SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

From: October 12, 2005

IVANHOE MINES LTD.

(Translation of Registrant’s Name into English)

Suite 654 – 999 CANADA PLACE, VANCOUVER, BRITISH COLUMBIA V6C 3E1

(Address of Principal Executive Offices)

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F o    Form 40-F þ

(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

Yes: o    No: þ

(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-                     .)

Enclosed:

     Technical Report

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		IVANHOE MINES LTD.
Date: October 12, 2005		By:		/s/ Beverly A. Bartlett
				BEVERLY A. BARTLETT
				Corporate Secretary

IMPORTANT NOTICE

This report was prepared as a National Instrument 43-101 Technical Report, in accordance with Form 43-101F1, for Ivanhoe Mines by AMEC Americas Limited [AMEC] with input from certain other professional consultants and Qualified Persons retained by Ivanhoe Mines as more particularly described in the report. The quality of information, conclusions, and estimates contained herein is consistent with the level of effort involved in AMEC’s and such other professional consultants and Qualified Persons services, based on :

i] information available at the time of preparation ii] data supplied by outside sources, and iii] assumptions , conditions , and qualifications set forth in this report.This report is intended to be used by Ivanhoe Mines , subject to the terms and conditions of its contract with AMEC. That contract permits Ivanhoe Mines to file this report as a Technical Report with Canadian Securities Regulatory Authorities pursuant to provincial securities legislation. Except for the purposes legislated under securities laws, any other use of this report by any third party is at that party’s sole risk.

		Integrated Development Plan Technical Report Oyu Tolgoi, Mongolia

Contents

SECTION 1 • Summary			1-1
1.1 Overview of IDP			1-1
1.2 Economic Benefit to Mongolia			1-3
1.3 Financial Summary			1-4
1.4 Ore Release Schedules			1-7
1.4.1 Phase 1 — Base Case			1-7
1.4.2 Phase 2 — Expanded case			1-8
1.5 Development, Capital and Production Schedules			1-9
1.6 Mineral Resources			1-11
SECTION 2 • Introduction and Terms of Reference			2-1
SECTION 3 • Disclaimer			3-1
SECTION 4 • Property Description and Location			4-1
4.1 Mineral Tenure			4-1
4.2 Permits and Agreements			4-3
SECTION 5 • Accessibility, Climate, and Physiography			5-1
5.1 Location			5-1
5.1.1 Regional Centres and Infrastructure			5-1
5.1.2 Transportation Infrastructure			5-1
5.2 CLIMATE			5-2
5.3 Physiography			5-5
5.4 Seismicity			5-5
5.4.1 General			5-5
5.4.2 Mongolian Seismology Centre			5-6
5.4.3 Analysis and Conclusions			5-6
SECTION 6 • History			6-1
SECTION 7 • Geological Setting			7-1
7.1 Regional Geology			7-1
7.2 Property Geological Units			7-2
7.2.1 Stratified Rocks			7-2
7.2.2 Intrusive Rocks			7-6
7.3 Property Structural Geology			7-7
7.3.1 Solongo Fault			7-7
7.3.2 Northwest Shear Zone			7-9
7.3.3 Central Fault			7-9
7.3.4 Axial Fault, West Bat, East Bat Faults			7-9
7.3.5 Boundary Fault System			7-10
7.3.6 Northeast-Striking Secondary Faults			7-10
7.3.7 Folds			7-10
7.4 Southern Oyu Deposits			7-11
7.4.1 Southwest Oyu Deposit			7-11
7.4.2 South Oyu Deposit			7-12
7.4.3 Wedge Deposit			7-13
7.4.4 Central Oyu Deposit			7-14
7.5 Hugo Dummett Deposit			7-15

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7.5.1 Hugo South Deposit			7-15
7.5.2 Hugo North Deposit			7-21
SECTION 8 • Deposit Types			8-1
SECTION 9 • Mineralization			9-1
9.1 Southern Oyu Deposits			9-1
9.1.1 Southwest Deposit			9-1
9.1.2 South Deposit			9-2
9.1.3 Wedge Deposit			9-2
9.1.4 Central Deposit			9-3
9.2 Hugo Dummett Deposits			9-4
9.2.1 Hugo South Deposit			9-4
9.2.2 Hugo North Deposit			9-8
SECTION 10 • Exploration			10-1
SECTION 11 • Drilling			11-1
SECTION 12 • Sampling Method and Approach			12-1
SECTION 13 • Sample Preparation, Analyses, and Security			13-1
13.1 Sample Preparation and Shipment			13-1
13.2 Assay Method			13-2
13.3 QA/QC Program			13-2
13.3.1 Standards Performance			13-2
13.3.2 Blank Sample Performance			13-3
13.3.3 Duplicates Performance			13-3
13.3.4 Specific Gravity Program			13-4
13.4 Concluding Statement			13-4
SECTION 14 • Data Verification			14-1
SECTION 15 • Adjacent Properties			15-1
SECTION 16 • Mineral Processing and Metallurgical Testing			16-1
16.1 Background			16-1
16.2 Flotation Testwork			16-1
16.3 Comminution			16-3
SECTION 17 • Mineral resource and Mineral Reserve Estimates			17-1
17.1 Geologic Models and Estimation Domains			17-1
17.2 Grade Interpolation			17-2
17.2.1 Validation			17-3
17.3 Mineral Resource Classification			17-3
17.4 Mineral Resource Summary			17-4
SECTION 18 • Other Relevant Data and Information			18-1
SECTION 19 • Requirements for Technical Reports on Production and Development Properties			19-1
19.1 Framework for IDP			19-1
19.2 Mine Plan			19-3
19.3 Scheduling Scenarios			19-3
19.3.1 Approach to Scheduling			19-5
19.3.2 Base Case Production Schedule			19-5
19.3.3 Expanded Case Production Schedule			19-7
19.4 Open Pit Mining			19-9

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19.4.1 Pit Optimization			19-9
19.4.2 Open Pit Mine Design			19-10
19.4.3 Open Pit Mining Operations			19-11
19.5 Underground Mine Development			19-12
19.5.1 Deposit Assessment			19-13
19.5.2 Lift 1 Development Plan			19-14
19.5.3 Underground Mining Method			19-15
19.5.4 Design and Planning Considerations			19-16
19.5.5 Cost and Schedule Issues			19-16
19.5.6 Geotechnical			19-16
19.5.7 Caving Predictability			19-17
19.6 Process Facilities			19-17
19.6.1 Process Description			19-18
19.7 Concentrate Handling and Shipping			19-22
19.7.1 Concentrate Transport to Railhead			19-22
19.7.2 Concentrate Transport to Smelters			19-23
19.8 Tailings Management			19-23
19.8.1 TSF Site			19-23
19.8.2 Facility Description			19-24
19.8.3 Facility Operation			19-24
19.8.4 Facility Closure			19-25
19.9 Mine and Process Water Supply			19-26
19.9.1 Water Supply and Management			19-26
19.9.2 Borefield Water Supply System			19-26
19.9.3 Camp and Construction Water Supply			19-27
19.9.4 Mine Dewatering			19-28
19.10 Electrical Power Requirement and Supply			19-28
19.11 Other Infrastructure and Facilities			19-30
19.11.1 Plant Site			19-30
19.11.2 River Diversion			19-31
19.11.3 Roads			19-31
19.12 On-Site Support Buildings, Structures and Facilities			19-32
19.12.1 Off-Site Facilities			19-36
19.12.2 Project Implementation			19-37
19.13 Operating Plan			19-40
19.13.1 Personnel Organization			19-40
19.13.2 Fuel Supply			19-41
19.13.3 Power Supply			19-41
19.13.4 Operating Consumables			19-41
19.13.5 Maintenance Contracts			19-41
19.13.6 Analytical Services			19-41
19.14 Socio-Political Assessment			19-42
19.14.1 Effects on Local Communities			19-42
19.14.2 Effects on National Economy			19-42
19.15 Safety, Health and Environment			19-44
19.16 Environmental Assessment and Management			19-45
19.16.1 Existing Environment			19-46
19.16.2 Closure and Reclamation			19-49
19.17 Marketing			19-51
19.18 Project Economics			19-53

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19.18.1 Summary of Results			19-53
19.18.2 Basis of Analysis			19-53
19.18.3 Special Stability Agreement (SSA)			19-56
19.18.4 Capital Cost Estimate			19-58
19.18.5 Operating Costs			19-59
19.19 Opportunities			19-61
19.20 Sensitivity Analysis			19-62
SECTION 20 • Conclusions and Recommendations			20-1
20.1 Geology — QP: Steve Blower			20-1
20.2 Open Pit Mining — QP: Bernie Peters, Allan Haines			20-3
20.3 Underground Mine Development — QP: Scott McIntosh, Jarek Jakubec			20-3
20.4 Metallurgy and Process Facilities — QP: Mike Grundy			20-5
20.5 General Components — QP: Duane Gingrich			20-7
20.6 Key Development Features			20-10
SECTION 21 • References			21-1
Tables
Table 1-1: Financial Model — Discount Rates @ 8% and 10%*			1-4
Table 1-2: Project Sensitivities — Phase 1 Base Case*			1-6
Table 1-3: Project Sensitivities — Phase 2 Expanded Case*			1-6
Table 1-4: Mineral Resource Estimate of 3 May 2005			1-11
Table 5-1: Monthly Temperatures (°C) based on Byan Ovoo Data			5-2
Table 5-2: Monthly Relative Humidity			5-2
Table 5-3: Design Soil Freezing Depths			5-3
Table 5-4: Rainfall Summary (mm)			5-3
Table 5-5: Rainfall Intensities (mm/h)			5-4
Table 5-6: Design Evaporation Data			5-4
Table 5-7: Maximum One-Hour Wind Speeds (m/s) at Byan Ovoo			5-5
Table 5-8: Frequency of Dust Storms in the Gobi Desert			5-5
Table 16-1: Sampling Density for Flotation Testwork			16-3
Table 16-2: Anticipated Life-of-Mine Metallurgical Performance — Base Case 85,000 t/d			16-3
Table 16-3 Summary of Grinding Simulation Results			16-5
Table 17-1: Oyu Tolgoi Project Mineral Resources based on a 0.6% Cu Eq. Cutoff, 3 May 2005			17-4
Table 19-1: Open Pit Resource Inventory by Stage			19-11
Table 19-2: Open Pit Mining Equipment Requirements			19-12
Table 19-3: Summary of Hugo North Assessment Base Case 85,000 t/d (June 2005)			19-13
Table 19-4: Initial Operations Work Force			19-40
Table 19-5: Project Impacts (2002 - 2043) — Expanded Case			19-43
Table 19-6: NPV ($million) After Tax @ 10% Discount Rate			19-54
Table 19-7: NPV ($million) After Tax @ 8% Discount Rate			19-54
Table 19-8: Basic Production Data — Life-of-Mine Average/Total			19-55
Table 19-9: Smelter Terms			19-56
Table 19-10: Summary of Capital Costs over Mine Life ($M)			19-58
Table 19-11: Operating Costs			19-60
Table 19-12: Sensitivity Analysis			19-62

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Table 20-1: Anticipated Life-of-Mine Metallurgical Performance — Base Case 85,000 t/d			20-6
Table 20-2: Summary of Capital Costs over Mine Life ($M)			20-8
Table 20-3: Operating Costs			20-9
Figures
Figure 1-1: Phase 1 Base Case — Cash Flow Schedule ($/lb Cu, $/oz Au)			1-5
Figure 1-2: Phase 2 Expanded Case — Cash Flow Schedule ($/lb Cu, $/oz Au)			1-5
Figure 1-3: Ore Sources and Feed Grades			1-7
Figure 1-4: Contained Metal Production, Life-of-Mine			1-7
Figure 1-5: Ore Sources and Feed Grades, Life-of-Mine			1-8
Figure 1-6: Contained Metal Production, Life-of-Mine			1-8
Figure 1-7: Base Case - 85,000 t/d, 1st 20 years			1-9
Figure 1-8: Expanded Case - 140,000 t/d, 1st 20 years			1-10
Figure 1-9: Profile of Orebodies			1-11
Figure 4-1: Oyu Tolgoi Project Location Map			4-1
Figure 4-2: Oyu Tolgoi Tenements			4-2
Figure 7-1: Location of Oyu Tolgoi, Gurvansayhan Terrane, and Major Cenozoic Faults in Southern Mongolia			7-1
Figure 7-2: Stratigraphic Column of Paleozoic Bedrock Units in the Oyu Tolgoi Project Area			7-3
Figure 7-3: Simplified Geological Map of Oyu Tolgoi Concession			7-8
Figure 7-4: Simplified Interpretation of Section 6200 N, Hugo South Deposit			7-17
Figure 7-5: Simplified Interpretation of Section 7100N, Hugo North Deposit			7-23
Figure 7-6: Simplified Interpretation of Section 7400N, Hugo North Deposit			7-24
Figure 9-1: Sulphide Distribution in the Hugo South Deposit (Section 6200N)			9-6
Figure 9-2: Cross-Section 6200N in the Hugo South Deposit			9-7
Figure 9-3: Section 4767500N (7500N) in Hugo North Deposit			9-9
Figure 13-1: SRM Failure Chart			13-3
Figure 16-1: Metallurgical Testwork Programs Related to Resource Growth			16-2
Figure 16-2: Throughput Assessment Method			16-4
Figure 16-3: Grinding Circuit Configuration for IDP			16-5
Figure 19-1: Open Pit and Underground Scheduling Blocks for Expanded Case			19-4
Figure 19-2: Ore Processing by Metallurgical Ore Type — Base Case			19-6
Figure 19-3: Copper Feed Grades — Base Case			19-6
Figure 19-4: Gold Feed Grades — Base Case			19-7
Figure 19-5: Ore Processing by Metallurgical Ore Type — Expanded Case			19-8
Figure 19-6: Copper Feed Grades — Expanded Case			19-8
Figure 19-7: Gold Feed Grades — Expanded Case			19-9
Figure 19-8: Block Cave Mining Method			19-15
Figure 19-9: Concentrator Facilities			19-18
Figure 19-10: Oyu Tolgoi — Simplified Flowsheet			19-19
Figure 19-11: Crushed Ore Conveyor and Stockpile			19-20
Figure 19-12: Grinding Circuit			19-20
Figure 19-13: General Arrangement of TSF			19-25
Figure 19-14: Basement Topography Gunii Hooloi North East			19-27
Figure 19-15: Electrical Power Load Profile			19-30
Figure 19-16: General Site Plan			19-33
Figure 19-17: Tianjin to Oyu Tolgoi Road Routes			19-39
Figure 19-18: Impact on Government Revenues (Tg 2005 billions) — Expanded Case			19-44

