Ivanhoe Mines : Management’s Discussion and Analysis for the year ended December 31,2021

MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2021

DATED: MARCH 7, 2022

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INTRODUCTION

This management's discussion and analysis (MD&A) should be read in conjunction with the audited consolidated financial statements of Ivanhoe Mines Ltd. ("Ivanhoe", "Ivanhoe Mines" or the "Company") for the years ended December 31, 2021 and 2020, which have been prepared in accordance with International Financial Reporting Standards (IFRS). All dollar figures stated herein are in U.S. dollars, unless otherwise specified. References to "C$" mean Canadian dollars and references to "R" mean South African Rands.

The effective date of this MD&A is March 7, 2022. Additional information relating to the Company is available on SEDAR at www.sedar.com. Certain statements contained in the MD&A are forward- looking statements that involve risks and uncertainties. See "Forward-LookingStatements" and "Risk Factors".

This MD&A includes references to earnings before interest, tax, depreciation and amortization (EBITDA), and "Cash costs (C1) per pound" which are non-GAAP financial performance measures. For a detailed description of each of the non-GAAP financial performance measures used in this MD&A, and a detailed reconciliation to the most directly comparable measure under IFRS, please refer to the Non-GAAP Financial Performance Measures section of this MD&A starting on page 42. The non-GAAP financial performance measures set out in this MD&A are intended to provide additional information to investors and do not have any standardized meaning under IFRS, and therefore may not be comparable to other issuers, and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

FOURTH QUARTER HIGHLIGHTS

• Production at the Kamoa-Kakula Mining Complex for the fourth quarter of 2021 was 54,481 tonnes of copper in concentrate.
• Kamoa-Kakulaproduced a total of 105,884 tonnes of copper in concentrate in 2021, which significantly exceeded the initial 2021 production guidance range of 80,000 to 95,000 tonnes, as well as the raised guidance of 92,500 to 100,000 tonnes for 2021.
• During Q4 2021, Kamoa-Kakula sold 53,165 tonnes of payable copper and recognized revenue of $488.5 million, with an operating profit of $198.9 million and an EBITDA of $357.6 million.
• Kamoa-Kakula'scost of sales per pound (lb) of payable copper sold was $1.12/lb for Q4 2021, while cash costs (C1) per pound of payable copper produced totaled $1.28/lb, compared to $1.08/lb and $1.37/lb in Q3 2021. Cash costs are expected to continue to trend downward as the Phase 2 concentrator plant is commissioned and the mine's fixed operating costs are spread over increased copper production.
• Kamoa-Kakula'sPhase 2 concentrator plant is on track to begin operations in April 2022, which will see a doubling of Kamoa-Kakula's nameplate milling capacity throughput to 7.6 million tonnes of ore per annum (Mtpa). A de-bottlenecking program is underway to expand processing capacity of Phase 1 and Phase 2 concentrators by 21%, to a combined total of 9.2 million tonnes of ore per year. Copper production from Kamoa Copper's first two phases are projected to exceed 450,000 tonnes per year by Q2 2023.
• Ivanhoe Mines recorded a profit of $48.2 million for Q4 2021, compared to a loss of $10.9 million for the same period in 2020. Ivanhoe Mines' share of profit from the Kamoa-Kakula joint venture and the finance income therefrom in aggregate of $103.9 million were the principal contributors to the profit recorded in the current quarter.
• Ivanhoe Mines has a strong balance sheet with cash and cash equivalents of $608.2 million on hand as at December 31, 2021, and expects that the majority of Kamoa-Kakula's expansion capital expenditures on Phase 2 and Phase 3 will be funded from copper sales and facilities

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already in place at Kamoa-Kakula. Based on current market conditions, it is expected that Ivanhoe Mines will start to receive shareholder loan repayments from Kamoa-Kakula in 2022.

• During Q4 2021, Ivanhoe continued its copper exploration program on its Western Foreland licences that cover approximately 2,550 square kilometres (km2) in close proximity to Kamoa- Kakula. An extensive drilling program is planned for 2022, commencing with the onset of the dry season in the DRC.
• In December 2021, the Platreef Project secured a $200 million gold stream financing and additional $100 million palladium and platinum stream financing, with the first prepayment of $75 million received in December 2021.
• At the end of 2021, Kamoa-Kakula had reached 2.7 million work hours free of a lost-time injury, Kipushi had reached 4.0 million work hours free of a lost-time injury, and Platreef had reached 677,450 work hours free of a lost-time injury.

REVIEW OF OPERATIONS

Ivanhoe Mines is a mining, exploration and development company. At present, the Company's financial performance is primarily affected by ongoing mining operations at its Kamoa-Kakula Mining Complex, and ongoing exploration and development activities being conducted at its three material properties and the highly prospective Western Foreland Exploration Project. These consist of:

• The Kamoa-KakulaMining Complex. A joint venture between Ivanhoe Mines and Zijin Mining

Group Co., Ltd., ("Zijin" or "Zijin Mining") within the Central African Copperbelt in the Democratic Republic of Congo's (DRC) southern Lualaba province. Ivanhoe Mines and Zijin Mining each hold an indirect 39.6% interest in the Kamoa-Kakula Mining Complex, Crystal River Global Limited (Crystal River) holds an indirect 0.8% interest and the DRC government holds a direct 20% interest. The Kamoa-Kakula Mining Complex began producing copper in May 2021 and, through phased expansions, is positioned to become one of the world's largest copper producers. (See "Kamoa-KakulaMining Complex")

