scale construction of Oyu Tolgois first phase
       Rio Tinto working with Ivanhoe Mines to complete international project-finance package
of up to $3.6 billion
   13




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Rio Tinto committed to provide $1.8 billion interim funding facility to Ivanhoe Mines
   Rio Tinto to assume management of Oyu Tolgoi Project under agreement pending approval
     14




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Critical mining and milling equipment acquired
    Skills-training and community programs well advanced
     15




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
    
    Release of the Community Health, Safety and Security Program and a Health Impact
Assessment Report for local communities.
 
    
    Ongoing establishment of the Oyu Tolgoi Cultural Heritage Program, including formation
of an advisory board.
 
    
    Reviews of local regional planning and infrastructure, and formation of the South Gobi
Regional Development Council.
 
    
    Local procurement activities to identify and develop small-, medium- and large-sized
businesses with capacities to support Oyu Tolgoi and surrounding communities.
 
    
    Development of a participatory environmental monitoring program focusing on water
management and pasture-land conservation, with the assistance of local communities.
 Mongolian Government joined Ivanhoe Mines and Rio Tinto as an Oyu Tolgoi partner in 2010
      16




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First of two agreed prepayments of Mongolian taxes made in 2010
   
    
    The first tax prepayment of $50 million was made on April 7, 2010.
 
    
    The second tax prepayment of $100 million will be made within 14 days of Oyu Tolgoi LLC
fully drawing down the financing necessary to enable the complete construction of the Oyu
Tolgoi Project, or on June 30, 2011, whichever date is earlier.
  Exploration
 Less than half of Oyu Tolgoi mineralized trend has been extensively drill tested
 New copper-molybdenum-gold zone discovered on Ivanhoe-BHP Billiton joint venture licence
  TM
   17




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Additional 5,000 metres of underground drilling and 27,000 metres of exploration drilling in 2010
     18




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MONGOLIA
 SOUTHGOBI RESOURCES (57% owned)
 Ongoing expansion of SouthGobis Ovoot Tolgoi coal mine
    19




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
    
    the realignment of the Sunset open pit, which began in December 2009 and was completed
in Q210;
 
    
    fleet issues experienced in 2010;
 
    
    higher input costs, such as fuel and the screening of some coals, which resulted in a
recovery loss; and
 
    
    additional screening costs.
      20




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Investment in Aspire Mining Limited
  Regional coal exploration
     Global equity offering raised C$459.0 million in conjunction with Hong Kong listing
   China Investment Corporation converted $250.0 million of its convertible debenture
   21




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AUSTRALIA
 IVANHOE AUSTRALIA (62% owned)
   Strategic acquisition of Osborne Complex completed
    
    
    Clearing and permitting was conducted for the 53-kilometre road linking the Merlin Project
with the Osborne Complex. Construction of the road is expected to begin in Q211, following
completion of a tendering process in Q111.
 
    
    Approximately 35 former Osborne employees subsequently have joined Ivanhoe Australia,
including a number of Osbornes key operating managers and supervisors. Their skills and
knowledge will help to ensure a high standard of care and maintenance, facilitate mining
studies of copper-gold sources and assist with Ivanhoe Australias smooth transition from
development to operation.
 
    
    Ivanhoe Australia conducted a competitive tendering process for the sale of excess volumes of
contracted natural gas identified at the Osborne Complex to Q112. Sale negotiations were
concluded in early October 2010, resulting in net savings of approximately A$4 million to
Ivanhoe Australia.
  22




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A$269 million equity raising completed in 2010
   Secondary listing gained on the Toronto Stock Exchange
  Underground decline roadway to access Merlin molybdenum and rhenium well underway
      23




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Mount Dore Deposit
   Mount Elliott Project
   Regional exploration
      24




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KAZAKHSTAN
 Kyzyl Gold Project (50% owned)
   Updated Indicated Mineral Resources announced for Kyzyl Project
   Kyzyl Project feasibility study proceeding on schedule
     25




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OTHER EXPLORATION
  
 OTHER DEVELOPMENTS
 Highly successful strategic rights offering completed in 2011
     Rio Tintos ownership stake in Ivanhoe Mines increased from 19.7% to 42.1%
    26




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Potential Rio Tinto investments in Ivanhoe Mines and resulting levels of ownership
 % Interest inInvestment
    