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		Integrated Development Plan Technical Report Oyu Tolgoi, Mongolia

Figure 19-19: China’s Sources vs. Consumption for Refined Copper until 2010			19-52
Figure 19-20: Phase 1 Base Case — Cumulative Cash Flow ($/lb Cu, $/oz Au)			19-60
Figure 19-21: Phase 2 Expanded Case — Cumulative Cash Flow ($/lb Cu, $/oz Au)			19-61
Appendices
Appendix A — List of Drill Holes used for Resource Estimates
Appendix B — List of Significant Composite Intervals used in Resource Estimates

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		Integrated Development Plan Technical Report Oyu Tolgoi, Mongolia

SECTION 1 • SUMMARY

This technical report summarizes the findings of the IDP study prepared for Ivanhoe Mines Mongolia XXK Inc. (IMMI) by AMEC Auscenco Joint Venture (AAJV), entitled “Oyu Tolgoi Project, Mongolia — Integrated Development Plan” and issued August 2005. AMEC Americas Limited, a partner in the AAJV, was commissioned by Ivanhoe Mines Limited to complete an Independent Qualified Person’s Report on the Oyu Tolgoi Project.

1.1

Overview of IDP

The Oyu Tolgoi property contains a large copper-gold resource recoverable by a combination of open pit methods and large-volume block-cave mining. The open pit mine designs were developed from a mineral resource model with 92% of the tonnage in the Measured or Indicated category (at 0.3% Cu equivalent cutoff grade). The primary underground mine resource, Hugo North, contains the majority of the economic value of the property. The underground block-cave mine designs were developed from a mineral resource model with 50% of the tonnage classified as Indicated and 50% as Inferred (at 0.6% Cu equivalent cutoff grade).

Ongoing drilling has encountered mineralized intersections that suggest the presence of an extension to the physical boundaries of the current resource.

Initial production from the open pit will be processed through a conventional 70,000 t/d crushing, grinding, and flotation circuit using proven technology and equipment sizing developed from extensive mineral processing testwork. Testwork has also confirmed that this circuit can process the higher-grade Hugo North ore at a rate of 85,000 t/d if additional capacity is added to the flotation and filtration circuits.

The open pit mine design is complete and optimized. It will provide the primary feed to the mill for the first few years until production from Hugo North ramps up. Stockpiled open pit material also tops up production from the underground for several years. Open pit mining will be done with a fleet of 220 to 240 tonne trucks and hydraulic shovels operated by IMMI. IMMI employees will be trained in block-cave mining methods for Hugo North, which, when combined with open pit ore, will provide feed to the mill for 40 years. This development and production scenario represents the base case for project assessment.

Construction of an exploration/early development shaft for Hugo North has begun. To maximize project value from the high-grade Hugo North deposit, this evaluation assumes that construction of a second production shaft will commence in 4Q 2005 and of a third 18 months later, both prior to obtaining results from the initial exploration shaft program.

A major expanded case was evaluated in which plant production increases to 140,000 t/d after Hugo North reaches its peak base case mining rate. The assessment of project economics for the expanded case is based on preliminary capital and operating cost estimates. To achieve this feed rate, production from Hugo North would be increased to over 90,000 t/d, the Hugo South deposit would be mined at a rate of 50,000 t/d, and open pit push-backs would be developed.

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		Integrated Development Plan Technical Report Oyu Tolgoi, Mongolia

Planning associated with the initial phase of project development—the Southwest open pit, concentrator, and infrastructure component—is well advanced. However, commencement of development will need to be coordinated with the conclusion of current negotiations and discussions related to:

	•		the Special Stability Agreement with the Government of Mongolia
	•		a reliable electrical power supply
	•		VAT and import duty payments on materials and equipment
	•		a location on the Chinese mainline rail system for concentrate transfer from trucks loaded at Oyu Tolgoi
	•		completion of environmental assessment and the development of an environmental monitoring program.

Oyu Tolgoi is located in an isolated region of Mongolia with little developed infrastructure. The site is, however, only 80 km from the Chinese border, where resources exist to support the project in the energy, transportation, manufacturing, and construction areas. The development plan for the project is therefore based on the principle of maximizing Mongolian content while involving and realizing the benefits of the resources in China. Balancing the dual objectives is seen as achievable.

Western companies with recent experience on major industrial developments in China have confirmed the presence of an experienced construction industry capable of working to international standards of quality and completing projects on schedule. The implementation plan assumes that Chinese construction capacity and experience will fill the gaps where Mongolian resources need to be augmented.

It is also assumed that the Chinese road and rail transportation systems can accommodate the movement to site of imported materials required for construction and operations and the shipment off site of all concentrate produced at the process plant. This will need to be confirmed.

The rail system between the southern Gobi area and northern China is expected to be augmented by the construction of a new rail line connecting the anticipated coal field development at Tavan Tolgoi, 140 km northwest of Oyu Tolgoi, to an existing Chinese railhead. Construction of a rail link to this new line is an important requirement for the project in about Year 4 of operations, when concentrate production will exceed the reasonable capacity of the early trucking system. Under the expanded case, three or more trains would be loaded with concentrate every day. Completion of these related developments in time to support Oyu Tolgoi is one of the base assumptions for the IDP.

The Mongolian population generally has a strong basic education, although experienced mine labour is scarce. IMMI is committed to operating the project with a 90% Mongolian workforce within five years of start-up. To make this possible, IMMI has identified the need and allowed funding for a major training initiative that encompasses a dedicated facility, experienced trainers, and modern equipment. During the early production years, experienced expatriate personnel will provide commissioning and training support to help bring the capacity and productivity of Mongolian employees to equivalent Western standards.

The results of a significant program of environmental and socioeconomic assessment suggest that environmental concerns can be managed and that the socioeconomic benefits to Mongolia will be

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		Integrated Development Plan Technical Report Oyu Tolgoi, Mongolia

substantial. Two of three Environmental Impact Assessment reports for the project have been submitted. The first was approved by the Mongolian government in May 2004. The second was submitted at the end of June 2005, and the third will be ready later in the year. Approvals of these reports are expected to be a prerequisite to project approval. Regulatory review and approval is assumed to support the proposed project development schedule.

To date no environmental or socioeconomic baseline or assessment work has been conducted for China-related components of the project. The Chinese regulatory approval processes and subsequent construction period associated with rail facilities are also expected to support the project development schedule.

A project risk assessment concluded that although IMMI must address and resolve several critical issues before commencing project development, no risks have been identified that, if managed to a reasonable conclusion, would jeopardize the successful development and operation of the project. It is assumed that a risk mitigation and management system will be implemented.

Based on the AMEC’s review, the character of the project is of sufficient merit to justify carrying out the recommended expenditures called for in the IDP.

1.2 Economic Benefit to Mongolia

Based on a report commissioned by IMMI and published in August 2005, the Oyu Tolgoi expanded case would have the following impacts on the economy of Mongolia between 2002 and 2043:

•		34.3% (average) increase in real GDP
•		10.3% (average) increase in employment
•		11.5% (average) increase in real per capita disposable income
•		US$7.9 billion (cumulative) increase in government operating balance, excluding debt payments
•		US$54 billion (cumulative) increase in exports.

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1.3 Financial Summary

Table 1-1: Financial Model — Discount Rates @ 8% and 10%*

										Expanded
Parameter		Unit				Base Case				Case
Key Input
Copper (Cu) average per year		M lb					730				1,007
Gold (Au) average per year		000 oz					258				333
Mine Life		Years					40				35
Initial Capital (to achieve 70,000 t/a)a		$	M				1,275				1,275
Future & Sustaining Capital		$	M				2,673				4,156
Site Operating Costs (average)b		$	/t				5.94				5.62
Realization costs (transport to smelter, treatment & refining, royalties)		$	/t				6.32				6.03
Financial Projections
After—Tax Results:
NPV 8%		$	M				2,221				2,706
NPV 10%		$	M				1,513				1,852
IRR			%				19.25				19.75
Payback		Years					5.80				6.53
Total Cash Costs /lb Cu (after Au credits)		$					0.39				0.40

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Figure 1-1: Phase 1 Base Case — Cash Flow Schedule ($/lb Cu, $/oz Au)

 

Figure 1-2: Phase 2 Expanded Case — Cash Flow Schedule ($/lb Cu, $/oz Au)

 

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Table 1-2: Project Sensitivities — Phase 1 Base Case*

										IRR				NPV8				NPV10
										Change				Change				Change
Parameter		Base Value				Change				(%)				($M)				($M)
Gold Price		$400/oz				± $25/oz					0.4				68				57
Copper Price		$1.00/lb				± $0.05/lb					1.2				271				216
Initial Capital			1.274 M				± 10	%			1.3				116				113
Site Operating & Transport		$6.78/t					± 10	%			0.9				183				149
Smelter Charges $		75/wmt, $0.075/lb				± $10/wmt, $0.01/lb					0.4				93				74
Copper Recovery		90.8% (avg)				± 1% point					0.2				50				40
Power Cost		$0.0426/kWh					± 10	%			0.2				46				36

Table 1-3: Project Sensitivities — Phase 2 Expanded Case*

										IRR				NPV8				NPV10
										Change				Change				Change
Parameter		Base Value				Change				(%)				($M)				($M)
Gold Price		$400/oz				± $25/oz					0.4				81				68
Copper Price		$1.00/lb				± $0.05/lb					1.2				346				274
Initial Capital			1.274 M				± 10	%			2.1				116				113
Site Operating & Transport			$6.50/t				± 10	%			1.0				241				195
Smelter Charges		$75 /wmt, $0.075/lb				± $%, $0.01/lb					0.4				120				94
Copper Recovery		89.7% (avg)				± 1% point					0.2				62				49
Power Cost		$0.0426/kWh					± 10	%			0.2				58				46

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1.4 Ore Release Schedules

1.4.1 Phase 1 — Base Case

Figure 1-3: Ore Sources and Feed Grades

Figure 1-4: Contained Metal Production, Life-of-Mine

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1.4.2 Phase 2 – Expanded case

Figure 1-5: Ore Sources and Feed Grades, Life-of-Mine

Figure 1-6: Contained Metal Production, Life-of-Mine

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		Integrated Development Plan Technical Report Oyu Tolgoi, Mongolia

1.5 Development, Capital and Production Schedules

Figure 1-7: Base Case — 85,000 t/d, 1st 20 years

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		Integrated Development Plan Technical Report Oyu Tolgoi, Mongolia

Figure 1-8: Expanded Case — 140,000 t/d, 1st 20 years

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		Integrated Development Plan Technical Report Oyu Tolgoi, Mongolia

1.6 Mineral Resources

Table 1-4: Mineral Resource Estimate of 3 May 2005

		0.6% Cu Eq. Cutoff												0.3% Cu Eq. Cutoff
						Grade												Grade
Mineral Resource Category		Tonnes				Cu %				Au g/t				Tonnes				Cu %				Au g/t
Southern Oyu Deposits
Measured			101,590,000				0.64				1.10				126,560,000				0.58				0.93
Indicated			465,640,000				0.62				0.43				790,590,000				0.49				0.27
Measured + Indicated			567,230,000				0.62				0.55				917,150,000				0.50				0.36
Inferred			88,500,000				0.47				0.41				78,240,000				0.37				0.18
Hugo Dummett Deposit
Hugo North															—				—				—
Indicated			581,930,000				1.89				0.41				—				—				—
Inferred			581,290,000				1.08				0.32				—				—				—
Hugo South*															—				—				—
Indicated			—				—				—				—				—				—
Inferred			490,330,000				1.05				0.09				—				—				—
Total Project
Measured+Indicated			1,149,160,000				1.30				0.47				—				—				—
Inferred			1,160,120,000				1.02				0.23				—				—				—

Figure 1-9: Profile of Orebodies

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		Integrated Development Plan Technical Report Oyu Tolgoi, Mongolia

SECTION 2 • INTRODUCTION AND TERMS OF REFERENCE

This technical report summarizes the findings of the IDP study prepared for Ivanhoe Mines Mongolia XXK Inc. (IMMI) by AMEC Auscenco Joint Venture (AAJV), entitled “Oyu Tolgoi Project, Mongolia — Integrated Development Plan” and issued August 2005. AMEC Americas Limited, a partner in the AAJV, was commissioned by Ivanhoe Mines Limited to complete an Independent Qualified Person’s Report on the Oyu Tolgoi Project.

