As filed with the Securities and Exchange Commission on October 18, 2010.

Registration No. 333-          

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM F-10

REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

IVANHOE MINES LTD.

(Exact name of Registrant as specified in its charter)

Yukon, Canada (Province or other Jurisdiction of Incorporation or Organization)		1000 (Primary Standard Industrial Classification Code Number)		Not Applicable (I.R.S. Employer Identification Number, if applicable)

Suite 654, 999 Canada Place, Vancouver, British Columbia, Canada V6C 3E1, (604) 688-5755
(Address and telephone number of Registrant’s principal executive offices)

CT Corporation System
111 Eighth Avenue, New York, NY 10011, (212) 894-8700
(Name, address (including zip code) and telephone number (including area code) of agent for
service in the United States)

Copies to:

Beverly A. Bartlett Ivanhoe Mines Ltd. 654-999 Canada Place Vancouver, B.C. Canada V6C 3E1 (604) 688-5755		Paul L. Goldman Goodmans LLP 355 Burrard Street Suite 1900 Vancouver, B.C. V6C 2G8 (604) 682-7737		Edwin S. Maynard Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, New York 10019-6064 (212) 373-3000

Approximate date of commencement of proposed sale of the securities to the public:
As soon as practicable after this Registration Statement becomes effective

Province of British Columbia, Canada
(Principal jurisdiction regulating this offering)

It is proposed that this filing shall become effective (check appropriate box below):

A.

o upon filing with the Commission, pursuant to Rule 467(a) (if in connection with an offering being made contemporaneously in the United States and Canada).

B.

x at some future date (check the appropriate box below)

1.

o pursuant to Rule 467(b) on (           ) at (           ) (designate a time not sooner than 7 calendar days after filing).

2.

o pursuant to Rule 467(b) on (           ) at (           ) (designate a time 7 calendar days or sooner after filing) because the securities regulatory authority in the review jurisdiction has issued a receipt or notification of clearance on (           ).

3.

o pursuant to Rule 467(b) as soon as practicable after notification of the Commission by the Registrant or the Canadian securities regulatory authority of the review jurisdiction that a receipt or notification of clearance has been issued with respect hereto.

4.

x after the filing of the next amendment to this Form (if preliminary material is being filed).

     If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to the home jurisdiction’s shelf prospectus offering procedures, check the following box. o

CALCULATION OF REGISTRATION FEE

Title of each class of

Proposed maximum

Proposed maximum

Amount of

securities to be registered

Amount to be registered

offering price per unit

aggregate offering price(1)

registration fee(1)

Rights

U.S. $1,000,000,000

U.S. $71,300

Common Shares

If, as a result of stock splits, stock dividends or similar transactions, the number of securities purported to be registered on this registration statement changes, the provisions of Rule 416 shall apply to this registration statement.

 

 

PART I

INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS

Preliminary Short Form Prospectus

Rights Offering		Subject to completion, October 18, 2010

IVANHOE MINES LTD.

US$  l  / Cdn$  l 

Rights to Subscribe for  l  Common Shares

at a Price of US$  l  per Common Share or Cdn$  l  per Common Share

Maximum Rights (100%)

Minimum Rights (85%)

     Ivanhoe Mines Ltd. (“IVN”, “Ivanhoe”, “we”, “us”, “our”, or the “Company”) is issuing to all holders (“Shareholders”) of its outstanding common shares (“Common Shares”) as at 5:00 p.m. (Toronto time) on  l , 2010 (the “Record Date”) rights (“Rights”) to subscribe for an aggregate of  l  Common Shares (the “Rights Offering”). A Shareholder is entitled to receive one Right for each Common Share held on the Record Date. The Rights are transferable and will be represented by rights certificates (“Rights Certificates”). Except as described below, only a Shareholder at the close of business on the Record Date with an address of record in any province or territory of Canada or the United States (a “Prospectus Holder”) or a Qualified Holder (as defined below) is entitled to exercise Rights. For every  l  Rights held, a Prospectus Holder or a Qualified Holder will be entitled to subscribe for one Common Share from  l , 2010 (the “Commencement Date”) until 5:00 p.m. (Toronto time) (the “Expiry Time”) on  l , 2010 (the “Expiry Date”), at a price of, at the holder’s choice, either US$ l  per Common Share or Cdn$ l  per Common Share (whether in US dollars or Canadian dollars, the “Subscription Price”). The US dollar denominated Subscription Price is a price equal to approximately  l % of the weighted average closing price per Common Share on the New York Stock Exchange (the “NYSE”) over the  l  trading days prior to the date hereof, and the Canadian dollar denominated Subscription Price is a price equal to approximately  l % of the weighted average closing price per Common Share on the Toronto Stock Exchange (the “TSX”) over the  l  trading days prior to the date hereof. No fractional Common Shares or cash in lieu thereof will be issued. Where the exercise of Rights would otherwise entitle a holder thereof (each, a “Subscriber” and, collectively, “Subscribers”) to fractional Common Shares, the Subscriber’s entitlement will be reduced to the next lowest whole number of Common Shares.

     The Rights Offering is conditional upon Rights representing at least 85% of the Rights offered in the Rights Offering having been exercised by holders thereof prior to the Expiry Time on the Expiry Date (the “Minimum Subscription Condition”). If the Minimum Subscription Condition is not satisfied, the Company will be under no obligation to complete the Rights Offering, although the Company will retain sole discretion to waive this condition and complete the Rights Offering. If the Minimum Subscription Condition is not satisfied as at the Expiry Time on the Expiry Date and the Company does not waive this condition, the Rights will not be exercisable by the holders thereof and will be void and no longer be exercisable for any Common Shares. If the Rights Offering does not proceed, the aggregate Subscription Price paid for the Rights exercised (the “Subscription Payments” and, with respect to each Subscriber, the “Subscription Payment”) will be returned promptly to the Subscribers without interest or deduction.

     There is no standby commitment or additional subscription privilege with respect to Common Shares underlying unsubscribed Rights as part of this Rights Offering.

     Rights not exercised by the Expiry Time on the Expiry Date will be void and no longer exercisable for any Common Shares. If the Rights Offering is completed, a Shareholder’s percentage interest in IVN will be substantially diluted upon the exercise of Rights by other Shareholders unless such Shareholder exercises its Rights. See “RISK FACTORS — Risks Related to the Rights Offering — Dilution”. Any subscription for Common Shares will be irrevocable once submitted.

     An application will be submitted to the TSX to approve the listing of the Rights and the Common Shares issuable upon the exercise of the Rights. Similar applications will be made with the NYSE and the Nasdaq Stock Market (“NASDAQ”) to admit the Rights for trading and list the Common Shares issuable upon the exercise of the Rights. Listing of the Rights on the TSX, NYSE and NASDAQ is subject to IVN obtaining conditional listing approval for the Rights and the underlying Common Shares from, and fulfilling all of the listing requirements of each of, the TSX, NYSE and NASDAQ, respectively. Provided IVN obtains each such approval and fulfills all such requirements, the Rights will be listed or admitted for trading, as applicable, on each of the TSX, NYSE and the NASDAQ on  l , 2010.

     This Prospectus qualifies the distribution of the Rights and the Common Shares issuable upon the exercise of the Rights (together, the “Offered Securities”). This Prospectus also covers the offer and sale of the Offered Securities within the United States under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”).

Subscription Price: US$ l per Common Share or Cdn$ l per Common Share

		Subscription		Dealer		Proceeds to
		Price		Manager Fee(5)		IVN(1)(2)
Per Common Share.		US$ l  /Cdn$ l		US$ l		US$ l
Minimum Subscription Proceeds		US$ l  /Cdn$ l		US$ l		US$ l (3)
Maximum Subscription Proceeds		US$ l  /Cdn$ l		US$ l		US$ l (4)

The sole dealer manager for the Rights Offering is:

Citi

 

     IVN’s head office is located at 654 – 999 Canada Place, Vancouver, British Columbia, Canada, V6C 3E1 and its registered office is located at 300 – 204 Black Street, Whitehorse, Yukon, Canada, Y1A 2M9.

     There is currently no market through which the Rights may be sold. As a result, even after the Rights are listed on the TSX and admitted for trading on the NYSE and NASDAQ, the pricing of the Rights in the secondary market, the transparency and availability of trading prices and the liquidity of the Rights may be adversely affected. See “RISK-FACTORS — Risks Related to the Rights Offering — No prior trading market for Rights”. The outstanding Common Shares are listed on the TSX, NYSE and NASDAQ, under the symbol “IVN”. The closing price for the Common Shares on the TSX on October 15, 2010 was Cdn$24.77 per Common Share (US$24.50, based on the Bank of Canada noon buying rate (the “Noon Buying Rate”) on October 15, 2010), and the closing price for the Common Shares on the NYSE and NASDAQ on October 15, 2010 was US$24.47 per Common Share (Cdn$24.73, based on the Noon Buying Rate on October 15, 2010).

     IVN has been informed by Mr. Robert Friedland that he and entities controlled by him, who collectively hold 96,881,622 Common Shares representing 18.26% of the issued and outstanding Common Shares, intend to fully exercise all of the Rights issued to each of them, subject to financing and an absence of any material adverse change to the Company. Mr. Robert Friedland has entered into a loan agreement (the “Loan Agreement”), subject to certain conditions precedent, with Citibank, N.A. (“Citibank”), an affiliate of the Dealer Manager, to finance his participation in the Rights Offering. Concurrently with entering into the loan agreement, Mr. Friedland has entered into a cash-settled contract (the “Cash-Settled Contract”) with Citibank which provides a collar with reference to a notional number of Common Shares equal to approximately •% of the number of Common Shares outstanding after the Rights Offering, assuming the Rights Offering is fully subscribed (together, the Loan Agreement and the Cash-Settled Contract are hereinafter referred to as the “Friedland Agreements”). Each of the Friedland Agreements is a separate transaction from the Rights Offering, entered into by Citibank and Mr. Friedland. See “RISK FACTORS — Risk Factors Related to this Offering — The cash-settled contract entered into by Mr. Robert Friedland may affect the value of the Common Shares after the Closing Date”.

     The Company, after reasonable inquiry, believes that certain insiders and others intend to exercise Rights to purchase approximately  l  Common Shares, representing  l % of the Rights Offering. If these insiders exercise their Rights, an additional  l % of the Rights will be required to be exercised to meet the Minimum Subscription Condition. See “INTENTION OF INSIDERS TO EXERCISE RIGHTS”.

     CIBC Mellon Trust Company (the “Subscription Agent”), at its principal office in the City of Toronto (the “Subscription Office”), is the subscription agent and depository for this Rights Offering. See “DETAILS OF THE RIGHTS OFFERING — Subscription Agent and Depository”.

     The Company will mail or cause to be mailed to each Registered Shareholder holding Common Shares in registered form (a “Registered Shareholder” and, collectively, the “Registered Shareholders”) that resides in any province or territory of Canada or the United States (collectively referred to as “Prospectus Jurisdictions”) a Rights Certificate evidencing the number of Rights issued to the holder thereof, together with a copy of this Prospectus. Registered Shareholders will be presumed to be resident in the place of their address of record, unless the contrary is shown to the Company’s satisfaction. In order to exercise the Rights represented by the Rights Certificate, a Prospectus Holder or a Qualified Holder must complete and deliver Form 1 of the Rights Certificate to the Subscription Agent in the manner and upon the terms set out in this Prospectus. See “DETAILS OF THE RIGHTS OFFERING — Common Shares Held in Registered Form”. For Registered Shareholders that reside in any jurisdiction other than the Prospectus Jurisdictions (each other jurisdiction, a “Non-Prospectus Jurisdiction”), the Company will mail or cause to be mailed a copy of this Prospectus together with a letter advising them that their Rights Certificates will be held by the Subscription Agent as agent for the benefit of all such Registered Shareholders. Registered Shareholders that wish to be recognized as Qualified Holders (as such term is defined below) should contact the Subscription Agent at the earliest possible time, but in no event after 4:30 p.m. (Toronto time) on  l , 2010. See “DETAILS OF THE RIGHTS OFFERING — Non-Prospectus Holders”.

     For Common Shares held through a securities broker or dealer, bank or trust company or other custodian (each, a “Participant”) that participates directly or indirectly in the book-based system administered by CDS Clearing and Depository Services Inc. (“CDS”) or in the book-based system administered by the Depository Trust Company (“DTC”), a Prospectus Holder or a Qualified Holder may exercise the Rights issued in respect of such Common Shares by: (a) instructing the Participant holding such Rights to exercise all or a specified number of such Rights, and (b) forwarding to such Participant the Subscription Price for each Common Share that such holder wishes to subscribe for in accordance with the terms of this Rights Offering. We refer to Participants in CDS as “CDS Participants” and to Participants in DTC as “DTC Participants.”

     Holders that wish to exercise Rights issued in respect of Common Shares held through a Participant should contact such Participant to determine how Rights may be exercised. The entire Subscription Price for any Rights exercised must be paid at the time of subscription and must be received by the Subscription Agent at the Subscription Office prior to the Expiry Time on the Expiry Date. Accordingly, Subscribers must provide the Participant holding their Rights with instructions and the required payment sufficiently in advance of the Expiry Date to permit proper exercise of their Rights. Participants will have an earlier deadline for receipt of instructions and payment. See “DETAILS OF THE RIGHTS OFFERING — Common Shares Held In Book-Entry Form”.

     If your Rights are held of record through DTC, you may exercise these Rights through the DTC’s “PSOP” function by instructing DTC to charge your applicable DTC account for the Subscription Payment for the Common Shares and deliver such amount to the Subscription Agent. We note, however, that if Rights are held through a DTC Participant, the holder of such Rights may not be able to exercise such Rights in Canadian dollars and such holder should contact its DTC Participant if it wishes to submit any Subscription Payment in Canadian dollars. The Subscription Agent must receive the required subscription documents, including the Subscription Payment for the Common Shares sufficiently in advance of the Expiry Date to permit proper exercise of their Rights. See “DETAILS OF THE RIGHTS OFFERING — Common Shares Held In Book-Entry Form — DTC”.

     The Offered Securities are not qualified under the securities laws of any Non-Prospectus Jurisdiction and Rights may not be exercised by or on behalf of a holder of Rights resident in a Non-Prospectus Jurisdiction (a “Non-Prospectus Holder”), except under the circumstances where the Company determines, in its sole discretion, that the offering to and subscription by such person (each, a “Qualified Holder”) is lawful and in compliance with all securities and other laws applicable in the Non-Prospectus Jurisdiction where such person is resident. See “DETAILS OF THE RIGHTS OFFERING — Non-Prospectus Holders”.

     As a condition to a purchase of any Common Shares in the Rights Offering, each Subscriber other than a Qualified Holder will be deemed to have represented and warranted that it is resident in a Prospectus Jurisdiction, and this representation and warranty will be relied upon by us, the Dealer Manager and its affiliates and the Subscription Agent.

     We reserve the right to treat as invalid any exercise or purported exercise of any Rights in the Rights Offering that appears to us to have been exercised, effected or dispatched in a manner which may involve a breach of the laws or regulations of any jurisdiction or if we believe, or our agents believe, that the same may violate or be inconsistent with the procedures and terms set out in this Prospectus or in breach of the representation and warranty that a holder exercising its Rights is resident in a Prospectus Jurisdiction, as described herein.

     Holders of Rights that reside outside of Canada or the United States and any persons (including any Participants) that have a contractual or legal obligation to forward this document to a jurisdiction outside a Prospectus Jurisdiction should read the section entitled “DETAILS OF THE RIGHTS OFFERING — Non-Prospectus Holders”.

     This Rights Offering is made by a Canadian issuer that is permitted, under a multijurisdictional disclosure system adopted by the United States, to prepare this Prospectus in accordance with the disclosure requirements of Canada. Prospective investors should be aware that those requirements are different from those of the United States.

     The enforcement by investors of civil liabilities under United States federal securities laws may be affected adversely by the fact that the Company is organized under the laws of the Yukon Territory, Canada, that many of our directors and officers, and some or all of the experts named in this Prospectus, are residents of Canada or otherwise reside outside the United States, and that a substantial portion of the assets of the Company and of said persons are located outside the United States. See “Enforcement of Civil Liabilities”.

     THE OFFERED SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) OR ANY STATE SECURITIES COMMISSION NOR HAS THE SEC OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.

     Prospective investors should be aware that the acquisition or disposition of the securities described in this Prospectus and the expiry of an unexercised Right may have tax consequences in Canada, the United States, or elsewhere, depending on each particular prospective investor’s specific circumstances. Such consequences for investors that are resident in, or citizens of, the United States may not be described fully herein. Prospective investors should consult their own tax advisors with respect to such tax considerations.

     Certain legal matters relating to Canadian law in connection with the Rights Offering will be passed upon on our behalf by Goodmans, Vancouver, British Columbia and Goodmans LLP, Toronto, Ontario, and on behalf of the Dealer Manager by McMillan LLP, and certain legal matters relating to United States law will be passed upon on our behalf by Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, New York and on behalf of the Dealer Manager by Cleary Gottlieb Steen & Hamilton LLP.

     Investments in Rights and Common Shares are subject to a number of risks. The risk factors outlined herein and incorporated by reference in this Prospectus should be carefully reviewed and considered by prospective purchasers in connection with an investment in Rights or the Common Shares underlying such Rights. See “RISK FACTORS”.

TABLE OF CONTENTS

WHERE YOU CAN FIND MORE INFORMATION		vii
ENFORCEABILITY OF CIVIL LIABILITIES		viii
CAUTIONARY NOTE TO UNITED STATES INVESTORS		viii
CURRENCY AND EXCHANGE RATE INFORMATION		ix
DOCUMENTS INCORPORATED BY REFERENCE		ix
FORWARD-LOOKING STATEMENTS			x
QUESTIONS AND ANSWERS RELATING TO THE RIGHTS OFFERING AND THE RIGHTS			1
SUMMARY			6
KEY DATES AND TIMES OF THE RIGHTS OFFERING			11
THE COMPANY			12
MINIMUM SUBSCRIPTION CONDITION			16
INTENTION OF INSIDERS TO EXERCISE RIGHTS			16
RATIONALE FOR A RIGHTS OFFERING			17
USE OF PROCEEDS			17
DETAILS OF THE RIGHTS OFFERING			18
CERTAIN AGREEMENTS OF THE COMPANY			25
CONSOLIDATED CAPITALIZATION			26
DESCRIPTION OF SHARE CAPITAL			27
PRIOR SALES			27
PRICE RANGE AND TRADING VOLUME			31
PRINCIPAL HOLDERS OF SECURITIES			32
PLAN OF DISTRIBUTION			34
RELATIONSHIPS BETWEEN THE COMPANY AND THE DEALER MANAGER			36
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS			37
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS			40
RISK FACTORS			44
LEGAL MATTERS			60
NAMING OF EXPERTS			60
INTEREST OF EXPERTS			60
AUDITORS, REGISTRAR AND TRANSFER AGENT AND SUBSCRIPTION AGENT			60
DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT			61
AUDITORS’ CONSENT			62
Ex-5.1

WHERE YOU CAN FIND MORE INFORMATION

     We have filed with the SEC under the U.S. Securities Act a registration statement on Form F-10 relating to the Offered Securities being offered hereunder and of which this Prospectus forms a part. This Prospectus, which constitutes part of the registration statement, does not contain all of the information set forth in such registration statement, certain items of which are contained in the exhibits to the registration statement as permitted or required by the rules and regulations of the SEC. Items of information omitted from this Prospectus but contained in the registration statement will be available on the SEC’s website at www.sec.gov.

     We file with the securities commissions or similar authorities in each of the provinces and territories of Canada (the “Canadian Securities Authorities”) material change, annual and quarterly reports and other information. We are subject to the informational requirements of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), and, in accordance with the Exchange Act, we also file certain reports with and furnish other information to the SEC. You may read any document we file with or furnish to the SEC at the SEC’s public reference room at Room 1580, 100 F Street N.E., Washington, D.C. 20549. You may also obtain copies of the same documents from the public reference room of the SEC at 100 F Street, N.E., Washington, D.C. 20549 by paying a fee. Please call the SEC at 1-800-SEC-0330 or contact them at www.sec.gov for further information on the public reference rooms.

     You may also access our disclosure documents and any reports, statements or other information that we file with the Canadian Securities Authorities through the Internet on the Canadian System for Electronic Document Analysis and Retrieval, which is commonly known by the acronym SEDAR and which may be accessed at www.sedar.com. SEDAR is the Canadian equivalent of the SEC’s Electronic Document Gathering Analysis and Retrieval System, which is commonly known by the acronym EDGAR and which may be accessed at www.sec.gov.

ENFORCEABILITY OF CIVIL LIABILITIES

     The Company is a corporation existing under the Business Corporations Act (Yukon). Many of the Company’s directors and officers, and some of the experts named in this Prospectus, are residents of Canada or otherwise reside outside the United States and other non-Canadian jurisdictions, and all or a substantial portion of their assets, and a substantial portion of the Company’s assets, are located outside the United States and other non-Canadian jurisdictions, other than Mongolia. The Company will appoint an agent for service of process in the United States, but it may be difficult for holders of Common Shares that reside in the United States to effect service within the United States upon those directors, officers and experts that are not residents of the United States. It may also be difficult for holders of Common Shares that reside in the United States to realize in the United States upon judgments of courts of the United States predicated upon the Company’s civil liability and the civil liability of its directors, officers and experts under the U.S. federal securities laws. The Company has been advised by its Canadian counsel, Goodmans, that a judgment of a U.S. court predicated solely upon civil liability under U.S. federal securities laws or the securities or “blue sky” laws of any state within the United States, would probably be enforceable in Canada if the U.S. court in which the judgment was obtained assumed jurisdiction on the same basis that a court in Canada would assume jurisdiction. The Company has also been advised by Goodmans, however, that there is substantial doubt whether an action could be maintained in Canada in the first instance on the basis of liability predicated solely upon U.S. federal securities laws.

     The Company has filed with the SEC, concurrently with its registration statement on Form F-10 of which this Prospectus is a part, an appointment of agent for service of process on Form F-X. Under the Form F-X, the Company has appointed CT Corporation System as its agent for service of process in the United States in connection with any investigation or administrative proceeding conducted by the SEC, and any civil suit or action brought against or involving the Company in a U.S. court arising out of or related to or concerning the offering of the securities under this Prospectus.