    
    IvanhoeItem
    
    
    (US$ billions)
    
    
    Mines(1)Total of Rio Tinto investments as at March 28, 2011(2)
    
    
    $3.0
    
    
    
    42.1
    %Remaining Series B warrants  expire Oct. 2011 (3)
    
    
    $0.1
    
    
    
    43.4
    %Series C warrants  to be exercised by Jan. 2012
    
    
    $0.4
    
    
    
    46.6
    %Subscription right (4)
    
    
    Up to approx. $0.6
    
    
    
    48.5
    %3.7 million shares purchased in open market (5)
    
    
    $0.1
    
    
    
    49.0
    %Total Potential Rio Tinto investment
(before Interim Funding Facility)
    
    
    Up to approx. $4.2
    
    
    
    49.0
    %
 (1)
    
    Based on 653.6 million shares outstanding as at March 28, 2011.(2)
    
    Includes $0.5 billion paid by Rio Tinto to Robert Friedland and Citibank. Rio Tinto
purchased 10.0 million shares from Robert Friedland at $25.34 per share. Rio Tinto
purchased 10.0 million shares from Citibank at $25.34 per share and 1.5 million shares at
$13.88 per share. Ivanhoe Mines did not receive any proceeds from the transactions.(3)
    
    Includes anti-dilution warrants previously issued to Rio Tinto.(4)
    
    Rio Tinto is not required to exercise its subscription right, in which case there may
be no proceeds from the subscription right. The exercise price of the subscription right
will be based on the prevailing market price at the time of exercise. For example, up to
approximately US$0.6 billion of proceeds assumes a US$25.00 per share exercise price on all
shares issuable under the subscription right.(5)
    
    If acquired, the per share purchase price will be based on the prevailing market price
at the time of acquisition. For example, US$0.1 billion assumes a US$25.00 per share
purchase price on all 3.7 million shares. Ivanhoe Mines will not receive any proceeds from
the transactions. Executive changes include establishment of Office of the Chairman
to evaluate strategic initiatives
    28




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Corporate governance measures provide assurance of independence
   Appointment of additional directors
   29




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Arbitration between Ivanhoe Mines and Rio Tinto suspended for six months
       30




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B. DISCONTINUED OPERATIONS
    
 C. ADMINISTRATIVE AND OTHER
 General and administrative costs.
 Interest income.
 Interest expense.
 Foreign exchange gains.
  31




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Share of loss of significantly influenced investees.
 Change in fair value of derivative.
 Change in fair value of embedded derivatives.
 Loss on conversion of convertible credit facility.
  32




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SELECTED QUARTERLY DATA
 Quarter EndedDec-31
    
    
    Sep-30
    
    
    Jun-30
    
    
    Mar-31($ in millions of dollars, except per share information)
    
    2010
    
    
    2010
    
    
    2010
    
    
    2010Revenue
    
    $
    41.6
    
    
    $
    6.6
    
    
    $
    17.7
    
    
    $
    13.9Cost of sales
    
    
    (46.4
    )
    
    
    (14.9
    )
    
    
    (13.2
    )
    
    
    (20.3
    )Exploration expenses
    
    
    (59.6
    )
    
    
    (48.1
    )
    
    
    (39.5
    )
    
    
    (71.4
    )General and administrative
    
    
    (46.4
    )
    
    
    (15.0
    )
    
    
    (14.7
    )
    
    
    (8.3
    )Foreign exchange gains (losses)
    
    
    6.6
    
    
    
    5.3
    
    
    
    (4.9
    )
    
    
    1.7Change in fair value of derivative
    
    
    135.7
    
    
    
    
    
    
    
    
    
    
    
    Change in fair value of embedded derivatives
    
    
    (20.0
    )
    
    
    49.8
    
    
    
    72.2
    
    
    
    (1.4
    )Loss on conversion of convertible credit facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (154.3
    )Net income (loss) from continuing operations
    
    
    37.3
    
    
    
    (24.9
    )
    
    
    (30.0
    )
    
    
    (200.5
    )Income (loss) from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.6Net income (loss)
    
    
    37.3
    
    
    
    (24.9
    )
    
    
    (30.0
    )
    