Duane Gingrich, P.Eng., an employee of AMEC and the AAJV Study Manager for the IDP, served as the Qualified Person responsible for preparing this technical report as defined in National Instrument 43-101 (N1 43-101) Standards of Disclosure for Mineral Projects, and in compliance with 43-101F1 (the “Technical Report”). Mr. Gingrich visited the project site on 17 March 2005.

Additional Qualified Person assistance was provided as follows:

	•		Steven Blower, P. Geo., an employee of AMEC, was responsible for preparation of all sections on geology.
	•		Mike Grundy, B. Eng. (Chemical Engineering), Aus.I.M.M., an employee of AMEC, was responsible for preparation of the sections on Metallurgy and Process Plant design.
	•		Bernard Peters, B. Eng. (Mining), Aus.I.M.M. 201743, an employee of GRD Minproc Limited, was responsible for preparation of the section on Open Pit Mining.
	•		Allan Haines, C. Eng, an employee of Steffen Robertson Kirsten (Australasia) Pty Ltd., was responsible for preparation of the subsection on Open Pit Mine Geotechnical.
	•		Scott McIntosh, PE, an employee of McIntosh Engineering Incorporated, was responsible for preparation of Section 19.5 (except those portions attributed to SRK Consulting (Canada), plus the specific reference to the underground operating costs contained in Tables 19-10 and 19-11.
	•		Jarek Jakubec, C. Eng., an employee of SRK Consulting Inc., was responsible for preparation of the subsection on Underground Mine Geotechnical.

Ivanhoe Mines Mongolia Inc. XXK (IMMI) holds mining licences associated with the Oyu Tolgoi project in Mongolia. Since 2000 the property has been the subject of an exploration program that has successfully delineated a large copper-gold resource contained in two deposits suitable for open pit development and two suitable for underground development. During the exploration period, several studies assessed various plant production rates and numerous mine plans. Exploration continues at the property, and mineralized drill intersections have been encountered that have not been

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categorized or included as part of this evaluation. This document is based on information available at the end of the first quarter 2005 and presents the current vision for developing the property.

The IDP report was prepared to describe the current status of the dynamic Oyu Tolgoi project and to clearly present the current vision for its development. The quality of geological and mineralogical knowledge of the deposits varies from high, for Southwest and Central, to moderate for the components of Hugo North and Hugo South considered in the report. Similarly, confidence levels for mine design and mineral processing and capital and operating cost estimates vary for the different deposits. As a result of these variations, the classification of work performed for the study varies from feasibility study level to scoping study level. The information associated with all levels of work was combined to prepare the economic evaluation for the project; therefore, the overall IDP report quality is classified as a preliminary assessment.

The preparation of the IDP study was coordinated by AMEC Ausenco Joint Venture (AAJV), a joint venture between AMEC E&C Services Limited (AMEC) and Ausenco International Pty. AAJV was also responsible for various other aspects of the study and reviewed the work by others for consistency and reasonableness. However, responsibility for the content of these sections remains with the original author. The main contributors to the report and their associated roles and responsibilities are outlined as follows:

IMMI ((Mongolia/Perth/Vancouver)

	•		Property ownership & tenure
	•		Exploration drilling
	•		Electrical power cost estimate
	•		Mineral resource model
	•		Government & public relations
	•		Financial modelling and analysis

AMEC (Vancouver)

•

Mineral resource estimate

AAJV (AMEC/Ausenco Joint Venture) (Perth/Vancouver)

	•		Coordinate IDP preparation
	•		Metallurgy & plant design
	•		On-site, off-site infrastructure design
	•		Capital & operating costs for process plant, on-site & off-site infrastructure

GRD Minproc Limited (Perth)

	•		Open pit mine design
	•		Capital & operating costs for open pit mines

Steffen Robertson Kirsten (Australasia) Pty Ltd. (Perth)

•

Geotechnical engineering for open pits

SRK Consulting Inc. (Vancouver)

•

Geotechnical engineering associated with underground mines

McIntosh Engineering Inc. (Tempe, Arizona)

	•		Design of block-cave underground mines
	•		Capital & operating costs for underground mines

SGS Lakefield Research Limited (Lakefield, Ontario)

	•		Flotation, gravity-recoverable gold, comminution & leaching testwork
	•		SAG mill pilot plant

MinnovEX Technologies Inc. (Toronto)

	•		Comminution & flotation testwork
	•		Modelling / interpretation

AMMTEC Ltd. (Perth)

•

Flotation & comminution testwork

Knight Piésold Pty Limited (Perth)

	•		Access road & tailings storage design
	•		Site-wide water balance

Aquaterra Consulting Pty Ltd. (Perth)

•

Hydrogeology & raw water borefield design

Eco-Trade Co Ltd. (Perth)

	•		2002 environmental baseline study
	•		Environmental Impact Assessment

Sustainability Pty Ltd. (Perth)

	•		Coordinate environmental, archaeological, & socioeconomic assessments
	•		Training systems assessment

Teshmont L.P. Consultants (Winnipeg, Manitoba)

•

Power supply study

Fluor (Shanghai)

•

Coal-fired power plant evaluation

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SECTION 3 • DISCLAIMER

The preparation of the IDP study was coordinated by AMEC Ausenco Joint Venture (AAJV), a joint venture between AMEC E&C Services Limited (AMEC) and Ausenco International Pty. AAJV was also responsible for various other aspects of the study and reviewed the work by others for consistency and reasonableness. However, responsibility for the content of these sections remains with the original author. The main contributors to the report and their associated roles and responsibilities were presented earlier in Section 1. Similarily, for the preparation of this technical report, AMEC has used the information supplied by the additional consultants and Qualified Persons under the assumption that the concepts, design, estimates, and conclusions have been prepared by qualified persons.

This assessment includes the use of Inferred resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as a Mineral Reserve. Inferred resources will require further exploration before they can be upgraded to the higher Measured and Indicated categories.

Although the assumptions underlying the preliminary assessment are considered reasonable, there is no certainty that the predicted results will be realized.

The term “ore” is used for convenience throughout this report to denote material mined or processed. The use of the term is not meant to imply that this material falls within the classification of a Mineral Reserve as determined by the Canadian Institute of Mining and Metallurgy (CIM), the Australasian Joint Ore Reserves Committee (JORC), or other similar bodies.

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SECTION 4 • PROPERTY DESCRIPTION AND LOCATION

The Oyu Tolgoi property hosts a series of copper-gold mineralized deposits in a mid-Palaeozoic porphyry system. It is located in the Aimag (Province) of Omnogovi in the South Gobi region of Mongolia, about 550 km south of the capital city of Ulaanbaatar and 80 km north of the border with China (see Figure 4-1). The Oyu Tolgoi property is included in Mining Licence 6709A, which covers an area of 8,496 ha centred at latitude 43°00"45"N, longitude 106°51"15"E.

Figure 4-1: Oyu Tolgoi Project Location Map

4.1 Mineral Tenure

IMMI was granted mining licences for the Oyu Tolgoi property and three satellite properties on 23 December 2003 in accordance with the Minerals Law of Mongolia. Also in accordance with this law, IMMI submitted a Scoping Study in February 2004 to support these licences, which give IMMI the right to mine within the bounds of the licence area.

The licences are valid for 60 years, with an option for IMMI to acquire a 40-year extension. The licences were converted from exploration licences originally issued on 17 February 1997.

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The exploration licence fees were $1.50 /ha in 2002 and 2003 (years six and seven of tenure). Thus, IMMI has paid $12,744 to the Mongolian government each year since acquiring the property. The mining licence fees are as follows:

•		Years 1 — 3		$5.00 /ha
•		Years 4 — 5		$7.50 /ha
•		Year 6 on		$10.00 /ha

Surtech International Ltd legally surveyed the Oyu Tolgoi property in August 2002.

In November 2004 IMMI signed an Earn-In Agreement with Entrée Gold Ltd. (Entrée) to explore and potentially develop approximately 40,000 ha of Entrée’s 100%-owned, Shivee Tolgoi (Lookout Hill) property, adjacent to Oyu Tolgoi. The agreement, which contains a number of conditions for IMMI to earn a participating interest in the project, will secure for IMMI a long-term option to utilize the optioned property to construct project facilities and give IMMI an interest in the property. The licence area in relation to the surrounding tenements and the property subject to the Entrée Earn-In Agreement are shown in Figure 4-2.

Figure 4-2: Oyu Tolgoi Tenements

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4.2 Permits and Agreements

Upon transfer of the exploration licence, IMMI agreed to a 2% NSR royalty with BHP Minerals Exploration International Inc. (BHP). However, this 2% NSR royalty has now been acquired by IMMI.

Royalties payable to the Mongolian government are governed by Article 38 of the Minerals Law of Mongolia, which states: “Royalties shall be equal to 2.5 per cent of the sales value of all products extracted from the mining claim that are sold, shipped for sale, or used. Royalties shall be equal to 7.5 per cent of the sales value of gold extracted from the placer that are sold, shipped for sale, or used.”

When the areas were covered by exploration licences, an environmental plan accompanied the annual work plans submitted to the relevant soum, or district (Khanbogd Soum). The original environmental performance bond was posted in 1998 by BHP and is still retained by the soum for the ongoing work. Further requirements for environmental impact assessment are discussed below.

The soum must also be paid for water and road usage. Payments are computed at the end of each calendar year based on the extent of use.

Archaeological surveys and excavations have been completed in the project area by the Institute of Archaeology of the Mongolian Academy of Science. Archaeological approvals have been granted for disturbance at the site.

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		Integrated Development Plan Technical Report Oyu Tolgoi, Mongolia

SECTION 5 • ACCESSIBILITY, CLIMATE, AND PHYSIOGRAPHY

5.1 Location

The Oyu Tolgoi project is in the Aimag of Omnogovi, located in the South Gobi region of Mongolia. The property is approximately 550 km south of the capital city, Ulaanbaatar.

The elevation of the Oyu Tolgoi property ranges from 1,140 m to 1,215 m above sea level. The topography largely consists of gravel-covered plains, with low hills along the northern and western lease borders. Small, scattered rock outcrops and colluvial talus are widespread within the northern, western, and southern parts of the property.

5.1.1 Regional Centres and Infrastructure

There are a number of communities in the South Gobi region. The most prominent is Dalanzadgad, population 15,000, which is the centre of the Omnogovi Aimag and is 220 km northwest of the Oyu Tolgoi property. Facilities at Dalanzadgad include a regional hospital, tertiary technical colleges, a domestic airport, and a 6 MW capacity coal-fired power station. IMMI envisions that Dalanzadgad may be suitable as a regional centre for recruiting and training. The closest community to the property is Khanbogd, the centre of the Khanbogd soum. Khanbogd has a population of approximately 2,500 and is 35 km to the east. Other communities relatively near to the project include Mandalgovi (population 13,500), the capital of the Dundgovi aimag, 310 km north of the project on the road to Ulaanbaatar, Bayan Ovoo (population 1,600), 55 km to the west, and Manlai (population 2,400), 150 km to the north.

5.1.2 Transportation Infrastructure

Access to the property from the Mongolian capital, Ulaanbaatar, is possible either by an unpaved road, via Mandalgovi, a 12-hour drive under good conditions, or by air. IMMI has constructed a 2,000 m long gravel airstrip at the site and routinely receives flights from Ulaanbaatar. The Trans-Mongolian Railway crosses the Mongolia-China border approximately 420 km east of the property, traversing the country from southeast to northwest through Ulaanbaatar to the border with Russia. At the Mongolian-Chinese border the rail gauge changes from the Russian standard to the Chinese standard. A desert trail connects the rail line at Sajn Sand to the site.

The Chinese government has upgraded 226 km of road from Ganqimaodao to Wuyuan, providing a direct road link between the Mongolian border crossing at Gushaan Suhait, 80 km south of Oyu Tolgoi, and the Trans-China Railway system. A rough track/trail crosses the desert from the Mongolian border to the site.

Ulaanbaatar has an international airport, and Mandalgovi and Dalanzadgad have regional airports. There is currently charter air service between the site and Ulaanbaatar. The closest regional airport in China is at Hohhot. There are no airport facilities at Wuyuan or Bayan Obo.

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5.2 CLIMATE

The South Gobi region has a continental, semi-desert climate. The spring and autumn seasons are cool, summers are hot, and winters are cold. Typical of desert climates, the site has low average humidity and significant variations in daily temperatures.

Knight Piésold conducted an extensive evaluation of the available climatic information for the project area using regional data from bibliographical sources and local data from nearby climate stations.

Data Sources

Data were derived primarily from climatic records for Byan Ovoo, approximately 75 km west of Oyu Tolgoi, and from two years of available Oyu Tolgoi site data. Although these data have some limitations they are considered adequate for use in design. Data were also obtained from Khanbogd, approximately 45 km northeast of the site, Dalanzadgad, 220 km northwest, and Hailutu, 200 km southwest, but the information from Byan Ovoo was deemed the most representative of conditions at Oyu Tolgoi.

Air Temperature

Temperatures range from an extreme maximum of about 50°C to an extreme minimum of about -34°C. The typical air temperature in wintertime fluctuates between 6°C and -21°C. In the coldest month, January, the average temperature is -21°C. Data from Byan Ovoo are shown in Table 5-1.

