Ivanhoe Mines Ltd. — Interim / Quarterly Report 2020

Aug 10, 2020

Condensed consolidated interim financial statements of

Ivanhoe Mines Ltd.

June 30, 2020 (Stated in U.S. dollars)

(Unaudited)

June 30, 2020

Table of contents

Condensed consolidated interim statement of financial position 3
Condensed consolidated interim statement of comprehensive income 4
Condensed consolidated interim statement of changes in equity 5
Condensed consolidated interim statement of cash flows 6
Notes to the condensed consolidated interim financial statements 7-41

Condensed consolidated interim statement of financial position

as at June 30, 2020

(Stated in U.S. dollars) (Unaudited)

		June 30,	December 31,
	Notes	2020	2019
		$'000	$'000
ASSETS
Non-current assets
Investment in joint venture	4	1,075,010	912,636
Property, plant and equipment	5	387,064	421,143
Mineral properties	6	264,324	264,324
Loans receivable	7	40,232	91,955
Right-of-use asset	8	13,858	15,096
Promissory note receivable	9	19,675	16,799
Other assets	10	4,244	4,826
Deferred tax asset		853	688
Investments	11	655	655
Total non-current assets		1,805,915	1,728,122
Current assets
Cash and cash equivalents	12	496,184	702,810
Loans receivable	7	54,545	-
Prepaid expenses	13	2,029	3,339
Other receivables	14	7,457	8,036
Consumable stores		1,059	1,060
Investments	11	710	1,140
Current tax assets		149	215
Total current assets		562,133	716,600
Total assets		2,368,048	2,444,722
EQUITY AND LIABILITIES
Capital and reserves
Share capital	19	2,292,959	2,286,562
Share option reserve	19	131,665	128,531
Foreign currency translation reserve	20	(79,622)	(30,857)
Accumulated profit		50,059	63,572
Equity attributable to owners of the Company		2,395,061	2,447,808
Non-controlling interests	21	(98,778)	(84,954)
Total equity		2,296,283	2,362,854
Non-current liabilities
Borrowings	15	30,785	29,674
Lease liability	8	14,251	14,980
Advances payable	16	2,729	2,661
Deferred tax liability		2,082	2,082
Rehabilitation provision		271	319
Total non-current liabilities		50,118	49,716
Current liabilities
Trade and other payables	17	12,599	23,025
Cash settled share-based payment liability	18	4,321	4,026
Borrowings	15	3,990	4,230
Lease liability	8	737	871
Total current liabilities		21,647	32,152
Total liabilities		71,765	81,868
Total equity and liabilities		2,368,048	2,444,722

Continuing operations (Note 1) Commitments and contingencies (Note 33)

(Signed) Peter Meredith

Peter Meredith, Director

(Signed) Livia Mahler Livia Mahler, Director

Condensed consolidated interim statement of comprehensive income

for the three and six months ended June 30, 2020

(stated in U.S. dollars)

(Unaudited)
		Three months ended June 30,		Six months ended June 30,
	Notes	2020	2019	2020	2019
		$'000	$'000	$'000	$'000
Expenses
Exploration and project expenditure		9,018	3,290	20,998	4,689
Salaries and benefits		5,065	2,770	11,687	6,086
Share-based payments	22	4,180	2,239	7,857	4,258
Travel costs		1,209	1,222	2,468	2,279
Professional fees		788	772	1,435	1,159
Other expenditure		753	301	1,299	794
Office and administration		410	1,030	1,366	1,734
Legal fees		90	267	387	301
Investor relations		40	194	575	452
Foreign exchange (gain) loss	23	(891)	(2,826)	2,263	(6,968)
Loss from operating activities		20,662	9,259	50,335	14,784
Share of loss from joint venture	4	6,597	6,248	13,325	12,127
Other income	26	(322)	(605)	(2,191)	(465)
Finance costs	24	70	56	170	152
(Gain) loss on fair valuation of financial asset	11	(164)	(281)	430	(32)
Finance income	25	(18,672)	(16,859)	(39,482)	(32,714)
Loss (profit) before income taxes		8,171	(2,182)	22,587	(6,148)
Income tax expense (recovery)
Current tax		-	238	79	396
Deferred tax		98	131	(308)	92
		98	369	(229)	488
LOSS (PROFIT) FOR THE PERIOD		8,269	(1,813)	22,358	(5,660)
Loss (profit) attributable to:
Owners of the Company		4,341	(3,889)	13,513	(9,841)
Non-controlling interests		3,928	2,076	8,845	4,181
		8,269	(1,813)	22,358	(5,660)
Other comprehensive (income) loss
Items that may subsequently be reclassified to loss (profit) :
Exchange (gains) losses on translation of foreign operations		(8,604)	(6,316)	53,932	(5,825)
Other comprehensive (income) loss for the period, net of tax		(8,604)	(6,316)	53,932	(5,825)
TOTAL COMPREHENSIVE (INCOME) LOSS FOR THE PERIOD		(335)	(8,129)	76,290	(11,485)
Total comprehensive (income) loss attributable to:
Owners of the Company		(3,458)	(9,570)	62,278	(15,106)
Non-controlling interest		3,123	1,441	14,012	3,621
		(335)	(8,129)	76,290	(11,485)

Condensed consolidated interim statement of changes in equity

for the six months ended June 30, 2020

(Stated in U.S dollars)

(Unaudited)
	Share capital
	Number		Share option	Foreign currency	Accumulated	Equity attributable	Non-controlling
	of shares	Amount	reserve	translation reserve	profit	to owners	interests	Total
		$'000	$'000	$'000	$'000	$'000	$'000	$'000
Balance at January 1, 2019	1,015,080,833	1,764,710	126,526	(38,845)	44,349	1,896,740	(77,932)	1,818,808
Profit (loss) for the period	-	-	-	-	9,841	9,841	(4,181)	5,660
Other comprehensive income	-	-	-	5,265	-	5,265	560	5,825
Total comprehensive income (loss)	-	-	-	5,265	9,841	15,106	(3,621)	11,485
Transactions with owners
Share-based payments
charged to operations (Note 22)	-	-	3,915	-	-	3,915	-	3,915
Restricted share units vested (Note 19(c))	1,179,833	2,653	(2,653)	-	-	-	-	-
Options exercised (Note 19(b))	3,435,424	3,329	(1,686)	-	-	1,643	-	1,643
Balance at June 30, 2019	1,019,696,090	1,770,692	126,102	(33,580)	54,190	1,917,404	(81,553)	1,835,851
Balance at January 1, 2020	1,196,109,399	2,286,562	128,531	(30,857)	63,572	2,447,808	(84,954)	2,362,854
Loss for the period	-	-	-	-	(13,513)	(13,513)	(8,845)	(22,358)
Other comprehensive loss	-	-	-	(48,765)	-	(48,765)	(5,167)	(53,932)
Total comprehensive loss	-	-	-	(48,765)	(13,513)	(62,278)	(14,012)	(76,290)
Transactions with owners
Shares issued (Note 19(a))	1,000,000	2,023	-	-	-	2,023	-	2,023
Recognition of non-controlling interest on	-	-	-	-	-	-	188	188
incorporation of subsidiaries
Share-based payments
charged to operations (Note 22)	-	-	7,261	-	-	7,261	-	7,261
Restricted share units vested (Note 19(c))	2,678,964	4,015	(4,015)	-	-	-	-	-
Options exercised (Note 19(b))	368,400	359	(112)	-	-	247	-	247
Balance at June 30, 2020	1,200,156,763	2,292,959	131,665	(79,622)	50,059	2,395,061	(98,778)	2,296,283

Condensed consolidated interim statement of cash flows

three and six months ended June 30, 2020

(stated in U.S. dollars)

(Unaudited)

Notes202020192020$'000$'000$'000Cash flows from operating activities(Loss) profit before income taxes(8,171)2,182(22,587)Items not involving cashShare of losses from joint venture46,5976,24813,325Share-based payments223,7002,2397,553Depreciation1,7688653,831Expected credit loss provision720-720Depreciation on right-of-use asset309981,233Finance costs247056170Transfer from other assets to working capital items56951128Loss (profit) on disposal of property, plant and equipment3-3Other taxes112(Increase) decrease in fair valuation of financial asset11(164)(281)430Unrealized foreign exchange (gains) losses(553)(2,897)2,385Finance income25(18,672)(16,859)(39,482)(14,336)(7,397)(32,289)Interest received6442,7803,537Change in working capital items30(5,293)2,086(8,536)Interest paid(46)(4)(102)Income taxes paid(60)(36)(73)Net cash used in operating activities(19,091)(2,571)(37,463)Cash flows from investing activitiesLoan advanced to joint venture(80,162)(61,183)(143,020)Property, plant and equipment acquired(9,104)(29,308)(19,825)Cash paid on behalf of joint venturer(1,619)(1,236)(2,889)		Three months ended June 30,		Six months ended June 30,
					2019
					$'000
					6,148
					12,127
					4,258
					1,720
					-
					222
					152
					2,262
					(1)
					2
					(32)
					(7,118)
					(32,714)
					(12,974)
					6,079
					(4,803)
					(54)
					(36)
					(11,788)
					(75,379)
					(60,343)
					(1,523)
	Other assets acquired	(61)	(50)	(177)	(149)
Advancement of long term loan facility7(34)(50,000)(75)					(50,000)
Proceeds from sale of property, plant and equipment1,595-1,595					19
Purchase of exploration licences-(623)-					(2,984)
Net cash used in investing activities(89,385)(142,400)(164,391)					(190,359)
Cash flows from financing activities
Options exercised661,388247					1,643
Principal portion of lease liability(204)(202)(304)					(476)
Net cash (used in) generated from financing activities(138)1,186(57)					1,167
Effect of foreign exchange rate changes on cash1,3813,042(4,715)					7,806
Net cash outflow(107,233)(140,743)(206,626)					(193,174)
Cash and cash equivalents, beginning of period603,417521,617702,810					574,048
Cash and cash equivalents, end of period496,184380,874496,184					380,874

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

1. Basis of presentation and going concern assumption

Ivanhoe Mines Ltd. is a mining development and exploration company incorporated in Canada which, together with its subsidiaries and joint venture (collectively referred to as the Company), is focused on the exploration, development and recovery of minerals and precious metals from its property interests located primarily in Africa.