    
    (193.9
    )Net income (loss) per share  basicContinuing operations
    
    $
    0.07
    
    
    $
    (0.05
    )
    
    $
    (0.06
    )
    
    $
    (0.44
    )Discontinued operations
    
    $
    0.00
    
    
    $
    0.00
    
    
    $
    0.00
    
    
    $
    0.01Total
    
    $
    0.07
    
    
    $
    (0.05
    )
    
    $
    (0.06
    )
    
    $
    (0.43
    )Net income (loss) per share  dilutedContinuing operations
    
    $
    0.06
    
    
    $
    (0.05
    )
    
    $
    (0.06
    )
    
    $
    (0.44
    )Discontinued operations
    
    $
    0.00
    
    
    $
    0.00
    
    
    $
    0.00
    
    
    $
    0.01Total
    
    $
    0.06
    
    
    $
    (0.05
    )
    
    $
    (0.06
    )
    
    $
    (0.43
    )
 Quarter EndedDec-31
    
    
    Sep-30
    
    
    Jun-30
    
    
    Mar-312009
    
    
    2009
    
    
    2009
    
    
    2009Revenue
    
    $
    9.9
    
    
    $
    11.9
    
    
    $
    10.7
    
    
    $
    3.5Cost of sales
    
    
    (8.5
    )
    
    
    (8.6
    )
    
    
    (9.1
    )
    
    
    (3.2
    )Exploration expenses
    
    
    (67.2
    )
    
    
    (40.9
    )
    
    
    (35.2
    )
    
    
    (34.1
    )General and administrative
    
    
    (15.0
    )
    
    
    (12.5
    )
    
    
    (10.5
    )
    
    
    (7.8
    )Foreign exchange gains (losses)
    
    
    2.2
    
    
    
    19.5
    
    
    
    21.7
    
    
    
    (9.3
    )Writedown of other long-term investments
    
    
    (45.0
    )
    
    
    
    
    
    
    
    
    
    
    Net income (loss) from continuing operations
    
    
    (138.7
    )
    
    
    (47.8
    )
    
    
    (27.0
    )
    
    
    (63.4
    )Income (loss) from discontinued operations
    
    
    9.2
    
    
    
    (21.9
    )
    
    
    2.1
    
    
    
    7.4Net income (loss)
    
    
    (129.5
    )
    
    
    (69.8
    )
    
    
    (24.9
    )
    
    
    (56.0
    )Net income (loss) per share  basicContinuing operations
    
    $
    (0.32
    )
    
    $
    (0.12
    )
    
    $
    (0.07
    )
    
    $
    (0.16
    )Discontinued operations
    
    $
    0.02
    
    
    $
    (0.05
    )
    
    $
    0.01
    
    
    $
    0.02Total
    
    $
    (0.30
    )
    
    $
    (0.17
    )
    
    $
    (0.06
    )
    
    $
    (0.14
    )Net income (loss) per share  dilutedContinuing operations
    
    $
    (0.32
    )
    
    $
    (0.12
    )
    
    $
    (0.07
    )
    
    $
    (0.16
    )Discontinued operations
    
    $
    0.02
    
    
    $
    (0.05
    )
    
    $
    0.01
    
    
    $
    0.02Total
    
    $
    (0.30
    )
    
    $
    (0.17
    )
    
    $
    (0.06
    )
    
    $
    (0.14
    )
  33




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FOURTH QUARTER
 Revenue.
 Exploration.
 Administrative costs.
 Foreign exchange gain.
 Change in fair value of derivatives.
 Change in fair value of embedded derivatives in convertible debenture
  34




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LIQUIDITY AND CAPITAL RESOURCES
 Cash flow
 Operating activities.
 Investing activities.
 Financing activities.
 Liquidity and capital resources
 Selected Ivanhoe Mines projected and present capital resources as at December 31, 2010
 Item
    
    US$ billionsRemaining Series B warrants  expire October 2011 (1) (Rio Tinto)
    
    
    $0.1Series C warrants  to be exercised by January 2012 (Rio Tinto)
    
    
    $0.4Subscription right (2)(Rio Tinto)
    
    Up to approx. $0.6Interim funding facility (3) (Rio Tinto)
    
    
    $1.8Total projected potential Rio Tinto investment
(excluding share of rights offering)
    