Table 5-1: Monthly Temperatures (°C) based on Byan Ovoo Data

		Jan				Feb				Mar				Apr				May				Jun				Jul				Aug				Sep				Oct				Nov				Dec
Minimum			-34.2				-33.3				-24.9				-21.7				-12.7				0.4				4.1				2.6				-4.6				-20.0				-26.5				-33.4
Average			-12.5				-8.0				-0.4				9.3				17.9				23.4				25.4				22.7				16.5				7.2				-2.9				-10.3
Maximum			9.0				16.2				24.0				31.0				38.4				49.9				40.2				39.0				39.0				29.8				25.3				14.0

Relative Humidity

The average relative humidity ranges from 18.7% in May to 53.3% in January. Daily relative humidity is dependent on current temperature and varies considerably. Table 5-2 shows monthly relative humidity statistics using the calculated hourly averages from the site weather station. The design relative humidity for summer is based on an analysis of the July 2002 and 2003 hourly temperatures and corresponding relative humidity values. The design relative humidity for a July 1 temperature of 34.5°C is 15.1%.

Table 5-2: Monthly Relative Humidity

		Jan				Feb				Mar				Apr				May				Jun				Jul				Aug				Sep				Oct				Nov				Dec
Minimum			19.0				12.5				3.0				2.0				1.0				1.5				4.5				8.0				1.0				2.0				5.5				10.5
Average			53.3				38.3				23.5				24.3				18.7				31.3				37.4				36.4				34.4				30.4				40.7				43.5
Maximum			81.5				67.0				88.0				89.5				100.0				96.5				100.0				100.0				100.0				81.0				85.0				80.5

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Ground Temperature

From the data available to date, the minimum recorded ground temperature is -39°C and the maximum is 70°C. Table 5-3 shows the design freezing depths at the site based on the Mongolian Climate Data and Geophysical Parameters for Use in Construction Design Code Document No. CNR 2.01-01-93.

Table 5-3: Design Soil Freezing Depths

Soil Type		Freezing depth (m)
Clayey soil			1.5
Sandy soil			1.9
Gravely soil			2.2

Solar Radiation

Solar radiation data have been collected at the Oyu Tolgoi site station since 2002. Solar radiation is measured in W/m² and fluctuates during the day, ranging from 0 W/m² at night and peaking soon after mid-day. The average daily maximum for the two years of data available is 655 W/m², the highest daily maximum is 1,030 W/m², and the lowest daily maximum is 76 W/m².

Maximum levels of solar radiation are lower during the winter. The average daily maximum is 429 W/m² for January and 859 W/m² for July.

Precipitation

Average annual precipitation is 57 mm/a, 90% of which falls as rain and the rest as snow. Snowfall accumulations rarely exceed 50 mm. Maximum rainfall events of up to 43 mm/h for a 1-in-10 year, 10-minute storm event have been recorded. In an average year, rainfalls occur on only 19 days, and snow falls on 10 to 15 days. The ground snow load is 0.1 kPa. Monthly rainfall data are shown in Table 5-4 and Table 5-5. Both tables are derived from Byan Ovoo data for 1975 to 2002.

Table 5-4: Rainfall Summary (mm)

		Jan				Feb				Mar				Apr				May				Jun				Jul				Aug				Sep				Oct				Nov				Dec				Total
Maximum daily			2.1				3.8				4.4				10.4				19.0				16.2				29.5				102.0				19.2				4.0				4.3				1.5				—
Average monthly			0.4				0.4				0.8				1.4				3.1				8.1				18.1				17.8				5.0				0.9				0.6				0.2				56.8
Average rain-days per month			0.6				0.6				1.0				0.8				1.5				3.0				4.5				3.9				1.4				0.6				0.7				0.4				19.0

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Table 5-5: Rainfall Intensities (mm/h)

Return Interval		1 in 2				1 in 10				1 in 20				1 in 50				1 in 100				1 in 500
Duration		Years				Years				Years				Years				Years				Years
10 minutes			15.4				44.2				63.5				99.8				138.3				284.2
30 minutes			10.0				28.7				41.3				64.8				89.9				187.7
60 minutes			6.8				19.5				28.0				44.0				60.9				125.2
2 hours			4.3				12.3				17.7				27.8				38.6				79.3
3 hours			3.2				9.2				13.3				20.9				28.9				59.4
6 hours			1.9				5.5				7.9				12.4				17.2				35.4
12 hours			1.1				3.2				4.6				7.3				10.1				20.7
24 hours			0.7				1.9				2.7				4.2				5.9				12.0
48 hours			0.4				1.1				1.5				2.3				3.2				6.3
72 hours			0.3				0.8				1.0				1.6				2.2				4.2

Thunderstorms and Lightning

Local records indicate that thunderstorms are likely to occur from 2 to 8 days each year at Oyu Tolgoi. Electrical activity generally totals about 29 hours each year. An average storm will have up to 83 lightning flashes a minute.

Evaporation

Given the importance of this variable for determining project water requirements, a number of different methods were used to generate and analyze evaporation data to determine design levels. The results are summarized in Table 5-6. It should be noted that site measurements are ongoing to confirm these results.

Table 5-6: Design Evaporation Data

						Evaporation
		Sublimation				Winter				Summer
		(waterbodies frozen in winter)				(open waterbodies)
Month		(mm)				(mm)
January			22				82				—
February			41				101				—
March			—				—				142
April			—				—				256
May			—				—				439
June			—				—				378
July			—				—				382
August			—				—				285
September			—				—				192
October			—				—				132
November			53				11				—
December			27				88				—
Total Water Loss: Sublimation + Evaporation = 2,349 mm

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		Integrated Development Plan Technical Report Oyu Tolgoi, Mongolia

Wind Loading and Dust Generation

Wind is usually present at the site, predominantly from the north. Very high winds are accompanied by sandstorms that often severely reduce visibility for several hours at a time. At present, site-specific wind monitoring data are available for only a short period of time, less than a year. Based on regional information, windstorms can have gusts up to 50 m/s. Snowstorms and blizzards with winds up to 40 m/s occur in the Gobi region for 5 to 8 days each winter. Spring dust storms are far more frequent and can continue through June and July. The average storm duration is 6 to 7 hours. An average of 120 hours of dust storm activity and 220 hours of drifting dust are recorded each year.

Based on the Mongolian Code, the Basic Wind Speed is 34 m/s. Maximum one-hour speeds recorded at Byan Ovoo are shown in Table 5-7. The number of dust days per year is shown in Table 5-8.

Table 5-7: Maximum One-Hour Wind Speeds (m/s) at Byan Ovoo

		Jan				Feb				Mar				Apr				May				Jun				Jul				Aug				Sep				Oct				Nov				Dec
Maximum wind speed			13.4				14.0				15.4				18.1				16.6				16.2				16.3				14.8				16.0				18.6				19.3				14.5

Table 5-8: Frequency of Dust Storms in the Gobi Desert

		Jan				Feb				Mar				Apr				May				Jun				Jul				Aug				Sep				Oct				Nov				Dec
No. of days			0.7				1.0				2.4				4.7				4.1				1.5				1.0				0.4				0.6				0.7				1.9				0.7

5.3 Physiography

The region is covered by sparse semi-desert vegetation and is used by nomadic herders who tend camels, goats, and sheep. Several ephemeral streams cross the lease area and flow for short periods immediately after rainfall. Water is widely available from shallow wells.

The Oyu Tolgoi property is relatively flat, with occasional exposed bedrock. This topography will be amenable for the construction of the infrastructure, including the tailings storage facility, permanent and construction accommodations, and the processing plant.

5.4 Seismicity

5.4.1 General

Knight Piésold has completed a seismic hazard assessment of the Oyu Tolgoi site. The seismicity of the Oyu Tolgoi site was determined to be low, and the seismicity of eastern Mongolia is generally low. However, to the west of Oyu Tolgoi lies the Mongolian Altai—a tectonically active mountain range stretching 1,700 km from southwest Siberia to the Gobi Desert. The easternmost extension of the Mongolian Altai is known as the Gobi Altai, which dies out approximately 50 to 100 km west of Oyu Tolgoi.

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5.4.2 Mongolian Seismology Centre

The Research Centre for Astronomy and Geophysics of Academy of Science (Seismology Centre) is responsible for assessing seismology in Mongolia. IMMI appointed the Seismology Centre to perform a seismic assessment for the project. This work has been completed and the findings incorporated into the assessment by Knight Piésold.

5.4.3 Analysis and Conclusions

Based on the assessment, appropriate seismic design parameters were selected:

	•		For plant site structures, the maximum acceleration associated with an earthquake with a return period of 475 years (10% chance of exceedance in 50 years) is 0.06g. This makes it a UBC Zone 1, which is recommended for design. For the Russian building code SNIP II-7-821, a seismic intensity rating of VI (6) would be used for the design of “common” facilities and of VII (7) for “critical” facilities at Oyu Tolgoi.
	•		The foundation factor is defined by the soil profile. The site will mainly have foundation on rock or on dense or very stiff soil less than 15 m in depth. There are no areas of deeper loose or soft soils or soils that may liquefy.
	•		For design of the tailings storage facility:

	–		The operating basis earthquake (OBE) was selected as the earthquake with a 475-year return period. Assuming a design life of 30 years for the tailings facility, the probability of exceedance is 6%. The maximum acceleration for the 475-year-return-period earthquake is 0.06g. A conservative design magnitude of M7.5 has been selected for the OBE.
	–		Considering the consequences of failure (safety of life, economics, social and environmental impacts), the hazard classification of the tailings facility is high.
	–		The maximum design earthquake (MDE) with a maximum bedrock acceleration of 0.08g (1,000-year-return-period event) and design magnitude of M7.8 has been adopted.

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SECTION 6 • HISTORY

The existence of copper in the Oyu Tolgoi area has been recognized since the Bronze Age, but contemporary exploration for mineral resources did not begin until the 1980s, when a joint Mongolian and Russian geochemical survey team identified a molybdenum anomaly at the Central deposit and evidence of alteration and copper mineralization at the South deposit.

In 1996, geologists from Magma Copper Company identified a porphyry copper leached cap nearby and secured exploration tenements in late 1996. Magma was subsequently acquired by BHP.

Geophysical surveying at Oyu Tolgoi was first initiated by BHP in 1996. An airborne magnetometer survey was flown at a height of approximately 100 m on 300 m spaced, east-west oriented lines over approximately 1,120 km² of BHP’s mineral concession. The survey provided good resolution of the magnetic features to facilitate geological and structural interpretation across the concession areas. BHP also undertook an induced polarization (IP) survey utilizing a single gradient array with a 2,000 m AB and a ground magnetometer survey. Both surveys were conducted on east-west-oriented lines surveyed by a local Mongolian surveying team at 250 m spacing. The surveys covered Southern, Southwest, Central, and North Oyu exploration targets but did not extend into the Far North region that ultimately became the Hugo Dummett deposit.

BHP carried out geological, geochemical, and geophysical surveys and diamond drilling programs (23 holes total) in the Central and South deposits in 1997 and 1998. Copper and gold were encountered at depths from 20 m to 70 m below surface. Based on the results of this drilling, BHP estimated a preliminary resource of 438 Mt, averaging 0.48% copper and 0.25 g/t gold, early in 1999. The historical resource estimate pre-dates National Instrument 43-101 and is not necessarily in accordance with the resource classification categories prescribed therein.

BHP then halted its exploration in Mongolia and offered its properties for joint venture. IMMI visited Oyu Tolgoi in May 1999 and made an agreement to acquire 100% interest in the property, subject to a 2% Net Smelter Royalty (NSR).

In 2000, IMMI completed 8,000 m of reverse circulation (RC) drilling, mainly at the Central deposit, to explore the chalcocite blanket discovered earlier by BHP. Based on this drilling, IMMI estimated an Indicated resource of 31.7 Mt at 0.80% copper and an additional Inferred resource of 11.2 Mt grading 0.78% copper for the chalcocite blanket. The historical resource estimate pre-dates National Instrument 43-101 and is not necessarily in accordance with the resource classification categories prescribed therein.

In 2001, IMMI continued RC drilling, mostly in the South deposit area, to test possible oxide resources, and then drilled three diamond core holes to test the deep hypogene copper-gold potential. Hole 150 intersected 508 m of chalcopyrite-rich mineralization grading 0.81% copper and 1.17 g/t gold; hole 159 intersected a 49 m thick chalcocite blanket grading 1.17% copper and 0.21 g/t gold, followed by 252 m of hypogene covellite mineralization grading 0.61% copper and 0.11 g/t gold.

These results encouraged IMMI to mount a major follow-up drill program. In late 2002, drilling in the far northern section of the property intersected 638 m of bornite-chalcopyrite-rich mineralization in hole 270, starting at a depth of 222 m. This hole marked the discovery of the Hugo Dummett deposit.

IMMI completed all of its earn-in requirements by June 2002 and acquired the 2% NSR royalty retained by BHP in November 2003. As a result, IMMI became the sole owner of the property.

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SECTION 7 • GEOLOGICAL SETTING

This section has been copied verbatim from the May 2005 Technical Report on the Oyu Tolgoi Mineral Resource estimate (Juras, 2005).