The registered and records office of the Company is located at Suite 654-999 Canada Place, Vancouver, British Columbia, Canada V6C 3E1. The Company is listed on the Toronto Stock Exchange ("TSX") under the ticker symbol IVN. The shares of the Company are also traded on the OTCQX Best Market in the United States of America under the symbol IVPAF.

These condensed consolidated interim financial statements have been prepared on the historical cost basis with the exception of financial instruments and share-based payments which are measured at fair value. Historical cost is generally based on the fair value of the consideration given in exchange for assets. The financial statements are also prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business.

The Company has an accumulated profit of $50.1 million at June 30, 2020 (December 31, 2019: $63.6 million). As at June 30, 2020, the Company's total assets exceeds its total liabilities by $2,296.3 million (December 31, 2019: $2,362.9 million) and current assets exceeds current liabilities by $540.5 million (December 31, 2019: $684.4 million). The Company currently has no producing properties and expects to fund all of its exploration and development activities through cash resources, debt and equity financing until operating revenues are generated.

2. Significant accounting policies

The significant accounting policies used in these condensed consolidated interim financial statements have been consistently applied to all periods presented, unless otherwise stated, and are as follows:

(a) Statement of compliance

The Company's condensed consolidated interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting, as issued by the International Accounting Standards Board.

These condensed consolidated interim financial statements do not include all of the information and footnotes required by International Financial Reporting Standards ("IFRS") for complete financial statements for year-end reporting purposes. Results for the period ended June 30, 2020, are not necessarily indicative of future results. The accounting policies applied by the Company in these condensed consolidated interim financial statements are the same as those applied by the Company in its most recent annual consolidated financial statements as at and for the year ended December 31, 2019 except for the adoption of the new and revised accounting standards mentioned in Note 3.

These unaudited condensed consolidated interim financial statements should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2019.

(b) Significant accounting estimates and judgments

The preparation of condensed consolidated interim financial statements in conformity with IAS 34 requires the Company's management to make estimates and assumptions concerning the future. The resulting accounting estimates can, by definition, only approximate the actual results. Estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

2. Significant accounting policies (continued)

(b) Significant accounting estimates and judgments (continued)

Significant accounting judgments are accounting policies that have been identified as being complex or involving subjective judgments or assessments.

Significant accounting estimates and judgments include, amongst other things, the recoverability of assets, the determination of the functional currency, technical feasibility and commercial viability of projects, the classification of Kamoa Holding Limited as a joint venture and the determination of inputs into lease accounting.

(c) Future accounting changes

The following new standards, amendments to standards and interpretations have been issued but are not effective during the period ended June 30, 2020. The Company has not yet adopted these new and amended standards.

Amendment to IAS 1 – Presentation of Financial Statements. The amendments clarify how to classify debt and other liabilities as current or non-current. (i)

The Company has considered the amendment and assessed that it will have no material impact on adoption.

Amendment to IAS 16 - Property, plant and equipment. The amendments prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in a manner intended by management. Instead an entity recognises the proceeds from selling such items, and the cost of producing these items, in profit or loss. (i)

The Company has considered the amendment and assessed that it will have no material impact on adoption.

Amendment to IAS 37 – Provisions, Contingent Liabilities and Contingent Assets. The amendments specify which costs should be included in an entity's assessment of whether a contract will be loss making.

The Company has considered the amendment and assessed that it will have no material impact on adoption.

(i) Effective for annual periods beginning on or after January 1, 2022

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

3. Application of new and revised standards

The following standards became effective for annual periods beginning on or after January 1, 2020. The Company adopted these standards in the current period and they did not have a material impact on its condensed consolidated interim financial statements unless specifically mentioned below.

• Amendment to IFRS 3 Business Combinations. The amendment to the definition of a business confirmed that a business must include inputs and a process and clarified that the process must be substantive and that the inputs and process must together significantly contribute to creating outputs. Furthermore, the amendment narrowed the definition of a business by focusing the definition of outputs on goods and services provided to customers and other income from ordinary activities, rather than providing dividends or other economic benefits directly to investors or lowering costs.
• Amendment to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. The amendments clarify and align the definition of 'material' and provide guidance to help improve consistency in the application of that concept whenever it is used in IFRS Standards.
• Amendment to IFRS 16 Leases. The amendment relates to providing lessee's with an exemption from assessing whether a COVID-19 related rent concession (a rent concession that reduces lease payments due on or before June 30, 2021) is a lease modification.

4. Investment in joint venture

Kamoa Holding Limited ("Kamoa Holding"), a joint venture between the Company and Zijin Mining Group Co., Ltd. ("Zijin"), holds a direct 80% interest in the Kamoa-Kakula Project. The Company holds an effective 39.6% interest in the Project through its 49.5% shareholding in Kamoa Holding. Zijin also holds 49.5% of Kamoa Holding while the remaining 1% share interest is held by privately-owned Crystal River Global Limited ("Crystal River") (see Note 9). The DRC government holds the remaining 20% of the Kamoa-Kakula Project. The Project is independently ranked as the world's fourth largest copper deposit by international mining consultant Wood Mackenzie.

On February 6, 2019, the Company announced the results from the Kakula 2019 pre-feasibility study (PFS) at the Kamoa-Kakula Project. The study assessed the potential development of the Kakula Deposit as a six million tonne per annum (Mtpa) mining and processing complex, which the Kamoa-Kakula Project is currently developing. The Kakula mill will be constructed in two modules of 3.8 Mtpa each as the mining operations ramp-up, with first copper concentrate production at the Kamoa-Kakula Project currently planned for the third quarter of 2021.

The costs associated with mine development at the Kamoa-Kakula Project's Kansoko and Kakula sites are capitalized as property, plant and equipment in a subsidiary of Kamoa Holding. Expenditure attributable to exploration is expensed in 2020.

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

4. Investment in joint venture (continued)

Company's share of comprehensive loss from joint venture

The following table summarizes the Company's share of Kamoa Holding's total comprehensive loss for the periods ended June 30, 2020 and June 30, 2019.

	Three months ended		Six months endedJune 30,
	June 30,
	2020	2019	2020	2019
	$'000	$'000	$'000	$'000
Finance costs	18,711	17,025	38,150	33,266
Exploration expenses	2,338	3,673	4,965	7,428
Foreign exchange (gain) loss	(28)	23	102	50
Finance income	(1,193)	(1,273)	(2,852)	(2,507)
Loss before taxes	19,828	19,448	40,365	38,237
Deferred tax recovery (i)	(4,431)	(4,654)	(9,167)	(9,367)
Loss after taxes	15,397	14,794	31,198	28,870
Non-controlling interest of Kamoa Holding (ii)	(2,068)	(2,172)	(4,278)	(4,371)
Total comprehensive loss for the period	13,329	12,622	26,920	24,499
Company's share of loss from joint venture
(49.5%)	6,597	6,248	13,325	12,127

(i) Following the release of the pre-feasibility study of the Kakula Copper mine in February 2019, the Company considers it probable that taxable profits will be available against which previously unrecognized deductible temporary differences can be utilized.

(ii) The DRC government holds a direct 20% interest in the Kamoa-Kakula Project. A 5%, nondilutable interest in the project was transferred to the DRC government on September 11, 2012 for no consideration, pursuant to the 2002 DRC mining code. Following the signing of an agreement in November 2016, an additional 15% interest in the project was transferred to the DRC government.

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

4. Investment in joint venture (continued)

Net assets of the joint venture

The assets and liabilities of the joint venture were as follows:

	June 30, 2020		December 31, 2019
	100%	49.5%	100%	49.5%
	$'000	$'000	$'000	$'000
Assets
Property, plant and equipment	952,270	471,374	727,391	360,059
Mineral property	802,021	397,000	802,021	397,000
Deferred tax asset	136,651	67,642	127,484	63,105
Long term loan receivable	130,164	64,431	126,012	62,376
Prepaid expenses	114,732	56,792	77,844	38,533
Cash and cash equivalents	84,481	41,818	73,968	36,614
Indirect taxes receivable	65,656	32,500	47,233	23,380
Non-current inventory	38,553	19,084	9,188	4,548
Right-of-use asset	26,455	13,095	30,128	14,913
Consumable stores	22,110	10,945	8,987	4,449
Non-current deposits	1,289	638	1,289	638
Liabilities
Shareholder loans	(1,839,693)	(910,648)	(1,484,737)	(734,945)
Trade and other payables	(67,103)	(33,216)	(54,005)	(26,733)
Lease liability	(26,599)	(13,166)	(30,211)	(14,954)
Rehabilitation provision	(15,321)	(7,584)	(5,727)	(2,835)
Non-controlling interest	(94,365)	(46,711)	(98,644)	(48,829)
Net assets of the joint venture	331,301	163,994	358,221	177,319

Investment in joint venture

	June 30,	December 31,
	2020	2019
	$'000	$'000
Company's share of net assets of the joint venture	163,994	177,319
Loan advanced to the joint venture	911,016	735,317
	1,075,010	912,636

The Company earns interest at USD 12 month LIBOR plus 7% on the loan advanced to the joint venture (see Note 25). If there is residual cash flow in Kamoa Holding, such cash shall be required to be utilized for the repayment of the then outstanding loan amount of each lender, on a pro-rata basis. No repayment is required in the absence of residual cash flow.