    Up to approx. $2.9Total from rights offering received in February 2011
    
    
    $1.1Total projected potential Rio Tinto investment plus
total from rights offering
    
    Up to approx. $4.0Long-term project financing, net of repayment of Rio Tinto interim facility (4)(international lenders)
    
    
    $1.8Cash available at Ivanhoe  as of December 31, 2010 (6)
    
    
    $0.7Total projected funds from Rio Tinto, rights offering, project financing & cash
    
    Up to approx. $6.5
 (1)
    
    Includes anti-dilution warrants previously issued to Rio Tinto.(2)
    
    Rio Tinto is not required to exercise its subscription right, in which case there may
be no proceeds from the subscription right. The exercise price of the subscription right
will be based on the prevailing market price at the time of exercise. For example, up to
approximately US$0.6 billion of proceeds assumes a US$25.00 per share exercise price on all
shares issuable under the subscription right.(3)
    
    Interim facility to be replaced when funds become available following completion of the
long-term project financing package now under negotiation (see note 4).(4)
    
    Assumes a debt package of US$3.6 billion is secured from a syndicate of international
lenders and replaces the Rio Tinto interim funding facility of US$1.8 billion.(5)
    
    Cash position as of December 31, 2010 (excludes cash associated with SouthGobi
Resources and Ivanhoe Australia).  35




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36




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37




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Financial instruments
  December 31,
    
    
    December 31,2010
    
    
    2009Carrying
    
    
    Fair
    
    
    Carrying
    
    
    Fair(Stated in $000s of dollars)
    
    Amount
    
    
    Value
    
    
    Amount
    
    
    ValueFinancial AssetsHeld-for-tradingShort-term investments
    
    
    98,373
    
    
    
    98,373
    
    
    
    14,999
    
    
    
    14,999Long-term investments
    
    
    10,235
    
    
    
    10,235
    
    
    
    9,876
    
    
    
    9,876Other long-term investments
    
    
    74,936
    
    
    
    74,936
    
    
    
    71,883
    
    
    
    71,883Available-for-saleLong-term investments
    
    
    103,431
    
    
    
    103,431
    
    
    
    43,304
    
    
    
    43,304Other long-term investments
    
    
    116,880
    
    
    
    116,880
    
    
    
    73,152
    
    
    
    73,152Cost methodLong-term investments
    
    
    20,534
    
    
    
    20,534
    
    
    
    19,972
    
    
    
    19,972Loans and receivablesAccounts receivable
    
    
    65,741
    
    
    
    65,741
    
    
    
    39,349
    
    
    
    39,349Investments in companies subject to
significant influenceLong-term investments
    
    
    16,991
    
    
    
    145,981
    
    
    
    20,359
    
    
    
    81,824Financial LiabilitiesAccounts payable and accrued liabilities
    
    
    260,528
    
    
    
    260,528
    
    
    
    55,128
    
    
    
    55,128Amounts due under credit facilities
    
    
    54,695
    
    
    
    54,695
    
    
    
    55,523
    
    
    
    55,523CIC convertible credit facility
debt host contract and interest payable
    
    
    99,719
    
    
    
    99,719
    
    
    
    191,430
    
    
    
    191,430Rio Tinto convertible credit facility
    
    
    
    
    
    
    
    
    
    
    378,916
    
    
    
    390,678DerivativesRights offering derivative liability
    
    
    766,238
    
    
    
    766,238
    
    
    
    
    
    
    
    CIC convertible credit facility
embedded derivative liability
    
    
    154,877
    
    
    
    154,877
    
    
    
    358,272
    
    
    
    358,272
    38




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Years EndedDecember 31,(Stated in $000s of dollars)
    
    2010
    
    
    2009Unrealized gains on long-term investments
    
    $
    360
    
    
    $
    1,099Unrealized gains on other long-term investments
    
    
    4,508
    
    
    
    438Change in fair value of derivative
    
    
    135,680
    
    
    
    Change in fair value of embedded derivatives
    
    
    100,637
    
    
    
    (44,980
    )
  Years EndedDecember 31,(Stated in $000s of dollars)
    
    2010
    
    
    2009Changes in fair value of long-term investments
    
    $
    39,801
    
    
    $
    29,718Changes in fair value of other long-term
investments
    
    
    (9,732
    )
    
    
    (27,448
    )
   39




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SHARE CAPITAL
  
    
    653.6 million common shares outstanding.
 