CAUTIONARY NOTE TO UNITED STATES INVESTORS

     This Prospectus has been prepared in accordance with the requirements of Canadian securities laws, which differ from the requirements of United States securities laws. Unless otherwise indicated, all reserve and resource estimates included or incorporated by reference in this Prospectus have been prepared in accordance with Canadian National Instrument 43-101, Standards of Disclosure for Mineral Projects (“NI 43-101”), and the Canadian Institute of Mining, Metallurgy and Petroleum Definition Standards for Mineral Resources and Mineral Reserves (“CIM Definition Standards”). NI 43-101 is a rule developed by the Canadian Securities Administrators which establishes standards for public disclosure an issuer makes of scientific and technical information concerning mineral projects. NI 43-101 permits the disclosure of a historical estimate made prior to the adoption of NI 43-101 that does not comply with NI 43-101 using the historical terminology if the disclosure: (a) identifies the source and date of the historical estimate; (b) comments on the relevance and reliability of the historical estimate; (c) states whether the historical estimate uses categories other than those prescribed by NI 43-101; and (d) includes any more recent estimates or data available.

     Canadian standards, including NI 43-101, differ significantly from the requirements of the SEC, and reserve and resource information contained or incorporated by reference in this Prospectus may not be comparable to similar information disclosed by U.S. companies. In particular, and without limiting the generality of the foregoing, the term “resource” does not equate to the term “reserves”. Under U.S. standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. The SEC’s disclosure standards normally do not permit the inclusion of information concerning “measured mineral resources”, “indicated mineral resources” or “inferred mineral resources” or other descriptions of the amount of mineralization in mineral deposits that do not constitute “reserves” by U.S. standards in documents filed with the SEC. U.S. investors should also understand that “inferred mineral resources” have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an “inferred mineral resource” will ever be upgraded to a higher category. Under Canadian rules, estimated “inferred mineral resources” may not form the basis of feasibility or pre-feasibility studies except in rare cases. Investors are cautioned not to assume that all or any part of an “inferred mineral resource” exists or is economically or legally mineable. Disclosure of “contained ounces” in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute “reserves” by SEC standards as in-place tonnage and grade without reference to unit measures. The requirements of NI 43-101 for identification of “reserves” are also not the same as those of the SEC, and reserves reported by Ivanhoe in compliance with NI 43-101 may not qualify as “reserves” under SEC standards.

Accordingly, information concerning mineral deposits set forth herein and in the documents incorporated herein by reference may not be comparable with information made public by companies that report in accordance with U.S. standards.

     See pages 5 to 8 of the Company’s AIF (as defined herein) for the year ended December 31, 2009 filed on SEDAR at www.sedar.com and filed on EDGAR at www.sec.com for a description of certain mining terms used in this Prospectus and the documents incorporated by reference herein.

CURRENCY AND EXCHANGE RATE INFORMATION

     In this Prospectus, all funds are quoted in United States dollars unless otherwise indicated. References to “$” and “US$” are to United States dollars and references to “Cdn$” are to Canadian dollars. The Noon Buying Rate for the purchase of one United States dollar using Canadian dollars was as follows during the indicated periods:

(Stated in Canadian dollars)

		Quarter Ended												Year Ended December 31
		Sept. 30,				June 30,				Mar. 31,
		2010				2010				2010				2009				2008				2007
End of period			1.0298				1.0606				1.0156				1.0466				1.2246				0.9881
High for the period			1.0660				1.0778				1.0734				1.3000				1.2969				1.1853
Low for the period			1.0158				0.9961				1.0113				1.0292				0.9719				0.9170
Average for the period			1.0391				1.0276				1.0401				1.1420				1.0660				1.0748

     The Noon Buying Rate on October 15, 2010 for the purchase of one United States dollar using Canadian dollars was Cdn$1.0108 (one Canadian dollar on that date equalled US$0.9893).

DOCUMENTS INCORPORATED BY REFERENCE

     You should read this Prospectus along with the documents incorporated by reference herein. We have prepared the information contained in this Prospectus, any free writing prospectus and the documents incorporated by reference herein. Neither we nor the Dealer Manager nor any of its affiliates have authorized anyone to provide you with any other information and we take no responsibility for other information others may give you. Neither we nor the Dealer Manager nor any of its affiliates is making an offer to sell the Offered Securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this Prospectus, any free writing prospectus or the documents incorporated by reference herein is accurate as of any date other than their respective dates.

     Information has been incorporated by reference in this Prospectus from documents filed with the Canadian Securities Administrators. Under the multijurisdictional disclosure system adopted by the United States and Canada, the SEC and the Canadian Securities Authorities allow us to “incorporate by reference” certain information we file with them, which means that we can disclose important information to you by referring you to those documents. Information that is incorporated by reference is an important part of this Prospectus. We incorporate by reference the documents listed below, which were filed with the Canadian Securities Authorities under applicable Canadian securities laws and, subject to certain exceptions, with the SEC.

     The following documents are specifically incorporated by reference in and form an integral part of this Prospectus:

(a)

the AIF for the year ended December 31, 2009, dated March 31, 2010 (the “AIF”);

(b)

our audited comparative consolidated financial statements for the years ended December 31, 2009 and 2008, together with the notes thereto and the auditor’s reports thereon (the “Annual Financial Statements”);

(c)

our unaudited interim comparative consolidated financial statements for the six-month period ended June 30, 2010, together with the notes thereto (the “Interim Financial Statements”);

(d)

management’s discussion and analysis of financial condition and operations of IVN for the year ended December 31, 2009;

(e)

management’s discussion and analysis of financial condition and operations of IVN for the six-month period ended June 30, 2010;

(f)

our management information circular dated April 5, 2010 prepared in connection with the annual and special meeting of Shareholders held on May 7, 2010;

(g)

our material change report dated April 6, 2010 respecting our adoption of a shareholders’ rights plan, as filed on SEDAR on April 6, 2010;

(h)

our material change report dated April 9, 2010 respecting the fulfillment of all conditions precedent under the Investment Agreement (as defined therein), as filed on SEDAR on April 9, 2010;

(i)

our material change report dated April 22, 2010 respecting the amendment and restatement of the shareholders’ rights plan, as filed on SEDAR on April 23, 2010; and

(j)

our material change report dated May 21, 2010 respecting the development of a new Integrated Development Plan for the Company’s copper and gold exploration and development project at Oyu Tolgoi in Mongolia (the “Oyu Tolgoi Project”), as filed on SEDAR on May 21, 2010.

     Any document of the types referred to above (excluding confidential material change reports) filed by us with a securities commission or similar authority in Canada after the date of this Prospectus and prior to the expiration of the Rights Offering hereunder, and any other document required to be incorporated by reference pursuant to Item 11.2 of Form 44-101F1 — Short Form Prospectus, will be deemed to be incorporated by reference in this Prospectus. In addition, to the extent that any document or information incorporated by reference in this Prospectus is included in any report on Form 6-K, Form 40-F, Form 20-F, Form 10-K, Form 10-Q or Form 8-K (or any respective successor form) that is filed with or furnished to the SEC after the date of this Prospectus, such document or information shall be deemed to be incorporated by reference as an exhibit to the registration statement of which this Prospectus forms a part. In addition, we may incorporate by reference into this Prospectus information from documents that we file with or furnish to the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act.

     Any statement contained in this Prospectus or in a document incorporated, or deemed to be incorporated, by reference in this Prospectus shall be deemed to be modified or superseded, for purposes of this Prospectus, to the extent that a statement contained in the Prospectus or in any other subsequently filed document that also is, or is deemed to be, incorporated by reference in this Prospectus modifies, replaces or supersedes such statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document which it modifies or supersedes. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute part of this Prospectus.

     Copies of the documents incorporated in this Prospectus by reference may be obtained on request without charge from the Vice President and Corporate Secretary of Ivanhoe at Suite 654, 999 Canada Place, Vancouver, British Columbia, V6C 3E1, Telephone: (604) 331-9803.

FORWARD-LOOKING STATEMENTS

     Certain statements made in this Prospectus and in the documents incorporated herein by reference, including statements relating to matters that are not historical facts and statements of our beliefs, intentions and expectations about developments, results and events which will or may occur in the future, constitute “forward-looking information” within the meaning of applicable Canadian securities legislation and “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking information and statements are typically identified by words such as “anticipate”, “could”, “should”, “expect”, “seek”, “may”, “intend”, “likely”, “plan”, “estimate”, “will”, “believe” and similar expressions suggesting future outcomes or statements regarding an outlook. These include, but are not limited to:

•

statements respecting anticipated business activities;

•

planned expenditures;

•

corporate strategies;

•

proposed acquisitions and dispositions of assets;

•

discussions with third parties respecting material agreements;

•

mining plans for the Oyu Tolgoi Project and the schedule for carrying out and completing construction of the Oyu Tolgoi Project;

•

the estimated schedule and cost of bringing the Oyu Tolgoi Project into commercial production;

•

the ability of IVN to arrange acceptable financing commitments for the Oyu Tolgoi Project;

•

anticipated future production and cash flows;

•

target milling rates, mining plans and production forecasts for the coal mine at Ovoot Tolgoi, Mongolia (the “Ovoot Tolgoi Coal Project”);

•

the schedule for carrying out and completing an expansion of the production capability of the Ovoot Tolgoi Coal Project;

•

anticipated outcomes with respect to the ongoing marketing of coal products from the Ovoot Tolgoi Coal Project;

•

the anticipated timing of payback of capital invested in the Ovoot Tolgoi Coal Project;

•

the impact of arbitration proceedings with Rio Tinto International Holdings Limited (“Rio Tinto”);

•

the impact of assertions made by Rio Tinto that the Rights Offering offends its rights under the Private Placement Agreement (as defined herein) and the shareholders’ agreement between Mr. Friedland and Rio Tinto;

•

the impact of amendments to the laws of Mongolia and other countries in which IVN carries on business, particularly with respect to taxation; and

•

the anticipated timing, cost and outcome of plans to continue the development of non-core projects, and other statements that are not historical facts.

     All such forward-looking information and statements are based on certain assumptions and analyses made by the Company’s management in light of their experience and perception of historical trends, current conditions and expected future developments, as well as other factors management believes are appropriate in the circumstances. These statements, however, are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information or statements. Important factors that could cause actual results to differ from these forward-looking statements are included in the section “RISK FACTORS” of this Prospectus.

     The reader is cautioned not to place undue reliance on forward-looking information or statements. By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, that contribute to the possibility that the predicted outcomes will not occur. Events or circumstances could cause our actual results to differ materially from those estimated or projected and expressed in, or implied by, these forward-looking statements. You should carefully consider the matters discussed under “RISK FACTORS” included and incorporated by reference in this Prospectus.

     This Prospectus also contains references to estimates of mineral reserves and mineral resources. The estimation of reserves and resources is inherently uncertain and involves subjective judgments about many relevant factors. The accuracy of any such

estimates is a function of the quantity and quality of available data, and of the assumptions made and judgments used in engineering and geological interpretation, which may prove to be unreliable. There can be no assurance that these estimates will be accurate or that such mineral reserves and mineral resources can be mined or processed profitably. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

     Readers are cautioned that the foregoing list of factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions with respect to the Company, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Furthermore, the forward-looking statements contained in this Prospectus are made as of the date of this document and the Company does not undertake any obligation to update or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. The forward-looking statements contained in this Prospectus, including the documents incorporated by reference herein, are expressly qualified by this cautionary statement.

QUESTIONS AND ANSWERS RELATING TO THE RIGHTS OFFERING AND THE RIGHTS

     The following are examples of what we anticipate will be common questions about the Rights Offering. The following questions and answers do not contain all of the information that may be important to you and may not address all of the questions that you may have about the Rights Offering. This Prospectus and the documents incorporated by reference in this Prospectus contain more detailed descriptions of the terms and conditions of the Rights Offering and provide additional information about us and our business, including potential risks related to our business, the Rights Offering, the Rights and the Common Shares issuable upon the exercise of the Rights.

What is this Rights Offering?

     The Company is issuing to Shareholders as of the close of business, Toronto time, on  l , 2010, which we refer to as the “Record Date”, at no charge, one Right for each Common Share held by such holder on that date. The Rights will be evidenced by Rights Certificates, and such certificates will be mailed to all Registered Shareholders that reside in any Prospectus Jurisdiction. The Subscription Agent will hold any remaining Rights Certificates as agent for the benefit of all Registered Shareholders that reside in a Non-Prospectus Jurisdiction.

Why is the Company engaging in the Rights Offering?

     The Company is contemplating the Rights Offering in order to raise capital to advance development and exploration of the Oyu Tolgoi Project and for general corporate purposes. The Rights Offering is intended to:

•

provide the capital necessary for the Company to maintain its current pace of development at the Oyu Tolgoi Project, which is ahead of schedule, with initial production now expected to commence as early as the fourth quarter of 2012;

•

provide a sufficient equity base to permit the Company to raise debt, project and other financing to reduce the Oyu Tolgoi Project’s risk profile and bring such project to commercial production;

•

strengthen the Company’s financial position and, consequently, its ability to protect and enhance value for all Shareholders;

•

ensure that each Shareholder, subject to applicable laws, has the opportunity to participate in the Rights Offering pro rata to its existing ownership interest in the Company; and

•

enable the Company to honour its commitment to the Government of Mongolia to continue moving the Oyu Tolgoi Project forward.

     The Board of Directors has unanimously approved the Rights Offering and the Company believes that the proceeds raised by the Rights Offering will place it in a much stronger position to fund ongoing development of the Oyu Tolgoi Project.

What are Rights and what are they exercisable for?

     Every  l  Rights held will entitle a Prospectus Holder or a Qualified Holder to purchase one Common Share with a Subscription Price of US$ l  per Common Share or Cdn$ l  per Common Share, upon delivery of the required documents and payment of the Subscription Price. Determination of the Subscription Price currency will be at the Subscriber’s sole discretion. Rights may only be exercised in increments of  l . To the extent you exercise your Rights in increments of less than  l , the Rights that exceed a multiple of  l  will be returned to you, together with any Subscription Payment for such excess, without deduction or interest. We will not issue fractional Common Shares or cash in lieu thereof.

     Subscriptions for Common Shares will be irrevocable and Subscribers will be unable to withdraw their subscriptions for Common Shares once submitted.

Am I required to exercise any or all of the Rights I receive in the Rights Offering?

     No. You may choose to exercise any number of your Rights (in increments of  l ), or you may choose not to exercise any Rights. If you do not exercise any Rights prior to the Expiry Time on the Expiry Date, such Rights will be void and will no longer be

exercisable for Common Shares. However, your percentage ownership interest in the Company will be diluted to the extent that the Minimum Subscription Condition is satisfied or waived by the Company and others exercise their Rights and you do not.

What should I do if I receive a Rights Certificate and want to exercise some of my Rights now while retaining the ability to exercise more of my Rights at a later point but before the Expiry Time on the Expiry Date?

     If you want to exercise some but not all of the Rights represented by a Rights Certificate and retain the ability to exercise the balance of the unexercised Rights represented by a Rights Certificate, you must first complete and submit to the Subscription Agent Form 3 on the Rights Certificate in order to divide the Rights and be issued two separate Right Certificates: one certificate representing the number of Rights that you wish to exercise in the first instance (which should then be completed and delivered to the Subscription Agent) and a second certificate representing the balance of unexercised Rights available for future exercise prior to the Expiry Time on the Expiry Date.

Is there a minimum amount of proceeds that must be raised in order for the Rights Offering to be completed?

     Yes. The Company has made the Minimum Subscription Condition a condition to the Rights Offering, whereby Rights representing at least 85% of the Rights offered in the Rights Offering must be exercised by holders thereof prior to the Expiry Time on the Expiry Date. If the Minimum Subscription Condition is not satisfied, the Company will be under no obligation to complete the Rights Offering, although the Company will retain sole discretion to waive this condition and complete the Rights Offering. If the Minimum Subscription Condition is not satisfied as at the Expiry Time on the Expiry Date and the Company does not waive this condition, the Rights will not be exercisable by the holder thereof and will be void and no longer exercisable for any Common Shares. If the Rights Offering does not proceed, the Subscription Payments will be returned promptly to the Subscribers without interest or deduction.

How soon must I act to exercise my Rights?

     The Rights may be exercised from the Commencement Date through the Expiry Time on the Expiry Date. If you elect to exercise any Rights, the Subscription Agent must actually receive all required documents and payments from you or your broker or nominee, or the guaranteed delivery procedures described under “DETAILS OF THE RIGHTS OFFERING — Guaranteed Delivery Procedures,” must be followed, at or before the Expiry Time on the Expiry Date. See “DETAILS OF THE OFFERING — Common Shares Held in Book-Entry Form” and “DETAILS OF THE OFFERING — Common Shares Held in Registered Form”).

When will I receive my Rights Certificate?

     Promptly after the date of this Prospectus, the Company will mail or caused to be mailed to each Registered Shareholder that resides in any of the Prospectus Jurisdictions a Rights Certificate evidencing the number of Rights issued to the holder thereof, together with a copy of the Prospectus. For Registered Shareholders that reside in a Non-Prospectus Jurisdiction, the Company will mail or caused to be mailed a copy of the Prospectus together with a letter advising them that their Rights Certificates will be held by the Subscription Agent as agent for the benefit of all such Registered Shareholders.

     However, if you hold your Common Shares through a Participant, such as a securities broker or dealer, bank or trust company or other custodian, you will not receive an actual Rights Certificate. Instead, as described in this Prospectus, you must instruct such Participant whether or not to exercise Rights on your behalf through a Beneficial Owner Election Form that such Participant has been instructed to provide to you. See “DETAILS OF THE RIGHTS OFFERING — Common Shares Held in Book-Entry Form”.

Will I be able to exercise my Rights if I live in a Non-Prospectus Jurisdiction?

     Exercise of Rights will only be accepted from Prospectus Holders resident in a Prospectus Jurisdiction, except under the circumstances where the Company determines that the subscription by a holder of Rights in a Non-Prospectus Jurisdiction is lawfully made by a Qualified Holder in compliance with all securities and other laws applicable in the Non-Prospectus Jurisdiction where such holder is resident. Rights will be issued to Non-Prospectus Holders, but Rights Certificates will not be mailed to Non-Prospectus Holders. Rights of Non-Prospectus Holders will be held by the Subscription Agent until 4:30 p.m. (Toronto time) on  l , 2010 in order to provide holders outside the Prospectus Jurisdictions with the opportunity to satisfy the Company that such holders are Qualified Holders. After such time, the Subscription Agent will attempt to sell the Rights of such registered Non-Prospectus Holders on such date or dates and at such price or prices and in such markets as the Subscription Agent determines in its sole discretion. The Subscription Agent will convert or

cause to be converted any proceeds denominated in Canadian dollars into U.S. dollars at the prevailing exchange rate on the date of distribution, and, net of any expenses incurred by the Subscription Agent in connection with such conversion, distribute all proceeds in U.S. dollars to the registered Non-Prospectus Holders on a pro rata basis. See “DETAILS OF THE RIGHTS OFFERING — Non-Prospectus Holders”.

May I transfer my Rights?

     Applications will be made for the Rights to be listed or admitted for trading on the TSX, NYSE and NASDAQ, as applicable. Holders of Rights that do not wish to exercise their Rights may sell or transfer their Rights through usual investment channels, such as investment dealers and brokers, at the expense of the holder. In addition, Registered Shareholders may transfer their Rights through the Subscription Agent as described in this Prospectus. See “DETAILS OF THE RIGHTS OFFERING — Sale or Transfer of Rights”. Holders of Rights may elect to exercise only some of their Rights and dispose of the remainder of them. See “DETAILS OF THE RIGHTS OFFERING — Sale or Transfer of Rights”.

How do I exercise my Rights? What forms and payment are required to purchase the Common Shares?

     If you wish to participate in the Rights Offering, you must take the following steps, if you are a Registered Shareholder:

•

deliver payment to the Subscription Agent using the methods outlined in this Prospectus; and

•

deliver a properly completed Rights Certificate to the Subscription Agent before the Expiry Time on the Expiry Date, or follow the guaranteed delivery procedures described under “DETAILS OF THE RIGHTS OFFERING—Guaranteed Delivery Procedures”.

     If you do not indicate the number of Rights being exercised, or do not forward the full Subscription Payment for the number of Rights that you indicate are being exercised, then you will be deemed to have exercised the maximum number of Rights that may be exercised with the Subscription Payment you delivered to the Subscription Agent. If the delivered Subscription Payment is greater than the amount you owe for your subscription, the Subscription Agent will return the excess amount to you by mail, without interest or deduction, promptly after the closing date of the Rights Offering (the “Closing Date”), which is anticipated to occur on or about  l , 2010.

What should I do if I want to participate in the Rights Offering, but my Common Shares are held in the name of a Participant?

     If you hold your Common Shares in the name of a Participant, such as a securities broker or dealer, bank or trust company or other custodian, then such Participant is the record holder of the shares you own. The Participant as record holder must exercise the Rights on your behalf.

     If you wish to participate in the Rights Offering and purchase Common Shares underlying the Rights, please promptly contact your Participant. You should complete and return to your Participant, the form entitled “Beneficial Owner Election Form”, together with the applicable Subscription Payment. You should receive this form from your Participant with the other Rights Offering materials. You should contact your Participant if you do not receive this form, but you believe you are entitled to participate in this Rights Offering. We are not responsible if you do not receive the form from your Participant or if you receive it without sufficient time to respond.

When will I receive my Common Shares?

     If you exercise your Rights and purchase Common Shares pursuant to this Rights Offering, we will deliver your Common Shares to you as soon as practicable after the Closing Date. We expect that such Common Shares will be delivered on or after  l , 2010, unless the Minimum Subscription Condition is not satisfied or not waived by the Company, in which case the Subscription Payments received from Subscribers will be promptly returned to the Subscribers without interest or deduction.

Does the Company expect to release its third quarter results before the Rights Offering is completed?

     Yes. In accordance with our customary financial reporting practices, on or about November 15, 2010, we intend to release our unaudited interim comparative consolidated financial statements for the nine-month period ended September 30, 2010, together with the notes thereto, and management’s discussion and analysis of financial condition and operations of the Company for the nine-month period ended September 30, 2010.

Are there risks in exercising my Rights?

     Yes. The exercise of your Rights involves risks. Exercising your Rights means buying our Common Shares, and should be considered as carefully as you would consider any other equity investment.

     You should carefully read the section entitled “RISK FACTORS” in this Prospectus, and all of the other information incorporated by reference in this Prospectus in its entirety before you decide whether to exercise your Rights.

If the Rights Offering is not completed, will my Subscription Payment be refunded to me?

     Yes. The Subscription Agent will hold all funds it receives in a segregated bank account until completion of the Rights Offering. If the Rights Offering is not completed because the Minimum Subscription Condition is not satisfied or waived by the Company, all Subscription Payments received by the Subscription Agent will be returned promptly, without interest or deduction. Even if the Minimum Condition is waived in the event it is not satisfied, the Company may not raise the proceeds necessary to fund its anticipated cash obligations and capital expenditures, which would have a material adverse impact on the Company and its share price.

Will the Rights trade on a stock exchange?