7.1 Regional Geology

The Oyu Tolgoi camp in southern Mongolia lies within the Paleozoic Gurvansayhan Terrane, which consists of highly-deformed accretionary complexes and oceanic island arc assemblages (Badarch et al., 2002). The Gurvansayhan Terrane is itself a component of the Altaid orogenic collage a continental-scale belt dominated by collisional tectonics related to Late Paleozoic convergence and rotation of Neoproterozoic and pre-0.6 Ga cratonic blocks. In the region surrounding Oyu Tolgoi, the Altaid orogenic collage forms a broad corridor of major strike-slip faults, contractional fault and fold belts, and fault-controlled Mesozoic sedimentary basins. Major structures in this area include the Gobi-Tien Shan sinistral strike-slip fault system, which splits eastward into a number of splays in the Oyu Tolgoi area, and the Gobi Altai Fault system, which forms a complex zone of sedimentary basins overthrust by basement blocks to the north and northwest of Oyu Tolgoi (Figure 7-1). To the east of Oyu Tolgoi, regional structures are dominated by the northeast-striking East Mongolian Fault Zone, which forms the southeastern boundary of the Gurvansayhan Terrane. This regional fault may have formed as a major suture during Late Paleozoic terrane assembly, with Mesozoic reactivation leading to the formation of northeasterly-elongate sedimentary basins along the fault trace.

Figure 7-1: Location of Oyu Tolgoi, Gurvansayhan Terrane, and Major Cenozoic Faults in Southern Mongolia

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The present morphology and structure of southern Mongolia largely reflect the influences of Mesozoic to Cenozoic intra-plate deformation events. The principal recognized deformation episodes include: 1) Late Jurassic to Cretaceous north-south extension, accompanied by the intrusion of granitoid bodies, unroofing of metamorphic core complexes, and formation of extensional and transpressional sedimentary basins; and 2) superimposed northeast-southwest shortening associated with major strike-slip faulting and folding within the Mesozoic basins.

7.2 Property Geological Units

7.2.1 Stratified Rocks

The Oyu Tolgoi area lies within an east-west-trending belt of Devonian-Carboniferous volcanic and sedimentary rocks of continental margin and island arc affinities, constituting the South Mongolia Volcanic Belt. Two major stratigraphic sequences are recognized in the project area (Figure 7-2): 1) tuffs, basaltic rocks, and sedimentary strata of probable island arc affinity, assigned to the Upper Devonian Alagbayan Formation; and 2) an overlying succession containing conglomerates, fossiliferous marine siltstones, sandstones, waterlain tuffs, and basaltic to andesitic flows and volcaniclastic rocks, assigned to the carboniferous Sainshandhudag Formation. The two sequences are separated by a regional unconformity that, in the Oyu Tolgoi area, is associated with a time gap of 10 Ma to 15 Ma.

A thin covering of gently-dipping to horizontal Cretaceous stratified clays and clay-rich gravels overlies the Paleozoic sequence, infilling paleochannels, and small fault-controlled basins.

Devonian Alagbayan Formation

The oldest rocks identified at Oyu Tolgoi are correlated with the Upper Devonian Alagbayan Formation. They subcrop in the area around and to the west of the South and Southwest Oyu deposits, and are intersected in drill holes in all of the deposit areas. Four major lithologic divisions are present within the Alagbayan Formation, and each of these divisions comprises two or more mappable subunits. The two lower units are commonly strongly altered and form important ore hosts, while the upper two units, although pre- to syn-mineral in age, lack significant alteration and mineralization.

Unit DA1: Basaltic Flows and Volcaniclastic Rocks

The stratigraphically lowest rocks identified to date at Oyu Tolgoi consist of mafic volcanic flows and volcanogenic sedimentary rocks, forming a sequence at least several hundred metres in thickness. These rocks are commonly strongly altered and host much of the contained copper in the Southern Oyu and Hugo Dummett deposits.

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Figure 7-2: Stratigraphic Column of Paleozoic Bedrock Units in the Oyu Tolgoi Project Area

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Three main lithotypes are present in the lower sequence. Lowest is a subunit consisting of grey to green finely-laminated volcanogenic siltstone and interbedded fine sandstone. These rocks are overlain by and partially interbedded with dark green, massive porphyritic (augite) basalt, characterized by up to 35% phenocrysts in a fine-grained pilotaxitic matrix of plagioclase and augite. The third principal rock type is monolithologic to slightly polylithic basaltic lapilli tuff to volcaniclastic conglomerate/breccia, occurring above or partially interbedded with the massive augite basalt.

Unit DA2: Dacite Tuff / Volcaniclastic Rocks

Volcanic fragmental rocks of dacitic composition overlie the basaltic rocks of unit DA1 and form an important ore host in parts of the Hugo South deposit. The dacite sequence can be up to 200 m thick and consists of two major divisions. Volumetrically dominant is buff to dark green, dacite lapilli tuff with common eutaxitic texture and ovoid to globular fragments. This subunit occurs in the lower part of the sequence and is usually overprinted by intense sericite and advanced argillic alteration. It is overlain by or partially interstratified with a thinner unit of typically unsorted, polymictic block tuff to breccia. This coarser subunit is usually less altered than the lapilli tuff and does not contain significant copper mineralization.

A zircon U/Pb date of 365+/-4 Ma from the Hugo Dummett deposit constrains the age of the dacite sequence to Upper Devonian (Wainwright et al., 2005).

Unit DA3: Clastic Sedimentary Sequence

A clastic sedimentary sequence that overlies the dacite marks an important change in stratigraphic style that is recognizable throughout the Oyu Tolgoi project area. This clastic sequence is only weakly altered and measures up to approximately 100 m in thickness. Two main rock types are present. A finer subunit consisting of rhythmically interbedded carbonaceous siltstone and fine brown sandstone forms a lithologically distinctive unit overlying the top of the dacite. This unit is ubiquitous in drill holes in Hugo North and is also discontinuously distributed in the more southerly deposits. A second subunit characterized by polylithic conglomerate, sandstone, and siltstone is abundant in the South Oyu deposits and parts of the Hugo South deposit. The conglomerate typically has a muddy matrix, and is transitional downward to boulder conglomerate and volcanic breccia at the top of the underlying dacite sequence.

Cross-cutting relationships with radiometrically-dated units constrain the age of these clastic strata to Upper Devonian.

Unit DA4 Basaltic Flows / Fragmental Rocks, Siltstone

The uppermost strata of the Alagbayan Formation at Oyu Tolgoi comprise a sequence of basaltic flows and volcaniclastic rocks, overlain by and partly interstratified with thinly-bedded siltstone and massive sandstone. Together with unit DA3, these strata form a weakly-altered to unaltered, pre- to syn-mineralization cover sequence to the Oyu Tolgoi deposits averaging around 600 m thick.

Basaltic composition, dark green volcanic breccia with vesicular, fine-grained to coarsely porphyritic basaltic clasts is the dominant lithotype in the upper Alagbayan Formation. These breccias are commonly interstratified with volcanogenic sandstones and conglomerates that appear to be directly derived from the basalts. Middle parts of unit DA4 are dominated by thinly-interbedded red and green

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siltstone, which contain subordinate basalt layers in their lower levels. Uppermost strata of the unit are massive green to grey sandstone with rare siltstone interbeds.

Lower Carboniferous Sainshandhudag Formation

The Lower Carboniferous Sainshandhudag Formation forms the upper of the two major stratigraphic packages at Oyu Tolgoi. The unit post-dates porphyry mineralization and is separated from the underlying Devonian rocks by a regional unconformity. Radiometric dates and biostratigraphic correlations suggest the unconformity spans a time gap of 10 Ma to 15 Ma, omitting most of the Famennian (Upper Devonian) and Tournaisian (Lower Carboniferous) stages.

The Sainshandhudag Formation is divided into three major units at Oyu Tolgoi: a lowermost tuffaceous sequence, an intermediate clastic package, and an uppermost volcanic/volcaniclastic sequence.

Unit CS1: Andesitic Lapilli Tuff and Volcaniclastic Rocks

Lowest strata within the Sainshandhudag Formation in the Oyu Tolgoi area consist of andesitic lapilli tuff with abundant fiamme, and subordinate block tuff to breccia. These rocks are characterized by a crowded feldspar phenocryst-rich matrix and angular lithic clasts, which are invariably fine-grained and non-porphyritic.

The andesitic tuff is widely distributed in the Oyu Tolgoi area and measures up to 200 m in thickness. It is absent from the base of the Sainshandhudag Formation in several drill holes along the east side of the Hugo Dummett deposit, where higher units in the Sainshandhudag Formation disconformably overlie Devonian strata.

A U/Pb zircon date obtained from the Hugo Dummett deposit area suggests an age of 351 ± 2 Ma for the andesitic tuff/volcaniclastic unit (Wainwright et al., 2005).

Unit CS2: Conglomerate, Sandstone, Tuff, and Coal

A clastic sedimentary sequence overlies the lower andesitic package and measures up to 200 m in thickness. The sequence typically shows a progression from a lower conglomerate-sandstone-siltstone dominant unit to an overlying siltstone-waterlain tuff unit. Carbonaceous siltstone and coal beds occur in the lower part of the sequence.

Abundant marine and plant fossils constrain an Upper Tournaisian-Lower Visean (Lower Carboniferous) age for the unit.

Unit CS3: Basaltic and Andesite Lava and Volcaniclastic Rocks

The uppermost division of the Sainshandhudag Formation consists of a thick sequence of andesitic to basaltic flows and volcaniclastic rocks comprising several subunits. These subunits include, in order of superposition, a basal thin volcanic sandstone, a discontinuous porphyritic basaltic andesitic lava sequence, a thick basaltic breccia-to-block tuff unit, and an interstratified- to overlying-porphyritic basalt flow sequence. Together, these units can measure over 800 m in thickness.

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7.2.2 Intrusive Rocks

Intrusive rocks are widely distributed through the Oyu Tolgoi area and range from large batholithic intrusions to narrow discontinuous dykes and sills. At least seven classes of intrusive rocks can be defined on the basis of compositional and textural characteristics. Copper-gold porphyry mineralization is related to the oldest recognized intrusive suite, comprising large Devonian quartz monzodiorite intrusions that occur in all of the deposit areas. Many of the older intrusive units found on the property are strongly to intensely altered (e.g., quartz monzodiorite suite), and the compositional classifications used for these units should therefore be considered only as field terms.

Basalt / Dolerite

Mafic dykes are the youngest intrusive rocks recognized on the Oyu Tolgoi property and intrude all stratified units. They are typically aphanitic to fine-grained, locally vesicular, and contain variable amounts of plagioclase phenocrysts. In the deposit area, they are limited to dykes from metres to at most a few tens of metres wide, but in the southwest part of the property they may also occur as large, sill-like intrusive masses. This class of intrusions includes a strongly magnetic, north-striking subvertical dolerite dyke that cuts across the Hugo Dummett deposit.

Rhyolite

Rhyolite dykes and sills are abundant throughout the property and measure up to a few metres to tens of metres wide, with strike extents of hundreds of metres. Except where emplaced as sills, they typically have steep dips, and strike orientations are variable. Texturally they are aphanitic and aphyric. Intrusive breccias are common along dyke contacts, commonly incorporating both rhyolitic and wall rock fragments within a flow-banded groundmass. U/Pb zircon dates obtained from the rhyolite dykes are 335 ± 3.1 Ma (Wainwright et al., 2005).

Hornblende Biotite Andesite, Dacite

Hornblende biotite andesite and dacite dykes occur in all of the deposit areas, but usually are less volumetrically significant than other intrusive units. Both units are part of a trachyte suite, which may be genetically related to flows and pyroclastic units of the Sainshandhudag Formation. They are typically strongly porphyritic with feldspar, hornblende, and biotite. Quartz phenocrysts are common within the dacite dykes.

Biotite Granodiorite

Late- to post-mineral biotite granodiorite intrusions form a voluminous dyke system along the western side of the Hugo Dummett deposit and the more-restricted dykes and sills elsewhere. The intrusions are compositionally and texturally varied and likely include several intrusive phases. Typically, they contain large plagioclase phenocrysts with lesser small biotite phenocrysts, within a fine-grained to aphanitic brown groundmass. In the Hugo Dummett deposit, the age of the biotite granodiorite is constrained by U/Pb dating of zircon to 362 ± 4 Ma (Wainwright et al., 2005).

Quartz Monzodiorite

Porphyry-style mineralization at Oyu Tolgoi is genetically linked to Late Devonian quartz monzodiorite to monzodiorite intrusions, which form the most voluminous intrusions in the deposit area. These intrusions are texturally and compositionally varied, and several distinct phases can be distinguished

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within the deposits. They are typically phenocryst-crowded, with >40% plagioclase phenocrysts up to 5 mm long, and 10% to 15% biotite and hornblende. Preliminary U/Pb zircon ages of 370.6 Ma and 378 Ma have been obtained from unaltered and altered phases of the quartz monzodiorite in the Southwest Oyu deposit. These dates are at odds with the younger ages obtained from the dacite tuff country rocks and require further analysis. The form and characteristics of the quartz monzodiorite subunits are described in more detail in the following individual deposit descriptions.

Northwest Granitic Complex

The Oyu Tolgoi deposit area is bounded on the northwest by a large, polyphase granitic complex. Intrusive phases recognized in this complex include syenite, granite, quartz monzonite, quartz diorite, and quartz syenite. The temporal relationships between these different compositional phases have not been documented, and the only radiometric date obtained to date is a U/Pb zircon age of 348 Ma (Wainwright et al., 2005), implying that the complex post-dates mineralization at Oyu Tolgoi. The Northwest Granitic Complex is separated from older rocks of the deposit area by the northeast-striking, steeply northwest-dipping North Boundary Fault. The movement history of this fault is uncertain, and it may largely be the result of movement focused along the intrusive contact during post-intrusion deformation.