    
    21.3 million incentive stock options outstanding, with a weighted average exercise price
of C$11.54 per share. Each option is exercisable to purchase a common share of the Company
at prices ranging from C$2.82 to C$27.83 per share.
 
    
    14.1 million Series B Warrants outstanding granted to Rio Tinto. The warrants are
determined by the date on which an approved Investment Agreement is reached. The warrant
determination date within the warrant terms presented below is the earlier of the date on
which an approved Investment Agreement is reached or October 27, 2009.
  (i)
    
    $8.38 during the period commencing 366 days after the warrant determination
date and ending 545 days after the warrant determination date; and
 (ii)
    
    $8.51 during the period commencing 546 days after the warrant determination
date and ending 725 days after the warrant determination date.
 
    
    40.2 million Series C Warrants outstanding granted to Rio Tinto with an exercise price
of $9.43 per share which are exercisable until October 24, 2012.
 
    
    0.8 million Type B, Series 1 Warrants outstanding with an exercise price of C$2.97 per
share. These warrants were granted to Rio Tinto under certain anti-dilution provisions in
the 2006 private-placement agreement and have lives identical to the Series B warrants.
  
 OUTLOOK
    40




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Commodity Prices and 2011 Production
    Capital Expenditures
      41




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##### Table of Contents



Corporate Development Activities
   Other information
   42




---



##### Table of Contents



Exchange Rates
   
 OFF-BALANCE-SHEET ARRANGEMENTS
  
 CONTRACTUAL OBLIGATIONS
  Payments Due by PeriodLess than 1($000s of U.S. dollars)
    
    year
    
    
    1 - 3 years
    
    
    4 - 5 years
    
    
    After 5 years
    
    
    TotalOperating leases (1)
    
    $
    8,331
    
    
    $
    9,621
    
    
    $
    1,909
    
    
    $
    
    
    
    $
    19,861Purchase obligations (1)
    
    
    856,517
    
    
    
    205,149
    
    
    
    
    
    
    
    
    
    
    
    1,061,666Debt obligations (2)
    
    
    20,927
    
    
    
    40,080
    
    
    
    
    
    
    
    250,000
    
    
    
    311,007Other long-term obligations (3)
    
    
    32,585
    
    
    
    
    
    
    
    
    
    
    
    58,046
    
    
    
    90,631Total
    
    $
    918,360
    
    
    $
    254,850
    
    
    $
    1,909
    
    
    $
    308,046
    
    
    $
    1,483,165
 (1)
    
    These amounts mainly represent various long-term contracts that include
commitments for future operating payments under contracts for drilling, engineering,
equipment purchases, rentals and other arrangements.(2)
    
    Debt obligations consist of amounts due under credit facilities and convertible
credit facilities.(3)
    
    Other long-term obligations consist of asset retirement obligations.
  43




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CHANGES IN ACCOUNTING POLICIES
   
 CRITICAL ACCOUNTING ESTIMATES
   
    
    Carrying Values of Property, Plant and Equipment;
    
    Depletion and Depreciation of Property, Plant and Equipment;
    
    Asset Retirement Obligations; and
    
    Income Taxes.
  44




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Carrying values of Property, Plant and Equipment
   Depletion and Depreciation of Property, Plant and Equipment
     Asset Retirement Obligations
   45




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##### Table of Contents



Income Taxes
     46




---



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RECENT ACCOUNTING PRONOUNCEMENTS
   
 INTERNATIONAL FINANCIAL REPORTING STANDARDS
 Acceptable Accounting Principles and Auditing Standards
 
 RISKS AND UNCERTAINTIES
   47




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Insofar as Rio Tinto is Ivanhoe Mines largest shareholder, Rio Tinto has the ability to
significantly influence the business and affairs of Ivanhoe Mines.
   Under the Heads of Agreement, Ivanhoe Mines is substantially dependent on Rio Tinto for its
financing needs.
  In the event of a breach by Ivanhoe Mines of any of the key terms of the Oyu Tolgoi Governance
Agreement, Rio Tinto will be released from Common Share acquisition limitations in effect pursuant
to the Standstill Cap.
   48