     It is the Company’s intention that the Rights be listed, in the case of the TSX, and admitted for trading, in the case of the NYSE and NASDAQ. In furtherance of such listing or admittance for trading, as the case may be, the Company will submit applications to each of the TSX, NYSE and NASDAQ. Listing of the Rights on the TSX, NYSE and NASDAQ is subject to IVN obtaining conditional listing approval for the Rights and the underlying Common Shares from, and fulfilling all of the listing requirements of each of, the TSX, NYSE and NASDAQ, respectively. Provided IVN obtains each such approval and fulfills all such requirements, the Rights will be listed or admitted for trading, as applicable, on each of the TSX, NYSE and the NASDAQ on  l , 2010. The applications further contemplate the Rights being listed for trading on the TSX under the symbol “ l ”, and admitted for trading on the NYSE or NASDAQ under the symbol “ l ”.

     During the Rights Offering, the Common Shares will continue to trade on the TSX, NYSE and NASDAQ under the symbol “IVN”, and the Common Shares issuable upon the exercise of the Rights will be eligible for trading on the TSX, NYSE and NASDAQ.

Have any shareholders indicated that they intend to exercise their Rights?

     Yes. The Company has been informed by Mr. Robert Friedland that he and entities controlled by him, who collectively hold 96,881,622 Common Shares representing 18.26% of the issued and outstanding Common Shares, intend to fully exercise all of the Rights issued to each of them, subject to financing and an absence of any material adverse change to the Company.

     Mr. Friedland has entered into the Friedland Agreements with Citibank, an affiliate of the Dealer Manager, to finance his participation in the Rights Offering. See “RISK FACTORS — Risk Factors Related to this Offering — The cash-settled contract entered into by Mr. Robert Friedland may affect the value of the Common Shares after the Closing Date.”

     Although Mr. Friedland intends to exercise all of his Rights, if either of Mr. Friedland or Rio Tinto does not exercise his or its respective Rights, the Minimum Subscription Condition will not be satisfied. As a result, unless the Company waives the Minimum Subscription Condition, the Rights Offering will not close. See “RISK FACTORS — Risk Factors Related to this Offering — If either of Mr. Robert Friedland or Rio Tinto does not exercise his or its respective Rights, the Minimum Subscription Condition will not be satisfied and, unless waived, the Rights Offering will not close” and “PLAN OF DISTRIBUTION”.

     The Company, after reasonable inquiry, believes that certain insiders and others intend to exercise Rights to purchase approximately  l  Common Shares, representing  l % of the Rights Offering. If these insiders exercise their Rights, an additional  l % of the Rights will be required to be exercised to meet the Minimum Subscription Condition. See “DETAILS OF THE RIGHTS OFFERING — Intention of Insiders and Others to Exercise Rights”.

     We have asked Rio Tinto to advise us of its intentions to participate in the Rights Offering and Rio Tinto has not responded to this request as of this date.

How many Common Shares will be outstanding after the Rights Offering?

     530,438,727 Common Shares were outstanding as of October 15, 2010, the most recent practicable date prior to the date of this Prospectus. Assuming that number of Rights is exercised as is necessary to satisfy the Minimum Subscription Condition, we expect approximately  l  Common Shares will be issued and outstanding upon completion of this Rights Offering, which does not include any Common Shares issuable under the Company’s options or warrants currently outstanding. Assuming the Rights Offering is fully subscribed, we expect approximately  l  Common Shares will be issued and outstanding upon completion of this Rights Offering, which does not include any Common Shares issuable under the Company’s options or warrants currently outstanding. See “CONSOLIDATED CAPITALIZATION”.

What fees or charges will I have to pay if I exercise Rights to purchase Common Shares?

     Apart from the Subscription Payment payable in connection with the exercise of your Rights, neither the Company nor the Subscription Agent is charging you any fee or sales commission to issue Rights to you or to issue Common Shares underlying exercised Rights. Notwithstanding the foregoing, payment of any service charge, commission or other fee payable (including those of brokers) in connection with the purchase or sale of Rights (other than the fees for the services to be performed by the Subscription Agent described herein) will be the responsibility of the Subscriber. Subscribers must also pay all stamp, issue, registration or other similar taxes or duties contingent upon the issue or delivery of Common Shares to or for the order of a third party.

What are the Canadian and United States federal income tax consequences of receiving or exercising Rights?

     You should consult your tax advisor as to the particular consequences to you of the Rights Offering. A summary of certain material Canadian and United States federal income tax consequences of receiving or exercising the Rights is contained in the sections of this Prospectus entitled “CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS” and “CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS”.

To whom should I send my forms and payment?

     If you are a Registered Shareholder, then you should send your properly completed Rights Certificate and Subscription Payment to the Subscription Agent by hand delivery, registered mail or courier service to:

CIBC Mellon Trust Company
199 Bay Street
Commerce Court West, Securities Level
Toronto, Ontario M5L 1G9

     If your Common Shares are held in the name of a Participant, then you should send a properly completed Beneficial Owner Election Form and Subscription Payment to such Participant in accordance with the instructions you receive from them.

Whom should I contact if I have other questions?

     If you have any questions, you should contact the Subscription Agent, CIBC Mellon Trust Company, toll-free at 1-800-387-0825 (in North America) or 1-416-643-5500 (outside North America), or by email at inquiries@cibcmellon.com. For a more complete description of the Rights Offering, see “DETAILS OF THE RIGHTS OFFERING”.

SUMMARY

     The following is a summary of the principal features of the Rights Offering and should be read together with, and is qualified in its entirety by, the more detailed information and financial data and statements contained elsewhere or incorporated by reference in this Prospectus. Certain terms used in this summary and in this Prospectus are defined elsewhere in this Prospectus.

Issuer:		Ivanhoe Mines Ltd.
The Offering:		Rights to subscribe for up to  l  Common Shares. Each Shareholder on the Record Date will receive one Right for each Common Share held. Every  l  Rights held entitle the holder thereof to subscribe for one Common Share at the Subscription Price.
Record Date:		l , 2010 (as at 5:00 p.m. (Toronto time)).
Commencement Date:		l , 2010.
Expiry Date:		l , 2010.
Expiry Time:		5:00 p.m. (Toronto time) on the Expiry Date. Rights not exercised at or before the Expiry Time on the Expiry Date will be void and no longer exercisable for any Common Shares.
Subscription Price:		US$ l  per Common Share or Cdn$ l  per Common Share, at the election of the Subscriber.
Rights:		Every  l  Rights held entitle the holder thereof to subscribe for one Common Share from the Commencement Date until the Expiry Time on the Expiry Date, upon payment of the Subscription Price. The US dollar denominated Subscription Price is a price equal to approximately  l % of the weighted average closing price per Common Share on the NYSE over the  l  trading days prior to the date hereof, and the Canadian dollar denominated Subscription Price is a price equal to approximately  l % of the weighted average closing price per Common Share on the TSX over the  l  trading days prior to the date hereof. No fractional Common Shares will be issued. See “DETAILS OF THE RIGHTS OFFERING — Issue of Rights and Record Date”.
Minimum Subscription Condition:		The Company has made the Minimum Subscription Condition a condition to the Rights Offering, whereby Rights representing at least 85% of the Rights offered in the Rights Offering must be exercised by holders thereof prior to the Expiry Time on the Expiry Date. If the Minimum Subscription Condition is not satisfied, the Company will be under no obligation to complete the Rights Offering, although the Company will retain sole discretion to waive this condition and complete the Rights Offering. If the Minimum Subscription Condition is not satisfied prior to the Expiry Time on the Expiry Date and the Company does not waive this condition, the Rights will not be exercisable by the holder thereof and will be void and will no longer be exercisable for any Common Shares. If the Rights Offering does not proceed, the Subscription Payments received from Subscribers will be returned promptly to the Subscribers without interest or deduction. See “MINIMUM SUBSCRIPTION CONDITION”.
Standby Commitment or Additional Subscription Privilege:		There is no standby commitment or additional subscription privilege with respect to Common Shares underlying unsubscribed Rights as part of this Rights Offering.
Net Proceeds:		Approximately US$ l , assuming exercise of all the Rights and after deducting total expenses relating to the Rights Offering estimated at US$ l , which are payable by the Company, and the Dealer Manager Fee of US$3,000,000.
		Approximately US$ l , if only that number of Rights sufficient to satisfy the Minimum Subscription Condition is exercised, after deducting total expenses relating to the Rights Offering estimated at US$ l , which are payable by the Company, and the Dealer Manager Fee of US$3,000,000.
Use of Proceeds:		Subject to satisfaction or waiver by the Company of the Minimum Subscription Condition, the Company intends to use the net proceeds from the Rights Offering to continue to advance development and exploration of the Oyu Tolgoi Project and for general corporate purposes. See “USE OF PROCEEDS”.

Rationale for the Offering:		The Company is contemplating the Rights Offering in order to raise capital to advance development and exploration of the Oyu Tolgoi Project and for general corporate purposes. The Rights Offering is intended to:

	•		provide the capital necessary for the Company to maintain its current pace of development at the Oyu Tolgoi Project, which is ahead of schedule, with initial production now expected to commence as early as the fourth quarter of 2012;
	•		provide a sufficient equity base to permit the Company to raise debt, project and other financing to reduce the Oyu Tolgoi Project’s risk profile and bring the project to commercial production;
	•		strengthen the Company’s financial position and, consequently, its ability to protect and enhance value for all Shareholders;
	•		ensure that each Shareholder, subject to applicable laws, has the opportunity to participate in the Rights Offering pro rata to its existing ownership interest in the Company; and
	•		enable the Company to honour its commitment to the Government of Mongolia to continue moving the Oyu Tolgoi Project forward.

		The Board of Directors has unanimously approved the Rights Offering and the Company believes that the proceeds raised by the Rights Offering will place it in a much stronger position to fund ongoing development of the Oyu Tolgoi Project.
Exercise of Rights:		For each Registered Shareholder in a Prospectus Jurisdiction, we will mail or cause to be mailed to such Shareholder a Rights Certificate evidencing the number of Rights issued to the holder thereof, together with a copy of this Prospectus. In order to exercise the Rights represented by the Rights Certificate, a Prospectus Holder or a Qualified Holder must complete and deliver Form 1 of the Rights Certificate to the Subscription Agent, or follow the guaranteed delivery procedures, in the manner and upon the terms set out in this Prospectus. See “DETAILS OF THE RIGHTS OFFERING — Common Shares Held in Registered Form — How to Complete the Rights Certificate”.
		For Common Shares held through a Participant in the book-based system administered by CDS or in the book-based system administered by DTC, a Prospectus Holder or a Qualified Holder may exercise the Rights issued in respect of such Common Shares by: (a) instructing the Participant holding such Rights to exercise all or a specified number of such Rights, and (b) forwarding to such Participant the Subscription Price for each Common Share that such holder wishes to subscribe for in accordance with the terms of this Rights Offering.
		Holders that wish to exercise Rights issued in respect of Common Shares held through a Participant should contact such Participant to determine how Rights may be exercised. The entire Subscription Price for any Rights exercised must be paid at the time of subscription and must be received by the Subscription Agent at the Subscription Office prior to the Expiry Time on the Expiry Date. Accordingly, Subscribers must provide the Participant holding their Rights with instructions and the required payment sufficiently in advance of the Expiry Date to permit proper exercise of their Rights. Participants will have an earlier deadline for receipt of instructions and payment. See “DETAILS OF THE RIGHTS OFFERING — Common Shares Held In Book-Entry Form”.
		If your Rights are held of record through DTC, you may exercise these Rights through the DTC’s “PSOP” function by instructing DTC to charge your applicable DTC account for the Subscription Payment for the Common Shares and deliver such amount to the Subscription Agent. If Rights are held through a DTC Participant, the holder of such Rights may not be able to exercise such Rights in Canadian dollars and such holder should contact its DTC Participant if it wishes to submit any Subscription Payment in Canadian dollars. The

		Subscription Agent must receive the required subscription documents, including the Subscription Payment for the Common Shares sufficiently in advance of the Expiry Date to permit proper exercise of the Rights. See “DETAILS OF THE RIGHTS OFFERING — Common Shares Held In Book-Entry Form — DTC”.
		Subscriptions for Common Shares will be irrevocable and Subscribers will be unable to withdraw their subscriptions for Common Shares once submitted.
Holders in Non-Prospectus Jurisdictions:		Exercise of Rights will be accepted only from holders of Rights resident in a Prospectus Jurisdiction, except where the Company determines that the offering to and subscription by a Non-Prospectus Holder is lawful and made in compliance with all securities and other laws applicable in the Non-Prospectus Jurisdiction where such Non-Prospectus Holder is resident. We refer to such Non-Prospectus Holder as a “Qualified Holder”. Rights will be issued to Non-Prospectus Holders, but Rights Certificates will not be mailed to Non-Prospectus Holders. Shareholders that have not received Rights Certificates but are resident in a Prospectus Jurisdiction or wish to be recognized as Qualified Holders should contact the Subscription Agent at the earliest possible time. Rights of Non-Prospectus Holders will be held by the Subscription Agent until 4:30 p.m. (Toronto time) on  l , 2010 in order to provide holders outside the Prospectus Jurisdictions with the opportunity to satisfy the Company that such holders are Qualified Holders. After such time, the Subscription Agent will attempt to sell the Rights of such registered Non-Prospectus Holders on such date or dates and at such price or prices and in such markets as the Subscription Agent determines in its sole discretion. The Subscription Agent will convert or cause to be converted any proceeds denominated in Canadian dollars into U.S. dollars at the prevailing exchange rate on the date of distribution, and, net of any expenses incurred by the Subscription Agent in connection with such conversion, distribute all proceeds in U.S. dollars to the registered Non-Prospectus Holders on a pro rata basis. See “DETAILS OF THE RIGHTS OFFERING — Non-Prospectus Holders”.
		As a condition to a purchase of any Common Shares in the Rights Offering, each Subscriber other than a Qualified Holder will be deemed to have represented and warranted that it is resident in a Prospectus Jurisdiction, and this representation and warranty will be relied upon by us, the Dealer Manager and its affiliates and the Subscription Agent.
		We reserve the right to treat as invalid any exercise or purported exercise of any Rights in the Rights Offering that appears to us to have been exercised, effected or dispatched in a manner which may involve a breach of the laws or regulations of any jurisdiction or if we believe, or our agents believe, that the same may violate or be inconsistent with the procedures and terms set out in this Prospectus or in breach of the representation and warranty that a holder exercising its Rights is resident in a Prospectus Jurisdiction, as described herein.
		Holders of Rights that reside outside of Canada or the United States and any persons (including any Participants) that have a contractual or legal obligation to forward this document to a jurisdiction outside a Prospectus Jurisdiction should read the section entitled “DETAILS OF THE RIGHTS OFFERING — Non-Prospectus Holders”.
Intention of Insiders to Exercise Rights:		The Company has been informed by Mr. Robert Friedland that he and entities controlled by him, who collectively hold 96,881,622 Common Shares representing 18.26% of the issued and outstanding Common Shares, intend to fully exercise all of the Rights issued to each of them, subject to financing and an absence of any material adverse change to the Company. Mr. Friedland has entered into the Friedland Agreements with Citibank, an affiliate of the Dealer Manager, to finance his participation in the Rights Offering. See “RISK FACTORS — Risk Factors Related to this Offering — The cash-settled contract entered into by Mr. Robert Friedland may affect the value of the Common Shares after the Closing Date.”

		Although Mr. Friedland intends to exercise all of his Rights, if either of Mr. Friedland or Rio Tinto does not exercise his or its respective Rights, the Minimum Subscription Condition will not be satisfied. As a result, unless the Company waives the Minimum Subscription Condition, the Rights Offering will not close. See “RISK FACTORS — Risk Factors Related to this Offering — If either of Mr. Robert Friedland or Rio Tinto does not exercise his or its respective Rights, the Minimum Subscription Condition will not be satisfied and, unless waived, the Rights Offering will not close” and “PLAN OF DISTRIBUTION”.
		The Company, after reasonable inquiry, believes that certain insiders and others intend to exercise Rights to purchase approximately  l  Common Shares, representing  l % of the Rights Offering. If these insiders exercise their Rights, an additional  l % will be required to be exercised to meet the Minimum Subscription Condition.
		See “DETAILS OF THE RIGHTS OFFERING — Intention of Insiders and Others to Exercise Rights” and “PLAN OF DISTRIBUTION”.
		We have asked Rio Tinto to advise us of its intentions to participate in the Rights Offering and Rio Tinto has not responded to this request as of this date.
Dealer Manager:		The Company has engaged Citigroup Global Markets Inc. as the Dealer Manager to organize and participate in the solicitation in certain jurisdictions of the exercise of Rights. Affiliates of the Dealer Manager, including Citigroup Global Markets Canada Inc., will solicit the exercise of Rights in certain jurisdictions. The Company has agreed to pay the Dealer Manager the Dealer Manager Fee of US$3,000,000 for acting as Dealer Manager in connection with the Rights Offering. The Dealer Manager Fee is payable at the Closing Date.
Listing and Trading:		An application will be submitted to the TSX to approve the listing of the Rights and the Common Shares issuable upon the exercise of the Rights. Similar applications will be made with the NYSE and NASDAQ to admit the Rights for trading and list the Common Shares issuable upon the exercise of Rights. Listing of the Rights on the TSX, NYSE and NASDAQ is subject to obtaining conditional listing approval for the Rights and the underlying Common Shares from the TSX, NYSE and NASDAQ and IVN fulfilling all of the listing requirements of the TSX, NYSE and NASDAQ, respectively. Provided conditional listing approval is obtained and these requirements are met, the Rights will be listed or admitted for trading, as applicable, on the TSX, NYSE and NASDAQ on  l , 2010.
		Holders of Rights that do not wish to exercise their Rights may sell or transfer their Rights through usual investment channels, such as investment dealers and brokers, at the expense of the holder. Holders of Rights may elect to exercise only some of their Rights and dispose of the remainder of them. The Subscription Agent will facilitate subdivisions of the Rights until 5:00 p.m. (Toronto time) on •, three business days prior to the scheduled Expiry Date. See “- Common Shares Held in Registered Form — How to Complete the Rights Certificate — Form 3”.
		The applications to the TSX, NYSE and NASDAQ further contemplate the Rights being listed for trading on the TSX under the symbol “ l ”, and admitted for trading on the NYSE or NASDAQ under the symbol “ l ”.
Risk Factors:		An investment in the Rights and Common Shares is subject to a number of risks. See “RISK FACTORS”.
Subscription Agent and Depository:		CIBC Mellon Trust Company, in its role as Subscription Agent, has been appointed the agent of the Company to receive subscriptions and payments from holders of Rights, to act as depository and to perform certain services relating to the exercise and transfer of Rights.

		The Subscription Agent can be reached by telephone toll-free at 1-800-387-0825 (in North America), or 1-416-643-5500 (outside North America), or by email at inquiries@cibcmellon.com.
		See “DETAILS OF THE RIGHTS OFFERING — Subscription Agent and Depository”.

KEY DATES AND TIMES OF THE RIGHTS OFFERING

		Date
Record Date for participation in the Rights Offering		l , 2010
Mailing Date of Prospectus and Rights Certificates		l , 2010
Commencement Date of Rights Offering		l , 2010
Expected Date of Sale of Rights of Non-Prospectus Holders by Subscription Agent		l , 2010
Expiry Time and Expiry Date		5:00 p.m. (Toronto time) on  l , 2010
Expected Closing Date of the Rights Offering		l , 2010

THE COMPANY

     IVN was incorporated under the Company Act (British Columbia) on January 25, 1994 under the name 463212 B.C. Ltd. In February 1994, IVN changed its name to Indochina Goldfields Ltd. In March 1994, IVN increased its authorized capital from 10,000 Common Shares without par value to 100,000,000 Common Shares without par value and created 100,000,000 Preferred Shares without par value. In February 1995, IVN was continued under the Business Corporations Act (Yukon). In July 1997, IVN increased its authorized capital to an unlimited number of Common Shares without par value and an unlimited number of Preferred Shares without par value. In June 1999, IVN changed its name to Ivanhoe Mines Ltd.

     IVN’s head office is located at 654 – 999 Canada Place, Vancouver, British Columbia, Canada, V6C 3E1 and its registered office is located at 300 – 204 Black Street, Whitehorse, Yukon, Canada, Y1A 2M9.

     The following corporate chart sets forth the name and jurisdiction of incorporation of IVN’s principal subsidiaries and the ownership interest of IVN in each of them.

Our Business

     IVN is an international mineral exploration and development company. The Company’s principal mineral resource property is a 66% interest in the Oyu Tolgoi Project, located in Mongolia. The Oyu Tolgoi Project is located in the Aimag (province) of Omnogovi, approximately 550 kilometres south of the capital city of Ulaanbaatar and 80 kilometres north of the border with China. Mineralization on the property consists of porphyry style copper, gold and molybdenum contained in a linear structural trend, termed the OT Trend, with a strike length that extends over 20 kilometres. Mineral resources have been identified in a series of deposits throughout this trend, which from south to north include the Heruga deposit, the Southern Oyu Deposit group, consisting of the Southwest Oyu, South Oyu, Wedge deposits and Central Oyu, and the Hugo Dummett Deposits group, consisting of the Hugo South, Hugo North and Hugo North Extension deposits.

     The Company also has two publicly traded subsidiaries: SouthGobi Resources Ltd. (“SGQ”), the shares of which are listed on the TSX and The Hong Kong Stock Exchange, which owns and operates the Ovoot Tolgoi Coal Project in Mongolia, and Ivanhoe Australia Ltd., the shares of which are listed on the Australian Stock Exchange, which owns the Cloncurry molybdenum, rhenium, copper, gold and uranium resource properties located in Queensland, Australia. The Company also holds interests in several other mineral resource projects in Asia, including a 50% interest in a gold exploration and development project in Kazakhstan.

     Further particulars with respect to our business and mineral resource projects are disclosed under the headings “General Development of the Business” and “Description of the Business” in the AIF and in the other documents incorporated by reference herein.

Recent Developments

     The following is a summary of material developments respecting the Company and its business since March 31, 2010, the date of the AIF.

     Shareholder Rights Plan

     On April 5, 2010, the Company adopted a shareholder rights plan (the “Shareholder Rights Plan”), which was subsequently amended and restated on April 21, 2010 and approved by the Company’s shareholders on May 7, 2010. The Shareholder Rights Plan is intended to allow shareholders to properly evaluate and assess a takeover bid without facing undue pressure or coercion. Reference is made to the Company’s material change reports dated April 6, 2010 and April 22, 2010, which are incorporated by reference in this Prospectus.