Hanbogd Complex

The Early Permian Hanbogd alkaline granite complex is a large, circular intrusion exposed just east of the Oyu Tolgoi property. The complex has a concentric structure defined by abundant pegmatite (dykes enriched in rare earth elements and Zr. The Hanbogd Complex has a flat roof, as indicated by numerous basaltic wall rock roof pendants, and may therefore have a “pancake” or lopolithic intrusive form.

7.3 Property Structural Geology

The Oyu Tolgoi project area is underlain by complex networks of faults, folds, and shear zones (Figure 7-3). Most of these structures are poorly exposed on surface and can only be defined through integration of detailed exploration data (primarily drill hole data), property-scale geological mapping, and geophysical data. Ivanhoe has made extensive use of oriented core drilling at Oyu Tolgoi, and the structural data collected has been invaluable in helping determine the subsurface morphology and structural history of the project area. Major structures in the project area strongly influence the distribution of mineralization by both controlling the original position and form of mineralized bodies, and modifying them during post-mineral deformation events.

7.3.1 Solongo Fault

The Solongo Fault is an east- to east-northeast-striking, subvertical structure that cuts across the Oyu Tolgoi property just south of the Southwest Oyu and South Oyu deposits. All of the significant mineralization discovered to date on the Oyu Tolgoi property is on the northern block of this fault.

The Solongo Fault typically occurs as a strongly tectonized, foliated zone up to several tens of metres wide. Rhyolite dykes commonly intrude the fault zone, and themselves have tectonically brecciated margins. On ground magnetic data, the fault forms a major linear anomaly that can be traced across the entire width of the Oyu Tolgoi property.

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Figure 7-3: Simplified Geological Map of Oyu Tolgoi Concession

Note:		Shows distribution of stratigraphic and intrusive units and major structural features of the western two-thirds of the concession

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The Solongo Fault forms a major structural break, and there is a minimum of approximately 1,600 m of south-side-down stratigraphic offset where it juxtaposes mineralized basalt (unit DA1b) in the South Oyu deposit against sediments correlated with the upper Alagbayan Formation (unit DA4) to the south. Depending on movement direction, net slip may be considerably greater. The displacement history of the Solongo Fault is poorly constrained. The fault clearly existed prior to emplacement of rhyolite dykes, which are part of a suite dated at 335 ± 3 Ma. Rhyolite dykes locally cross the fault with little or no apparent displacement, implying that movement since their emplacement was negligible.

7.3.2 Northwest Shear Zone

The Northwest Shear Zone is a wide, ductile shear zone that cuts across the far northwest corner of the Oyu Tolgoi project area (Figure 7-3). This shear zone consists of mylonitic to ultramylonitic rocks in the centre, grading outward over about 200 m to rocks lacking visible ductile strain. Together with the Boundary Fault, the shear zone marks the break between the volcanic and sedimentary strata hosting and surrounding the Oyu Tolgoi deposits (Alagbayan and Sainshandhudag formations), and the carboniferous granitic complex exposed on the northwestern corner of the property. Ubiquitous subhorizontal stretching lineation, asymmetric mesoscopic fabrics (shear bands, asymmetric porphyroclasts), and map-scale deflections of dykes indicate that the Northwest Shear Zone accommodated dominantly dextral strike-slip movement. The magnitude of displacement is not closely constrained, but the geometry of deformed dykes in the shear zone indicates that at least several kilometres of displacement have occurred.

Deformed quartz-feldspar porphyry dykes in the shear zone are geochemically identical to the rhyolite intrusions in the deposit area, and have produced an identical U/Pb age of 335 ± 3 Ma, placing a maximum age on shear zone deformation; no minimum age is constrained.

7.3.3 Central Fault

The Central Fault is a west-northwest-striking, moderately north-dipping structure that lies between the Hugo South and Central Oyu deposits. It occurs in numerous drill hole intersections in Hugo South, and its surface trace coincides with a strong linear magnetic anomaly.

Stratigraphic distribution across the Central Fault shows conflicting stratigraphic relationships at different levels. The fault consists of several splays and may have experienced multiple periods of displacement. The simplest interpretation of geological relationships is that early fault displacement resulted in north-side-down apparent offset, followed by a later apparent reverse displacement of lesser magnitude. Stratigraphic evidence suggests the Central Fault may have been active as a Late Devonian growth fault. However, the fault is clearly visible as a linear magnetic feature cutting the overlying Sainshandhudag Formation, implying that movement continued into the carboniferous or later.

7.3.4 Axial Fault, West Bat, East Bat Faults

The alignment of the Southwest Oyu, Central Oyu, and Hugo Dummett deposits, along with the elongate form of the Hugo Dummett deposit itself, strongly implies that an underlying north-northeast-

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striking fault or fault zone (referred to as the Axial Fault) controlled emplacement of porphyry intrusions and related hydrothermal activity. For example, the tabular, north-northeast-elongate form of the biotite granodiorite dyke complex that follows the west side of the deposit may reflect fault-controlled intrusion.

The Hugo Dummett deposit lies within a north-northeast-trending structural high bounded by the West Bat and East Bat faults. Although the latest movement on these bounding faults displaces post-mineral strata, they may represent the shallow expression of a longer-lived, deposit-controlling fault zone. Offsets of post-mineral stratigraphic contacts measure at least a kilometre (east-side up) for the West Bat Fault, and 200 m to 300 m (west-side-up) for the East Bat Fault. For both of these structures, the true slip direction is uncertain, and if there is a large strike-slip component of movement, total displacement may be significantly greater than stratigraphic offset.

7.3.5 Boundary Fault System

Roughly coincident with the northern boundary of the Oyu Tolgoi concession, an east-northeast-striking fault zone juxtaposes the Devonian sequence hosting and overlying the Oyu Tolgoi deposits against the carboniferous granitic complex to the north. Faults within this system include the North Boundary Fault, a splay of the North Boundary Fault, and the Boundary Fault. These faults dip steeply to the north or northwest, and occur as strongly-developed, foliated gouge and breccia zones ranging from decimetres to several tens of metres wide. They juxtapose younger rocks (north block) over older (south block), but true displacement direction and magnitude are poorly constrained.

7.3.6 Northeast-Striking Secondary Faults

Magnetic and satellite images show a strong northeast to east-northeast linear structural fabric cutting across parts of the Oyu Tolgoi property. Many of these lineaments can be correlated with faults identified in drill holes (e.g., East Bounding and West Bounding faults at the Southwest Oyu deposit), but others occur in areas where few or no drill holes have been completed, and may mark the positions of undocumented faults. Northeast-striking faults in the Southwest Oyu deposit form a primary control on the distribution of copper and gold mineralization, and the presence of mineralized clasts within the fault zones implies that they were also active following mineralization. Other northeast-striking faults displace stratigraphic contacts in the Lower carboniferous Sainshandhudag Formation near the South Oyu deposit.

7.3.7 Folds

Variations in bedding attitude recorded in both oriented drill core and surface outcrops define two orientations of folds on the Oyu Tolgoi property: a dominant set of northeast-trending folds, and a less developed set of northwest-trending folds. These folds are well defined in bedded strata of both the Sainshandhudag and Alagbayan formations. They are likely present in stratified rocks throughout the property, but outcrop and drill hole data are insufficient to define them in many areas.

Together, the two orientations of folds form a dome-and-basin interference pattern, but it is not possible to determine their relative ages. Both of the dominant fold orientations occur in Lower carboniferous strata, indicating that both folding events post-date mineralization.

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Sedimentary facing direction indicators in drill holes along the east flank of the Hugo Dummett deposit indicate that parts of the upper Alagbayan Formation are overturned. The overturning is interpreted to be associated with tight to isoclinal folds. These folds are cut by biotite granodiorite dykes, and therefore most were formed within the Late Devonian.

7.4 Southern Oyu Deposits

The Southern Oyu deposits include the Southwest Oyu or Southwest, South Oyu or South, Wedge Zone of Wedge, and Central Oyu or Central deposits. These deposits form contiguous zones of mineralization representing multiple mineralizing centres, each with distinct styles of mineralization, alteration, and host rock lithology. The boundaries between the individual deposits coincide with major fault zones (Figure 7-3). Strong, high-sulphidation mineralization and associated advanced argillic alteration, hosted by dacite tuff and quartz monzodiorite, are characteristic of the Central and Wedge deposits. The mineralization grades downward into chalcopyrite-gold mineralization with associated biotite-chlorite alteration hosted within basalt. At Southwest the dacite tuff and overlying strata have been removed by erosion, exposing deeper-level chalcopyrite-gold mineralization with associated biotite-chlorite alteration, hosted within basalt. Mineralization at the South deposit is chalcopyrite-bornite dominant with associated biotite-chlorite alteration, and is hosted within quartz monzodiorite, basalt, and dacite tuff.

7.4.1 Southwest Oyu Deposit

Host Rocks

The Southwest Oyu or Southwest deposit is a Au-rich porphyry system characterized by a southwest-plunging, pipe-like geometry with over a 700 m vertical extent. Over 80% of the deposit is hosted by massive to fragmental porphyritic basalt of the Upper Devonian Alagbayan Formation, with the remainder hosted by intra-mineral, Late Devonian quartz monzodiorite intrusions. The quartz monzodiorite intrusions form irregular plugs and dykes related to several distinct phases. These include 1) early-strongly-altered quartz-veined dykes mainly limited to the high-grade central deposit core (informally referred to as OT-Qmd); 2) superimposed younger fragmental dykes entraining early quartz vein clasts but lacking strong sulphide mineralization (informally referred to as xQmd); and 3) voluminous massive quartz monzodiorite containing weaker mineralization, flanking and underlying the high-grade deposit core.

Several phases of post-mineral dykes cut the Southwest deposit. Most of the dykes belong to the rhyolite, hornblende biotite andesite, or biotite granodiorite intrusive phases. They commonly have steep dips, and many are localized along faults. The rhyolite dykes tend to have west to west-northwest strikes in the deposit core and northeast strikes when emplaced along major faults. Hornblende biotite andesite dykes strike east-northeast except where they intrude along the major northeast faults.

Structural Geology

Most of the Southwest deposit, and the entire high-grade, gold-rich core of the deposit, lies between two northeast-striking faults, the West Bounding Fault and the East Bounding Fault. Both faults are clearly defined on ground magnetic images, and their positions and orientations are well constrained by numerous drill hole intersections.

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The bounding faults consist of foliated cataclasite, gouge/breccia, and mylonitic bands in zones ranging from a few metres to a few tens of metres wide. Both faults have subparallel splays locally. Correlation of drill hole intersections constrains an average fault dip of 80° to 310° for both faults. The East Bounding Fault juxtaposes younger rocks to the southeast against the Alagbayan Formation rocks (augite basalt) hosting the deposit, while the West Bounding Fault is mainly intraformational within the augite basalt. The West Bounding Fault is commonly intruded by hornblende-biotite andesite dykes, whereas rhyolite dykes are more common along the East Bounding Fault.

The cataclasite within the fault zones contains abundant quartz, quartz sulphide, and sulphide (py, cpy, sph, gal) clasts in a comminuted matrix that is locally overprinted by fine-grained pyrite and chalcopyrite. These relationships imply that at least some of the fault movement was contemporaneous with mineralization. Kinematic indicators within the fault zones imply dominantly sub-horizontal, sinistral movement on the bounding faults.

Quartz-dominant veins with variable amounts of sulphide (py, cpy, bn), K-feldspar, chlorite, and carbonate are ubiquitous in the Southwest deposit, and there is a general correlation between vein density and copper and gold grade. Most veins have widths of several millimetres to several centimetres, although within the core of the deposit veins up to a metre or more thick occur. Vein contacts can be either planar or variably deformed, and folded and/or faulted veins are common. Veins within the high-grade deposit core display subparallel to sheeted forms with a preferred southwest-dipping orientation. These pass into more irregularly oriented stockwork veins in peripheral mineralized zones, where subvertical north- to northwest-striking orientations are most common.

Fault geometry and kinematics, vein orientations, and deposit geometry at Southwest support a structural model invoking deposit formation in a dilational fault transfer zone. This zone is delineated by the West Bounding Fault on the northwest and the East Bounding Fault on the southeast. The preferred vein orientation within the core of the deposit reflects the local stress geometry within this zone of dilation. The Southwest deposit probably formed as a subvertical cylindrical body and attained its present west-southwest plunge during post-mineral regional deformation. This post-mineral rotation is consistent with the easterly stratigraphic dips of both pre- and post-mineral rocks in the deposit area.

7.4.2 South Oyu Deposit

Host Rocks

The South Oyu or South deposit occurs within an east- to northeast-dipping sequence of Alagbayan Formation strata (basalt and dacite tuff units), intruded on the southwest by an irregular quartz monzodiorite body. Much of the basalt sequence contains fragmental textures with juvenile pyroclasts and is texturally similar to the overlying dacite tuff sequence. To the northeast, the altered and mineralized rocks are overlain by mudstones and conglomerates of the upper Alagbayan Formation, which pass up-section into the overlying basalt and sediment sequence and ultimately into rocks of the Sainshandhudag Formation.

The deposit area is cut by numerous barren dykes, most of which belong to the post-mineral rhyolite and basalt intrusive suites. These dykes typically have widths of only a few metres, with the exception of a major, east-west rhyolite dyke that cuts through the middle of the South deposit and

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attains widths of up to a few tens of metres. This wide dyke commonly balloons into larger intrusive masses where it intersects the South and Solongo faults. Although irregular in form, the rhyolite dykes have roughly west to west-northwest strikes and steep dips. In contrast, the basalt dykes have moderate north-easterly dips, subparallel to contacts within the stratified host rocks.