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

4. Investment in joint venture (continued)

Commitments in respect of joint venture

The Company is required to fund its Kamoa Holding joint venture in an amount equivalent to its proportionate shareholding interest. The following table summarizes the Company's proportionate share of the joint venture's commitments:

	Less than			After 5
	1 year	1 - 3 years	4 - 5 years	years	Total
	$'000	$'000	$'000	$'000	$'000
Civil construction and supplies	103,082	-	-	-	103,082
Advancement of loan (i)	65,963	-	-	-	65,963
Kakula decline development	22,152	-	-	-	22,152
Mine equipment acquisitions	13,382	-	-	-	13,382
Logistics services	14,040				14,040
Power infrastructure	7,462	-	-	-	7,462
Site catering	1,509	-	-	-	1,509
Other commitments	26,769	-	-	-	26,769
	254,359	-	-	-	254,359

(i) On March 21, 2014, a financing agreement was entered into between a subsidiary of Kamoa Holding and La Société Nationale d'Electricité SARL ("SNEL") relating to the first stage upgrade of two existing hydroelectric power plants in the DRC to feed up to 113 MW into the national power supply grid and for the supply of electricity to the Kamoa-Kakula Project.

Under the agreement, the subsidiary of Kamoa Holding agreed to provide a loan relating to the power upgrade, which is estimated to be $141 million (including a $4.5 million pre-finance loan), but is capped at a maximum commitment of $250 million. The loan advanced as at June 30, 2020 by the subsidiary of Kamoa Holding amounted to $116.7 million (December 31, 2019: $115.2 million).

The term for repayment of accrued interest and future costs is estimated to be 15 years, beginning after the expiry of a two year grace period from the signing date of the agreement. The actual repayment period will ultimately depend on the amount actually financed and on the amounts deducted from electricity bills based on a fixed percentage of 40% of the actual bill as per the loan repayment terms. Interest is earned at a rate of USD 6 month LIBOR + 3%. The Kamoa-Kakula Project will be given a priority electricity right by which SNEL commits to make available as per an agreed power requirements schedule, sufficient energy from its grid to meet the energy needs of the project and following the upgrade, on an exclusivity and priority basis, up to 200 MW depending on the production and mine expansion scenarios.

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

5. Property, plant and equipment

								Assets
				Office	Motor	Plant and	Mining	under
	Land	Buildings	Aircraft	equipment	vehicles	equipment	infrastructure	construction	Total
	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000
June 30, 2020
Cost
Beginning of the year	2,217	13,561	-	7,040	3,486	34,095	5,774	377,912	444,085
Additions	-	-	2,375	224	74	8	-	19,385	22,066
Borrowing costs capitalized	-	-	-	-	-	-	-	1,111	1,111
Disposals	-	-	-	(58)	-	(11)	-	(1,578)	(1,647)
Transfers	-	-	-	53	-	-	-	(53)	-
Foreign exchange translation	(426)	(909)	(93)	(1,000)	(178)	(318)	(1,108)	(48,821)	(52,853)
End of the period	1,791	12,652	2,282	6,259	3,382	33,774	4,666	347,956	412,762
Accumulated depreciation
and impairment
Beginning of the year	-	1,610	-	4,501	2,019	13,962	850	-	22,942
Depreciation	-	194	20	552	159	3,039	79	-	4,043
Disposals	-	-	-	(49)	-	-	-	-	(49)
Foreign exchange translation	-	(173)	-	(656)	(75)	(168)	(166)	-	(1,238)
End of the period	-	1,631	20	4,348	2,103	16,833	763	-	25,698
Carrying value
Beginning of the year	2,217	11,951	-	2,539	1,467	20,133	4,924	377,912	421,143
End of the period	1,791	11,021	2,262	1,911	1,279	16,941	3,903	347,956	387,064

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

5. Property, plant and equipment (continued)

							Assets
				Office	Motor	Plant and	Mining	under
	Land	Buildings	Aircraft	equipment	vehicles	equipment	infrastructure	construction	Total
	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000
December 31, 2019
Cost
Beginning of the year	2,145	11,704	-	6,452	3,367	21,098	5,443	268,192	318,401
Additions	-	1,477	-	1,147	216	17,474	143	100,061	120,518
Borrowing costs capitalized	-	-	-	-	-	-	-	2,480	2,480
Disposals	-	-	-	(1,017)	(127)	(5,064)	-	-	(6,208)
Transfers	-	-	-	251	-	532	-	(783)	-
Foreign exchange translation	72	380	-	207	30	55	188	7,962	8,894
End of the year	2,217	13,561	-	7,040	3,486	34,095	5,774	377,912	444,085
Accumulated depreciation
and impairment
Beginning of the year		1,223	-	4,571	1,792	15,217	642	-	23,445
Depreciation	-	341	-	823	325	3,768	181	-	5,438
Disposals	-	-	-	(1,014)	(111)	(5,055)	-	-	(6,180)
Foreign exchange translation	-	46	-	121	13	32	27	-	239
End of the year	-	1,610	-	4,501	2,019	13,962	850	-	22,942
Carrying value
Beginning of the year	2,145	10,481	-	1,881	1,575	5,881	4,801	268,192	294,956
End of the year	2,217	11,951	-	2,539	1,467	20,133	4,924	377,912	421,143

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

5. Property, plant and equipment (continued)

Assets under construction includes development costs capitalized as property, plant and equipment which are costs incurred to obtain access and to provide facilities for extracting, treating, gathering, transporting and storing the minerals. Costs incurred at the Platreef Project are deemed necessary to bring the Project to commercial production and are therefore capitalized (see Note 6). Until December 31, 2019, costs incurred at the Kipushi Project were also deemed necessary to bring the project to commercial production and were therefore capitalized. The Kipushi Project was placed under care and maintenance during Q1 2020, therefore all costs incurred for the six months ended June 30, 2020 have been expensed.

Borrowing costs capitalized includes the interest incurred and the low interest loan accretion on the loan payable to ITC Platinum Development Limited (see Note 15(i)).

Assets pledged as security

Buildings with a carrying amount of $8.9 million (December 31, 2019: $9.5 million) have been pledged to secure borrowings of the Company (see Note 15(ii)). The buildings have been pledged as security for bank loans under a mortgage. The Company is not allowed to pledge these assets as security for other borrowings or to sell them to another entity.

6. Mineral properties and exploration and project expenditure

Mineral properties

The following table summarizes the carrying values of the Company's mineral property interests as described below:

	June 30,	December 31,
	2020	2019
	$'000	$'000
Platreef property, South Africa (a)	6,940	6,940
Kipushi Properties, Democratic Republic of Congo (b)	252,337	252,337
Other properties (c)	5,047	5,047
	264,324	264,324

Costs directly related to the acquisition of mineral properties are capitalized as mineral properties on a property by property basis, whereas development costs are capitalized as property, plant and equipment and are costs incurred to obtain access and to provide facilities for extracting, treating, gathering, transporting and storing the minerals. Development costs are capitalized to the extent that they are necessary to bring the property to commercial production.

(a) Platreef property

Construction of the planned Platreef mine is underway on the Company's discovery of palladium, platinum, nickel, copper, gold and rhodium on the Northern Limb of South Africa's Bushveld Igneous Complex approximately 8 km from Mokopane and 280 km northeast of Johannesburg, South Africa.

In November 2014 the mining right for the development and operation of the Company's Platreef mining project was notorially executed. The mining right authorizes the Company to mine and process platinum-group metals, nickel, copper, gold, silver, cobalt, iron, vanadium and chrome at its Platreef discovery. The mining right was issued for an initial period of 30 years and may be renewed for further periods, each of which may not exceed 30 years at a time, in accordance with the terms of section 24 of the Mineral and Petroleum Resources Development Act of South Africa.

Notes to the condensed consolidated interim financial statements June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

6. Mineral properties and exploration and project expenditure (continued)

(a) Platreef property (continued)

The Company announced the positive results of the pre-feasibility study for the planned first phase of the Platreef Project's platinum-group metals, nickel, copper and gold mine in South Africa in January 2015 and the independent, definitive feasibility study (DFS) in July 2017.

A Japanese consortium of ITOCHU Corporation, Japan Oil, Gas and Metals National Corporation; and Japan Gas Corporation holds an effective 10% interest in the Platreef Project. The Company transferred an additional 26% of Platreef to a broad-based black economic empowerment (B-BBEE) special purpose vehicle in compliance with South African ownership requirements.

(b) Kipushi properties

The Kipushi Project is a past-producing, high-grade underground zinc-copper-silver-leadgermanium mine in the Central African Copperbelt, in Haut-Katanga Province, Democratic Republic of Congo ("DRC"). The Kipushi Project lies adjacent to the town of Kipushi and the border with Zambia, and about 30 km southwest of the provincial capital of Lubumbashi. Ivanhoe Mines and La Générale des Carrières et des Mines SARL ("Gecamines") own 68% and 32% of the Kipushi Project respectively, through their holdings in Kipushi Corporation SA ("Kipushi"), the mining rights holder.

Ivanhoe Mines' interest in Kipushi was acquired in November 2011 and comprises mining rights for zinc, copper and cobalt as well as the underground workings and related infrastructure, inclusive of a series of vertical mine shafts.

Costs incurred at the Kipushi Project subsequent to the finalization of its pre-feasibility study in December 2017, were capitalized as property, plant and equipment until December 31, 2019. In response to government-imposed travel restrictions and emergency protocols being introduced worldwide due to the COVID-19 pandemic, Kipushi has temporarily suspended operations in order to reduce the risk to the workforce and local communities. The project is maintaining a small workforce to conduct care and maintenance activities, and to maintain pumping operations. All costs incurred for the six months ended June 30, 2020 have been expensed.