     Integrated Development Plan

     On May 11, 2010, the Company released a new Integrated Development Plan (the “IDP”) in respect of its Oyu Tolgoi Project. The new IDP is a comprehensive update of the original 2005 Integrated Development Plan and reflects independent analyses of project economics, increased mineral resources and reserves and revised valuation estimates modelled on the basis of the terms of the Oyu Tolgoi Investment Agreement with the Government of Mongolia, which was entered into in October 2009 and took full legal effect on March 31, 2010, following the fulfillment of all conditions precedent to its effectiveness. The IDP contains the first published declaration of underground reserves for the planned Hugo Dummett block-cave mine and estimates average annual production at the Oyu Tolgoi Project should exceed 1.2 billion pounds of copper and 650,000 ounces of gold for the first 10 years. Reference is made to the Company’s material change report dated May 21, 2010, which is incorporated by reference in this Prospectus.

     The fundamental elements of the IDP were completed prior to Rio Tinto having assumed control of the technical committee through which Ivanhoe and Rio Tinto collectively oversee and supervise the development, operation and management of the Oyu Tolgoi Project (the “Technical Committee”). The Technical Committee is comprised of members appointed by each of Ivanhoe and Rio Tinto. In October 2009, Rio Tinto assumed effective control of the Technical Committee through its right under the terms of the Private Placement Agreement to appoint the Technical Committee Chair and the right to appoint two other the members of the five-member Technical Committee. Accordingly, Rio Tinto’s members have the right to cast the deciding vote on Technical Committee decisions concerning the development of the Oyu Tolgoi Project.

     The IDP recommends that Oyu Tolgoi LLC (“OT LLC”), the Mongolian company that owns the Oyu Tolgoi Project and is developing and will operate the mining complex, conduct a comprehensive review to establish a baseline for the Oyu Tolgoi Project with a goal of improving or optimizing value. The Company owns an indirect 66% equity interest in OT LLC. Erdenes LLC (“Erdenes”), a Mongolian company wholly owned by the Government of Mongolia, holds the remaining 34%. The shareholders of OT LLC are parties to a Shareholders’ Agreement which governs a number of key matters respecting the business of OT LLC, including the manner in which the shareholders of OT LLC will fund their financial contributions to the development of the Oyu Tolgoi Project. Although, as discussed above, the Technical Committee oversees and supervises the development, operation and management of the Oyu Tolgoi Project, the board of directors of OT LLC must also approve certain development, operational and management matters relating to the project. The board of directors of OT LLC, whose members include appointees from each of Ivanhoe, Rio Tinto and the Government of Mongolia, as the holder of a 34% ownership interest in the Oyu Tolgoi Project, may not agree with the views of the Technical Committee, which could potentially result in the disruption, delay or suspension of development and operational activity, which in turn could potentially result in significantly increased costs to the Company and adversely affect its share price.

     The IDP also recommends that its conclusions be reviewed and analyzed by the Technical Committee to help determine detailed plans for the ongoing implementation of the Oyu Tolgoi Project. This review and analysis (the “IDP Review”), which remains at an early stage, is focussed on all aspects of project development, including operating costs, construction and development costs, production rates and scheduling, financing and economic returns and is expected to involve extensive stakeholder analysis and consultation on several levels, including among Ivanhoe and Rio Tinto technical personnel, the OT LLC board of directors (including representatives of the Government of Mongolia) and the Ivanhoe and Rio Tinto representatives on the Technical Committee. The IDP Review process is expected to continue through the fourth quarter of 2010 and possibly into the first quarter of 2011.

     The objective of the IDP Review is to establish a consensus among the stakeholders as to the optimal project development plans, parameters and schedules. However, representatives of Ivanhoe and Rio Tinto on the Technical Committee have expressed differing opinions on several issues that could affect key aspects of project development, including the determination and timing of capital and operating costs and project scheduling. The extent to which these differences of opinion will be resolved or will become matters of disagreement depends upon the results of ongoing and future evaluations and consultations, which are not reasonably determinable at this time, but failure to reach a timely consensus by all Oyu Tolgoi Project stakeholders could delay the completion of the IDP Review Process and could potentially affect the Oyu Tolgoi Project’s current development schedule.

     Series A Warrant Exercise

     On June 29, 2010, Rio Tinto exercised all of the 46,026,522 Series A share purchase warrants it received under the terms of a private placement agreement dated October 18, 2006, as amended November 16, 2006, October 24, 2007, September 21, 2009 and October 6, 2009, between the Company and Rio Tinto (the “Private Placement Agreement”), and thereby acquired an additional 46,026,522 Common Shares at a price of US$8.54 per Common Share. The Company received total proceeds from the exercise of the Series A share purchase warrants of approximately US$393.1 million and Rio Tinto’s equity ownership of the Company increased from 22.4% to 29.6% of the Company’s then issued and outstanding Common Shares. Rio Tinto continues to hold 46,026,522 Series B share purchase warrants (the “Series B Warrants”) it received under the terms of the Private Placement Agreement.

     Rio Tinto Arbitration

     On July 9, 2010, Rio Tinto notified the Company that it was commencing an arbitration proceeding under the terms of the Private Placement Agreement, seeking a series of declarations to the effect that the operation of the Shareholder Rights Plan interferes with certain of Rio Tinto’s contractual rights under the Private Placement Agreement. The Company’s position is that nothing in the Private Placement Agreement prohibits the Company from implementing the Shareholder Rights Plan and that nothing in the Shareholder Rights Plan breaches any of Rio Tinto’s existing contractual rights under the Private Placement Agreement. Rio Tinto and Ivanhoe have agreed to the appointment of an arbitrator and to a schedule for the hearing and for related pre-hearing procedural steps in the arbitration hearing. At this time, the arbitration is scheduled to be held between January 18 and February 5, 2011.

     Strategic Purchaser Covenant

     The Company evaluates strategic and financing opportunities on an ongoing basis and, on July 13, 2010, the Company notified Rio Tinto that it was electing to terminate the “Strategic Purchaser Covenant” under the Private Placement Agreement. The Strategic Purchaser Covenant restricted the Company’s ability to issue Common Shares or securities convertible into or exercisable to acquire Common Shares to “strategic purchasers” (persons other than retail investors and certain eligible institutional investors). As a consequence of the Company’s election to terminate this restriction, if the Company proposes to issue any Common Shares or

securities convertible into or exercisable for Common Shares to any person in a transaction where Rio Tinto’s right of first offer under the Private Placement Agreement (the “Right of First Offer”) applies, and if Rio Tinto’s exercise of its Right of First Offer results in Rio Tinto’s equity ownership of the Company exceeding the contractual 46.65% standstill limit provided for in the Private Placement Agreement (the “Standstill Limit”), the Standstill Limit and all of the other standstill restrictions applicable to Rio Tinto under the Private Placement Agreement will terminate. The Company’s termination of the “Strategic Purchase Covenant” does not, in the absence of a transaction where Rio Tinto’s exercises its Right of First Offer and thereby exceeds the Standstill Limit, otherwise affect Rio Tinto’s Standstill Limit.

     We believe that the Rights Offering is an Exempt Ivanhoe Share Transaction under the Private Placement Agreement and, accordingly, Rio Tinto’s Right of First Offer does not apply to the Rights Offering. See “CERTAIN AGREEMENTS OF THE COMPANY”.

     Conversion of Credit Facility

     On September 13, 2010, the convertible credit facility entered into between Rio Tinto and the Company in October 2007 was, by its terms, automatically converted into Common Shares. The US$350 million principal amount plus approximately US$50.8 million in accrued and unpaid interest was converted into 40,083,206 Common Shares at a conversion price of US$10.00 per Common Share. As a result, Rio Tinto’s equity ownership of the Company increased from 29.6% to 34.9% of the Company’s issued and outstanding Common Shares as of September 13, 2010.

     Board of Directors

     On September 16, 2010, the Company announced the appointment of Michael Gordon and Dan Westbrook as non-executive, Rio Tinto-nominated, independent members of the Board of Directors. These appointments to the Board of Directors increased the total number of Rio Tinto appointees to the Board of Directors to three. Under the terms of the Private Placement Agreement, Rio Tinto is entitled to nominate its proportionate share of members of the Board of Directors based on its shareholding. Rio Tinto’s current shareholdings entitle it to appoint a further two directors.

     Oyu Tolgoi Project Exploration

     On September 28, 2010, the Company announced the results of drill hole OTD1510 in the area known as Heruga North, located between the Heruga deposit and the Southern Oyu deposits of the Oyu Tolgoi Project property. OTD1510 intercepted almost one kilometre of near-continuous gold and copper mineralization, making it the longest exploration drill intercept of gold and copper mineralization recorded since the Company began drilling at the Oyu Tolgoi Project in 2001.

     OTD1510 intercepted 112 metres grading 1.36 grams of gold per tonne (g/t) and 0.34% copper, with a copper equivalent (“CuEq”) grade of 1.21%, at a down-hole depth of between 2,286 and 2,398 metres. The intercept included 20 metres grading 3.78 g/t gold and 0.64% copper, with a CuEq grade of 3.06%, at a down-hole depth of between 2,376 and 2,396 metres, and six metres of 8.4 g/t gold and 0.66% copper, with a CuEq grade of 6.05%, at a down-hole depth of between 2,388 and 2,394 metres. Individual two-metre samples near the bottom of hole OTD1510 returned gold assays of approximately 10 grams per tonne, among the highest gold grades ever drilled at the Oyu Tolgoi Project. Over the entire 938-metre intercept, OTD1510 averaged 0.42 g/t gold and 0.46% copper, with a CuEq grade of 0.76%, at a down-hole depth of between 1460 and 2398 metres (true depth below surface of between approximately 1,200 and 1,885 metres).

     The Company’s deep diamond drilling first identified mineralization in the Heruga North zone in December 2008. Since the initial discovery, the Company has completed approximately 43,500 metres of wide-spaced diamond drilling into the Heruga North zone. Although there has been insufficient drilling to date to define a mineral resource, the Company believes that the Heruga North zone may host mineralization of a similar tonnage and grade to that previously identified in the adjacent Heruga zone. As of October 2009, the Heruga Deposit had an estimated inferred resource of 970 million tonnes grading 0.48% copper, 0.48 g/t gold and 140 parts per million molybdenum, for a copper equivalent grade of 0.86%, using a 0.60% copper equivalent cut-off grade. See page 53 of the AIF for details of the Heruga resource estimate. Mineral resources are not mineral reserves until they have demonstrated economic viability based on a feasibility study or pre-feasibility study.

     Dr. David Crane, R.P.Geo., the Exploration Manager for OT LLC, a member of the Australian Institute of Geoscientists and a qualified person as required by National Instrument 43-101, supervised the preparation of the scientific and technical information in this subsection entitled “— Oyu Tolgoi Project Exploration”.

     Project Financing Activities

     As part of the Company’s efforts to arrange the necessary funding for the Oyu Tolgoi Project, the Company is continuing discussions with a group of international financial institutions on a separate debt-financing package for the project, with funding targeted for the first half of 2011. The proposed multi-billion-dollar package is being considered by a core lending group of five international financial institutions: the European Bank for Reconstruction and Development, the International Finance Corporation, Export Development Canada, BNP Paribas and Standard Chartered.

     New Management Appointees

     On October 18, 2010, the Company announced that Mr. Robert Friedland will re-assume the duties and title of Chief Executive Officer of the Company as part of a series of organizational changes that also will result in the establishment of the Office of the Chairman. President John Macken will relinquish the position of Chief Executive Officer that he has held since 2006. Mr. Macken will continue to lead the ongoing construction of the Oyu Tolgoi Project.

     Other Recent Developments

     The Company also announced on October 18, 2010 that a number of potential options have been presented to the Company by industry leaders, on an unsolicited basis, since it announced in January 2010 that the Dealer Manager and Hatch Corporate Finance were working with the Company in exploring opportunities to further enhance value from development successes at its various projects. However, no agreements have been reached with any party and there is no assurance that the Company will pursue or conclude any transaction with such a third party.

     Third Quarter Results

     In accordance with our customary financial reporting practices, on or about November 15, 2010, we intend to release our unaudited interim comparative consolidated financial statements for the nine-month period ended September 30, 2010, together with the notes thereto, and management’s discussion and analysis of financial condition and operations of the Company for the nine-month period ended September 30, 2010.

MINIMUM SUBSCRIPTION CONDITION

     The Rights Offering is conditional upon satisfaction or waiver by the Company of the Minimum Subscription Condition, such condition being the exercise of Rights representing at least 85% of the Rights offered in the Rights Offering prior to the Expiry Time on the Expiry Date. If the Minimum Subscription Condition is not satisfied, the Company will be under no obligation to complete the Rights Offering, although the Company will retain sole discretion to waive this condition and complete the Rights Offering. If the Minimum Subscription Condition is not satisfied as at the Expiry Time on the Expiry Date and the Company does not waive this condition, the Rights will not be exercisable by the holder thereof and will be void and will no longer be exercisable for any Common Shares. If the Rights Offering does not proceed, the Subscription Payments will be returned promptly to the Subscribers without interest or deduction.

INTENTION OF INSIDERS TO EXERCISE RIGHTS

     The Company has been informed by Mr. Robert Friedland that he and entities controlled by him, who collectively hold 96,881,622 Common Shares representing 18.26% of the issued and outstanding Common Shares, intend to fully exercise all of the Rights issued to each of them, subject to financing and an absence of any material adverse change to the Company. Mr. Friedland has entered into the Friedland Agreements, which consist of a loan agreement, subject to certain conditions precedent, with Citibank, an affiliate of the Dealer Manager, to finance his participation in the Rights Offering and a cash-settled contract with Citibank which provides a collar with reference to a notional number of Common Shares equal to approximately  l % of the number of Common Shares outstanding after the Rights Offering, assuming the Rights Offering is fully subscribed. The Friedland Agreements will facilitate the participation of Mr. Robert Friedland in the Rights Offering. See “RISK FACTORS — Risk Factors Related to this Offering — The cash-settled contract entered into by Mr. Robert Friedland may affect the value of the Common Shares after the Closing Date.”

     Although Mr. Friedland intends to exercise all of his Rights, if either Mr. Friedland or Rio Tinto does not exercise his or its respective Rights, the Minimum Subscription Condition will not be satisfied. As a result, unless the Company waives the Minimum Subscription Condition, the Rights Offering will not close. See “RISK FACTORS — Risk Factors Related to this Offering — If either of Mr. Robert Friedland or Rio Tinto does not exercise his or its respective Rights, the Minimum Subscription Condition will not be satisfied and, unless waived, the Rights Offering will not close” and “PLAN OF DISTRIBUTION”.

     The Company, after reasonable inquiry, believes that certain insiders and others intend to exercise Rights to purchase approximately  l  Common Shares, representing  l % of the Rights Offering. If these insiders exercise their Rights, an additional  l % of Rights will be required to be exercised to meet the Minimum Subscription Condition.

     The information as to the intentions of our insiders is not within our knowledge and has been furnished by the respective insiders. No assurance can be given by us that the respective insiders will subscribe for Common Shares in the amounts set out above or at all.

     Rio Tinto’s Intentions

     Ivanhoe is required to enquire as to the intentions of insiders of Ivanhoe to participate in the Rights Offering, so we disclosed to Rio Tinto our plans to conduct the Rights Offering prior to filing this Preliminary Prospectus. In response, a representative of Rio Tinto has communicated to us a number of assertions, including that he believes that there are superior financing opportunities available to us, that the Rights Offering and the Friedland Agreements offend a number of Rio Tinto’s contractual rights, including Rio Tinto’s Right of First Offer, and that we are obligated to make certain additional disclosure regarding the Oyu Tolgoi Project, among other things. Further, the representative has advised that Rio Tinto is reserving its rights to make an arbitration claim or seek injunctive relief to protect its interests. See “RISK FACTORS — Rio Tinto has made a number of assertions about the Rights Offering and may take actions to delay, impede or substantially increase the costs of the Rights Offering”.

      We have responded to the representative, the Chief Executive Officer and board of directors of Rio Tinto by advising them that we believe the other financing opportunities suggested by the representative of Rio Tinto are not superior to the Rights Offering. In addition, we have advised the representative, the Chief Executive Officer and board of directors of Rio Tinto that we believe the representative’s assertion that the Rights Offering offends Rio Tinto’s contractual rights is wrong and is without merit. We believe that we have addressed the concerns of Rio Tinto’s representative with respect to the disclosure regarding the Oyu Tolgoi Project as set forth or incorporated by reference herein. We have advised the representative, the Chief Executive Officer and board of directors of Rio Tinto that if the Rights Offering is delayed or impeded by Rio Tinto’s conduct, we intend to hold Rio Tinto fully liable for any and all losses Ivanhoe may suffer as a result of Rio Tinto’s actions.

     We have asked Rio Tinto to advise us of its intentions to participate in the Rights Offering and Rio Tinto has not responded to this request as of this date.

RATIONALE FOR A RIGHTS OFFERING

     The Company is contemplating the Rights Offering in order to raise capital to advance development and exploration of the Oyu Tolgoi Project and for general corporate purposes. The Rights Offering is intended to:

•

provide the capital necessary for the Company to maintain its current pace of development at the Oyu Tolgoi Project, which is ahead of schedule, with initial production now expected to commence as early as the fourth quarter of 2012;

•

provide a sufficient equity base to permit the Company to raise debt, project and other financing to reduce the Oyu Tolgoi Project’s risk profile and bring the project to commercial production;

•

strengthen the Company’s financial position and, consequently, its ability to protect and enhance value for all Shareholders;

•

ensure that each Shareholder, subject to applicable laws, has the opportunity to participate in the Rights Offering pro rata to its existing ownership interest in the Company; and

•

enable the Company to honour its commitment to the Government of Mongolia to continue moving the Oyu Tolgoi Project forward.

     The Board of Directors has unanimously approved the Rights Offering and the Company believes that the proceeds raised by the Rights Offering will place it in a much stronger position to fund ongoing development of the Oyu Tolgoi Project.

     We believe that the Rights Offering is an Exempt Ivanhoe Share Transaction under the Private Placement Agreement and, accordingly, Rio Tinto’s Right of First Offer does not apply to the Rights Offering.

USE OF PROCEEDS

     The net proceeds from the issuance of the Common Shares under the Rights Offering are expected to be approximately US$ l , assuming exercise of all the Rights, after deducting expenses relating to the Rights Offering, estimated at US$ l , which are payable by the Company, and the $3,000,000 Dealer Manager Fee.

     The net proceeds from the issuance of the Common Shares under the Rights Offering are expected to be approximately US$ l , assuming only that number of Rights sufficient to satisfy the Minimum Subscription Condition is exercised, after deducting expenses relating to the Rights Offering, estimated at US$ l , which are payable by the Company, and the $3,000,000 Dealer Manager Fee.

     Subject to satisfaction or waiver by the Company of the Minimum Subscription Condition, the Company intends to use the net proceeds from the Rights Offering to continue to advance development and exploration of the Oyu Tolgoi Project and for general corporate purposes.

     The net proceeds from the Rights Offering, in conjunction with (i) approximately US$0.8 billion of available cash and cash equivalents as of June 30, 2010, (ii) approximately US$0.8 billion in proceeds that would be received if Rio Tinto elects to exercise its outstanding Series B Warrants and the Series C share purchase warrants (the “Series C Warrants”) in the future, and (iii) amounts obtained in the form of limited recourse loans by the Oyu Tolgoi Project lender group, are expected to fund the majority of the Oyu Tolgoi Project’s initial capital cost. The Company began full-scale construction of the Oyu Tolgoi Project in the second quarter of 2010, and initial production is expected as early as the fourth quarter of 2012.

DETAILS OF THE RIGHTS OFFERING

Issue of Rights and Record Date

     All Shareholders as at 5:00 p.m. (Toronto time) on the Record Date of  l , 2010 will receive Rights to subscribe for Common Shares pursuant to the Rights Offering. A Shareholder is entitled to receive one Right for each Common Share held.

      Except as described below, only a Prospectus Holder at 5:00 p.m. (Toronto time) on the Record Date with an address of record in a Prospectus Jurisdiction may exercise Rights and be entitled to hold a Rights Certificate directly. For every  l  Rights held, a Prospectus Holder or a Qualified Holder will be entitled to subscribe for one Common Share from the Commencement Date until the Expiry Time on the Expiry Date, at the Subscription Price. The US dollar denominated Subscription Price is a price equal to approximately  l % of the weighted average closing price per Common Share on the NYSE over the  l  trading days prior to the date hereof, and the Canadian dollar denominated Subscription Price is a price equal to approximately  l % of the weighted average closing price per Common Share on the TSX over the  l  trading days prior to the date hereof. Rights not exercised prior to the Expiry Time on the Expiry Date will be void and no longer exercisable for any Common Shares.

     At the Commencement Date, the Rights will be evidenced by Rights Certificates registered in the name of the Shareholder entitled thereto. Each Registered Shareholder, other than a Non-Prospectus Holder, will receive a Rights Certificate evidencing the total number of Rights to which such Shareholder is entitled. Subject to certain exceptions described herein, Rights Certificates may not be held directly by, and subscriptions for Common Shares will not be accepted from, Non-Prospectus Holders. See “— Non-Prospectus Holders” below.

     Shareholders that hold their Common Shares through a Participant will not receive physical certificates evidencing their ownership of Rights. Instead, on the Record Date, a global Rights Certificate representing the total number of Rights to which all such Shareholders are entitled pursuant to the terms of the Rights Offering will be issued in registered form to, and in the name of, CDS or DTC (or one of their respective nominees), as the case may be, and will be delivered to CDS or DTC, as the case may be. The Company expects that each such Shareholder will receive a confirmation of the number of Rights issued to it from its respective Participant in accordance with the practices and procedures of that Participant. Each of CDS and DTC will be responsible for establishing and maintaining book-entry accounts for Participants holding Rights. See “— Common Shares Held In Book-Entry Form” below.

     Only subscriptions for whole Common Shares will be accepted. No fractional Common Shares will be issued. There is no standby commitment or additional subscription privilege with respect to Common Shares underlying unsubscribed Rights as part of this Rights Offering.

     Rights are transferable. A Right does not entitle the holder thereof to any rights whatsoever as a securityholder of the Company other than to subscribe for and purchase Common Shares as described herein.

     This Prospectus qualifies the distribution of the Rights and the Common Shares issuable upon the exercise of the Rights only in the Prospectus Jurisdictions, except where the subscription by a holder of Rights in a Non-Prospectus Jurisdiction is lawfully made by a Qualified Holder in compliance with all securities and other laws applicable

Shareholders Resident in the United States

     We have filed with the SEC a Registration Statement on Form F-10 under the U.S. Securities Act, and expect to make certain other filings with the SEC, the NYSE and NASDAQ so that the Rights and the Common Shares issuable upon the exercise of the Rights issued to Shareholders that are U.S. residents and are not affiliates of the Company will not be subject to transfer restrictions under U.S. securities law.