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##### Table of Contents



In the event of a breach by Ivanhoe Mines of any of the key terms of the Oyu Tolgoi Governance
Agreement or a number of other material contracts between Ivanhoe Mines or its subsidiaries
and Rio Tinto or its affiliates, Rio Tinto will be able to accelerate repayments under the Interim
Funding Facility.
  If the arbitration proceeding initiated by Rio Tinto is not resolved in Ivanhoe Mines favour, Rio
Tinto may acquire control of Ivanhoe Mines after the expiration of the Standstill Cap and without
making an offer to all other Shareholders.
   The actual cost of developing the Oyu Tolgoi Project may differ materially from Ivanhoe Mines
estimates and involve unexpected problems or delays.
   49




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##### Table of Contents




    
    the timing and cost, which can be considerable, of the construction of mining and
processing facilities;
 
    
    the availability and cost of skilled labour, power and transportation;
 
    
    the annual usage costs to the local province for sand, aggregate and water;
 
    
    the availability and cost of appropriate smelting and refining arrangements;
 
    
    the need to obtain necessary environmental and other government permits, and the timing
of those permits; and
 
    
    the availability of funds to finance construction and development activities.
  Ivanhoe Mines may be limited in its ability to enforce the Investment Agreement against a sovereign
government.
   50




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##### Table of Contents



The Investment Agreement includes a number of future covenants that may be outside of the control
of Ivanhoe Mines to complete.
  
    
    Ivanhoe Mines is obligated to obtain project financing for the development of the Oyu
Tolgoi Project within two years following the Effective Date of the Investment Agreement
and to commence commercial production within five years of securing such financing. There
is a risk that Oyu Tolgoi LLC will be unable to obtain sufficient project financing within
the stipulated time or that, in order to meet the project financing requirement in a timely
manner, Oyu Tolgoi LLC will be required to accept financing terms that are less
advantageous than those that might have been available had there been no deadline for
obtaining such financing. There is also a risk that unanticipated construction delays or
other unforeseen development problems may cause delays in commencement in commercial
production or that unforeseen mining or processing difficulties are encountered that
prevent Oyu Tolgoi LLC from attaining the required commercial production levels.
 
    
    Ivanhoe Mines is obligated to utilize only Mongolian power sources within four years of
commencing commercial production. Such sources of power may not be available or may be
available upon commercial terms that are less advantageous than those available from other
potential power suppliers.
 
    
    Mongolian nationals must represent at least 90% of the Oyu Tolgoi Project work force
once commercial production is attained and 50% of the Projects engineers must be Mongolian
nationals within five years, increasing to 70% after 10 years. While Ivanhoe Mines has a
plan for achieving these targets, success in doing so is contingent upon the availability
of a sufficient number of qualified personnel, which is not wholly within Ivanhoe Mines
control.
 
    
    Ivanhoe Mines is obligated to use Mongolian services, transportation and freight
facilities on a priority basis. Such services and facilities may not be available to the
extent required or may be available upon commercial terms that are less advantageous than
those available from other sources.
 
    
    Oyu Tolgoi LLC has community development commitments and social responsibility
obligations. There is a risk that Oyu Tolgoi LLC will be unable to meet the expectations or
demands of relevant community stakeholders to the extent contemplated to allow Oyu Tolgoi
LLC to meet its commitments under the Investment Agreement.
 
    
    The extension of the term of the Investment Agreement from 30 years to 50 years is
subject to a number of conditions, including Ivanhoe Mines having demonstrated that the Oyu
Tolgoi Project has been operated in accordance with industry best practices in terms of
national and community benefits, environment and health and safety practices. The
inherently subjective nature of these criteria creates the risk that Ivanhoe Mines and the
Government of Mongolia may disagree as to whether the conditions for extending the term of
the Investment Agreement have been met.
   51




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##### Table of Contents



The Oyu Tolgoi Project is operated as a corporate/government joint venture and is subject to joint
venture risk.
  The Government of Mongolia T-Bill may remain illiquid beyond the stated maturity date.
  There can be no assurance that Ivanhoe Mines will be capable of raising the additional funding that
it needs to complete its development and objectives.
   52




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##### Table of Contents



Lack of more sophisticated electrical power and transportation infrastructure in proximity to
Ivanhoe Mines material properties could adversely affect mining feasibility.
        53