Structural Geology

The South deposit lies on a fault block bounded on the northwest by the northeast-striking South Fault, and on the south by the east-northeast-striking Solongo Fault (Figure 7-3). The South Fault forms a zone with several strands over a width of up to 90 m, which juxtapose progressively younger strata on the northwest against older strata to the southeast. Drill hole intersections of these faults typically consist of gouge and breccia zones up to several metres wide. To the west, the faults strike into a large quartz monzodiorite intrusion. The faults are difficult to trace through the intrusion and offset of the intrusive contact is minimal, implying that most movement pre-dated emplacement of the quartz monzodiorite.

The Solongo Fault truncates the southern edge of the South deposit. It forms a wide, strongly tectonized zone. Stratigraphic offset on the Solongo Fault is at least 1,600 m. No significant mineralization has been identified on the south side of the fault.

Copper mineralization in the South deposit is associated with stockworks of thin (usually < 10 cm) quartz+sulphide veins. In surface exploration pits and trenches, veins occur as steep, northwest-striking, strongly sheeted sets. However, veins intersected in drill holes have a stockwork style and lack the strong preferred orientation visible in surface exposures.

7.4.3 Wedge Deposit

Host Rocks

The Wedge deposit occurs within a northeast-dipping sequence of Upper Devonian Alagbayan Formation strata similar to that hosting the adjacent South deposit. However, in the Wedge deposit, the dacite tuff unit is significantly thicker (up to 180 m) than at South and forms the dominant host to copper mineralization. On the northeast, conformably overlying non-mineralized rocks of the upper Alagbayan Formation and lower Sainshandhudag Formation form the upper limit of mineralization.

Mineralized rocks in the Wedge deposit are cut by numerous barren dykes, including biotite granodiorite, hornblende biotite andesite, and rhyolite compositions. Biotite granodiorite and hornblende biotite andesite are more common along the northwest margin of the deposit and typically have northeast strikes, parallel to the East Bounding Fault. These intrusions are also common as sills, typically intruding along the stratigraphic contact between the dacite tuff and the overlying sedimentary strata. Rhyolite dykes are common throughout the deposit. They typically have steeply-dipping contacts but varied strike orientations.

Structural Geology

The Wedge deposit occupies a rectangular fault block bounded on the west by the northeast-striking East Bounding Fault and on the south by the east-northeast-striking South Fault (Figure 7-3). Within this block, stratigraphic contacts are continuous and relatively planar, showing little evidence of structural disruption.

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Movement on the East Bounding and South faults has juxtaposed younger strata within the fault block hosting the Wedge deposit against older strata on the adjacent blocks containing the Southwest and South deposits. Stratigraphic contacts are relatively continuous between the Wedge deposit and the Central deposit, implying that displacement on the East Bounding Fault is largely transferred to the Rhyolite Fault (between Southwest and Central), leaving the Wedge and Central as a structurally intact block that has been displaced downward relative to the Southwest and South deposits.

Fault disruption is common along the contact between the Alagbayan Formation dacite tuff and the overlying sedimentary strata. However, there is no evidence of significant stratigraphic omission or repetition associated with this faulting, and the movement may be relatively minor.

7.4.4 Central Oyu Deposit

Host Rocks

The Central Oyu or Central deposit is hosted within a swarm of feldspar-phyric quartz monzodiorite intrusions, emplaced into porphyritic augite basalt and overlying dacite tuff of the Alagbayan Formation. The dacite tuff is in turn overlain by unmineralized sedimentary and mafic volcanic rocks of the upper Alagbayan Formation, which currently dip moderately to the east.

Several phases of intra-mineral and late-mineral quartz monzodiorite intrusions have been distinguished in the Central deposit based on textural variations and intensity of mineralization and alteration. Most have dyke forms, emanating from a larger intrusive mass to the north and west of the deposit area. The quartz monzodiorite dykes terminate within the base of the sedimentary units of the upper Alagbayan Formation.

Basalt flows and dacite tuffs of the Alagbayan Formation are preserved as a series of isolated, irregular, moderately north- to northeast-dipping bodies within the quartz monzodiorite dyke swarm. These volcanic windows are up to 200 m thick and extend several hundred metres down dip to the limit of drilling. The contact between the dacite and the overlying sedimentary sequence is commonly faulted and forms the upper limit to mineralization, as elsewhere in the Oyu Tolgoi district.

Post-mineral dykes are common in the Central deposit and comprise rhyolite, biotite granodiorite, hornblende biotite andesite, and dacite dykes. The rhyolite dykes are most abundant, with the majority occurring as west- and west-northwest-striking bodies in the southern half and on the periphery of the deposit. Biotite-granodiorite dykes occur along the deposit’s eastern margin and tend to strike north to north-northeast. East-northeast striking hornblende biotite andesite dykes occur mainly along the north-eastern margin of the deposit.

Structural Geology

Drill holes through the Central deposit show little evidence of significant post-mineral faulting, and the mineralogical zoning, grade distribution, and continuity of contacts are consistent with the deposit being contained in a structurally intact block. Most contacts in the deposit are intrusive or stratigraphic, although minor faulting occurs locally. Post-mineral faults form minor zones of breccia and cataclasite in some drill holes, but it is not possible to correlate these intersections between drill holes to define continuous fault surfaces. Pre- or syn-mineral faults, if present, are largely obscured by intrusive and hydrothermal overprinting.

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The Central deposit area is overlain to the east by non-mineralized conglomerate, mudstone, and siltstone of the upper Alagbayan Formation. Wide zones of breccia and foliated breccia occur either along the basal contact of or within the lower portion of these sedimentary strata. The displacement history of these zones is uncertain, and they may be related to minor post-mineralization movement between the two rheologically contrasting rock packages.

Along its southern margin, the Central deposit is juxtaposed against the Southwest deposit area by an east-west-striking fault that is now occupied by a rhyolite dyke (the Rhyolite Fault). The ignimbrite and overlying sedimentary units have been uplifted and eroded from the block south of this fault.

Mineralized veins within the Central deposit show a range in orientations, the most common including southwest-, west-, and northwest-dipping attitudes. Vein orientations are similar to those documented in the Southwest deposit, although the degree of preferred orientation in the deposit core is weaker at Central. Similar preferred vein orientations at Central and Southwest suggest that the two deposits were formed in a similar structural regime. However, the Central deposit lacks the strong bounding fault control that is fundamental to the form and geometry of the Southwest deposit. This lack of bounding fault control may account for the more-irregular form of the mineralized body at Central.

Post-mineral tilting of the Central deposit is implied by bedding dips in the enclosing and overlying stratigraphic sequence. Rotating the structural data for the Central deposit sufficiently to restore bedding to horizontal indicates a strong preference for subvertical veins within the deposit at the time of formation.

7.5 Hugo Dummett Deposit

The Hugo Dummett deposit consisting of Hugo North and Hugo South, contains porphyry-style mineralization associated with quartz monzodiorite intrusions, concealed beneath a deformed sequence of Upper Devonian and Lower carboniferous sedimentary and volcanic rocks. The deposit is highly elongated to the north-northeast and extends over 3 km (Figure 7-3). Although mineralization is continuous over this entire length, it thins markedly and decreases in grade where the host strata are displaced by an east-west striking, north-dipping fault, termed the 110 Fault. This fault defines the boundary between Hugo South and Hugo North. The depth to the top of the high-grade (>2.5% Cu) zone varies from 300 m at Hugo South to about 900 m at Hugo North.

7.5.1 Hugo South Deposit

Host Rocks

The Hugo South deposit is hosted by an easterly-dipping sequence of volcanic strata correlated with the lower part of the Devonian Alagbayan Formation and quartz monzodiorite intrusive rocks. Stratigraphically lowest rocks in the sequence consist of porphyritic basalt flows and minor volcaniclastic strata. These rocks are overlain by dacite tuffs and breccias forming a sequence approximately 100 m to 200 m thick. Weakly-altered to unaltered sedimentary and volcanic rocks of the upper Alagbayan Formation and Sainshandhudag Formation overlie the mineralized sequence along the eastern flank of the Hugo South deposit. The thickness of the non-mineralized Alagbayan Formation sequence commonly exceeds 600 m, although structural thickening may occur within the

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sequence. The Sainshandhudag Formation strata unconformably overlie, and are locally faulted against, the Alagbayan Formation.

Several phases of intrusive rocks occur in the Hugo South deposit. The oldest recognized intrusions are quartz monzodiorite bodies, which underlie the entire deposit area and contain low copper grades. Quartz monzodiorite contacts are irregular, but overall show a preferred easterly dip, subparallel to contacts in the enclosing stratified rocks. The quartz monzodiorite is broadly contemporaneous with alteration and mineralization, and two varieties are distinguished on the basis of alteration characteristics and position within the deposit: 1) an intensely quartz veined phase that occurs along the upper margin of the main intrusive body or as a separate east-dipping tabular body in the overlying strata; and 2) a lower-grade, more weakly veined variety, which makes up the large intrusive body forming the lower part of and underlying the entire deposit.

Late- to post-mineral biotite granodiorite intrusions form a north-northeast-striking dyke complex cutting across the western edge of the deposit. Based on correlations between drill hole intersections and measurements of individual contacts using oriented drill core, dyke contacts appear to have a moderate to steeply west-dipping preferred orientation.

Younger intrusions include rhyolitic, hornblende biotite andesite, dacite, and basalt/dolerite compositional varieties. These intrusions usually occur as dykes with subvertical orientations, or less commonly as easterly-dipping sills emplaced along stratigraphic contacts. They are non-mineralized and not volumetrically significant except locally in the deposit.

Structural Geology

The Hugo South deposit occurs within a north-northeasterly elongate block bounded on the north and south by moderately north-dipping faults, and on the east and west by steep, north-northeast-striking faults. Strata within the block form a homoclinal sequence dipping moderately to the east-southeast.

Deformation of the Hugo South deposit is dominated by brittle faulting (Figure 7-4). Major faults cutting the deposit can be grouped on the basis of orientation into four sets: 1) east-west striking, moderately north-dipping faults (110, Central faults); 2) steep north-northeast-striking faults (East and West Bat, East Hugo, and Axial faults); 3) north-northeast-striking faults that dip moderately east, subparallel to lithologic contacts (Contact, Lower faults); and 4) east-west-striking, subvertical faults (East-West Fault).

110 Fault

The 110 Fault defines the division between the Hugo North and Hugo South deposits, although mineralization is continuous across the fault. The fault strikes east-west and dips northerly at approximately 45° to 55°. In drill hole intersections, the 110 Fault consists of zones of non-cohesive gouge and breccia up to several metres thick. Tectonic fragments within the fault zone are derived from adjacent wall rocks and include mineralized quartz veins within strongly foliated clay gouge.

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Figure 7-4: Simplified Interpretation of Section 6200 N, Hugo South Deposit

Note: Shows distribution of major lithologic units, principal faults, and Cu mineralization

The 110 Fault juxtaposes younger strata on the hangingwall block (north) against older strata on the footwall block (south). The stratigraphic offset of the base of the upper member of the Alagbayan Formation varies between approximately 100 m and 200 m. Depending on the net slip direction, the true offset may be greater. The fault is truncated up-dip by the East-West Fault, and the intersection between the two fault surfaces is subhorizontal. Because it is truncated by the East-West Fault, the 110 Fault does not have a surface trace in the Hugo Dummett deposit area.

Stratigraphic evidence suggests that earliest movement on the 110 Fault had a large north-side-down component and may have been syn-depositional with respect to the strata immediately overlying the ignimbrite unit. In particular, in several areas coarse volcanic breccias (block and ash tuff unit) are thicker in drill holes immediately north of the fault than on the southern fault block. In addition, the upper basalt + sediment portion of the Alagbayan Formation is up to 200 m thicker on the northern fault block than to the south. However, the variation in thickness could be associated with varying depths of erosion at the disconformity marking the top of the unit. Additional evidence for early movement on the 110 Fault is the lack of offset of the biotite granodiorite dyke contact where the two intersect, implying that most of the stratigraphic displacement pre-dates dyke emplacement.

Kinematic indicators in the foliated gouge indicate oblique sinistral + reverse movement on the 110 Fault, contrary to the apparent stratigraphic displacement. These fabrics likely record a late

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period of movement that is of lesser apparent magnitude than earlier displacements. Cataclasite developed during this stage of movement contains tectonic fragments of veins with copper sulphides, indicating post-mineral timing. However, the late fault movement does not significantly displace mineralization.

Central Fault

The Central Fault is a shallowly to moderately north-dipping structure that lies beneath the southern portion of the Hugo Dummett deposit. It projects to surface between the Hugo South and Central deposits. Drill hole intersections indicate a strike of approximately 90° to 100°, and its surface trace coincides with a strong linear magnetic anomaly.

At shallow levels, stratigraphic contacts are offset across the Central Fault with apparent normal displacement. At deeper levels (OTD401 series drill holes), the opposite stratigraphic relationships occur: dacite tuff of the Alagbayan Formation is faulted over sedimentary strata correlated with the upper Alagbayan Formation. In drill core, the Central Fault consists of a zone of fault breccia and gouge that can be up to several metres thick.