Dilution to Existing Shareholders

     If a Shareholder wishes to retain its current percentage ownership, and assuming all the Rights are exercised, a Shareholder should exercise all of the Rights issued to such Shareholder. If a Shareholder does not exercise its Rights and the Rights Offering is completed, such Shareholder’s percentage interest in the Company may be substantially diluted upon the exercise of Rights by other Shareholders and the corresponding issuance of Common Shares.

Expiry of Rights

     The Rights will expire at the Expiry Time of 5:00 p.m. (Toronto time) on the Expiry Date of  l , 2010. Rights not exercised prior to the Expiry Time on the Expiry Date will be void and of no value and will no longer be exercisable for any Common Shares.

Fees Payable by Subscribers

     Apart from the Subscription Payment payable in connection with the exercise of your Rights, there will be no fee or sales commission charged by us or the Subscription Agent on the issuance of Rights to Shareholders or upon the exercise of Rights. Notwithstanding the foregoing, payment of any service charge, commission or other fee payable (including those of brokers) in connection with the purchase or sale of Rights (other than the fees for the services to be performed by the Subscription Agent referred to under “— Subscription Agent” below) will be the responsibility of the Subscriber. Subscribers must also pay all stamp, issue, registration or other similar taxes or duties contingent upon the issue or delivery of Common Shares to or for the order of a third party.

Rights

      l  Rights are required to be exercised by a Subscriber to subscribe for one Common Share. No fractional Common Shares will be issued. Rights only may be exercised in increments of  l . To the extent a Subscriber exercises a portion of Rights in an increment of less than  l  any Rights in excess of a increment of  l  and less than the next highest increment of  l  will be returned to such Subscriber, together with the Subscription Payment for such excess, without deduction or interest.

     Rights will be eligible for exercise at any time from the Commencement Date to the Expiry Time on the Expiry Date. If a Prospectus Holder or a Qualified Holder wants to exercise some but not all of the Rights represented by a Rights Certificate and such holder wishes to retain the ability to exercise the balance of the unexercised Rights represented by a Rights Certificate, such holder must first complete and submit to the Subscription Agent Form 3 on the Rights Certificate in order to divide the Rights and be issued two separate Right Certificates: one certificate representing the number of Rights that the holder wishes to exercise in the first instance (which should then be completed and delivered to the Subscription Agent) and a second certificate representing the balance of unexercised Rights available for future exercise prior to the Expiry Time on the Expiry Date. For information on how to exercise Rights, see “— Common Shares Held in Book-Entry Form” and “— Common Shares Held in Registered Form” below.

     Prospectus Holders and Qualified Holders of Rights that are unsure how to exercise their Rights should contact the Subscription Agent, the Company or their respective Participant. See “— Enquiries” below.

Deemed Representation and Warranty of Each Subscriber

     As a condition to a purchase of any Common Shares in the Rights Offering, each Subscriber other than a Qualified Holder will be deemed to have represented and warranted that it is resident in a Prospectus Jurisdiction, and this representation and warranty will be relied upon by us, the Dealer Manager and its affiliates and the Subscription Agent.

Subscription Agent and Depository

     CIBC Mellon Trust Company, in its role as Subscription Agent, has been appointed the agent of the Company to (i) receive subscriptions for Common Shares and Subscription Payments directly from Registered Shareholders or indirectly through Participants, and (ii) act as depository and to perform certain services relating to the exercise and transfer of Rights. Completed Rights Certificates Subscription Payments under the Rights Offering should be delivered by hand delivery, registered mail or courier service to:

CIBC Mellon Trust Company
199 Bay Street
Commerce Court West, Securities Level
Toronto, Ontario M5L 1G9

The Subscription Agent can be reached toll-free at 1-800-387-0825 (in North America) or 1-416-643-5500 (outside North America), or by email at inquiries@cibcmellon.com.

Common Shares Held In Book-Entry Form

     Shareholders that hold their Common Shares through a Participant will not receive physical certificates evidencing their ownership of Rights. Instead, on the Record Date, one or more global Rights Certificates representing the total number of Rights to which all such Shareholders are entitled pursuant to the terms of the Rights Offering will be issued in registered form to, and in the name of, CDS or DTC (or one of their respective nominees), as the case may be, and will be delivered to CDS or DTC, as the case may be. The Company expects that each such Shareholder will receive a confirmation of the number of Rights issued to it from its respective Participant in accordance with the practices and procedures of that Participant. Each of CDS and DTC will be responsible for establishing and maintaining book-entry accounts for Participants holding Rights.

     For Common Shares held through a Participant, a Prospectus Holder or a Qualified Holder may exercise the Rights issued in respect of such Common Shares by: (a) delivering to the Participant a properly completed Beneficial Owner Election Form and (b) forwarding to such Participant the Subscription Price for each Common Share that such holder wishes to subscribe for in accordance with the terms of this Rights Offering.

     Subscriptions for Common Shares made through a Participant will be irrevocable and Subscribers will be unable to withdraw their subscriptions for Common Shares once submitted.

     Holders that wish to exercise Rights issued in respect of Common Shares held through a CDS Participant or a DTC Participant should contact such CDS Participant or DTC Participant to determine how Rights may be exercised. The entire Subscription Price for any Rights exercised must be paid at the time of subscription and must be received by the Subscription Agent at the Subscription Office prior to the Expiry Time on the Expiry Date. Accordingly, Subscribers must provide the CDS Participant or DTC Participant holding their Rights with the Beneficial Owner Election Form and the corresponding Subscription Payment sufficiently in advance of the Expiry Time on the Expiry Date to permit proper exercise of their Rights. Participants will have an earlier deadline for receipt of the Beneficial Owner Election Form and corresponding Subscription Payment.

     None of the Company, the Dealer Manager, any of its affiliates or the Subscription Agent will have any liability for: (a) the records maintained by CDS or DTC or by CDS Participants or DTC Participants relating to the Rights or the book-entry accounts maintained by them; (b) maintaining, supervising or reviewing any records relating to such Rights; or (c) any advice or representations made or given by CDS or DTC or by CDS Participants or DTC Participants with respect to the rules and regulations of CDS or DTC, respectively, or any action to be taken by CDS or DTC or by CDS Participants or DTC Participants, as the case may be. The ability of a person having an interest in Rights held through a Participant to pledge such interest or otherwise take action with respect to such interest (other than through a Participant) may be limited due to the lack of a physical Rights Certificate. Holders of Rights must arrange sales or transfers of Rights through their Participant. See “— Sale or Transfer of Rights”.

CDS

     The Subscription Price for Rights held through a CDS Participant is payable, at the election of the Subscriber, in either Canadian dollars or U.S. dollars by way of wire transfer, cheque, bank draft or money order payable to the CDS Participant, by direct debit from the Subscriber’s brokerage account or by electronic funds transfer or other similar payment mechanism.

DTC

     If Rights are held of record through DTC, a holder may exercise its Rights through the DTC’s “PSOP” function by instructing DTC to charge his or her applicable DTC account for the Subscription Payment for the Common Shares and deliver such amount to the Subscription Agent. If Rights are held through a DTC Participant, the holder of such Rights may not be able to exercise such Rights in Canadian dollars and such holder should contact its DTC Participant if it wishes to submit any Subscription Payment in Canadian dollars. The Subscription Agent must receive the required subscription documents, including the Subscription Payment for the Common Shares sufficiently in advance of the Expiry Time on the Expiry Date to permit proper exercise of their Rights. Participants will have an earlier deadline for receipt of instructions and payment.

Common Shares Held in Registered Form

     Registered Shareholders in a Prospectus Jurisdiction will be mailed a copy of this Prospectus and a Rights Certificate representing the total number of Rights each such Shareholder is entitled to receive. In order to exercise Rights represented by the Rights Certificate, Subscribers must complete and deliver the Rights Certificate in accordance with the instructions set out below.

     Rights not exercised by the Expiry Time on the Expiry Date will be void and of no value and will no longer be exercisable for any Common Shares. The Subscription Price for Rights exercised by Subscribers is payable, at the election of the Subscriber, in either Canadian dollars or U.S. dollars by way of wire transfer, certified cheque, bank draft or money order payable to the Subscription Agent.

How to Complete the Rights Certificate

1.

Form 1 — Subscription.  Every  l  Rights entitle the holder thereof to subscribe for one Common Share. The maximum number of Rights that may be exercised pursuant to the Rights Offering is shown in the box on the upper right-hand corner of the face of the Rights Certificate. If a Prospectus Holder or a Qualified Holder wants to exercise some but not all of the Rights represented by a Rights Certificate and such holder wishes to retain the ability to exercise the balance of the unexercised Rights represented by a Rights Certificate, such holder must first complete and submit to the Subscription Agent Form 3 on the Rights Certificate in order to divide the Rights and be issued two separate Right Certificates: one certificate representing the number of Rights that the holder wishes to exercise in the first instance (which should then be completed and delivered to the Subscription Agent) and a second certificate representing the balance of unexercised Rights available for future exercise prior to the Expiry Time on the Expiry Date.

Only subscriptions for whole Common Shares will be accepted. Where the exercise of Rights would otherwise entitle the holder of Rights to fractional Common Shares, the holder’s entitlement will be reduced to the next lowest whole number of Common Shares. See “— No Fractional Common Shares; No Fractional Cents”.

Completion of Form 1 on the Rights Certificate constitutes a representation by the holder thereof that the holder, other than in the case of a Qualified Holder, is not a resident or national of a Non-Prospectus Jurisdiction or an agent of a person that is a national or resident of a Non-Prospectus Jurisdiction.

2.

Form 2 — Transfer of Rights.  Only a holder of Rights that wishes to transfer the Rights represented by a Rights Certificate should complete and sign Form 2 on the Rights Certificate. To complete a transfer, a holder of Rights must complete Form 2 on the Rights Certificate and have its signature guaranteed by one of the following methods:

•

Holders in Canada and the United States:  A Medallion Guarantee obtained from a member of an acceptable Medallion Guarantee Program (STAMP, SEMP or MSP). Many banks, credit unions, savings associations and broker dealers are members of a Medallion Guarantee Program. The guarantor must affix a stamp in the space above bearing the actual words “Medallion Guaranteed”.

•

Holders in Canada:  In addition to a Medallion Guarantee, holders in Canada may obtain a Signature Guarantee from a major Canadian Schedule I bank that is not a member of a Medallion Guarantee Program. The guarantor must affix a stamp in the space above bearing the actual words “Signature Guaranteed”.

•

Holders outside Canada and the United States:  Must obtain a guarantee from a local financial institution that has a corresponding affiliate in Canada or the United States that is a member of an acceptable Medallion Guarantee Program. The corresponding affiliate must overguarantee the guarantee provided by the local financial institution.

			It is not necessary for a transferee to obtain a new Rights Certificate to exercise the Rights, but the signatures of the transferee on Form 1 must correspond in every particular with the name of the transferee (or the bearer if no transferee is specified) as the absolute owner of the Rights Certificate for all purposes. If Form 2 is completed, the Company and the Subscription Agent will treat the transferee as the absolute owner of the Rights Certificate for all purposes and will not be affected by notice to the contrary.
	3.		Form 3 — Dividing or Combining.  Only a holder of Rights that wishes to divide or combine the Rights represented by a Rights Certificate should complete and sign Form 3 on the Rights Certificate. Rights Certificates need not be endorsed if the new Rights Certificate(s) will be issued in the same name. The Subscription Agent will then issue a new Rights Certificate in such denominations (totalling the same number of Rights as represented by the Rights Certificate(s) being divided or combined) as are required by the Rights Certificate holder. Rights Certificates must be surrendered for division or combination in sufficient time prior to the Expiry Time to permit the new Rights Certificates to be issued to and used by the Rights Certificate holder. The Subscription Agent will facilitate subdivisions of the Rights until 5:00 p.m. (Toronto time) on  l , 2010, three business days prior to the scheduled Expiry Date.

4.

Payment.  The Subscription Price per Common Share is payable, at the election of the Subscriber, in either Canadian or U.S. dollars by way of wire transfer, certified cheque, bank draft or money order payable to the order of “CIBC Mellon Trust Company”.

5.

Delivery.  Holders of Rights that exercise their Rights for Common Shares must complete and mail the enclosed Rights Certificate to the Subscription Agent, together with payment of the Subscription Price, in the enclosed return envelope. The completed Rights Certificate and payment of the Subscription Price must be received by the Subscription Agent, unless the guaranteed delivery procedures described below are followed, by no later than the Expiry Time on the Expiry Date. If mailing, registered mail is recommended. Sufficient time should be allowed to avoid late delivery.

     The signature of the holder of a Rights Certificate must correspond in every particular with the name that appears on the face of the Rights Certificate. Signatures by a trustee, executor, administrator, guardian, attorney, officer of a company or any person acting in a fiduciary or representative capacity should be accompanied by evidence of authority satisfactory to the Subscription Agent.

     Subscriptions for Common Shares will be irrevocable and Subscribers will be unable to withdraw their subscriptions for Common Shares once submitted.

Guaranteed Delivery Procedures

     If you wish to exercise your Rights, but you do not have sufficient time to deliver the Rights Certificate evidencing your Rights to the Subscription Agent before the Expiry Time on the Expiry Date, you may exercise your Rights by complying with the following guaranteed delivery procedures:

•

provide your payment in full of the Subscription Price for each Common Share subscribed for to the Subscription Agent before the Expiry Time on the Expiry Date;

•

deliver a notice of guaranteed delivery to the Subscription Agent at or before the Expiry Time on the Expiry Date; and

•

deliver the properly completed Rights Certificate evidencing the Rights being exercised, with any required signature guarantee as described herein, to the Subscription Agent, within three business days after the Expiry Date.

     Your notice of guaranteed delivery must be substantially in the form provided to you with your Rights Certificate. Your notice of guaranteed delivery must come from a Prospectus Holder or a Qualified Holder, as applicable. In your notice of guaranteed delivery you must state:

•

your name;

•

the number of Rights represented by your Rights Certificate, the number of Common Shares you are subscribing for pursuant to your Rights; and

•

your guarantee that you will deliver to the Subscription Agent any Rights Certificates evidencing the Rights you are exercising within three business days after the Expiry Date.

     You may deliver the notice of guaranteed delivery to the Subscription Agent in the same manner as the Rights Certificate at the addresses set forth above under “DETAILS OF THE RIGHTS OFFERING — Subscription Agent and Depositary”.

     The Subscription Agent will send you additional copies of the form of notice of guaranteed delivery if you need them. You may call the Subscription Agent toll-free at 1-800-387-0825 (in North America) or 1-416-643-5500 (outside North America).

Undeliverable Rights

     Rights Certificates returned to the Subscription Agent as undeliverable will be held by the Subscription Agent until the Expiry Time on the Expiry Date, after which time the Rights represented by such Rights Certificate will be void and no longer be exercisable for any Common Shares. As a result, the Subscription Agent will not sell or attempt to sell such undelivered Rights and no proceeds of sale will be credited to holders of such Rights.

Sale or Transfer of Rights

     A holder of Rights in registered form may sell or transfer some or all of such Rights to any person that is not a Non-Prospectus Holder. A holder of Rights in registered form that wishes to sell or transfer some or all of its Rights must complete Form 2 on the Rights Certificate and have its signature guaranteed in accordance with the procedures outlined above. Holders that hold their Rights either through a CDS Participant or DTC must arrange purchases or transfers of Rights through their CDS Participant or DTC, respectively. See “— Common Shares Held in Book Entry Form” and “— Common Shares Held in Registered Form — How to Complete the Rights Certificate” above.

     An application will be submitted to the TSX to approve the listing of the Rights and the Common Shares issuable upon the exercise of the Rights. Similar applications will be made with NYSE and NASDAQ to admit the Rights for trading and list the Common Shares issuable upon the exercise of the Rights. Listing of the Rights on the TSX, NYSE and NASDAQ is subject to IVN obtaining conditional listing approval for the Rights and the underlying Common Shares from, and fulfilling all of the listing requirements of each of, the TSX, NYSE and NASDAQ, respectively. Provided IVN obtains each such approval and fulfills all such requirements, the Rights will be listed or admitted for trading, as applicable, on each of the TSX, NYSE and the NASDAQ on  l , 2010. Holders that do not wish to exercise their Rights may sell or transfer their Rights through the usual investment channels, such as investment dealers and brokers, at the holder’s own expense. The Company has filed with the SEC a Registration Statement on Form F-10 under the U.S. Securities Act, and expects to make other certain filings with the SEC, the NYSE and NASDAQ so that the Rights and the Common Shares issuable upon the exercise of the Rights issued to Shareholders that are U.S. residents and are not affiliates of the Company will not be subject to transfer restrictions under U.S. securities law.

     Persons interested in selling or purchasing Rights should be aware that the exercise of Rights by holders that are located in Non-Prospectus Jurisdictions will not be permitted unless the person exercising the Rights meets the conditions and satisfies the procedures described under “— Non-Prospectus Holders” below.

Non-Prospectus Holders

     Holders of Rights that reside outside of Canada or the United States and any persons (including any Participants) that have a contractual or legal obligation to forward this document to a jurisdiction outside a Prospectus Jurisdiction should read this section.

     This Prospectus covers the distribution of the Offered Securities in the Prospectus Jurisdictions only. Rights Certificates will not be sent to any holders of Rights with addresses of record in a Non-Prospectus Jurisdiction and, except as described herein, Rights may not be exercised by or on behalf of any holder of Rights with addresses of record in a Non-Prospectus Jurisdiction. Instead, Non-Prospectus Holders will be sent a copy of this Prospectus together with a letter advising them that their Rights Certificates will be held by the Subscription Agent as agent for the benefit of all such Non-Prospectus Holders. The letter will also set out the conditions required to be met, and procedures that must be followed, in order for Non-Prospectus Holders to participate in the Rights Offering.

     Notwithstanding any of the foregoing, subscriptions from Qualified Holders will be accepted. Shareholders that have not received Rights Certificates but are resident in a Prospectus Jurisdiction or that wish to be recognized as Qualified Holders should contact the Subscription Agent at the earliest possible time. Rights of Shareholders with addresses of record in a Non-Prospectus Jurisdiction will be held by the Subscription Agent until 4:30 p.m. (Toronto time) on  l , 2010 in order to provide such holders with the opportunity to satisfy the Company that: (i) the holder is resident in a Prospectus Jurisdiction, or (ii) the exercise of their Rights will not be in violation of securities and other laws applicable in the Non-Prospectus Jurisdiction where such person is resident. After such time, the Subscription Agent will attempt to sell the Rights of such registered Non-Prospectus Holders on such date or dates and at such price or prices and in such markets as the Subscription Agent determines in its sole discretion. The Subscription Agent will convert or cause to be converted any proceeds denominated in Canadian dollars into U.S. dollars at the prevailing exchange rate on the date of distribution, and, net of any expenses incurred by the Subscription Agent in connection with such conversion, distribute all proceeds in U.S. dollars to the registered Non-Prospectus Holders on a pro rata basis.

     No charge will be made for the sale of Rights on behalf of Non-Prospectus Holders by the Subscription Agent except for a proportionate share of any brokerage commissions incurred by the Subscription Agent and the costs of or incurred by the Subscription Agent in connection with the sale of the Rights. The proceeds from the sale of Rights by the Subscription Agent (net of brokerage fees and selling expenses and, if applicable, costs incurred and Canadian withholding taxes) will be divided on a pro rata basis among registered Non-Prospectus Holders and delivered to such Non-Prospectus Holders as soon as reasonably practicable, provided that amounts of less than US$10.00 will not be remitted. The Subscription Agent will act in its capacity as agent of the registered Non-Prospectus Holders on a best efforts basis only and none of the Company, the Dealer Manager and its affiliates, or the Subscription Agent accept any liability for the price obtained on the sale of Rights or the inability of the Subscription Agent to sell the Rights. None of the Company, the Dealer Manager and its affiliates, or the Subscription Agent will be subject to any liability for or in connection with the sale of, or failure to sell, any Rights on behalf of Non-Prospectus Holders. There is a risk that the proceeds to be received from the sale of Rights issued in respect of Common Shares held by Non-Prospectus Holders would not exceed the costs of or incurred by the Subscription Agent in connection with the sale of such Rights, in which case no sale of Rights will occur and no proceeds will be remitted to Non-Prospectus Holders.

     Holders of Rights that are not resident in Canada or the United States should be aware that the acquisition and disposition of any of the Offered Securities may have tax consequences in the jurisdiction in which they reside which are not described in this Prospectus. Such holders should consult their own tax advisors about the specific tax consequences of acquiring, holding and disposing of the Offered Securities.

Common Share Certificates

     Common Shares issued in connection with the Rights Offering will be registered in the name of the person to whom the Rights Certificate was issued or to whom the Rights have been properly and duly transferred. The certificates representing such Common Shares will be delivered by mail to the address of the Subscriber as it appears on the Rights Certificate, unless otherwise directed, or to the address of the transferee, if any, indicated on the appropriate form on the Rights Certificate as soon as practicable after the Expiry Date. Except as otherwise described under “— Non-Prospectus Holders” above, Common Shares will not be issued to or on behalf of any holder of Rights with addresses of record in a Non-Prospectus Jurisdiction, other than Qualified Holders that exercise their Rights.

     Holders of Rights that hold their Rights through a CDS Participant or through a DTC Participant will not receive physical certificates evidencing their ownership of Common Shares issued upon the exercise of Rights. At the Closing Date, one or more global certificates representing such Common Shares will be issued in registered form to, and in the name of, CDS, DTC or their respective nominees as applicable.

Enquiries

     If you have any questions, you should contact the Subscription Agent, CIBC Mellon Trust Company, toll-free at 1-800-387-0825 (in North America) or 1-416-643-5500 (outside North America), or by email at inquiries@cibcmellon.com.

Validity and Rejection of Subscriptions

     All questions as to the validity, form, eligibility (including time of receipt) and acceptance of any subscription will be determined by us in our sole discretion, which determination will be final and binding. All subscriptions are irrevocable. Subject to applicable laws and the rules of the TSX, NYSE and NASDAQ, we reserve the absolute right to reject any subscription if such subscription is not in proper form or if the acceptance thereof or the issue of Common Shares upon the exercise of the Rights could be deemed unlawful. We also reserve the right to waive any defect with regard to any particular subscription. Neither we, the Dealer Manager and its affiliates, nor the Subscription Agent will be under any duty to give any notification of any defect or irregularity in such subscriptions, nor will either of us incur any liability for failure to give such notification.

     We reserve the right to treat as invalid any exercise or purported exercise of any Rights in the Rights Offering that appears to us to have been exercised, effected or dispatched in a manner which may involve a breach of the laws or regulations of any jurisdiction or if we believe, or our agents believe, that the same may violate or be inconsistent with the procedures and terms set out in this Prospectus.