(c) Other properties

The Company's DRC exploration group is targeting Kamoa-Kakula style copper mineralization through a regional drilling program on its 100% owned Western Foreland exploration licences, located to the north, south and west of the Kamoa-Kakula Project.

(d) Kamoa-Kakula properties

The Company is a joint venturer in the Kamoa-Kakula Project which is located within the Central African Copperbelt in Lualaba Province, DRC. The Kamoa-Kakula Project lies approximately 25 km west of the town of Kolwezi, and about 270 km west of Lubumbashi (see Note 4).

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

7. Loans receivable

	June 30,	December 31,
	2020	2019
	$'000	$'000
Loan to HPX (i)	54,729	52,740
Social development loan (ii)	40,240	38,963
Loan to Nzuri Exploration Holding Company Pty Ltd (iii)	327	252
Other loans receivable	188	-
Loss allowance - Loan to HPX	(184)	-
Loss allowance - Social development loan	(523)	-
	94,777	91,955
Non-current loans receivable	40,232	91,955
Current loans receivable	54,545	-
	94,777	91,955

(i) In April 2019, the Company extended a secured loan of $50 million to High Power Exploration Inc. (HPX). The loan receivable has a two-year maturity and earns interest at a rate of 8% per annum. Interest of $2.0 million was earned during the six months ended June 30, 2020 (see Note 25).

The principal amount of the loan and accrued interest is convertible in whole, or in part, by Ivanhoe at its sole discretion into shares of treasury common stock of HPX and/or a subsidiary of HPX. The loan is secured by a pledge of shares of an HPX subsidiary in the United States which is pursuing a Tier One copper-gold exploration and development project.

(ii) A long term loan receivable from Gecamines of $10 million was ceded to the Company on completion of the purchase of Kipushi on November 28, 2011, by the seller. An additional $20 million was requested and advanced to Gecamines during November 2012.

The loan receivable is unsecured and earns interest at USD 12 month LIBOR plus 3%. Repayment will be made by offsetting the loan against future royalties and dividends payable to Gecamines from future profits earned at Kipushi. The fair value of the receivable at acquisition date was estimated by the Company by calculating the present value of the future expected cash flows using an effective interest rate of 9.2%. Interest of $1.3 million was earned during the six months ended June 30, 2020 (see Note 25).

(iii) In September 2019, the Company, through its wholly owned subsidiary, Ivanhoe DRC Holding Limited, extended a loan to Nzuri Exploration Holding Company Pty Ltd ("Nzuri"). Additional funding of $0.1 million was provided during the six months ended June 30, 2020. The loan was advanced to fund exploration activities of a subsidiary of Nzuri in the DRC. The Company has a 10% equity investment in Nzuri (see Note 11).

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

8. Leases

Right-of-use asset

	June 30,	December 31,
	2020	2019
	$'000	$'000
Rented surface infrastructure and equipment (Kipushi) (i)	12,098	12,582
Office building (ii)	1,681	2,339
Other properties	79	175
	13,858	15,096

(i) A right of use asset is recognized in terms of IFRS 16 for the use of the surface infrastructure and equipment at the Kipushi mine.

(ii) The Company leases an office building in Sandton, South Africa.

Lease liability

	June 30,	December 31,
	2020	2019
	$'000	$'000
Rented surface infrastructure and equipment (Kipushi) (i)	12,869	13,007
Office building (ii)	1,381	1,943
Other properties	1	30
Non-current lease liability	14,251	14,980
Rented surface infrastructure and equipment (Kipushi) (i)	274	272
Office building (ii)	377	447
Other properties	86	152
Current lease liability	737	871

(i) The lease liability was initially measured at the present value of the lease payments payable over the life of mine and has been discounted at an incremental borrowing rate of 8%. The lease payments have been determined in accordance with the contract, which allocates a fixed rate monthly and it has been estimated that the lease will continue for the duration of the life of mine.

(ii) The lease liability was initially measured at the present value of the lease payments payable over a lease term of six years and has been discounted at an incremental borrowing rate of 10.25%. The lease payments have been determined in accordance with the contract which includes an escalation clause of 7.5% per annum.

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

8. Leases (continued)

Amounts recognized in the statement of comprehensive income:

	Three months endedJune 30,		Six months endedJune 30,
	2020	2019	2020	2019
	$'000	$'000	$'000	$'000
Depreciation on right-of-use assets (i)	79	98	163	222
Interest on lease liability (ii)	25	(18)	52	5
	104	80	215	227

• (i) Included in other expenditure on the condensed consolidated interim statement of comprehensive income. Right-of-use assets are depreciated over the term of the lease on a straight line basis.
• (ii) Included as finance costs on the condensed consolidated interim statement of comprehensive income and as interest paid in the operating activities section of the condensed consolidated interim statement of cash flows.

9. Promissory note receivable

The Company has the following promissory note receivable:

	June 30,	December 31,
	2020	2019
	$'000	$'000
Promissory note receivable from Crystal River	19,688	16,799
Loss allowance	(13)	-
	19,675	16,799

The promissory note receivable with a carrying value of $19.7 million is a non-interest-bearing, 10 year promissory note, of which $8.3 million is receivable by the Company as the purchase consideration for selling 1% of its share in Kamoa Holding to Crystal River (see Note 4). The remaining $11.4 million is receivable for subsequent funding provided to Kamoa Holding on Crystal River's behalf. The promissory note is payable on the earlier of December 8, 2025 or the next business day following the completion of the sale, transfer or disposition of the shares held by Crystal River in Kamoa Holding.

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

10. Other assets

	June 30,	December 31,
	2020	2019
	$'000	$'000
Prepayments related to bulk power supply (i)	2,654	3,284
Deposits	1,558	1,534
Other non-current prepayments	32	8
	4,244	4,826

(i) Advances of $2.7 million (December 31, 2019: $3.3 million) paid to Eskom, the South African state-owned electricity provider, in preparation for the construction of additional bulk power lines which will provide electricity to the Platreef project.

11. Investments

	June 30,	December 31,
	2020	2019
	$'000	$'000
Fair value through profit or loss
Investment in unlisted shares (i)	655	655
Investment in listed shares (ii)	710	1,140
	1,365	1,795
Non-current investments	655	655
Current investments	710	1,140
	1,365	1,795

• (i) On September 12, 2019 the Company, through its wholly owned subsidiary, Ivanhoe DRC Holding Limited, subscribed for 10% of the ordinary shares of Nzuri Exploration Holding Company Pty Ltd ("Nzuri"). Nzuri is an Australian company, a subsidiary of which is conducting mining exploration activities in the DRC.
• (ii) The Company holds listed shares which have been classified as financial assets at fair value through profit or loss. The trading value of the listed shares as at June 30, 2020 is $0.7 million (December 31, 2019: $1.1 million). A loss of $0.4 million on the fair valuation of the financial asset was recognized for the six months ended June 30, 2020 (June 30, 2019: gain of $0.1 million).

12. Cash and cash equivalents

	June 30,	December 31,
	2020	2019
	$'000	$'000
Cash and cash equivalents	406,114	702,810
Short-term deposits	90,070	-
	496,184	702,810

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

13. Prepaid expenses

	June 30,	December 31,
	2020	2019
	$'000	$'000
Prepaid insurance	685	823
Advance payments to suppliers	370	379
Deposits	223	457
Other prepayments	751	980
Advance payment on shaft construction	-	700
	2,029	3,339

Prepaid expenses are amounts paid in advance which give the Company rights to receive future goods or services.

14. Other receivables

	June 30,	December 31,
	2020	2019
	$'000	$'000
Accounts receivable	3,235	2,624
Administration consulting receivable from joint venture	2,389	3,448
Refundable taxes (i)	1,441	1,379
Other	393	585
Loss allowance	(1)	-
	7,457	8,036

(i) Refundable taxes are net of an impairment provision for value-added taxes receivable in foreign jurisdictions where recoverability of those taxes are uncertain.

15. Borrowings

	June 30,	December 31,
	2020	2019
	$'000	$'000
Unsecured - at amortized cost
Loans from other entities (i)	30,785	29,674
Secured - at amortized cost
Citi bank loan (ii)	3,990	4,230
	34,775	33,904
Non-current borrowings	30,785	29,674
Current borrowings	3,990	4,230
	34,775	33,904

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

15. Borrowings (continued)

• (i) On June 6, 2013, the Company, through its subsidiary Ivanplats (Pty) Ltd, ("Ivanplats") the owner of the Platreef Project, became party to a $28.0 million loan payable to ITC Platinum Development Limited. The loan is repayable only once Ivanplats has residual cashflow, which is defined in the loan agreement as gross revenue generated by Ivanplats, less all operating costs attributable thereto, including all mining development and operating costs. The loan incurs interest of USD 3 month LIBOR plus 2% calculated monthly in arrears. Interest is not compounded. Using prevailing market interest rates for an equivalent loan of USD 3 month LIBOR plus 7% at June 6, 2013, the carrying value of the loan as at June 30, 2020, is estimated at $30.8 million (December 31, 2019: $29.7 million) with a contractual amount due of $34.2 million (December 31, 2019:$33.8 million). The difference of $3.4 million (December 31, 2019: $4.1 million) between the contractual amount due and the carrying value of the loan is the benefit derived from the low-interest loan. Interest of $0.4 million was recognized during the six months ended June 30, 2020 and was capitalized as borrowing costs together with the low interest loan accretion of $0.7 million.
• (ii) The Citi bank loan of $4.0 million (£3.2 million) is secured by the Rhenfield property (see Note 27). The loan is an interest only term loan repayable at August 31, 2020, and incurs interest at a rate of GBP 1 month LIBOR plus 1.90% payable monthly in arrears. The interest expense incurred for the six months ended June 30, 2020 amounted to $0.1 million.

