Ivanhoe Mines next major milestone in the development of the Oyu Tolgoi project, in Mongolia is the granting of all remaining government approvals.

Senior representatives of Ivanhoe Mines and Rio Tinto began detailed discussions in January with a nine-member working group of Mongolian Government officials. The discussions, which remain ongoing, are intended to produce a draft investment agreement for Oyu Tolgoi that will be submitted for approvals by the Cabinet of the Mongolian Government and the national Parliament.

In October last year, Rio Tinto reached an agreement with Ivanhoe Mines to form a strategic partnership involving an equity investment in the company by Rio Tinto and, through a joint technical committee, to oversee the engineering, construction and operation of Ivanhoe Mines' Oyu Tolgoi copper-gold mining complex in Mongolia's South Gobi region.

During last year, Ivanhoe Mines continued construction, engineering and planning for the development of the Oyu Tolgoi copper-gold project. The activity positioned Oyu Tolgoi to achieve first production as early as possible following the start of full-scale construction.

Ivanhoe Mines expects that the first production from Oyu Tolgoi could begin within 30 months of the receipt of the necessary government approvals, contingent upon timely delivery of key long-lead-time equipment.

Planning and development activities throughout 2006 were focused on the underground, high-grade Hugo North Deposit - although it is expected that the initial production at Oyu Tolgoi will consist mainly of ore mined from the open pit on the Southern Oyu Deposits.