Contradictory stratigraphic relationships (stratigraphic repetition at deeper levels, stratigraphic omission at shallow levels) imply that the Central Fault may have experienced multiple periods of displacement, similar to the history proposed for the 110 Fault. The simplest interpretation is that early displacement resulted in north-side-down apparent offset, followed by a later period of reverse displacement during a period of roughly north-south contractional deformation. The magnitude of reverse displacement was insufficient to restore the entire apparent normal offset. At depth, the reverse sense reactivation may have been localized along a splay in the hangingwall of the principal fault surface, resulting in local stratigraphic repetition.

East-West Fault

The East-West Fault cuts across and displaces the northern end of the Hugo South deposit. Drill hole intersections constrain the fault orientation to subvertical with a strike of approximately 080° to 090°. It forms an abrupt boundary to alteration and mineralization in several sections. Biotite granodiorite dyke contacts—the Contact Fault, East Hugo Fault, 110 Fault, and East Bat Fault—are all cut by the East-West. In drill hole intersections, the East-West Fault occurs as a zone of clay-rich breccia and locally foliated gouge up to several metres in width, similar in character to the Central and 110 faults. Narrow basaltic dykes commonly occur within the fault zone.

Offsets of a late basaltic dyke, stratigraphic contacts, and the axis of the Hugo South deposit constrain an oblique dextral + north-side-down net slip of roughly 150 m to 200 m on the fault, along a gently eastward-plunging slip vector.

Deposit-Parallel Faults

Moderately east-dipping (deposit-parallel) faults that occur within and immediately adjacent to the Hugo Dummett deposit include the Contact Fault and the Lower Fault. The Contact Fault is a bedding-parallel detachment zone that normally occurs at the transition between the dacite tuff unit (middle Alagbayan Formation) and the overlying sediment/basalt sequence. The intensity of fabric development along this fault is highly variable: in some drill holes it occurs as a wide zone of anastamosing foliation and brecciation in carbonaceous mudstones within the base of the upper

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sequence; elsewhere there is little tectonic disruption along the contact. The Contact Fault is often intruded by dykes or sills of basaltic, andesitic, or rhyolitic composition. The Contact Fault marks the upper limit of strong alteration in most of the Hugo Dummett deposit. Bedding above and below the faulted contact is concordant. Other than the variable thickness of lithologic marker unit near the contact (e.g., uppermost block and ash tuff in the middle Alagbayan Formation), there is no indication that significant structural omission or repetition has occurred at the Contact Fault.

In the western part of the Hugo Dummett deposit, the biotite granodiorite dyke crosses the Contact Fault at a high angle. The fault continues as a narrow zone of breccia and clay gouge in the biotite granodiorite, but is difficult to identify in many drill holes. Although there is likely some displacement of the intrusive contact, the magnitude is too small to be mappable with the present drill hole spacing.

The Lower Fault occurs as an intensely brecciated, clay gouge-rich zone within the middle or lower portion of the mineralized body, typically 200 m to 400 m below the Contact Fault. Similar to the Contact Fault, the Lower Fault can be traced westward through at least part of the biotite granodiorite dyke as a narrow zone of breccia and gouge.

Latest movement on the deposit-parallel faults post-dates both mineralization in the Hugo Dummett deposit and intrusion of the biotite granodiorite dykes. It is difficult to clearly demonstrate geological offsets on the deposit-parallel faults. The lack of apparent offset may in part reflect the absence of clear stratigraphic markers at the levels at which the faults occur, as well as the fault orientation being close to that of both stratigraphic and alteration contacts. However, in the Hugo North deposit, the Lower Fault appears to displace the Hugo North gold zone and biotite granodiorite dykes by up to 400 m.

The contact-parallel nature of the Contact and Lower faults suggests that they may have formed as gently-dipping thrusts during regional contractional deformation. These faults were localized along contacts between units with differing competencies, or along relatively weak layers within the stratigraphic sequence.

Axial Fault

The linear mineralized trend defined by the Central, Southwest, and Hugo Dummett deposits, which now measures over 6.5 km, likely reflects the presence of a deep, north-northeast-striking crustal fault or fault zone controlling magma emplacement and mineralization. This inferred structure probably also controlled emplacement of the north-northeast-striking late-mineral biotite granodiorite dyke. Although the controlling structure is largely conceptual and direct evidence for it would have been overprinted in many areas by the biotite granodiorite dyke, it is referred to for convenience as the Axial Fault.

Apparent offsets of stratigraphic contacts across the main biotite granodiorite dyke provide supporting evidence for the existence of the Axial Fault (Figure 7-4). Depending on how contacts are projected through areas with low drill hole density, the basal contact of the upper member of the Alagbayan Formation shows an apparent stratigraphic displacement of approximately 200 m to 300 m across the biotite granodiorite dyke. Because the slip direction is unknown, this represents the minimum amount of movement on the fault. There is no clear evidence for post-dyke movement on the Axial Fault. This restricts the timing of movement to the narrow time interval between deposition of upper Alagbayan Formation and intrusion of the biotite granodiorite.

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West Bat Fault

The West Bat Fault is a north-northeast-striking, subvertical structure that extends along the west side of the Hugo Dummett deposit. It cuts the northwestern edge of the Hugo North deposit, but is well west of the main part of the Hugo South deposit. The structural character of the fault in drill hole intersections varies with both depth and stratigraphic level. In deeper intersections, where the fault juxtaposes massive volcanic conglomerates (upper Sainshandhudag Formation) against quartz monzodiorite, biotite granodiorite, or lower Alagbayan Formation, it occurs as a weakly to moderately foliated gouge and breccia zone up to a few metres wide. At shallower levels, the fault forms a much broader tectonized zone and commonly splits into several subparallel splays.

The West Bat Fault juxtaposes significantly lower stratigraphic levels to the east against higher stratigraphic levels to the west. If the base of the upper Sainshandhudag Formation is used as a marker, stratigraphic offset, and therefore the minimum net slip, is over 1,500 m. Determination of true net slip amount and direction on the West Bat Fault is complicated by the probable multiple periods of movement on the fault, and available data do not uniquely constrain the fault movement history.

East Bat Fault

The East Bat Fault is a north-northeast-striking, subvertical structure occurring along the east side of the Hugo Dummett deposit. Although contact positions adjacent to the fault imply a minimum of a few hundred metres’ displacement, the fault expression in drill core can be subtle, often amounting to only decimetres of foliated gouge or cataclasite. The East Bat Fault occurs well east of the mineralization defined within the Hugo South deposit.

Stratigraphic contacts within the Sainshandhudag Formation show around 200 m to 300 m of east-side-down stratigraphic offset across the East Bat Fault. There is no kinematic information available for the fault, so the true slip direction and amount are uncertain. Much, if not all, movement would have been post-mineral: the fault cuts carboniferous strata of the Sainshandhudag Formation, but is itself cut by the East-West Fault.

East Hugo Fault

The East Hugo Fault occurs as a north- to north-northwest-striking, steeply east-dipping zone of strong to intense brecciation and clay gouge occurring along the east limb of the Hugo South and Hugo North deposits. At Hugo South it cuts across stratigraphic contacts at moderate angles and forms a sharp break in alteration intensity and copper grade. It displaces mineralization, and there is no evidence in grade distribution or alteration to suggest that the fault was present at the time of mineralization. Drill hole data suggest that the East Hugo Fault cuts the 110 Fault but is displaced dextrally by the East-West Fault. Sections where fault and contact geometry are best constrained show apparent east-side-down displacement of the Alagbayan Formation contacts ranging from about 200 m to as much as 400 m. The true slip direction, and thus the amount of net slip, is not constrained.

Folding History

Bedding measurements obtained from oriented drill core, mainly from bedded intervals within the upper Alagbayan Formation, define two orientations of folds in the Hugo South deposit area: a dominant set of north-northeast-trending folds, and a subordinate set of northwest-trending folds.

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Both of the dominant fold orientations also occur in carboniferous post-mineral strata, indicating that both events post-date mineralization and may have modified the form of the deposit.

Within the upper Alagbayan Formation, north-northeast-trending folds have wavelengths and amplitudes on the scale of metres to tens of metres. The far greater abundance of east-dipping bedding measurements implies that the fold geometry is strongly asymmetric, characterized by west-verging folds. In contrast, northwest-trending folds have wavelengths of hundreds of metres and open, symmetric forms. Together, the two fold sets define an elongate dome and basin interference pattern. Because the axial surfaces and fold axes of the two sets are at a high angle to one another, and no penetrative cleavage fabrics formed during either event, it is not possible to determine their relative ages in the deposit area.

Reversals in sedimentary facing direction occur locally in the upper part of the Alagbayan Formation along the east flank of the Hugo South deposit. These reversals suggest the presence of tight to isoclinal folds affecting at least the Alagbayan Formation. These same overturned folds occur in the Hugo North deposit, where they are cut by the Late Devonian biotite granodiorite dyke. These cross-cutting relationships effectively bracket the timing of folding to Late Devonian, roughly contemporaneous or close in age to mineralization.

7.5.2 Hugo North Deposit

Host Rocks

The Hugo North deposit occurs within a geological setting similar to that at Hugo South. Host rocks are an easterly-dipping sequence of volcanic strata correlated with the lower part of the Devonian Alagbayan Formation and quartz monzodiorite intrusive rocks. Stratigraphically lowest rocks in the sequence consist of basalt flows and minor volcaniclastic strata overlain by a dacite tuff and breccia sequence. The dacite sequence includes a lower lapilli tuff unit, with overlying coarser tuffs and breccias. Weakly-altered to unaltered sedimentary and volcanic rocks of the upper Alagbayan Formation and Sainshandhudag Formation overlie the mineralized sequence along the eastern flank of the deposit. Farther to the east and up-section, Sainshandhudag Formation rocks unconformably overlie and are locally faulted against the Alagbayan Formation.

Intrusive rocks at Hugo North are dominated by quartz monzodiorite bodies that underlie the entire deposit area and host a significant portion of the copper and gold mineralization. Quartz monzodiorite contacts are irregular, but overall show a preferred easterly dip, subparallel to stratification in the enclosing rocks. The quartz monzodiorite is contemporaneous with alteration and mineralization, and several varieties are distinguished on the basis of alteration characteristics and position within the deposit: 1) an intensely quartz-veined phase that occurs along the upper margin of the main intrusive body or as a separate east-dipping tabular body in the overlying strata; 2) a gold-rich phase, restricted to the western part of the main intrusion in the northern part of the Hugo North deposit; and 3) the main intrusive body, which typically has lower vein density and lower copper and gold grades. Cross-cutting relationships between the different phases are ambiguous, and it is uncertain whether they represent a temporally distinct intrusive events or simply variations in alteration intensity related to position within the deposit.

Late- to post-mineral biotite granodiorite intrusions form a voluminous, northerly-striking dyke complex cutting across the western edge of the deposit. Although these intrusions locally contain

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elevated copper grades adjacent to intrusive contacts or associated with xenolithic zones, they are essentially non-mineralized. The positions and orientations of dyke contacts are now well established in the Hugo North deposit area on the basis of correlations between drill hole intersections and measurements of individual contacts using oriented drill core. Dominant dyke orientation varies with depth. At levels above approximately 250 m, where it cuts through the non-mineralized hangingwall strata, the biotite granodiorite occurs as a single intrusive mass with contacts dipping moderately to steeply to the west. Below this level, the biotite granodiorite is more complex, occurring as multiple, subparallel to anastamosing dykes that cut through the quartz monzodiorite intrusion and mineralized Alagbayan Formation strata. Drill hole correlation suggests that this lower portion contains a wide, steeply-dipping central dyke, from which emanate numerous moderately- to steeply-dipping apophyses.

Younger intrusions include rhyolitic, hornblende biotite andesite, dacite, and basalt/dolerite compositional varieties. These intrusions usually occur as dykes with subvertical orientations or less commonly as easterly-dipping sills emplaced along stratigraphic contacts. They are non-mineralized and not volumetrically significant in most of the deposit.

Structural Geology

The Hugo North deposit occurs within easterly-dipping homoclinal strata contained in a north-northeasterly elongate fault-bounded block. The northern end of this block is cut by several northeast-striking faults near the northern boundary of the Oyu Tolgoi property, but the deposit remains open along trend north of these faults. Other than these northeasterly faults, the structural geometry and deformation history of the Hugo North deposit are similar to those of the Hugo South deposit.

Deformation of the Hugo North deposit is dominated by brittle faulting (Figures 7-5 and 7-6). Major faults cutting the deposit can be grouped on the basis of orientation into four sets: 1) east-west-striking, moderately north-dipping faults (110 Fault); 2) steep north-northeast-striking faults (East and West Bat, East Hugo, and Axial faults); 3) north-northeast-striking, moderately east-dipping faults subparallel to lithologic contacts (Contact, Lower faults); and 4) the east-northeast-striking faults cutting across the northern end of the deposit (Boundary Fault System).

110 Fault

The 110 Fault defines the division between the Hugo North and Hugo South deposits. The Hugo North deposit diminishes in size and grade southward approaching the fault. The characteristics and interpretation of the 110 Fault are summarized above in the description of the Hugo South deposit.

Deposit-Parallel Faults

Moderately east-dipping faults at the Hugo North deposit include the Contact Fault and the Lower Fault. The Contact Fault is a bedding-parallel detachment zone that normally occurs at the transition between the dacite tuff (middle Alagbayan Formation) and the overlying basalt/sediment cover sequence. The structural character of the Contact Fault at Hugo North is similar to that described above for the Hugo South area. The Contact Fault does not significantly displace the biotite granodiorite dyke contact, implying that movement following emplacement of this intrusion was minor.

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