16. Advances payable

	June 30,	December 31,
	2020	2019
	$'000	$'000
Advances payable to Gecamines	2,729	2,661
	2,729	2,661

Advances payable to Gecamines are unsecured and bear interest at USD 12 month LIBOR plus 4% and represent the loan advanced to Kipushi by Gecamines prior to the acquisition of Kipushi by the Company.

17. Trade and other payables

	June 30,	December 31,
	2020	2019
	$'000	$'000
Trade accruals	8,922	13,241
Trade payables	3,105	8,097
Payroll tax and other statutory liabilities	480	1,613
Other payables	71	4
Indirect taxes payable	21	70
	12,599	23,025

The Company has policies in place to ensure trade and other payables are paid within agreed terms.

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

18. Cash settled share-based payment liability

	June 30,	December 31,
	2020	2019
	$'000	$'000
Balance at the beginning of the year	4,026	3,349
Vesting of the option liability (B-BBEE transaction expense)	295	677
Balance at the end of the period	4,321	4,026

On June 26, 2014, the Company entered into the Platreef B-BBEE transaction where it sold a 26% interest in the Platreef Project for which it has recognized a cash-settled share-based payment liability. The liability is valued using an option pricing model taking into account the terms and conditions on which the right was granted (see Note 22).

19. Share capital

(a) Shares issued

The Company is authorized to issue an unlimited number of Class A Shares, an unlimited number of Class B Shares (together with the Class A Shares, the "common shares") and an unlimited number of Preferred Shares.

As at June 30, 2020, 1,200,156,763 (December 31, 2019: 1,196,109,399) Class A Shares, nil Class B Shares and nil Preferred Shares were issued and outstanding. All shares in issue have been fully paid.

On August 16, 2019, the Company issued 153,821,507 common shares to CITIC Metal Africa Investments Limited upon the completion of a private placement at a price of C$3.98 per unit for gross proceeds of C$612 million ($459 million). Issue costs amounted to $0.3 million. A further 16,754,296 common shares were issued to Zijin as an anti-dilution subscription at the same price per unit for additional proceeds of C$67 million ($50 million).

On May 11, 2020, the Company concluded a purchase and sale agreement for a Gulfstream Aerospace G-IV aircraft. The Company issued 1,000,000 common shares at a price of C$2.82 per unit as purchase consideration for the aircraft (see Note 29).

(b) Options

Share options are granted at an exercise price equal to the weighted average price of the shares on the TSX for the five days immediately preceding the date of the grant. As at June 30, 2020, 65,075,900 share options have been granted and exercised, and 27,174,488 have been granted and are outstanding.

All outstanding share options granted before December 2019 vest in four equal parts, commencing on the one year anniversary of the date of grant and on each of the three anniversaries thereafter. The maximum term of these options is five years. All share options granted during and after December 2019 vest in three equal parts, commencing on the one year anniversary of the date of grant and on each of the two anniversaries thereafter. The maximum term of these options awarded is seven years.

A summary of changes in the Company's outstanding share options is presented below. The changes for 2020 represent the period January 1, 2020 to June 30, 2020, while the changes for 2019 represent the period January 1, 2019 to December 31, 2019.

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

19. Share capital (continued)

(b) Options (continued)

			2020		2019
		Weighted			Weighted
		average			average
	Number of	exercise		Number of	exercise
	options		price	options	price
			$		$
Balance at the beginning of year	17,550,000		1.90	19,900,000	1.18
Granted	10,034,900		3.02	7,500,000	2.45
Exercised	(368,400)		0.79	(9,837,500)	0.86
Expired		-	-	-	-
Forfeited	(42,012)		3.02	(12,500)	0.47
Balance at the end of the period	27,174,488		2.33	17,550,000	1.90
million). An additional expense of $2.5 million was recognized in the six months ended June30, 2020 (June 30, 2019: $1.5 million) relating to options granted during prior years.The following weighted average assumptions were used for the share option grants in 2020:					2020
Risk free interest rate					1.59%
Expected volatility (i)					46.50%
Expected life					3.5
Expected dividends					$Nil
(i) Expected volatility was based on the historical volatility of a peer company analysis.
A reconciliation of the number of share options exercised to shares issued for the six monthsended June 30, 2020 and six months ended June 30, 2019 is presented below:
		2020			2019
	Number of	Number of		Number of
	options	shares		options	Number of
	exercised	issued		exercised	shares issued
Ordinary exercise	368,400	368,400		2,030,000	2,030,000
Exercised by ShareAppreciation Rights (i)	-	-		1,987,500	1,405,424
Total	368,400	368,400		4,017,500	3,435,424
(i)In terms of the equity incentive plan, participants have the right in lieu of receiving theshares to which the options relate, to receive the number of shares calculated bydeducting the exercise price from the fair market value of the shares and dividing thisresult by the fair market value of the shares immediately prior to exercise.

	2020
Risk free interest rate	1.59%
Expected volatility (i)	46.50%
Expected life	3.5
Expected dividends	$Nil

		2020		2019
	Number of	Number of	Number of
	options	shares	options	Number of
	exercised	issued	exercised	shares issued
Ordinary exercise	368,400	368,400	2,030,000	2,030,000
Exercised by Share
Appreciation Rights (i)	-	-	1,987,500	1,405,424
Total	368,400	368,400	4,017,500	3,435,424

Notes to the condensed consolidated interim financial statements June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

19. Share capital (continued)

(b) Options (continued)

The following table summarizes information about share options outstanding and exercisable as at June 30, 2020:

		Options outstanding	Options exercisable
		Weighted		Weighted
		average		average
	Number of	exercise	Number of	exercise
Expiry date	shares	price	shares	price
		$		$
December 15, 2020	3,857,500	0.47	3,857,500	0.47
May 29, 2021	933,003	3.07	933,003	3.07
May 31, 2021	4,258,565	2.49	4,258,565	2.49
June 30, 2021	485,008	3.02	485,008	3.02
March 31, 2023	4,270,235	2.61	4,270,235	2.61
May 7, 2023	375,000	2.07	125,000	2.07
December 4, 2023	2,000,000	1.98	500,000	1.98
January 12, 2024	1,449,100	1.90	324,100	1.90
December 5, 2026	2,000,000	2.59	-	2.59
January 13, 2027	7,546,077	3.02	-	3.02
	27,174,488	2.33	14,753,411	2.02

(c) Restricted share units

The Company issues restricted share units ("RSUs") as a security based compensation arrangement. Each RSU represents the right of an eligible participant to receive one Class A Share.

RSUs vest in three equal parts, commencing on the initial vesting date established at grant and on each of the two anniversaries thereafter, subject to the satisfaction of any performance conditions.

A summary of changes in the Company's RSUs is presented below. The changes for 2020 represent the period January 1, 2020 to June 30, 2020, while the changes for 2019 represent the period January 1, 2019 to December 31, 2019.

	2020	2019
Balance at the beginning of the year	3,751,382	2,878,198
RSUs issued	1,069,211	2,098,333
RSUs vested	(2,678,964)	(1,210,540)
RSUs cancelled	(40,176)	(14,609)
Balance at the end of the period	2,101,453	3,751,382

An expense of $3.2 million will be amortized over the vesting period for the RSUs granted during the six months ended June 30, 2020 (June 30, 2019: $4.1 million), using the fair value of a common share at time of grant. The weighted average fair value of a common share at the time that the RSUs were granted in 2020 was $3.03 (2019: $1.98). An expense of $2.0 million was recognized for the period ended June 30, 2020 relating to RSU's which vested during the period (June 30, 2019: $1.8 million) (see Note 22).

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

19. Share capital (continued)

(d) Deferred share units

The Company issues deferred share units ("DSUs") as a security based compensation arrangement to non-executive directors of the Company. Each DSU represents the right of an eligible participant to receive one Class A Share.

A summary of changes in the Company's DSUs is presented below. The changes for 2020 represent the period January 1, 2020 to June 30, 2020, while the changes for 2019 represent the period January 1, 2019 to December 31, 2019.

	2020	2019
Balance at the beginning of the year	182,259	281,614
DSUs issued	267,450	130,621
DSUs vested	-	(216,016)
DSUs cancelled	-	(13,960)
Balance at the end of the period	449,709	182,259

An expense of $0.4 million was recognized for the DSUs granted during the period ended June 30, 2020 (June 30, 2019: $0.2 million). A gain of $0.1 million was recognized for DSUs granted during prior years due to a decrease in the company share price which resulted in a decrease in the deferred share unit liability. In accordance with the DSU plan, directors may elect to receive settlement of their DSU's in cash or shares. No DSU's have been settled in 2020.

20. Foreign currency translation reserve

	June 30,	December 31,
	2020	2019
	$'000	$'000
Balance at the beginning of the year	(30,857)	(38,845)
Exchange (loss) gain arising on translation of foreign
operations	(48,765)	7,988
Balance at the end of the period	(79,622)	(30,857)

Exchange differences relating to the translation of the results and net assets of the Company's foreign operations from their functional currencies to the Company's presentation currency are recognized directly in other comprehensive income (loss) and accumulated in the foreign currency translation reserve.