• The Platreef Project. Construction of the planned Platreef Mine on the Company's discovery of palladium, rhodium, platinum, nickel, copper and gold, on the Northern Limb of South Africa's
  Bushveld Igneous Complex is in progress. Ivanhoe Mines holds a 64% interest in Platreef, the South African beneficiaries of a broad-based, black economic empowerment structure have a combined 26% stake in the Platreef Project and the remaining 10% is owned by a Japanese consortium of ITOCHU Corporation, Japan Oil, Gas and Metals National Corporation; and Japan Gas Corporation. (See "Platreef Project")
• The Kipushi Project. The existing Kipushi Mine is located on the Central African Copperbelt in the DRC's southern Haut-Katanga province, one of Africa's major mining hubs. The mine, which operated between 1924 and 1993, is approximately 30 kilometres southwest of the provincial capital, Lubumbashi, and less than one kilometre from the DRC-Zambia border. Ivanhoe Mines holds a 68% interest in Kipushi; the state-owned mining company, La Générale des Carrières et des Mines (Gécamines), holds the remaining 32% interest. (See "Kipushi Project")
• The Western Foreland Exploration Project. A group of exploration licences totalling approximately 2,550 km2 and located in close proximity to the Kamoa-Kakula Mining Complex, the majority of which are 90%-100%-owned. Ivanhoe's DRC exploration group is targeting Kamoa-Kakula-style copper mineralization through a regional exploration and drilling program. (See "DRC Western Foreland Exploration Project")

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KAMOA-KAKULA MINING COMPLEX

The Kamoa-Kakula Mining Complex, a joint venture between Ivanhoe Mines and Zijin Mining, has been independently ranked as the world's fourth-largest copper deposit by international mining consultant Wood Mackenzie. The project is approximately 25 kilometres west of the town of Kolwezi and about 270 kilometres west of Lubumbashi. Kamoa-Kakula began producing copper in May 2021 and achieved commercial production on July 1, 2021.

Ivanhoe sold a 49.5% share interest in Kamoa Holding Limited (Kamoa Holding) to Zijin Mining and a 1% share interest in Kamoa Holding to privately owned Crystal River in December 2015. Kamoa Holding holds an 80% interest in the project. Since the conclusion of the Zijin transaction, each shareholder has been required to fund expenditures at Kamoa-Kakula in an amount equivalent to its proportionate shareholding interest. Ivanhoe and Zijin Mining each hold an indirect 39.6% interest in the Kamoa-Kakula Mining Complex, Crystal River holds an indirect 0.8% interest and the DRC government holds a direct 20% interest.

Photo: Kamoa-Kakula's Phase 1 and Phase 2 concentrator plants at dusk.

Kamoa-Kakula summary of operating and financial data
	Q4 2021	Q3 2021
Ore tonnes milled (000's tonnes)	1,059	861
Copper ore grade processed (%)	5.96%	5.89%
Copper recovery (%)	86.40%	83.40%
Copper in concentrate produced (tonnes)	54,481	41,545
Payable Copper sold (tonnes)	53,165	41,490
Sales revenue ($'000)	488,536	342,584
Cost of sales per pound ($ per lb)	1.12	1.08
Cash cost (C1) ($ per lb)	1.28	1.37
EBITDA ($'000)	357,619	233,212

Prior to the start of commercial production on July 1, 2021, 9,858 tonnes of copper in concentrate was produced in Q2 2021, bringing the total tonnes produced for the year ending December 31, 2021, to 105,884.

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C1 cash costs are prepared on a basis consistent with the industry standard definitions by Wood Mackenzie cost guidelines, but are not measures recognized under IFRS. In calculating the C1 cash cost, the costs are measured on the same basis as the Company's share of profit from the Kamoa Holding joint venture that is contained in the financial statements. C1 cash costs are used by management to evaluate operating performance and include all direct mining, processing, and general and administrative costs. Smelter charges and freight deductions on sales to final port of destination, which are recognized as a component of sales revenues, are added to C1 cash cost to arrive at an approximate cost of delivered, finished metal. C1 cash costs exclude royalties and production taxes and non-routine charges as they are not direct production costs.

C1 cash cost per pound of payable copper produced can be further broken down as follows:

		Q4 2021	Q3 2021
Mining	($ per lb)	0.27	0.36
Processing	($ per lb)	0.17	0.16
Logistics charges (delivered to China)	($ per lb)	0.37	0.35
Treatment, refining and smelter charges	($ per lb)	0.24	0.21
General and administrative expenditure	($ per lb)	0.23	0.29
C1 cash cost per pound of payable copper produced	($ per lb)	1.28	1.37

All figures in the above tables are on a 100%-project basis. Metal reported in concentrate is prior to refining losses or deductions associated with smelter terms. This MD&A includes EBITDA and "Cash costs (C1) per pound" which are non-GAAP financial performance measures. For a detailed description of each of the non-GAAP financial performance measures used in this MD&A, and a detailed reconciliation to the most directly comparable measure under IFRS, please refer to the Non- GAAP Financial Performance Measures section of this MD&A starting on page 42.

Chart: Spot price of copper (US$/lb) over the last 12 months.

	$5.0	Copper Price (1 Year)
(US$/lb)	$4.8
$4.6
$4.4
Price
$4.2
Copper	$4.0
$3.8
	$3.6
	Mar-21	Jun-21	Sep-21	Dec-21	Mar-22
Source: Bloomberg

Health and safety at Kamoa-Kakula

At the end of December 2021, Kamoa-Kakula reached 2,696,794 work hours free of a lost-time injury. One lost-time injury occurred in Q4 2021. The project continues to strive toward its workplace objective of zero harm to all employees and contractors.

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