No Fractional Common Shares; No Fractional Cents

     We will not issue fractional Common Shares upon the exercise of the Rights. Where the exercise of Rights would otherwise entitle a holder thereof to fractional Common Shares, the holder’s entitlement will be reduced to the next lowest whole number of Common Shares. Where the exercise of Rights would result in the payment of a fractional cent in respect of the aggregate Subscription Price, the aggregate Subscription Price payable by such holder will be rounded up to the next whole cent.

Reservation of Common Shares

     We will, at all times, reserve sufficient unissued Common Shares to permit the exercise of all of the Rights.

CERTAIN AGREEMENTS OF THE COMPANY

     Under the terms of the Private Placement Agreement, Rio Tinto was granted the Right of First Offer to purchase any Common Shares or securities convertible into or exercisable to acquire Common Shares that Ivanhoe proposes to issue in any equity financing transaction other than certain types of transactions specifically excluded by the terms of the Private Placement Agreement (“Exempt Ivanhoe Share Transactions”). We believe that the Rights Offering is an Exempt Ivanhoe Share Transaction under the Private Placement Agreement and, accordingly, Rio Tinto’s Right of First Offer does not apply to the Rights Offering. In addition, the Standstill Limit applicable to Rio Tinto under the Private Placement Agreement will not be violated by its acquisition of Common Shares resulting from the exercise of the Rights issued to it. Rio Tinto has communicated to us that the Rights Offering offends some of their contractual rights, including Rio Tinto’s Right of First Offer. We have responded to Rio Tinto that we believe its assertions are incorrect and without merit. See “INTENTION OF INSIDERS TO EXERCISE RIGHTS — Rio Tinto’s Intentions”.

     The Shareholder Rights Plan is intended to allow shareholders to properly evaluate and assess a takeover bid without facing undue pressure or coercion. The Shareholder Rights Plan provides the Board of Directors with additional time to consider any takeover bid and, if applicable, to explore alternative transactions that would maximize value for shareholders. It is intended to prevent any shareholder from increasing its holdings beyond 20% — or, in the case of Rio Tinto, beyond the level agreed by Ivanhoe and Rio Tinto pursuant to the terms of the Private Placement Agreement — without making an offer to all other shareholders.

     The Rights Offering is a “Pro Rata Acquisition” under the Shareholder Rights Plan. Accordingly, a person acquiring and exercising Rights pursuant to the Rights Offering will not thereby become an “Acquiring Person” (as defined in the Shareholder Rights Plan) and trigger the effects of the Shareholder Rights Plan as long as that person does not thereby acquire a greater percentage of the total number of Common Shares available under the Rights Offering than the person’s percentage of the total number of issued and outstanding Common Shares that such person owned immediately prior to the Record Date.

CONSOLIDATED CAPITALIZATION

     The following table sets forth IVN’s capitalization as at June 30, 2010. IVN’s capitalization is presented on an actual basis, and as adjusted for the Rights Offering. The capitalization table should be read in conjunction with IVN’s interim consolidated financial statements as at and for the period ended June 30, 2010, which are incorporated by reference in this Prospectus.

										Outstanding as at
						Outstanding as at				June 30, 2010 after
						June 30, 2010 after				giving effect to
						giving effect to				the Rights Offering,
						the Rights Offering,				assuming only the
						assuming the Rights				Minimum Subscription
		Outstanding as				are exercised				Condition is
		at June 30, 2010				in full(1)				satisfied(2)
		(stated in thousands of U.S. dollars)
Cash and cash equivalents(3)		$	1,454,475				l				l
Credit Facilities
Convertible credit facilities, including current portion(4)			674,280				674,280				674,280
Amounts due under credit facilities, including current portion(5)			54,654				54,654				54,654
Total Credit Facilities			728,934				728,934				728,934
Shareholders’ Equity
Share capital
Authorized
Unlimited number of preferred shares without par value
Unlimited number of common shares without par value
Issued and outstanding 488,036,669 common shares			2,544,774				l				l
Share purchase warrants(6)			18,443				18,443				18,443
Beneficial conversion feature(7)			33,869				33,869				33,869
Additional paid-in capital(8)			1,144,720				1,144,720				1,144,720
Accumulated other comprehensive income			(26,128	)			(26,128	)			(26,128	)
Deficit			(2,024,075	)			(2,024,075	)			(2,024,075	)
Total Ivanhoe Mines Ltd. Shareholders’ Equity			1,691,603				l				l
Noncontrolling Interests			(69,485	)			(69,485	)			(69,485	)
Total Shareholders’ Equity			1,622,118				l				l
Total Capitalization		$	2,351,052				l				l

DESCRIPTION OF SHARE CAPITAL

     The authorized share capital of IVN consists of an unlimited number of Common Shares without par value and an unlimited number of Preferred Shares without par value. As at October 15, 2010 there were 530,438,727 Common Shares and no Preferred Shares issued and outstanding. Rights and restrictions in respect of the Common Shares and the Preferred Shares are set out in our articles of continuance, our by-laws and in the Business Corporations Act (Yukon) and its regulations. In addition, as of October 15, 2010, there were options outstanding to acquire 19,599,270 Common Shares pursuant to our Employees’ and Directors’ Equity Incentive Plan and Common Share purchase warrants outstanding to acquire 81,746,725 Common Shares.

Common Shares

     The holders of Common Shares are entitled to one vote per Common Share at all meetings of Shareholders except meetings at which only holders of another specified class or series of shares of the Company are entitled to vote separately as a class or series. Subject to the prior rights of the holders of Preferred Shares, the holders of Common Shares are entitled to receive dividends as and when declared by the Board of Directors, and to receive a pro rata share of the remaining property and assets of the Company in the event of liquidation, dissolution or winding up of the Company. The Common Shares carry no pre-emptive, redemption, purchase or conversion rights. Neither the Business Corporations Act (Yukon) nor the constating documents of the Company impose restrictions on the transfer of Common Shares on the register of the Company, provided that the Company receives the certificate representing the Common Shares to be transferred together with a duly endorsed instrument of transfer and payment of any fees and taxes which may be prescribed by the Board of Directors from time to time. There are no sinking fund provisions in relation to the Common Shares and they are not liable to further calls or to assessment by the Company. The Business Corporations Act (Yukon) provides that the rights and provisions attached to any class of shares may not be modified, amended or varied unless consented to by special resolution passed by a majority of not less than two-thirds of the votes cast in person or by proxy by holders of shares of that class.

Preferred Shares

     The Preferred Shares are issuable in one or more series, each consisting of such number of Preferred Shares as may be fixed by the Board of Directors. The Board of Directors may from time to time, by resolution passed before the issue of any Preferred Shares of any particular series, alter the constating documents of the Company to determine the designation of the Preferred Shares of that series and to fix the number of Preferred Shares therein and alter the constating documents to create, define and attach special rights and restrictions to the shares of that series, including, without limitation, the following: (i) the nature, rate or amount of dividends and the dates, places and currencies of payment thereof; (ii) the consideration for, and the terms and conditions of, any purchase of the Preferred Shares for cancellation or redemption; (iii) conversion or exchange rights; (iv) the terms and conditions of any share purchase plan or sinking fund; and (v) voting rights and restrictions.

     Registered holders of any Preferred Shares or Common Shares are entitled, at their option, to a certificate representing their shares of the Company.

Options and Warrants to Purchase Common Shares

     The Rights Offering is a corporate transaction that will affect the Company’s issued share capital and its outstanding equity securities that are convertible into, exchangeable for or exercisable to acquire unissued share capital (“Convertible Securities”). The Convertible Securities contain certain anti-dilution adjustment provisions that are intended to ensure that a holder of Convertible Securities is entitled to acquire equivalent share capital after the occurrence of a relevant corporate transaction, such as the Rights Offering. Information provided in this Prospectus with respect to the number of Convertible Securities issued and outstanding is given without giving effect to any anti-dilution adjustment provisions described above.

PRIOR SALES

     The following table summarizes issuances of Common Shares and securities convertible into Common Shares within the twelve (12) months prior to the date of this Prospectus. “C/S” refers to Common Shares and the price per security represents the issue price per Common Share. “S/O” refers to incentive stock options issued under the Company’s Employees’ and Directors’ Equity Incentive Plan, each exercisable to purchase one (1) Common Share and the price per security represents the exercise price per Common Share.

Issuance Date		Issuance Type		Number Issued				Price per C/S
2009
October 8		S/O exercise			18,750			Cdn$8.35
October 9		S/O exercise			20,000			Cdn$9.73
October 9		S/O exercise			6,250			Cdn$8.35
October 14		C/S issuance			125,000			Cdn$12.81
October 21		S/O exercise			2,400			Cdn$7.03
October 21		S/O exercise			20,000			Cdn$7.27
October 26		S/O exercise			10,000			Cdn$9.73
October 26		S/O exercise			10,000			Cdn$8.35
October 27		C/S issuance		46,304,473(1)				US$8.38
October 27		S/O exercise			8,000			Cdn$6.76
November 16		S/O exercise			5,250			Cdn$2.82
November 16		S/O exercise			700			Cdn$8.35
November 17		S/O exercise			19,875			Cdn$2.82
November 17		S/O exercise			35,000			Cdn$8.99
November 17		S/O exercise			600			Cdn$7.03
November 17		S/O exercise			32,500			Cdn$9.73
November 17		S/O exercise			10,000			Cdn$8.35
November 18		S/O exercise			8,000			Cdn$7.03
November 18		S/O exercise			3,750			Cdn$8.35
November 18		S/O exercise			15,000			Cdn$2.82
November 19		S/O exercise			3,000			Cdn$7.03
November 24		S/O exercise			5,000			Cdn$9.35
November 24		S/O exercise			137,500			Cdn$2.82
November 25		S/O exercise			2,000			Cdn$7.93
November 25		S/O exercise			50,000			Cdn$7.01
November 25		S/O exercise			5,625			Cdn$2.82
November 25		S/O exercise			37,500			Cdn$8.35
December 2		S/O exercise			5,625			Cdn$2.82
December 10		S/O exercise			2,000			Cdn$7.93
December 10		S/O exercise			12,500			Cdn$10.56
December 11		S/O exercise			6,000			Cdn$2.82
December 11		S/O exercise			1,000			Cdn$7.03
December 11		S/O exercise			1,250			Cdn$8.35
December 11		S/O exercise			5,000			Cdn$9.73
December 14		S/O exercise			6,000			Cdn$8.35
December 16		S/O exercise			5,625			Cdn$2.82
December 16		S/O exercise			10,000			Cdn$7.93
December 16		S/O exercise			12,500			Cdn$8.35
December 16		S/O exercise			3,000			Cdn$9.73
December 16		S/O exercise			37,500			Cdn$13.71
December 18		S/O exercise			1,200			Cdn$8.35
December 21		S/O exercise			250			Cdn$8.35
December 22		S/O exercise			5,000			Cdn$10.75
December 23		S/O exercise			2,000			Cdn$7.03
December 23		S/O exercise			3,000			Cdn$7.93
December 23		S/O exercise			2,550			Cdn$8.35
December 24		S/O exercise			700			Cdn$2.82
December 24		S/O exercise			4,800			Cdn$10.87
December 30		S/O exercise			11,250			Cdn$2.82
December 30		S/O exercise			2,500			Cdn$8.35
December 30		S/O exercise			5,000			Cdn$9.73
December 30		S/O exercise			12,500			Cdn$13.71
2010
January 4		S/O exercise			300			Cdn$7.03
January 4		S/O exercise			1,500			Cdn$7.93
January 4		S/O exercise			12,500			Cdn$8.35
January 5		S/O exercise			10,000			Cdn$6.76
January 5		S/O exercise			4,600			Cdn$7.03
January 5		S/O exercise			1,250			Cdn$8.35
January 5		S/O exercise			1,000			Cdn$9.73
January 6		S/O exercise			6,700			Cdn$8.20
January 8		S/O exercise			5,625			Cdn$2.82
January 8		S/O exercise			10,000			Cdn$8.20
January 8		S/O exercise			700			Cdn$8.35
January 8		S/O exercise			100,000			Cdn$8.41
January 8		S/O exercise			16,875			Cdn$9.64
January 8		S/O exercise			19,000			Cdn$9.73
January 8		S/O exercise			30,000			Cdn$13.29
January 11		S/O exercise			35,250			Cdn$2.82
January 11		S/O exercise			5,000			Cdn$8.35
January 11		S/O exercise			27,500			Cdn$9.73
January 12		S/O exercise			12,500			Cdn$8.35
January 12		S/O exercise			31,000			Cdn$9.73
January 12		S/O exercise			15,000			Cnd$10.56
January 14		S/O exercise			5,000			Cdn$7.93
January 14		S/O exercise			24,000			Cdn$9.73
January 19		S/O exercise			7,000			Cdn$7.93

Issuance Date		Issuance Type		Number Issued				Price per C/S
January 20		S/O exercise			13,000			Cdn$9.73
January 25		S/O exercise			14,500			Cdn$9.73
January 26		S/O exercise			5,000			Cdn$2.82
January 26		S/O exercise			62,500			Cdn$8.35
February 11		S/O exercise			23,000			Cdn$7.93
February 11		S/O exercise			3,750			Cdn$8.35
February 16		S/O exercise			20,000			Cdn$7.93
February 16		S/O exercise			8,000			Cdn$9.73
February 16		S/O exercise			2,400			Cdn$10.87
February 17		S/O exercise			800			Cdn$7.03
February 17		S/O exercise			4,000			Cdn$7.93
February 19		S/O exercise			7,500			Cdn$2.82
February 19		S/O exercise			20,000			Cdn$7.93
February 19		S/O exercise			37,500			Cdn$8.35
February 25		S/O exercise			12,500			Cdn$8.35
February 26		S/O exercise			300			Cdn$7.03
February 26		S/O exercise			26,450			Cdn$8.35
February 26		S/O exercise			20,000			Cdn$10.56
March 18		C/S issuance		15,000,000(2)				Cdn$16.31
March 30		S/O exercise			25,000			Cdn$8.96
March 31		S/O exercise			25,000			Cdn$8.96
April 7		S/O exercise			1,250			Cdn$8.35
April 8		S/O exercise			2,700			Cdn$7.03
April 8		S/O exercise			1,500			Cdn$7.93
April 8		S/O exercise			750			Cdn$8.35
April 9		S/O exercise			50,000			Cdn$3.47
April 9		S/O exercise			3,750			Cdn$8.35
April 9		S/O exercise			60,000			Cdn$9.20
April 12		S/O exercise			3,750			Cdn$2.82
April 12		S/O exercise			6,000			Cdn$6.98
April 12		S/O exercise			10,300			Cdn$7.03
April 14		S/O exercise			5,625			Cdn$2.82
April 14		S/O exercise			12,500			Cdn$8.35
April 14		S/O exercise			40,000			Cdn$8.96
April 14		S/O exercise			12,500			Cdn$13.71
April 15		S/O exercise			15,000			Cdn$7.93
April 15		S/O exercise			10,000			Cdn$9.73
April 19		S/O exercise			25,000			Cdn$4.17
April 21		S/O exercise			10,000			Cdn$7.93
April 22		S/O exercise			12,500			Cdn$8.35
April 30		S/O exercise			4,500			Cdn$2.82
April 30		S/O exercise			25,000			Cdn$9.37
May 21		S/O exercise			37,500			Cdn$8.20
May 25		C/S issuance			261,900			Cdn$14.08
May 25		S/O exercise			50,000			Cdn$8.26
May 27		S/O exercise			25,000			Cdn$7.03
May 31		S/O exercise			25,000			Cdn$4.17
June 11		S/O exercise			1,500			Cdn$7.93
June 15		S/O exercise			5,000			Cdn$7.93
June 18		S/O exercise			1,875			Cdn$8.20
June 21		S/O exercise			56,500			Cdn$8.20
June 23		S/O exercise			900			Cdn$7.03
June 28		S/O exercise			1,600			Cdn$7.03
June 29		C/S issuance		46,026,522(3)				US$8.54
June 30		S/O exercise			50,000			Cdn$6.32
July 13		S/O exercise			1,500			Cdn$7.03
July 13		S/O exercise			2,000			Cdn$9.73
July 14		S/O exercise			200			Cdn$7.03
July 14		S/O exercise			16,500			Cdn$7.93
July 14		S/O exercise			10,000			Cdn$10.56
July 15		S/O exercise			7,000			Cdn$7.03
July 16		S/O exercise			3,000			Cdn$7.03
July 20		S/O exercise			1,875			Cdn$2.82
July 20		S/O exercise			1,000			Cdn$7.03
July 20		S/O exercise			17,500			Cdn$7.93
July 20		S/O exercise			1,000			Cdn$8.20
July 21		S/O exercise			7,500			Cdn$8.20
July 21		S/O exercise			7,200			Cdn$10.87
July 22		S/O exercise			6,000			Cdn$6.76
July 22		S/O exercise			33,500			Cdn$7.03
July 22		S/O exercise			15,000			Cdn$8.20
July 23		S/O exercise			2,700			Cdn$2.82
July 23		S/O exercise			1,400			Cdn$7.03
July 23		S/O exercise			1,500			Cdn$7.93
July 23		S/O exercise			6,300			Cdn$8.35
July 23		S/O exercise			55,750			Cdn$8.77
July 23		S/O exercise			16,000			Cdn$10.56
July 23		S/O exercise			10,000			Cdn$12.16
July 23		S/O exercise			12,500			Cdn$13.71
July 26		S/O exercise			5,625			Cdn$2.82
July 26		S/O exercise			2,500			Cdn$7.93
July 26		S/O exercise			1,250			Cdn$8.35

Issuance Date		Issuance Type		Number Issued				Price per C/S
July 27		S/O exercise			4,875			Cdn$2.82
July 27		S/O exercise			125,000			Cdn$3.47
July 27		S/O exercise			300			Cdn$7.03
July 27		S/O exercise			77,800			Cdn$8.20
July 27		S/O exercise			125,000			Cdn$11.69
July 28		S/O exercise			2,000			Cdn$8.35
July 29		S/O exercise			1,875			Cdn$2.82
July 29		S/O exercise			2,000			Cdn$7.93
July 29		S/O exercise			6,250			Cdn$8.35
July 29		S/O exercise			9,500			Cdn$9.73
July 29		S/O exercise			12,500			Cdn$13.71
July 29		S/O exercise			10,000			Cdn$16.79
July 30		S/O exercise			22,500			Cdn$2.82
July 30		S/O exercise			2,500			Cdn$7.03
July 30		S/O exercise			2,000			Cdn$7.93
July 30		S/O exercise			10,000			Cdn$8.20
August 23		S/O exercise			18,750			Cdn$2.82
August 23		S/O exercise			5,000			Cdn$7.93
August 23		S/O exercise			2,500			Cdn$8.20
August 23		S/O exercise			12,500			Cdn$8.35
August 30		S/O exercise			25,000			Cdn$7.03
August 30		S/O exercise			10,000			Cdn$12.16
August 31		S/O exercise			15,000			Cdn$2.82
August 31		S/O exercise			500			Cdn$7.03
August 31		S/O exercise			10,000			Cdn$8.35
August 31		S/O exercise			37,500			Cdn$8.77
August 31		S/O exercise			20,000			Cdn$9.73
August 31		S/O exercise			17,500			Cdn$10.56
September 2		S/O exercise			25,200			Cdn$7.03
September 2		S/O exercise			40,000			Cdn$9.73
September 3		S/O exercise			50,000			Cdn$7.01
September 3		S/O exercise			4,000			Cdn$7.03
September 3		S/O exercise			2,500			Cdn$8.35
September 3		S/O exercise			10,000			Cdn$8.96
September 7		S/O exercise			25,000			Cdn$7.03
September 7		S/O exercise			20,000			Cdn$9.73
September 7		S/O exercise			37,500			Cdn$13.71
September 13		C/S issuance			40,083,206(4)			US$10.00
September 14		S/O exercise			12,500			Cdn$8.35
September 16		S/O exercise			2,000			Cdn$6.98
September 17		S/O exercise			20,000			Cdn$7.93
September 17		S/O exercise			4,700			Cdn$9.73
September 17		S/O exercise			50,000			Cdn$13.71
September 20		S/O exercise			1,900			Cdn$7.03
September 20		S/O exercise			7,500			Cdn$7.93
September 20		S/O exercise			1,000			Cdn$8.20
September 21		S/O exercise			1,300			Cdn$8.35
September 21		S/O exercise			15,000			Cdn$9.73
September 22		S/O exercise			2,500			Cdn$7.93
September 22		S/O exercise			26,500			Cdn$8.35
September 22		S/O exercise			20,000			Cdn$9.73
September 23		S/O exercise			1,000			Cdn$7.03
September 23		S/O exercise			19,500			Cdn$8.35
September 24		S/O exercise			400			Cdn$7.03
September 27		S/O exercise			5,800			Cdn$8.35
September 27		S/O exercise			5,000			Cdn$10.75
September 30		S/O exercise			25,000			Cdn$13.71
September 30		S/O exercise			15,500			Cdn$9.73
September 30		S/O exercise			20,000			Cdn$10.56
September 30		S/O exercise			19,550			Cdn$8.35
September 30		S/O exercise			6,000			Cdn$2.82
October 5		C/S issuance		720,203(5)				Cdn$3.15
October 6		C/S issuance			125,000			Cdn$25.01
October 13		S/O exercise			125,000			Cdn$3.47

     The table above does not reflect the issuance of rights in respect of each of the outstanding Common Shares as of April 5, 2010 pursuant to the Shareholder Rights Plan. Such rights will become exercisable after the Separation Time (as defined in the Shareholder Rights Plan). The initial exercise price under each right in order to acquire a Common Share is five times the Market Price at the Separation Time (as each of those terms is defined in the Shareholder Rights Plan).

     The following incentive stock options were granted during the twelve (12) months preceding the date of this Prospectus pursuant to the Company’s Employees’ and Directors’ Equity Incentive Plan. Each stock option is exercisable to purchase one (1) Common Share.

Date of Issue		Number of Options				Exercise Price
February 11, 2010			500,000			Cdn$14.41
March 1, 2010			250,000			Cdn$16.59
May 7, 2010			450,000			Cdn$15.25
August 18, 2010			12,500			Cdn$17.70
September 16, 2010			100,000			Cdn$19.18

     The following table sets forth the number of Common Shares which were granted during the twelve (12) months preceding the date of this Prospectus pursuant to the Company’s Employee Share Purchase Plan (the “SPP”). Pursuant to the SPP, participating employees have authorized the Company to deduct from their respective salaries an amount, not to exceed seven percent (7%) of their net salary for the purchase of Common Shares. The Company will credit participating employees with an additional amount equal to fifty percent (50%) of each such participants’ contributions. On March 31, June 30, September 30 and December 31 in each calendar year, the Company issues to each participating employee that number of fully paid and non-assessable Common Shares which is equal to the aggregate amount of each respective employees’ contributions together with the Company’s contributions divided by the weighted average price of the Common Shares on the TSX for the 90-day period immediately preceding the date of issuance.