21. Non-controlling interests

	June 30,	December 31,
	2020	2019
	$'000	$'000
Balance at the beginning of the year	(84,954)	(77,932)
Share of total comprehensive loss for the period	(14,012)	(7,022)
Recognitionofnon-controllinginterestincorporationofon
subsidiaries	188	-
Balance at the end of the period	(98,778)	(84,954)

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

22. Share-based payments

The share-based payment expense of the Company is summarized as follows:

2020	2019
		2020	2019
	$'000	$'000	$'000
2,609	1,119	5,275	2,107
959	952	1,986	1,808
3,568	2,071	7,261	3,915
135	168	295	343
477	-	301	-
4,180	2,239	7,857	4,258
	$'000

Of the share-based payment expense recognized for the six months ended June 30, 2020, $0.3 million (2019: $0.3 million) related to the Platreef B-BBEE transaction, while $7.6 million (2019: $3.9 million) related to the expense for share options, restricted share units and deferred share units which have been granted to employees and directors of the Company and were recognized over the vesting period.

23. Foreign exchange (gain) loss

	Three months endedJune 30,		Six months endedJune 30,
	2020	2019	2020	2019
	$'000	$'000	$'000	$'000
Foreign exchange (gain) loss	(891)	(2,826)	2,263	(6,968)
	(891)	(2,826)	2,263	(6,968)

Included in the foreign exchange loss recognized for the six months ended June 30, 2020, was a loss of $2.0 million (2019: gain of $6.7 million) related to exchange loss (gain) on cash held in Canadian dollars.

24. Finance costs

The finance costs of the Company are summarized as follows:

		Three months ended		Six months ended
	June 30,		June 30,
	2020	2019	2020	2019
	$'000	$'000	$'000	$'000
Interest on borrowings (see Note 15)	549	632	1,161	1,305
Interest on advances payable (see Note 16)	31	40	68	83
Lease liability unwinding	25	(18)	52	5
Other financing costs	(7)	29	-	10
Borrowing costs capitalized (see Note 5)	(528)	(627)	(1,111)	(1,251)
	70	56	170	152

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

25. Finance income

Finance income is summarized as follows:

	Three months ended		Six months ended
		June 30,		June 30,
	2020	2019	2020	2019
	$'000	$'000	$'000	$'000
Interest on loan to joint venture (i)	(16,392)	(12,737)	(32,679)	(24,687)
Interest on bank balances	(644)	(2,780)	(3,537)	(6,079)
Interest on loan receivable - HPX (ii)	(994)	(723)	(1,989)	(723)
Interest on long term loan receivable -	(642)	(619)	(1,277)	(1,225)
Gecamines (iii)
	(18,672)	(16,859)	(39,482)	(32,714)

• (i) The Company earns interest at a rate of USD 12 month LIBOR plus 7% on the loan advanced to the Kamoa Holding joint venture (see Note 4).
• (ii) The Company earns interest at a rate of 8% per annum on the loan receivable from HPX (see Note 7).
• (iii) The Company earns interest at a rate of USD 12 month LIBOR plus 3% on the social development loan (see Note 7), although an effective interest rate of 9.2% was applied from initial recognition.

26. Other income

Other income is summarized as follows:

	Three months ended		Six months ended
		June 30,		June 30,
	2020	2019	2020	2019
	$'000	$'000	$'000	$'000
Administration consulting income (i)	(1,100)	(661)	(2,228)	(1,167)
Irrecoverable amounts	(107)	-	(117)	649
Other	885	56	154	53
	(322)	(605)	(2,191)	(465)

(i) Administration consulting income is fees charged to the Kamoa Holding joint venture for administration, accounting and other services performed for the joint venture (see Note 4).

27. Joint operations

The Company has a 50% interest in Rhenfield Limited, a British Virgin Islands registered company. Rhenfield Limited purchased buildings in London, England which the Company uses for office space. The buildings have a carrying value of $8.9 million (December 31, 2019: $9.5 million) and are included in property, plant and equipment (see Note 5).

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

28. Loss (profit) per share

The basic loss (profit) per share is computed by dividing the loss (profit) attributable to the owners of the Company by the weighted average number of common shares outstanding during the period. The diluted loss (profit) per share reflects the potential dilution of common share equivalents, such as outstanding stock options and restricted share units, in the weighted average number of common shares outstanding during the year, if dilutive. Outstanding stock options and restricted share units were anti-dilutive for the three and six months ended June 30, 2020.

	Three months endedJune 30,			Six months endedJune 30,
	2020	2019	2020	2019
	$'000	$'000	$'000	$'000
Basic loss (profit) per shareLoss (profit) attributable to
owners of the CompanyWeighted average number of	4,341	(3,889)	13,513	(9,841)
basic shares outstanding	1,199,177,155	1,018,733,746	1,198,236,716	1,016,339,443
Basic loss (profit) per share	0.00	(0.00)	0.01	(0.01)
Diluted loss (profit) per shareLoss (profit) attributable to
owners of the CompanyWeighted average number of	4,341	(3,889)	13,513	(9,841)
diluted shares outstanding	1,199,177,155	1,031,417,233	1,198,236,716	1,029,685,848
Diluted loss (profit) per share	0.00	(0.00)	0.01	(0.01)

The weighted average number of shares for the purpose of diluted profit per share reconciles to the weighted average number of shares used in the calculation of basic profit per share as follows:

		Three months endedJune 30,		Six months endedJune 30,
	2020	2019	2020	2019
Weighted average number ofbasic shares outstanding	1,199,177,155	1,018,733,746	1,198,236,716	1,016,339,443
Shares deemed to be issued forno consideration in respect of:
- stock options- restricted share units	--	9,248,3683,435,119	--	10,087,1223,259,283
Weighted average number ofdiluted shares outstanding	1,199,177,155	1,031,417,233	1,198,236,716	1,029,685,848

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

29. Related party transactions

The financial statements include the financial results of Ivanhoe Mines Ltd., its subsidiaries, joint ventures and joint operations listed in the following table:

		% equity interest
		as at
	Country of	June 30, December 31,
Name	Incorporation	2020	2019
Direct Subsidiaries
Ivanhoe Mines (Barbados) Limited	Barbados	100%	100% (i)
African Copperbelt Exploration Ltd.	Barbados	100%	100% (i)
Gabon Holding Company Ltd.	Barbados	100%	100% (i)
Ivanhoe Mines US LLC	United States of America	100%	100% (i)
Ivanhoe Mines UK Limited	United Kingdom	100%	100% (ii)
Ivanplats Holding SARL	Luxembourg	97%	97% (i)
Ivanhoe Mines Consulting Services	China	100%	100% (iv)
(Beijing) Co., Ltd
Indirect Subsidiaries
Ivanhoe DRC Holding Ltd.	Barbados	100%	100% (i)
Kipushi Holding Limited	Barbados	100%	100% (i)
Ivanhoe Mines DRC SARL	DRC	100%	100% (ii)
Ivanhoe Mines Exploration DRC SARL	DRC	100%	100% (iii)
Lufupa SASU	DRC	100%	100% (iii)
Magharibi Mining SAU	DRC	90%	90% (iii)
Makoko SA	DRC	90%	0% (iii)
Kengere Mining SA	DRC	75%	0% (iii)
Kipushi Corporation SA	DRC	68%	68% (iii)
Ivanhoe Gabon SA	Gabon	100%	100% (iii)
Ivanhoe (Namibia) (Pty) Ltd.	Namibia	100%	100% (iii)
Kamoa Services (Pty) Ltd.	South Africa	100%	100% (ii)
GB Mining & Exploration (SA) (Pty) Ltd. South Africa		100%	100% (iv)
Ivanhoe Mines SA (Pty) Ltd.	South Africa	100%	100% (ii)
Ivanplats (Pty) Ltd.	South Africa	64%	64% (iii)
Kico Services (Pty) Ltd.	South Africa	100%	100% (ii)
Ivanhoe (Zambia) Ltd.	Zambia	100%	100% (iii)
Joint ventures
Kamoa Holding Limited	Barbados	49.50%	49.50% (i)
Joint operations
Rhenfield Limited	British Virgin Islands	50%	50% (iv)

(i) This company acts as an intermediary holding company to other companies in the Group.

(ii) This company provides administration, accounting and other services to the Group on a costrecovery basis.

(iii) This company is incorporated with the intention of engaging in exploration, development and mining activities.

(iv) This is a special purpose entity that has been incorporated for a particular purpose.

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

29. Related party transactions (continued)

The following table summarizes related party income earned and expenses incurred by the Company, primarily on a cost-recovery basis, with companies related by way of directors or shareholders in common.

	Three months ended		Six months ended
	June 30,		June 30,
	2020	2019	2020	2019
	$'000	$'000	$'000	$'000
Global Mining Management Corporation (a)	1,763	1,139	2,354	2,104
Ivanhoe Capital Aviation Ltd. (b)	875	625	1,750	1,250
Ivanhoe Capital Services Ltd. (c)	139	77	272	210
Global Mining Services Ltd. (d)	256	(1)	364	23
Ivanhoe Capital Pte Ltd (e)	115	16	111	70
Ivanhoe Capital Corporation (UK) Limited (f)	4	5	2	-
Kamoa Holding Limited (g)	(16,392)	(12,737)	(32,679)	(24,687)
Kamoa Copper SA (h)	(1,767)	(1,209)	(3,937)	(2,161)
High Power Exploration Inc.(i)	(1,034)	(721)	(2,084)	(721)
Ivanhoe Mines Energy DRC Sarl (j)	(45)	(69)	(109)	(127)
GMM Tech Holdings Inc. (k)	(26)	9	388	322
HCF International Advisers (l)	-	294	-	497
	(16,112)	(12,572)	(33,568)	(23,220)
Salaries and benefits	1,941	1,129	2,608	2,106
Travel	1,011	671	1,890	1,357
Consulting	79	308	480	843
Office and administration	55	58	168	172
Finance income	(17,386)	(13,460)	(34,668)	(25,410)
Cost recovery and management fee	(1,812)	(1,278)	(4,046)	(2,288)
	(16,112)	(12,572)	(33,568)	(23,220)

The transactions summarized above were in the normal course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

As at June 30, 2020, trade and other payables included $0.4 million (December 31, 2019: $0.6 million) with regards to amounts due to parties related by way of director, officers or shareholder in common. These amounts are unsecured and non-interest bearing.