---



##### Table of Contents



The resource and reserve estimates for the Ivanhoe Mines projects disclosed in this MD&A are
estimates only and are subject to change based on a variety of factors, some of which are beyond
Ivanhoe Mines control. Ivanhoe Mines actual production, revenues and capital expenditures may
differ materially from these estimates.
     54




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##### Table of Contents



Mining projects are sensitive to the volatility of metal prices.
    Copper
    
    
    GoldYear
    
    High
    
    
    Low
    
    
    Average
    
    
    High
    
    
    Low
    
    
    Average2006
    
    $
    3.99
    
    
    $
    2.06
    
    
    $
    3.05
    
    
    $
    725
    
    
    $
    524
    
    
    $
    6042007
    
    $
    3.77
    
    
    $
    2.37
    
    
    $
    3.23
    
    
    $
    841
    
    
    $
    604
    
    
    $
    6952008
    
    $
    4.08
    
    
    $
    1.26
    
    
    $
    3.15
    
    
    $
    1,011
    
    
    $
    713
    
    
    $
    8722009
    
    $
    3.33
    
    
    $
    1.38
    
    
    $
    2.34
    
    
    $
    1,213
    
    
    $
    810
    
    
    $
    9722010
    
    $
    4.42
    
    
    $
    2.76
    
    
    $
    3.42
    
    
    $
    1,421
    
    
    $
    1,058
    
    
    $
    1,225
 Ivanhoe Mines ability to carry on business in Mongolia is subject to legal and political risk.
    55




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56




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##### Table of Contents



Recent and future amendments to Mongolian laws could adversely affect Ivanhoe Mines mining rights
in the Oyu Tolgoi Project or make it more difficult or expensive to develop the project and carry
out mining.
  Changes in, or more aggressive enforcement of, laws and regulations could adversely impact Ivanhoe
Mines business.
   Ivanhoe Mines is subject to substantial environmental and other regulatory requirements and such
regulations are becoming more stringent. Non-compliance with such regulations, either through
current or future operations or a pre-existing condition, could materially, adversely affect
Ivanhoe Mines.
   57




---



##### Table of Contents



Previous mining operations may have caused environmental damage at current and former Ivanhoe Mines
mining projects, and if Ivanhoe Mines cannot prove that such damage was caused by such prior
operators, its indemnities and exemptions from liability may not be effective.
   58




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##### Table of Contents



Ivanhoe Mines ability to obtain dividends or other distributions from its subsidiaries may be
subject to restrictions imposed by law, foreign currency exchange regulations and financing
arrangements.
  There can be no assurance that the interest held by Ivanhoe Mines in its exploration, development
and mining properties is free from defects or that material contractual arrangements between
Ivanhoe Mines and entities owned or controlled by foreign governments will not be unilaterally
altered or revoked.
  Competition for new mining properties by larger, more established companies may prevent Ivanhoe
Mines from acquiring interests in additional properties or mining operations.
  Ivanhoe Mines does not expect to pay dividends for the foreseeable future.
   59




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##### Table of Contents



There is no assurance that Ivanhoe Mines will be capable of consistently producing positive cash
flows.
  There is no guarantee that any exploration activity will result in commercial production of mineral
deposits.
  Ivanhoe Mines cannot insure against all of the risks associated with mining.
  
    
    rock bursts, slides, fires, earthquakes or other adverse environmental occurrences;
 
    
    industrial accidents;
 
    
    labour disputes;
 
    
    political and social instability;
 
    
    technical difficulties due to unusual or unexpected geological formations;
 
    
    failures of pit walls, shafts, headframes, underground workings; and
    
    flooding and periodic interruptions due to inclement or hazardous weather condition.
  60




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
    
    damage to, and destruction of, mineral properties or production facilities;
 
    
    personal injury;
 
    
    environmental damage;
 
    
    delays in mining;
 
    
    monetary losses; and
 
    
    legal liability.
  Ivanhoe Mines is exposed to risks of changing political stability and government regulation in the
countries in which it operates.
    61




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##### Table of Contents



Ivanhoe Mines prospects depend on its ability to attract and retain key personnel.
  Certain directors of Ivanhoe Mines are directors or officers of, or have significant shareholdings,
in other mineral resource companies and there is the potential that such directors will encounter
conflicts of interest with Ivanhoe Mines.
   Capital markets are volatile.
   62