Date of Issue		Number of C/S Issued				Issue Price
January 6, 2010			10,853			Cdn$13.36
April 6, 2010			8,842			Cdn$16.32
July 5, 2010			9,279			Cdn$15.89
October 1, 2010			7,870			Cdn$18.70

PRICE RANGE AND TRADING VOLUME

     Our outstanding Common Shares are listed for trading in Canada on the TSX and in the United States on the NYSE and NASDAQ, under the trading symbol “IVN”. The following table sets forth the high and low sale prices of the Common Shares and their monthly trading volumes as reported on the TSX for the periods indicated.

TSX

		High				Low				Volume
		Cdn$				Cdn$
2009
October		$	14.67			$	11.21				28,313,580
November		$	13.59			$	11.29				21,922,184
December		$	15.85			$	12.26				22,164,728
2010
January		$	18.49			$	14.69				18,746,900
February		$	16.81			$	13.46				20,937,360
March		$	17.91			$	15.75				15,103,178
April		$	18.99			$	16.02				30,044,372
May		$	16.83			$	13.15				28,688,482
June		$	16.33			$	13.59				22,565,072
July		$	18.69			$	13.63				29,269,250
August		$	19.12			$	17.13				17,413,796
September		$	25.71			$	18.44				19,296,112
October			l				l				l

     On October 15, 2010, the closing price of the Common Shares on the TSX was Cdn$24.77 per Common Share (US$24.50, based on the Noon Buying Rate on October 15, 2010).

NYSE/NASDAQ

		High				Low				Volume
		US$				US$
2009
October		$	13.70			$	10.37				68,388,352
November		$	12.87			$	10.44				36,511,708
December		$	15.19			$	11.64				36,612,592
2010
January		$	17.93			$	13.73				38,149,128
February		$	15.97			$	12.60				34,279,404
March		$	17.66			$	15.33				30,511,836
April		$	18.94			$	15.76				35,886,492
May		$	16.37			$	12.15				57,728,620
June		$	16.05			$	12.85				31,305,166
July		$	18.01			$	12.39				54,581,976
August		$	18.74			$	16.07				27,289,152
September		$	25.06			$	17.82				55,085,236
October			l				l				l

     On October 15, 2010, the closing price of the Common Shares on the NYSE and NASDAQ was US$24.47 per Common Share (Cdn$24.73, based on the Noon Buying Rate on October 15, 2010).

PRINCIPAL HOLDERS OF SECURITIES

     As of the date of this Prospectus, to our knowledge, no person beneficially owns, directly or indirectly, or exercises control or direction over, more than ten percent of our issued Common Shares, except as follows:

		Number of Common
		Shares beneficially				Approximate
		owned, or controlled or				percentage of
		directed, directly or				total outstanding
		indirectly(1)				Common Shares
Rio Tinto(2)			185,468,059				34.97	%
Robert M. Friedland(3)(4)			96,881,622				18.26	%

     The information as to the intentions of our insiders is not within our knowledge and has been furnished by the respective insiders. No assurance can be given by us that the respective insiders will subscribe for Common Shares in the amounts set out above or at all.

PLAN OF DISTRIBUTION

     Each Shareholder on the Record Date will receive one Right for every Common Share held. Every  l  Rights entitle the holder thereof, subject to the limitations set out below, to subscribe for one Common Share upon payment of the Subscription Price for each Common Share for which the holder is subscribing. The Company has determined that the Subscription Price per Common Share will be equal to Cdn$ l  or US$ l , at the election of the Subscriber.

     The Rights Offering is conditional upon satisfaction or waiver by the Company of the Minimum Subscription Condition, such condition being the exercise of Rights representing at least  l % of the Rights offered in the Rights Offering prior to the Expiry Time on the Expiry Date. If the Minimum Subscription Condition is not satisfied, the Company will be under no obligation to complete the Rights Offering, although the Company will retain sole discretion to waive this condition and complete the Rights Offering. If the Minimum Subscription Condition is not satisfied as at the Expiry Time on the Expiry Date and the Company does not waive this condition, the Rights will not be exercisable by the holder thereof and will be void and no longer be exercisable for any Common Shares. If the Rights Offering does not proceed, the Subscription Payments will be returned promptly to the Subscribers without interest or deduction. See “MINIMUM SUBSCRIPTION CONDITION”.

     We have retained Citigroup Global Markets Inc. to act, either directly or through affiliates, including Citigroup Global Markets Canada Inc., as Dealer Manager in connection with this Rights Offering pursuant to a Dealer Manager Agreement dated as of October 18, 2010. The Dealer Manager will not underwrite this Rights Offering and has no obligation to purchase, or procure purchases of, the Rights or the underlying Common Shares offered hereby or otherwise act in any capacity whatsoever as an underwriter.

     The Dealer Manager is earning the Dealer Manager Fee, such amount equal to US$3,000,000, in connection with the Rights Offering, and payable on the Closing Date. The Company has also agreed to reimburse the Dealer Manager for costs and expenses relating to the Rights Offering. The Company estimates that its total expenses in connection with the Rights Offering will be approximately US$ l . In addition, the Company has agreed to indemnify the Dealer Manager with respect to certain liabilities, including liabilities under U.S. and Canadian securities laws.

     The Dealer Manager and certain of its affiliates have provided, currently are providing and may in the future provide various investment banking, financial advisory, commercial lending and other services to the Company and/or its affiliates, including certain loans and related transactions to Mr. Robert Friedland under the Friedland Agreements and certain advisory services for which Citigroup Global Markets Inc. will receive an amount equal to a minimum of 1.5% and a maximum of 2.0%, subject to the level of participation of Prospectus Holders and Qualified Holders in the Rights Offering, of the Subscription Payments received by the Company pursuant to the Rights Offering (payable in U.S. dollars), less the US$3,000,000 Dealer Manager Fee.

     Neither the Dealer Manager nor any of its affiliates has prepared any report or opinion constituting a recommendation or advice to the Company or to its Shareholders in connection with the Rights Offering, nor has the Dealer Manager prepared an opinion as to the fairness of the Subscription Price or the terms of this Rights Offering. Neither the Dealer Manager nor any of its affiliates expresses any opinion or makes any recommendation to the Shareholders or to the holders of Rights as to the purchase by any person of any of our Common Shares or Rights. Also, neither the Dealer Manager nor any of its affiliates expresses any opinion as to the prices at which the Rights, or the underlying Common Shares upon exercise of the Rights, may trade if and when they are issued or at any future time.

     Other than the Dealer Manager, the Company has not employed any brokers, dealers or underwriters in connection with the solicitation of exercise of Rights, and, except as described herein, no fee or sales commissions, fees or discounts will be paid in connection with this Rights Offering. Certain of our employees may solicit responses from the holders of the Rights in connection with this Rights Offering, but such employees will not receive any commissions or compensation for such services other than their normal employment compensation.

     In the ordinary course of its various business activities, the Dealer Manager and its affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of the Company.

     General Offering Restrictions

     This Prospectus qualifies for distribution under applicable Canadian securities laws the Offered Securities in each of the provinces and territories of Canada. This Prospectus also covers the offer and sale of the Offered Securities within the United States under the U.S. Securities Act.

     The Offered Securities have not been qualified under the securities laws of any jurisdiction other than the Prospectus Jurisdictions. Except as described herein, Rights may not be exercised by or on behalf of a Non-Prospectus Holder. This Prospectus is not, and under no circumstances is to be construed as, an offering of any of the Offered Securities for sale in any Non-Prospectus Jurisdiction or a solicitation therein of an offer to buy any securities. Rights Certificates will not be sent to any Shareholder with an address of record in a Non-Prospectus Jurisdiction. Instead, such Non-Prospectus Holders will be sent a letter advising them that their Rights Certificates will be held by the Subscription Agent, which will hold such Rights as agent for the benefit of all such Non-Prospectus Holders. See “DETAILS OF THE RIGHTS OFFERING — Non-Prospectus Holders”.

     No action has been or will be taken in any jurisdiction other than in the Prospectus Jurisdictions, where action for that purpose is required, which would permit a public offering of the Offered Securities or the possession, circulation or distribution of this Prospectus or any material relating to this Rights Offering except as set forth herein. Accordingly, the Offered Securities may not be offered, sold or delivered, directly or indirectly, and neither this Prospectus nor any other offering material or advertisements in connection with this Rights Offering may be distributed or published, in or from any country or jurisdiction, except under circumstances that will result in compliance with any applicable rules and regulations of any such country or jurisdiction.

     European Economic Area

     In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”) an offer to the public of any Offered Securities may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any Offered Securities may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

(a)

to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

(b)

to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than EUR43,000,000 and (3) an annual net turnover of more than EUR50,000,000, as shown in its last annual or consolidated accounts;

(c)

by the Dealer Manager to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive); or

(d)

in any other circumstances which do not require the publication by the Company of a prospectus pursuant to Article 3(2) of the Prospectus Directive,

provided that no such offer of Offered Securities shall require the Company or the Dealer Manager to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.

     For the purposes of this provision, the expression an “offer to the public” in relation to any Offered Securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the Rights Offer and any Offered Securities to be offered so as to enable an investor to decide to purchase any Offered Securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

     The European Economic Area selling restriction is in addition to any other selling restrictions set out below.

     United Kingdom

     Any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act (2000) (“FSMA”)) in connection with the issue or sale of the Offered Securities may only be communicated or caused to be communicated in circumstances in which Section 21(1) of the FSMA does not apply to the Company. Without limitation to the other restrictions referred to herein, this prospectus is directed only at (i) persons outside the United Kingdom, (ii) persons

having professional experience in matters relating to investments that fall within the definition of “investment professionals” in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005; or (iii) high net worth bodies corporate, unincorporated associations and partnerships and trustees of high value trusts as described in Article 49(2) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005. Without limitation to the other restrictions referred to herein, any investment or investment activity to which this Prospectus relates is available only to, and will be engaged in only with, such persons, and persons within the United Kingdom that receive this communication (other than persons that fall within (2) or (3) above) should not rely or act upon this communication.

     Australia

     Neither the Prospectus nor any other disclosure document (as defined in the Australian Corporations Act) in relation to the Offered Securities has been or will be lodged with the Australian Securities & Investments Commission (“ASIC”). The Prospectus does not comply with Part 6D.2 or Chapter 7 of the Australian Corporations Act. In addition: (a) no offers or applications will be made or invited with respect of any Offered Securities in Australia (including an offer or invitation which is received by a person in Australia); and (b) the Rights Offering and any offering material or advertisement relating to any Offered Securities will not be distributed or published in Australia, unless (i) such action complies with all applicable laws, directives and regulations (including, without limitation, Part 6D.2 of the Australian Corporations Act or the licensing requirements set out in Chapter 7 of the Australian Corporations Act); (ii) such action does not require any document to be lodged with ASIC; and (iii) the offer or invitation is only directed at professional investors as defined in Section 9 of the Australian Corporations Act or wholesale clients as defined in Section 761G of the Australian Corporations Act or is otherwise made only in circumstances specified in Corporations Regulation 7.9.97.

     Indonesia

     The offering of the Offered Securities will not be conducted in a manner which constitutes a public offering of securities under applicable laws and regulations of the Republic of Indonesia. The Offered Securities have not been filed with the Indonesian Securities Commission.

     Stock Exchange Approvals

     An application will be submitted to the TSX to approve the listing of the Rights and the Common Shares issuable upon the exercise of the Rights. Similar applications will be made with NYSE and NASDAQ to admit the Rights for trading and list the Common Shares issuable upon the exercise of Rights. Listing of the Rights on the TSX, NYSE and NASDAQ is subject to obtaining conditional listing approval for the Rights and the underlying Common Shares from the TSX, NYSE and NASDAQ and IVN fulfilling all of the listing requirements of the TSX, NYSE and NASDAQ, respectively. Provided conditional listing approval is obtained and these requirements are met, the Rights will be listed or admitted for trading, as applicable, on the TSX, NYSE and NASDAQ on  l , 2010.

RELATIONSHIPS BETWEEN THE COMPANY AND THE DEALER MANAGER

     Citigroup Global Markets Inc., as Dealer Manager, and certain of its affiliates have in the past and may in the future provide commercial banking, investment banking and financial advisory or other services to the Company and/or its affiliates.

     In particular, the Dealer Manager has been engaged by the Company to provide certain financial advisory services and investment banking services and continues to provide such services. In addition, certain affiliates of the Dealer Manager are entering into financing arrangement with Mr. Robert Friedland, the Chief Executive Officer of the Company, in connection with his intention to exercise the Rights issued to him and the entities controlled by him. See “INTENTION OF INSIDERS TO EXERCISE RIGHTS” for details of this arrangement. Accordingly, the Company may be considered a “connected issuer” (as such term is defined in National Instrument 33-105 — Underwriting Conflicts) of the Dealer Manager and its affiliates.

     Other than the payment of the Dealer Manager Fee and the variable fee for advisory services disclosed above in “PLAN OF DISTRIBUTION”, the Dealer Manager will not receive any other compensation from the Company from the completion of this Rights Offering. Certain affiliates of the Dealer Manager will receive fees, interest and other compensation from Mr. Friedland in connection with the entering into of the Friedland Agreements. The decision to undertake the Rights Offering was made by the Company, and the terms and conditions of the Rights Offering were determined by the Company.

CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

     In the opinion of Goodmans LLP, Canadian tax counsel to the Company, the following is a summary of the principal Canadian federal income tax considerations under the Income Tax Act (Canada) and the regulations thereunder (the “Tax Act”) generally applicable to holders of Rights acquired pursuant to this Prospectus and Common Shares acquired on the exercise of Rights who, for the purposes of the Tax Act and at all relevant times, hold such Rights and Common Shares as capital property, are not affiliated with the Company, and deal with the Company at arm’s length (“Holders”). A Right or Common Share will generally be capital property to a Holder unless it is held in the course of carrying on a business of trading in or dealing in securities, or it has been acquired in a transaction or transactions considered to be an adventure or concern in the nature of trade. Canadian Holders (as described below) whose Common Shares do not otherwise qualify as capital property may in certain circumstances make an irrevocable election in accordance with subsection 39(4) of the Tax Act to have their Common Shares and every “Canadian security” (as defined in the Tax Act) owned by such Canadian Holder in the taxation year of the election and in all subsequent taxation years deemed to be capital property.

     This summary does not apply to a Holder: (i) that is a “financial institution” for purposes of section 142.2 of the Tax Act, (ii) that is a “specified financial institution” as defined for purposes of the Tax Act, (iii) to which the “functional currency” reporting rules in section 261 of the Tax Act apply, or (iv) an interest in which is a tax shelter investment for the purpose of the Tax Act. Such Holders should consult their own tax advisors.

     This summary is based on the current provisions of the Tax Act, all specific proposals to amend the Tax Act publicly announced by or on behalf of the Minister of Finance (Canada) (“Tax Proposals”) before the date of this Prospectus, and the current published administrative policies and assessing practices of the Canada Revenue Agency (“CRA”). No assurance can be given that the Tax Proposals will be enacted in the form proposed or at all. This summary is not exhaustive of all possible Canadian federal income tax considerations and, except as mentioned above, does not take into account or anticipate any changes in law, whether by legislative, administrative or judicial decision or action, nor does it take into account provincial, territorial or foreign income tax legislation or considerations, which may differ significantly from the Canadian federal income tax considerations discussed herein.

     This summary is of a general nature only and is not intended to be, nor should it be construed to be, legal or tax advice to any particular Holder. Accordingly, Holders should consult their own tax advisors about the specific tax consequences to them of acquiring, holding and disposing of Rights or Common Shares.

     For purposes of the Tax Act, all amounts relating to the acquisition, holding or disposition of Rights and Common Shares must be expressed in Canadian dollars (including adjusted cost base, proceeds of disposition and dividends). For purposes of the Tax Act, amounts denominated in a foreign currency generally must be converted into Canadian dollars using the rate of exchange quoted by the Bank of Canada at noon on the date such amounts arose, or such other rate of exchange as is acceptable to the CRA.

Residents of Canada

     The following portion of the summary is generally applicable to a Holder who, at all relevant times for purposes of the Tax Act, is or is deemed to be resident in Canada (a “Canadian Holder”).

Distribution of Rights

     A Canadian Holder that receives a Right pursuant to the Rights Offering will not be required to include the value of such Right in computing the Canadian Holder’s income for purposes of the Tax Act.

Disposition of Rights

     A Canadian Holder that disposes of or is deemed to dispose of a Right (otherwise than by exercise of the Right) will generally realize a capital gain (or a capital loss) equal to the amount by which the proceeds of disposition of the Right exceed (or are exceeded by) the aggregate of the Canadian Holder’s adjusted cost base thereof and any reasonable costs of disposition. Rights received by a Canadian Holder pursuant to this Rights Offering will have an adjusted cost base of nil. The cost of Rights acquired by a Canadian Holder otherwise than pursuant to this Rights Offering will be averaged with the adjusted cost base of all other Rights held by that Canadian Holder as capital property immediately prior to such acquisition for the purposes of determining the adjusted cost base to that Canadian Holder of each Right so held. The tax treatment of any capital gain (or capital loss) realized on the disposition of a Right (otherwise than by the exercise of a Right) is described below under “Certain Canadian Federal Income Tax Considerations — Residents of Canada — Treatment of Capital Gains and Capital Losses”.

Exercise of Rights

     The exercise of a Right will not be a disposition for purposes of the Tax Act, with the result that no gain or loss will be realized by a Canadian Holder upon the exercise of a Right. The adjusted cost base, if any, of the Right so exercised will be added in computing the cost of the Common Shares acquired upon the exercise of the Right.

Expiry of Rights

     The expiry or termination of an unexercised Right will result in a capital loss to the Canadian Holder equal to the adjusted cost base, if any, of the Right immediately before its expiry or termination. Any such capital loss will be subject to the treatment described below under “Certain Canadian Federal Income Tax Considerations — Residents of Canada — Treatment of Capital Gains and Capital Losses”.

Common Shares

     Common Shares acquired by a Canadian Holder upon the exercise of a Right will have a cost equal to the aggregate of the Subscription Price paid for such Common Shares and the adjusted cost base to such holder of the Right so exercised. Common Shares otherwise purchased by a Canadian Holder will have a cost to the Canadian Holder equal to such purchase price, together with any reasonable acquisition costs. For the purposes of determining the adjusted cost base to a Canadian Holder of any Common Shares acquired by a Canadian Holder, the cost of each such Common Share must be averaged with the adjusted cost base to the Canadian Holder of all other Common Shares held as capital property by the Canadian Holder immediately prior to such acquisition.

     Dividends received or deemed to be received on Common Shares by a Canadian Holder that is an individual (other than certain trusts) will be included in computing the individual’s income and will be subject to the gross-up and dividend tax credit rules normally applicable to taxable dividends received by an individual from a taxable Canadian corporation. Taxable dividends received or deemed to be received by such individual which are designated by the Company as “eligible dividends” in accordance with the Tax Act will be entitled to enhanced gross-up and dividend tax credit rules under the Tax Act.

     Dividends received or deemed to be received on Common Shares by a Canadian Holder that is a corporation will be included in computing the corporation’s income and will generally be deductible in computing the taxable income of the corporation. A corporation that is a “private corporation” or a “subject corporation” for purposes of the Tax Act may be liable to pay a refundable tax of 33¹/3% on dividends received or deemed to be received to the extent such dividends are deductible in computing the corporation’s taxable income.

Disposition of Common Shares

     On a disposition or a deemed disposition of a Common Share (other than to IVN), a Canadian Holder will generally realize a capital gain (or a capital loss) equal to the amount by which the proceeds of disposition of the Common Share exceed (or are exceeded by) the aggregate of the Canadian Holder’s adjusted cost base thereof and any reasonable costs of disposition. The tax treatment of any such capital gain (or capital loss) is described under the following heading.

Treatment of Capital Gains and Capital Losses

     One-half of the amount of any capital gain (a “taxable capital gain”) realized by a Canadian Holder in a taxation year must be included in computing the Canadian Holder’s income in that year, and one-half of the amount of any capital loss (an “allowable capital loss”) realized by a Canadian Holder in a taxation year generally must be deducted from taxable capital gains realized by the Canadian Holder in that year. Allowable capital losses in excess of taxable capital gains may generally be carried back and deducted in any of the three preceding taxation years or carried forward and deducted in any following taxation year against taxable capital gains realized in such years to the extent and under the circumstances described in the Tax Act.

     The amount of any capital loss realized on the disposition or deemed disposition of a Common Share by a Canadian Holder that is a corporation may be reduced by the amount of dividends received or deemed to have been received by it on the Common Share to the extent and in the circumstances prescribed by the Tax Act. Similar rules may apply where a corporation is a member of a partnership or a beneficiary of a trust that owns Common Shares. Canadian Holders to whom these rules may be relevant should consult their own tax advisors.

     A Canadian Holder that is a “Canadian-controlled private corporation” (as defined in the Tax Act) may be liable for a refundable tax of 6²/3% on certain investment income, including taxable capital gains.

Alternative Minimum Tax

     Individuals, including certain trusts, are subject to an alternative minimum tax. Generally, dividends received or deemed to be received on the Common Shares and capital gains may increase a Canadian Holder’s liability for alternative minimum tax. Canadian Holders should consult their own tax advisors with respect to alternative minimum tax.

Eligibility for Investment

     Provided that the Rights and Common Shares are listed on a designated stock exchange under the Tax Act (which includes the TSX), the Rights and the Common Shares issuable on the exercise of Rights, if issued on the date hereof, would be qualified investments under the Tax Act for a trust governed by a registered retirement savings plan, registered retirement income fund, registered education savings plan, registered disability savings plan, deferred profit sharing plan and a tax-free savings account (a “TFSA”). Notwithstanding that the Rights and Common Shares may be qualified investments for a trust governed by a TFSA, the holder of a TFSA will be subject to a penalty tax in respect of the Rights and Common Shares, if such Rights and Common Shares are a “prohibited investments” (as defined in the Tax Act) for the TFSA. The Rights and Common Shares will not be a “prohibited investment” for a trust governed by a TFSA provided that the holder of the TFSA deals at arm’s length with IVN for purposes of the Tax Act and does not have a significant interest (within the meaning of the Tax Act) in IVN or in any person or partnership with which IVN does not deal at arm’s length for purposes of the Tax Act.

Non-Residents of Canada

     The following portion of the summary is generally applicable to a Holder who, at all relevant times for purposes of the Tax Act, is neither resident nor deemed to be resident in Canada (including as a consequence of an applicable income tax treaty or convention) and does not use or hold, and is not deemed to use or hold Rights or Common Shares in connection with carrying on a business in Canada (a “Non-Resident Holder”). Special rules which are not discussed in this summary, may apply to a non-resident insurer carrying on business in Canada and elsewhere.