Amounts included in other receivables due from parties related by way of director, officers or shareholder in common as at June 30, 2020 amounted to $4.4 million (December 31 2019: $3.9 million).

On March 11, 2020, the Company entered into a purchase and sale agreement with ICA Global Services LLC ("ICA Global"), under which ICA Global agreed to sell a Gulfstream Aerospace G-IV aircraft to the Company for a purchase consideration equal to 1,000,000 Common Shares of the Company. The transaction closed on May 11, 2020 (see Note 19 (a)). ICA Global is a private company controlled by a director of the Company.

On June 30, 2020, Kipushi sold equipment to Kamoa Copper SA for proceeds of $1.6 million.

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

29. Related party transactions (continued)

• (a) Global Mining Management Corporation ("Global") is a private company based in Vancouver, Canada. The Company and a director of the Company hold an indirect equity interest in Global. Global provides administration, accounting and other services to the Company on a cost-recovery basis.
• (b) Ivanhoe Capital Aviation Ltd. ("Aviation") is a private company owned indirectly by a director of the Company. Aviation operates an aircraft for which the Company contributes toward the running costs.
• (c) Ivanhoe Capital Services Ltd. ("Services") is a private company owned indirectly by a director of the Company. Services provides salaries administration and other services to the Company in Singapore and Beijing on a cost-recovery basis.
• (d) Global Mining Services Ltd. ("GMS") is a private company incorporated in Delaware and is 100% owned by Global. GMS provides administration and other services to the Company on a cost-recovery basis.
• (e) Ivanhoe Capital Pte Ltd. ("Capital") is a private company owned indirectly by a director of the Company. Capital provides administration, accounting and other services in Singapore on a cost-recovery basis.
• (f) Ivanhoe Capital Corporation (UK) Ltd. ("ICC") is a private company 100% owned by a director of the Company. ICC provides administration, accounting and other services in the United Kingdom on a cost-recovery basis.
• (g) Kamoa Holding Limited ("Kamoa Holding") is a company registered in Barbados. The Company has an effective 49.5% ownership in Kamoa Holding. The Company earns interest on the loans advanced to Kamoa Holding (see Note 4).
• (h) Kamoa Copper SA ("Kamoa Copper") is a company incorporated in the DRC. The Company has an effective 39.6% ownership in Kamoa Copper (see Note 4). The Company provides administration, accounting and other services to Kamoa Copper on a cost-recovery basis.
• (i) High Power Exploration Inc. ("HPX") is a private company incorporated under the laws of Delaware, USA. HPX has members of executive management and directors in common with the Company. The Company extended a secured loan of $50 million to HPX. The loan receivable has a two-year maturity and earns interest at a rate of 8% per annum (see Note 7).
• (j) Ivanhoe Mines Energy DRC Sarl ("Energy") is a company incorporated in the DRC. The Company has an effective 49.5% ownership in Energy (see Note 4). The Company provides administration, accounting and other services to Energy on a cost-recovery basis.
• (k) GMM Tech Holdings Inc. ("GMM Tech") is a private company incorporated in British Columbia, Canada and is 100% owned by Global. GMM Tech provides information technology services to the Company on a cost-recovery basis.
• (l) HCF International Advisers ("HCF") is a corporate finance adviser specializing in the provision of advisory services to clients worldwide in the metals, mining, steel and related industries. HCF has a director in common with the Company and provides financial advisory services to the Company.

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

30. Cash flow information

Net change in working capital items:

		Three months ended		Six months ended
	June 30,		June 30,
	2020	2019	2020	2019
	$'000	$'000	$'000	$'000
Net decrease (increase) in
Prepaid expenses	707	721	1,310	1,181
Other receivables	(1,562)	122	579	2,334
Consumable stores	(30)	102	1	118
Net (decrease) increase in
Trade and other payables	(4,408)	1,141	(10,426)	(8,436)
	(5,293)	2,086	(8,536)	(4,803)

31. Financial instruments

(a) Fair value of financial instruments

The Company's financial assets and financial liabilities are categorized as follows:

		June 30,	December 31,
Financial instrument	Level	2020	2019
		$'000	$'000
Financial assets
Financial assets at fair value through profit or loss
Investment in listed entity	Level 1	710	1,140
Investment in unlisted entity	Level 3	655	655
Amortized cost
Loan advanced to joint venture	Level 3	911,016	735,317
Cash and cash equivalents		496,184	702,810
Loans receivable	Level 3	94,777	91,955
Promissory note receivable	Level 3	19,675	16,799
Other receivables		7,457	8,036
Financial liabilities
Amortized cost
Borrowings	Level 3	34,775	33,904
Trade and other payables	Level 3	12,599	23,025
Advances payable	Level 3	2,729	2,661

IFRS 13 - Fair value measurement, requires an explanation about how fair value is determined for assets and liabilities measured in the financial statements at fair value and established a hierarchy into which these assets and liabilities must be grouped based on whether inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's assumptions. The two types of inputs create the following fair value hierarchy:

• Level 1: observable inputs such as quoted prices in active markets;
• Level 2: inputs, other than the quoted market prices in active markets, which are observable, either directly and/or indirectly; and
• Level 3: unobservable inputs for the asset or liability in which little or no market data exists and therefore require an entity to develop its own assumptions.

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

31. Financial instruments (continued)

(a) Fair value of financial instruments (continued)

Investment in listed entity

The fair value is the market value of the listed shares at the end of the period.

Investment in unlisted entity

The Company acquired these shares on September 12, 2019. No significant changes occurred between acquisition date and June 30, 2020 and the Company has therefore determined that the purchase price approximates the fair value.

Loan advanced to the joint venture

Carrying amount is a reasonable approximation of fair value. The loan incurs interest at a variable rate of USD 12 month Libor plus 7% which approximates the current market interest rate.

Loans receivable (Loan to HPX)

Carrying amount is a reasonable approximation of fair value. The loan period is less than two years, the interest rate is considered to be an arm's length rate. Country risk is considered to be low and the loan is secured by a pledge of shares of an HPX subsidiary.

Loans receivable (Social development loan)

Carrying amount is a reasonable approximation of fair value. The fair value of the receivable at acquisition date was estimated by the Company by calculating the present value of the future expected cash flows using an effective interest rate of 9.2%.

Promissory note receivable

Carrying amount is a reasonable approximation of fair value. The creditworthiness of the promissory note holder is considered to be high (see Note 31(b)(ii)). The promissory note is payable on the earlier of December 8, 2025 or the next business day following the completion of the sale, transfer or disposition of the shares held by Crystal River in Kamoa Holding.

Other receivables

Carrying amount is a reasonable approximation of fair value due to the short term nature of the receivable (less than 1 month).

Borrowings (Loan from other entities)

Carrying amount is a reasonable approximation of fair value. The fair value of the loan is determined using a discounted future cashflow analysis based on an interest rate of USD 3 month Libor plus 7% and the loan is carried at this value (see Note 15(i)).

Borrowings (Loan from Citi Bank)

Carrying amount is a reasonable approximation of fair value due to its short term nature (repayable at August 31, 2020).

Trade and other payables

Carrying amount is a reasonable approximation of fair value due to the short term nature of the receivable (less than 1 month).

Advances payable

Carrying amount is a reasonable approximation of fair value. This loan bears interest at USD 12 month LIBOR plus 4% which approximates the current market interest rate.

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

31. Financial instruments (continued)

(b) Financial risk management objectives and policies

The risks associated with the Company's financial instruments and the policies to mitigate these risks are set out below. Management manages and monitors these exposures to ensure appropriate measures are implemented in a timely and effective manner.

(i) Foreign exchange risk

The Company incurs certain of its expenses in currencies other than the U.S. dollar. The Company also has foreign currency denominated monetary assets and liabilities. As such, the Company is subject to foreign exchange risk as a result of fluctuations in exchange rates. The Company enters into derivative instruments to manage foreign exchange exposure as deemed appropriate.

The carrying amount of the Company's foreign currency denominated monetary assets and liabilities at the respective statement of financial position dates are as follows:

	June 30,	December 31,
	2020	2019
	$'000	$'000
Assets
Canadian dollar	27,017	41,358
South African rand	20,629	24,386
British pounds	8,553	7,387
Australian dollar	709	1,141
Liabilities
British pounds	(8,075)	(7,008)
South African rand	(5,867)	(9,484)
Canadian dollar	(325)	(718)
Australian dollar	(22)	-

Foreign currency sensitivity analysis

The following table details the Company's sensitivity to a 5% increase or decrease in the U.S. dollar against the foreign currencies presented. The sensitivity analysis includes only outstanding foreign currency denominated monetary items not denominated in the functional currency of the Company or the relevant subsidiary and adjusts their translation at the end of the period for a 5% change in foreign currency rates. A positive number indicates a decrease in loss for the year where the foreign currencies strengthen against the U.S. dollar. The opposite number will result if the foreign currencies depreciate against the U.S. dollar.

	Six months ended,June 30,
	2020	2019
	$'000	$'000
Canadian dollar	1,335	6,118
Australian dollar	34	98
South African rand	(60)	(58)
British pounds	(1)	-

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

31. Financial instruments (continued)

• (b) Financial risk management objectives and policies (continued)
  • (ii) Credit risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. Credit risk for the Company is primarily associated with the loan to the joint venture, promissory note receivable, loans receivable, other receivables and cash and cash equivalents.