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Ivanhoe Mines is subject to the U.S. Foreign Corrupt Practices Act.
  Ivanhoe Mines may become a passive foreign investment company (PFIC), which could have adverse U.S.
federal income tax consequences to United States Holders of Common Shares.
    63




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Ivanhoe Mines and SouthGobi hold substantial funds in cash and cash equivalents and there is a risk
that financial market turmoil or other extraordinary events could prevent the companies from
obtaining timely access to such funds or result in the loss of such funds.
  
 RELATED-PARTY TRANSACTIONS
  Years EndedDecember 31,(Stated in $000s of U.S. dollars)
    
    2010
    
    
    2009Rio Tinto plc (a)
    
    $
    23,836
    
    
    $
    8,588Global Mining Management Corporation (b)
    
    
    13,627
    
    
    
    8,982Ivanhoe Capital Aviation LLC (c)
    
    
    6,465
    
    
    
    5,940Fognani & Faught, PLLC (d)
    
    
    476
    
    
    
    60Ivanhoe Capital Corporation (e)
    
    
    434
    
    
    
    211Ivanhoe Capital Services Ltd. (f)
    
    
    752
    
    
    
    618$
    45,590
    
    
    $
    24,399
  64




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Year EndedDecember 31,2010
    
    
    2009Development and exploration
    
    $
    23,836
    
    
    $
    8,588Salaries and benefits
    
    
    11,437
    
    
    
    7,379Travel (including aircraft rental)
    
    
    6,465
    
    
    
    5,940Office and administrative
    
    
    3,376
    
    
    
    2,432Legal
    
    
    476
    
    
    
    60$
    45,590
    
    
    $
    24,399
   (a)
    
    Rio Tinto owns 42.1% of Ivanhoe Mines. Rio Tinto provides services for the Oyu Tolgoi Project
on a cost-recovery basis.
 In addition, Rio Tinto completed certain equity transactions with Ivanhoe Mines in 2010 and
2009. These are detailed in the Other Developments section.
 (b)
    
    Global Mining Management Corporation (Global) is a private company based in Vancouver owned
equally by seven companies, one of which is Ivanhoe Mines. Global has a director in common
with the Company. Global provides administration, accounting and other office services to the
Company on a cost-recovery basis.
 (c)
    
    Ivanhoe Capital Aviation LLC (Aviation) is a private company 100%-owned by the Companys
Chairman and Chief Executive Officer. Aviation operates aircraft which are rented by the
Company on a cost-recovery basis.
 (d)
    
    An officer of a subsidiary of the Company is associated with Fognani & Faught, PLLC, a legal
firm that provides legal services to Ivanhoe Mines.
 (e)
    
    Ivanhoe Capital Corporation (ICC) is a private company 100%-owned by the Companys Chairman
and Chief Executive Officer. ICC provides administration and other office services out of
London, England on a cost-recovery basis.
 (f)
    
    Ivanhoe Capital Services Ltd. (ICS) is a private company 100%-owned by the Companys Chairman
and Chief Executive Officer. ICS provides management services out of Singapore on a
cost-recovery basis.
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DISCLOSURE CONTROLS AND PROCEDURES
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MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
   Changes in internal control over financial reporting
  
 OVERSIGHT ROLE OF THE AUDIT COMMITTEE
  
 QUALIFIED PERSON
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CAUTIONARY STATEMENTS
 LANGUAGE REGARDING RESERVES AND RESOURCES
 Standards of Disclosure for Mineral Projects www.sedar.com
 NOTE TO UNITED STATES INVESTORS CONCERNING ESTIMATES OF MEASURED, INDICATED AND INFERRED RESOURCES
 Standards of Disclosure for Mineral Projects
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FORWARD-LOOKING STATEMENTS
   69




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MANAGEMENTS REPORT TO THE SHAREHOLDERS
     /s/ Robert Friedland

Robert Friedland
    
    
    
    /s/ Tony Giardini

Tony GiardiniExecutive Chairman and
    
    
    
    Chief Financial OfficerChief Executive OfficerMarch 28, 2011Vancouver, BC, Canada
  71