The Company reviews the recoverable amount of their financial assets at each statement of financial position date to ensure that adequate impairment losses are made for irrecoverable amounts. The Company has considered the requirement of IFRS 9 to recognize a loss allowance for expected credit losses on financial assets. The general approach was applied to these financial assets, where the 12 month expected credit losses are calculated. The Company did not apply lifetime expected credit losses as there has not been a significant increase in credit risk in 2020.

A significant increase in credit risk would include:

• Existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant change in the borrower's ability to meet its debt obligations.
• An actual or expected significant change in the operating results of the borrower.
• Significant increases in credit risk on other financial instruments of the same borrower.
• An actual or expected significant adverse change in the regulatory, economic, or technological environment of the borrower that results in a significant change in the borrower's ability to meet its debt obligations.
• Significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements, which are expected to reduce the borrower's economic incentive to make scheduled contractual payments or to otherwise have an effect on the probability of a default occurring.

The Company assesses whether an impairment is required on loan receivables. A range of cash flow scenarios are considered, taking into account forward looking information which may impact recoverability of loan receivables.

The loan advanced to the joint venture will be repaid as and when there is residual cash flow in Kamoa Holding. Due to the positive results of Kamoa-Kakula's PFS and Preliminary Economic Assessment, repayment of the loan is deemed to be highly probable.

The promissory note receivable will be repaid using proceeds from the sale of Crystal River's 1% stake in Kamoa Holding.

The principal amount of the loan receivable from HPX and accrued interest thereon, is convertible in whole, or part, by the Company at its sole discretion into shares of treasury common stock of HPX and/or a subsidiary of HPX. The loan is secured by a pledge of shares of an HPX subsidiary in the United States which is pursuing a Tier One copper-gold exploration and development project, into which the Company also may convert and acquire at least a 25% interest.

Repayment of the social development loan will be made by offsetting the loan against future royalties and dividends payable to Gecamines which arise from future profits to be earned at Kipushi.

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

31. Financial instruments (continued)

• (b) Financial risk management objectives and policies (continued)
  • (ii) Credit risk (continued)

The credit risk on cash and cash equivalents is limited because the cash and cash equivalents are composed of deposits with major banks who have investment grade credit ratings assigned by international credit ratings agencies and have low risk of default.

Other receivables is comprised primarily of administration consulting income from the joint venture and refundable taxes. The credit quality of these financial assets can be assessed by reference to historical information about counterparty default rates and adjusted to reflect current and forward-looking information, as well as macroeconomic factors affecting the ability of the parties to settle the receivables. The historical loss rates are negligible and therefore the expected credit losses relating to other receivables is also negligible.

The Company continues to monitor its credit risk and assess expected credit losses.

(iii) Liquidity risk

In the management of liquidity risk of the Company, the Company maintains a balance between continuity of funding and the flexibility through the use of borrowings. Management closely monitors the liquidity position and expects to have adequate sources of funding to finance the Company's projects and operations.

The following table details the Company's expected remaining contractual maturities for its financial liabilities. The table is based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to satisfy the liabilities.

	Less			More	Total un-
	than 1	1 to 3	3 to 12	than 12	discounted
	month	months	months	months	cash flows
	$'000	$'000	$'000	$'000	$'000
As at June 30, 2020
Non-current borrowings	-	-	-	34,193	34,193
Trade and other payables (a)	10,092	813	1,117	-	12,022
Lease liability	63	132	542	14,251	14,988
Current borrowings	-	3,990	-	-	3,990
As at December 31, 2019
Non-current borrowings	-	-	-	33,767	33,767
Trade and other payables (a)	18,960	1,002	1,376	-	21,338
Lease liability	80	151	640	14,980	15,851
Current borrowings	-	-	4,230	-	4,230-

(a) Trade and other payables in the above table excludes payroll tax, other statutory liabilities and indirect taxes payable.

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

31. Financial instruments (continued)

(b) Financial risk management objectives and policies (continued)

(iv) Interest rate risk

The Company's interest rate risk arises mainly from long term borrowings, the loans receivable and the loan advanced to the joint venture. The Company's main exposure to interest rate risk arises from the fact that the Company earns and incurs interest on interest rates linked to LIBOR.

If interest rates (including applicable LIBOR rates) had been 50 basis points higher or lower and all other variables were held constant the Company's loss for the six months ended June 30, 2020 would have decreased or increased by $4.8 million (June 30, 2019: $5.0 million) and is comprised as follows:

	Six months ended,
	June 30,
	2020	2019
	$'000	$'000
Cash and cash equivalents	2,481	1,904
Loan advanced to the joint venture (see Note 4)	1,996	2,898
Other interest bearing amounts	280	184
	4,757	4,986

32. Capital risk management

The Company includes as capital its common shares and share option reserve. The Company's objectives are to safeguard its ability to continue as a going concern in order to pursue the development of its mineral properties and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk.

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. Currently the Company has no cash inflows from operations. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue new debt and acquire or dispose of assets to satisfy cash requirements. In order to facilitate the management of its capital requirements, the Company prepares annual expenditure budgets that are updated as necessary depending on various factors, including capital deployment, results from the exploration and development of its properties and general industry conditions. The annual and updated budgets are approved by the Board of Directors.

In order to maximize ongoing development efforts, the Company does not pay dividends. The Company's investment policy is to invest its cash in highly liquid, short-term, interest-bearing investments with maturities of 90 days or less from the original date of acquisition, selected with regard to the expected timing of expenditures from operations.

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

33. Commitments and contingencies

Due to the size, complexity and nature of the Company's operations, various legal and tax matters arise in the ordinary course of business. The Company accrues for such items when a liability is both probable and the amount can be reasonably estimated. In the opinion of management, these matters will not have a material effect on the condensed consolidated interim financial statements for the Company.

As at June 30, 2020, the Company's commitments that have not been disclosed elsewhere in the condensed consolidated interim financial statements are as follows:

	Less than			After
		1 year 1 - 3 years	4 - 5 years	5 years	Total
	$'000	$'000	$'000	$'000	$'000
As at June 30, 2020Shaft 1 construction (Platreef project)	6,875	-	-	-	6,875
As at December 31, 2019Shaft 1 construction (Platreef project)	12,964	-	-	-	12,964

The Company contracted Moolmans (formerly known as Aveng Mining) for the sinking of shaft 1 at the Platreef Project. Sinking of shaft 1 has been successfully completed to its final depth of 996 metres below surface. Further commitments in relation to the change-over of Shaft 1 as the project's initial production shaft under the phased development plan were undertaken during the six months ended June 30, 2020.

The commitments in respect of the joint venture are set out in Note 4.

34. Segmented information

At June 30, 2020, the Company has four reportable segments, being the Platreef property, Kamoa Holding joint venture, Kipushi properties and the Company's treasury offices.

An operating segment is defined as a component of the Company:

• that engages in business activities from which it may earn revenues and incur expenses;
• whose operating results are reviewed regularly by the entity's chief operating decision maker; and
• for which discrete financial information is available.

For these four reportable segments, the Company receives discrete financial information that is used by the chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance.

The reportable segments are principally engaged in the development of mineral properties in South Africa (see Note 6); exploration and development of mineral properties through a joint venture in the DRC (see Note 4); and the care and maintenance of a mine in the DRC respectively (see Note 6).

The following is an analysis of the non-current assets by geographical area and reconciled to the Company financial statements:

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

34. Segmented information (continued)

	South Africa	DRC	Other	Total
	$'000	$'000	$'000	$'000
Non-current assets
As at June 30, 2020	245,977	1,489,521	70,417	1,805,915
As at December 31, 2019	276,491	1,331,741	119,890	1,728,122
			June 30,	December 31,
			2020	2019
			$'000	$'000
Segment assets
Kamoa Holding joint venture			1,075,010	912,636
Treasury (ii)			546,040	752,675
Kipushi properties			451,457	453,784
Platreef property			258,510	287,828
All other segments (i)			37,031	37,799
Total			2,368,048	2,444,722
Segment liabilities
Platreef property			36,255	36,531
Kipushi properties			20,085	22,643
All other segments (i)			12,683	16,475
Treasury (ii)			2,742	6,219
Total			71,765	81,868

Notes to the condensed consolidated interim financial statements

June 30, 2020

(Stated in U.S. dollars unless otherwise noted) (Unaudited)

34. Segmented information (continued)

	Three months endedJune 30,		Six months endedJune 30,
	2020	2019	2020	2019
	$'000	$'000	$'000	$'000
Segment losses (profits)
Kipushi properties	7,018	(531)	16,488	(974)
Kamoa Holding Limited joint venture	6,597	6,248	13,325	12,127
All other segments (i)	4,044	2,840	5,645	5,057
Platreef properties	117	333	704	683
Treasury (ii)	(9,507)	(10,703)	(13,804)	(22,553)
Total	8,269	(1,813)	22,358	(5,660)
Capital expenditures
Platreef properties	8,163	13,683	18,544	26,933
All other segments (i)	2,450	552	2,747	1,009
Kipushi properties	614	16,323	775	33,651
	11,227	30,558	22,066	61,593

Kipushi properties	7,541	-	17,523	-
All other segments (i)	1,477	3,290	3,475	4,689
Total	9,018	3,290	20,998	4,689

(i) The Company's other divisions that do not meet the quantitative thresholds of IFRS 8 Operating segments, are included in the segmental analysis under the all other segments.

(ii) Treasury includes mainly cash balances, the promissory note receivable, the investments and the loan to HPX.

35. Approval of the financial statements

The condensed consolidated interim financial statements of Ivanhoe Mines Ltd., for the six months ended June 30, 2020, were approved and authorized for issue by the Board of Directors on August 6, 2020.