     The issuance of Rights to a Non-Resident Holder will not be subject to Canadian withholding tax and no other tax will be payable under the Tax Act by a Non-Resident Holder in respect of the receipt of Rights. The cost of Rights acquired under the Rights Offering will be nil. For the purpose of determining the adjusted cost base of each Right held by the Non-Resident Holder, the cost of Rights so acquired must be averaged with the adjusted cost base to the Non-Resident Holder of all other Rights held as capital property immediately prior to such acquisition.

     The exercise of Rights by a Non-Resident Holder will not constitute a disposition of Rights for purposes of the Tax Act and, consequently, no gain or loss will be realized upon the exercise of the Rights.

     Upon the expiry of an unexercised Right, a Non-Resident Holder will realize a capital loss equal to the adjusted cost base of the Right, if any, to the Non-Resident Holder. The ability of a Non-Resident Holder to utilize any capital loss realized will depend upon whether the unexercised Rights constituted “taxable Canadian property” of the Non-Resident Holder for the purposes of the Tax Act and the detailed rules in the Tax Act with respect to the Canadian taxation of non-residents.

     A Non-Resident Holder will not be subject to tax under the Tax Act in respect of any capital gain realized on a disposition (including a disposition of securities held in a book-entry system on behalf of Non-Prospectus Holders) of Rights or Common Shares unless the Rights or Common Shares disposed of constitute “taxable Canadian property” of the Non-Resident Holder and the Non-Resident Holder is not entitled to relief under an applicable income tax treaty or convention.

     The Rights will generally not constitute “taxable Canadian property” of such Non-Resident Holder unless, (a) the Rights are exercisable for or entitle the Non-Resident Holder to receive 25% or more of Common Shares of the Company and at any time during the five-year period immediately preceding their disposition, more than 50% of the fair market value of the Common Shares was derived directly or indirectly from one or any combination of (i) real or immovable property situated in Canada, (ii) Canadian resource properties, (iii) timber resource properties, and (iv) options in respect of, or interests in (or, for civil law purposes, rights in), property described in any of (i) to (iii), or (b) the Common Shares held by such Non-Resident Holder constitute “taxable Canadian property”.

     So long as the Common Shares are listed on a “designated stock exchange” (which currently includes the TSX), the Common Shares will generally not constitute “taxable Canadian Property” of a Non-Resident Holder unless, at any time during the five-year period immediately preceding their disposition (a) the Non-Resident Holder, together with persons with whom the Non-Resident Holder does not deal at arm’s length, owned not less than 25% of the issued shares of any class or series of shares of the capital stock of IVN and (b) more than 50% of the fair market value of the Common Shares was derived directly or indirectly from one or any combination of (i) real or immovable property situated in Canada, (ii) Canadian resource properties, (iii) timer resource properties, and (iv) options in respect of, or interests in (or, for civil law purposes, rights in), property described in any of (i) to (iii).

     Non-Resident Holders whose Rights or Common Shares constitute “taxable Canadian property” should consult their own tax advisors for advice having regard to their particular circumstances.

     Dividends on Common Shares paid or credited, or deemed to be paid or credit to a Non-Resident Holder will be subject to a non-resident withholding tax under the Tax Act at a rate of 25%, subject to reduction under the provisions of an applicable income tax treaty or convention.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

     The following is a general summary of certain United States federal income tax consequences to United States Holders, as defined below, of the acquisition, ownership, exercise, lapse and disposition of Rights issued pursuant to this Rights Offering and the ownership and disposition of Common Shares received upon exercise of such Rights. This discussion is based on existing provisions of the United States Internal Revenue Code of 1986, as amended (the “Code”), final and temporary Treasury Regulations promulgated thereunder, administrative pronouncements or practice, judicial decisions, and interpretations of the foregoing, all as of the date hereof. Future legislative, judicial or administrative modifications, revocations or interpretations, which may or may not be retroactive, may result in United States federal income tax consequences significantly different from those discussed herein. This discussion is not binding on the United States Internal Revenue Service (the “IRS”). No ruling has been or will be sought or obtained from the IRS with respect to any of the United States federal income tax consequences discussed herein. There can be no assurance that the IRS will not challenge any of the conclusions described herein or that a United States court will not sustain such challenge.

     As used herein, a “United States Holder” is any beneficial owner of a Common Share or Right that is (i) a citizen or individual resident of the United States as determined for United States federal income tax purposes; (ii) a corporation, or other entity taxable as a corporation for United States federal income tax purposes, created or organized in or under the laws of the United States or any of its political subdivisions; (iii) an estate the income of which is subject to United States federal income taxation regardless of its source; and (iv) a trust if (a) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust, or (b) the trust has a valid election in effect under applicable Treasury Regulations to be treated as a United States person. If a pass-through entity, including a partnership or other entity taxable as a partnership for United States federal income tax purposes, holds a Common Share or a Right, the United States federal income tax treatment of an owner or partner generally will depend upon the status of such owner or partner and upon the activities of the pass-through entity. A United States person that is an owner or partner of a pass-through entity holding a Common Share or a Right is urged to consult its own tax advisor.

     This discussion does not address any United States federal alternative minimum tax, United States federal estate, gift, or other non-income tax; or state, local or non-United States tax consequences of the acquisition, ownership and disposition of a Common Share or a Right. In addition, this discussion does not address the United States federal income tax consequences to certain categories of United States Holders subject to special rules, including United States Holders that are (i) banks, financial institutions or insurance companies; (ii) regulated investment companies or real estate investment trusts; (iii) brokers or dealers in securities or currencies or traders in securities that elect to use a mark-to-market method of accounting; (iv) tax-exempt organizations, qualified retirement plans, individual retirement accounts or other tax-deferred accounts; (v) holders that hold a Common Share or Right as part of a hedge, straddle, conversion transaction or a synthetic security or other integrated transaction; (vi) holders that have a “functional currency” other than the United States dollar; (vii) holders that own directly, indirectly or constructively 10 percent or more of the voting power of the Company; and (viii) United States expatriates.

     This discussion assumes that Common Shares are held as capital assets (generally, property held for investment), within the meaning of Section 1221 of the Code, in the hands of a United States Holder at all relevant times.

     A UNITED STATES HOLDER OF COMMON SHARES AND/OR RIGHTS IS URGED TO CONSULT ITS OWN TAX ADVISOR REGARDING THE APPLICATION OF UNITED STATES FEDERAL TAX LAWS TO ITS PARTICULAR SITUATION AND ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL, NON-UNITED STATES OR OTHER TAXING JURISDICTION.

Consequences of the Ownership, Disposition, and Lapse of Rights

Receipt of Rights

     The distribution of the Rights should be treated as a non-taxable distribution under Section 305(a) of the Code. This position is not binding on the IRS, or the courts, however. If this position is finally determined by the IRS or a court to be incorrect, the fair market value of the Rights would be taxable to holders of Common Shares as a dividend to the extent of the holder’s pro rata share of the Company’s current and accumulated earnings and profits, if any, with any excess being treated as a return of capital to the extent thereof and then as capital gain. The remaining discussion assumes that holders of Common Shares in respect of which Rights are received will not be subject to United States federal income tax on the receipt of a Right.

     If the aggregate fair market value of the Rights at the time they are distributed to United States Holders of Common Shares is less than 15% of the aggregate fair market value of our Common Shares at such time, the tax basis of the Rights received by a United States Holder will be zero unless such holder elects to allocate a portion of his or her tax basis of previously owned Common Shares to the Rights issued pursuant to this Rights Offering. However, if the aggregate fair market value of the Rights at the time they are distributed to United States Holders of Common Shares is 15% or more of the aggregate fair market value of the Company’s Common Shares at such time, or if a United States Holder elects to allocate a portion of his or her tax basis of previously owned Common Shares to the Rights issued in this Rights Offering, then such holder’s tax basis in previously owned Common Shares will be allocated between such Common Shares and the Rights based upon the relative fair market value of such Common Shares and the Rights as of the date of the distribution of the Rights. Thus, if such an allocation is made and the Rights are later exercised, the tax basis in the Common Shares originally owned will be reduced by an amount equal to the tax basis allocated to the Rights and the basis in the new Common Shares will be increased by the tax basis allocated to these Common Shares. This election is irrevocable if made and would apply to all of the Rights received pursuant to the Rights Offering. The election must be made in a statement attached to a United States Holder’s Federal income tax return for the taxable year in which the Rights are distributed.

     Notwithstanding the foregoing, pursuant to applicable Treasury Regulations, basis will be allocated to a Right only if it is exercised or disposed of. If a holder allows a Right to lapse unexercised, no basis will be allocated to such Right.

     The holding period for the Rights received in the Rights Offering by a United States Holder of Common Shares will include the holding period for the Common Shares with respect to which the Rights were received.

Exercise of Rights

     A United States Holder will generally not recognize gain or loss on the exercise of a Right and related receipt of a Common Share. A United States Holder’s initial tax basis in the Common Share received on the exercise of a Right should be equal to the sum of (a) such United States Holder’s tax basis in such Right, if any, plus (b) the exercise price paid by such United States Holder on the exercise of such Right. A United States Holder’s holding period for the Common Share received on the exercise of a Right will begin on the day that such Right is exercised by such United States Holder.

     A United States Holder that exercises Rights received in this Rights Offering after disposing of the Common Shares with respect to which the Rights were received is urged to consult a tax advisor regarding the potential application of the “wash sale” rules under Section 1091 of the Code.

Disposition of Rights

     A United States Holder will recognize gain or loss on the sale or other taxable disposition of a Right in an amount equal to the difference, if any, between (a) the amount of cash plus the fair market value of any property received and (b) such United States Holder’s tax basis, if any, in the Right sold or otherwise disposed of. Subject to the discussion under “Passive Foreign Investment Company (PFIC) Considerations” below, any such gain or loss generally will be capital gain or loss, and will short term or long term depending on whether the Rights are treated as having been held for more than one year under the special holding period rule described above under “Receipt of Rights.” Long-term capital gains of a non-corporate taxpayer are generally subject to taxation at preferential rates. The deductibility of capital losses is subject to various limitations.

Lapse of Rights

     Upon the lapse or expiration of a Right, a United States Holder should recognize no loss, and the tax basis of the Common Shares in respect of which the Rights were received will equal their tax basis before receipt of the Rights.

Consequences of the Ownership and Disposition of Common Shares received upon Exercise of a Right

Distributions on Common Shares

     Subject to the discussion under “Passive Foreign Investment Company (PFIC) Considerations” below, the gross amount of any distribution paid by the Company will generally be subject to United States federal income tax as dividend income to the extent paid out of the Company’s current or accumulated earnings and profits, as determined under United States federal income tax principles. Such amount will be includable in gross income by a United States Holder as ordinary income on the date such United States Holder actually or constructively receives the distribution. Dividends paid by the Company will not be eligible for the dividends received deduction generally allowed to corporations.

     Certain dividends received by non-corporate United States Holders prior to January 1, 2011 from a “qualified foreign corporation” may be eligible for reduced rates of taxation (“qualified dividends”). A qualified foreign corporation includes a foreign corporation that is eligible for the benefits of a comprehensive income tax treaty with the United States that the United States Treasury Department determines to be satisfactory for these purposes and that includes an exchange of information provision. The United States Treasury has determined that the income tax convention between the United States and Canada (the “Tax Convention”) meets these requirements, and the Company believes it is eligible for the benefits of the Tax Convention. Dividends received by United States investors from a foreign corporation that was a PFIC (as defined below) in either the taxable year of the distribution or the preceding taxable year will not constitute qualified dividends. As discussed below in “Passive Foreign Investment Company (PFIC) Considerations,” the Company believes that it is unlikely to be a PFIC for its 2010 taxable year. Accordingly, in such event, any dividends paid on the Common Shares in 2010 would constitute qualified dividends.

     The limitations on foreign taxes eligible for credit are calculated separately with respect to specific classes of income. For foreign tax credit purposes, dividends received by a United States Holder with respect to shares of a foreign corporation generally constitute foreign-source income and are treated as “passive category” or “general category” income. Subject to certain limitations, any Canadian tax withheld with respect to distributions made on the Common Shares may be treated as foreign taxes eligible for credit against a United States Holder’s United States federal income tax liability. Alternatively, a United States Holder may, subject to applicable limitations, elect to deduct the otherwise creditable Canadian withholding taxes for United States federal income tax purposes. The rules governing the foreign tax credit are complex and their application depends on each taxpayer’s particular circumstances. Accordingly, United States Holders are urged to consult their own tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

     To the extent that a distribution exceeds the amount of the Company’s current or accumulated earnings and profits, as determined under United States federal income tax principles, it will be treated first as a tax-free return of capital, causing a reduction in the United States Holder’s adjusted basis in the Common Shares held by such United States Holder (thereby increasing the amount of gain, or decreasing the amount of loss, to be recognized by such United States Holder upon a subsequent disposition of the Common Shares), with any amount that exceeds the adjusted basis being taxed as a capital gain recognized on a sale or exchange (as discussed under “Sale, Exchange or Other Taxable Disposition of Common Shares and Rights” below).

     The gross amount of distributions paid in any foreign currency will be included by each United States Holder in gross income in a United States dollar amount calculated by reference to the exchange rate in effect on the day the distributions are paid, regardless of whether the payment is in fact converted into United States dollars. If the foreign currency is converted into United States dollars on the date of the payment, the United States Holder should not be required to recognize any foreign currency gain or loss with respect to the receipt of the foreign currency distributions. If instead the foreign currency is converted at a later date, any currency gains or losses resulting from the conversion of the foreign currency will be treated as United States source ordinary income or loss.

Sale, Exchange, or Other Taxable Disposition of Common Shares

     Upon a sale or other taxable disposition of Common Shares, and subject to the discussion below under “Passive Foreign Investment Company (PFIC) Considerations”, a United States Holder should recognize capital gain or loss in an amount equal to the difference between the amount realized and the United States Holder’s adjusted tax basis in the Common Shares.

     Long term capital gains recognized by non-corporate United States Holders are generally subject to United States federal income tax at preferential rates. Capital gain or loss will constitute long-term capital gain or loss if the United States Holder’s holding period for the Common Shares exceeds one year. The deductibility of capital losses is subject to various limitations.

Passive Foreign Investment Company (PFIC) Considerations

     Special and generally unfavourable United States federal income tax rules may apply to a United States Holder if its holding period in its Common Shares, Rights or both includes any period during a taxable year of the Company in which the Company is a passive foreign investment company (a “PFIC”). A non-United States corporation is a PFIC for each taxable year in which (i) 75% or more of its gross income is passive income or (ii) 50% or more of the average value of its assets are assets that either produce or are held for the production of passive income. Special rules apply where a non-United States corporation owns, directly or indirectly, at least 25% by value of the stock of another corporation (the “lower-tier corporation”). For purposes of determining whether the Company is a PFIC, it will be treated as if it held its proportionate share of the assets of any lower-tier corporation and received directly its proportionate share of the income of any lower-tier corporation.

     Based on the value of its assets and the scope of its current and projected operations, the Company believes that it is not a PFIC for U.S. federal income tax purposes, and does not expect to become a PFIC in the future. However, the determination of the Company’s PFIC status for any year is very fact-specific, and is dependent on continued operations by SGQ (which is currently the Company’s sole source of active income), the values of the Company’s resources and reserves, legal and political risk, and other factors beyond the Company’s control, see generally “RISK FACTORS — Risks Related to the Business”. Accordingly, there can be no assurance in this regard, and it is possible that the Company may become a PFIC in the current taxable year or in future years. If the Company is classified as a PFIC in any year during which a United States Holder holds Common Shares, the Company will generally continue to be treated as a PFIC to such holder in all succeeding years, regardless of whether the Company continues to meet the income or asset test discussed above.

     If a United States Holder does not make a timely qualified electing fund (“QEF”) or mark-to-market election (a “Non-Electing Holder”) and the Company is a PFIC, then special taxation rules will apply to (i) gains realized on the disposition of such United States Holder’s Common Shares and (ii) certain “excess distributions” (generally, distributions received in the current taxable year that are in excess of 125% of the average distributions received during the three preceding years or, if shorter, such United States Holder’s holding period) by the Company. Pursuant to these rules, a Non-Electing Holder generally would be required to pro rate all gains realized on the disposition of any of its Common Shares and all excess distributions on its Common Shares over its entire holding period. All gains or excess distributions allocated to prior years of a United States Holder (other than any year before the first taxable year of the Company during such United States Holder’s holding period for which it was a PFIC) would be taxed at the highest tax rate for each such prior year applicable to ordinary income. A Non-Electing Holder also would be liable for interest on the foregoing tax liability for each such prior year calculated as if such liability had been due with respect to each such prior year but had not been paid until the taxable year within which the gains or excess distributions have occurred. The balance of the gain or the excess distribution would be treated as ordinary income in the year of the disposition or distribution, and no interest charge would be incurred with respect to such balance. Neither the QEF nor the mark-to-market election is available with respect to Rights, and therefore, the rules described above generally apply to gain realized on the disposition of Rights.

     If the Company were a PFIC and the Company’s Common Shares were considered “marketable stock” for purposes of the PFIC rules, a United States Holder may avoid the imposition of the additional tax and interest described above by making a mark-to-market election in the first year of its holding period in such PFIC’s shares. The Common Shares will be marketable stock if they are regularly traded on a qualifying exchange that is either (i) a national securities exchange which is registered with the Securities and Exchange Commission or the national market system established pursuant to the Exchange Act, or (ii) any exchange or other market that the United States Treasury Department determines is adequate. The Company believes that the TSX meets this test, and accordingly, provided that the Common Shares are regularly traded on the TSX, a United States Holder should be able to make a mark-to-market election with respect to the Common Shares if the Company is classified as a PFIC. If a United States Holder chooses to make a mark-to-market election, such United States Holder must include in ordinary income for each taxable year for which the election is in effect, and during which the Company is a PFIC, an amount equal to the excess, if any, of the fair market value of its Common Shares as of the close of the taxable year over its adjusted tax basis in the Common Shares. In addition, the United States Holder may claim an ordinary loss deduction for the excess, if any, of its adjusted tax basis in the Common Shares over the fair market value of the Common Shares at the close of the taxable year, but only to the extent of any prior net mark-to-market gains. United States Holders are urged to consult their own tax advisors as to the consequences of marking a mark-to-market election.

     Under the Code, a United States Holder of shares of a PFIC may also make a QEF election with respect to shares of the PFIC. United States Holders should consult with their tax advisor as to the availability and consequences of the QEF election. In particular, an election to treat the Company as a QEF will not be available if the Company does not provide the information necessary to make such an election. It is not expected that a United States Holder will be able to make a QEF election because the Company does not intend to provide United States Holders with the information necessary to make a QEF election.

Recently Enacted Legislation

     Recently enacted United States legislation requires each United States person that directly or indirectly owns an interest in a PFIC to file an annual report with the IRS and failure to file such report could result in the imposition of penalties on such United States person.

     For taxable years beginning after December 31, 2012, United States Holders that are individuals, estates or trusts and whose income exceeds certain thresholds generally will be subject to a 3.8% Medicare contribution tax on unearned income, including, among other things, dividends on, and capital gains from the sale or other taxable disposition of, the Common Shares and Rights, subject to certain limitations and exceptions.

     New United States return disclosure obligations (and related penalties for failure to disclose) have also been imposed on United States individuals that hold certain specified foreign financial assets in excess of $50,000. The definition of specified foreign financial assets includes not only financial accounts maintained in foreign financial institutions, but also may include the Common Shares and Rights.

     United States Holders are urged to consult their own tax advisors regarding the possible implications of the recently enacted legislation described above.

United States Information Reporting and Backup Withholding Tax

     Under United States federal income tax law and regulations, certain categories of United States Holders must file information returns with respect to their investment in, or involvement in, a foreign corporation. Penalties for failure to file certain of these information returns are substantial. United States Holders of Common Shares and/or Rights should consult with their own tax advisors regarding the requirements of filing information returns.

     Dividends on Common Shares and proceeds from the sale or other disposition of Common Shares and/or Rights that are paid in the United States or by a United States-related financial intermediary will be subject to United States information reporting rules, unless a United States Holder is a corporation or other exempt recipient. In addition, payments that are subject to information reporting may be subject to backup withholding (currently at a 28% rate) if a United States Holder does not provide its taxpayer identification number and otherwise comply with the backup withholding rules. Backup withholding is not an additional tax. Amounts withheld under the backup withholding rules are available to be credited against a United States Holder’s United States federal income tax liability and may be refunded to the extent they exceed such liability, provided the required information is provided to the IRS in a timely manner.

RISK FACTORS

     An investment in Rights or Common Shares is subject to a number of risks. In addition, the Company is subject to a number of risks due to the nature of the industry in which it operates, the present state of development of its business and the foreign jurisdictions in which it carries on business. The following is a description of some of the risks and uncertainties to which the Company is subject. Some of the following statements are forward-looking and actual results may differ materially from the results anticipated in these forward-looking statements. Please refer to the section entitled “Forward-Looking Information” in this Prospectus.

Risks Related to the Rights Offering

Dilution

     If a Shareholder does not exercise its Rights for Common Shares and the Minimum Subscription Condition is satisfied or waived by the Company, or a Shareholder sells or transfers its Rights, the Shareholder’s current percentage ownership may be significantly diluted by the issue of Common Shares pursuant to the exercise of the Rights by other holders of such Rights.

     IVN currently has  l  Common Shares outstanding. As a result of the Rights Offering, IVN may issue up to  l  Common Shares if all the Rights are exercised.

If either of Mr. Robert Friedland or Rio Tinto does not exercise his or its respective Rights, the Minimum Subscription Condition will not be satisfied and, unless waived, the Rights Offering will not close

     Although Mr. Friedland intends to exercise all of his Rights, if either of Mr. Friedland or Rio Tinto does not exercise his or its respective Rights, the Minimum Subscription Condition will not be satisfied. As a result, unless the Company waives the Minimum Subscription Condition, the Rights Offering will not close, which may have a material adverse impact on the Company and its share price.

The cash-settled contract entered into by Mr. Robert Friedland may affect the value of the Common Shares after the Closing Date

     Mr. Friedland has advised us that he intends to exercise all Rights issued to him in respect of his directly and indirectly held Common Shares. Mr. Friedland has entered into a loan agreement, subject to certain conditions precedent, with Citibank, an affiliate of the Dealer Manager, to finance his participation in the Rights Offering. Concurrently with entering into the loan agreement, Mr. Friedland has entered into a cash-settled contract with Citibank which provides a collar with reference to a notional number of Common Shares equal to approximately •% of the number of Common Shares outstanding after the Rights Offering, assuming the Rights Offering is fully subscribed.

     In connection with the cash-settled contract, Citibank may enter into or unwind options, swaps or forwards with respect to our Common Shares and/or purchase or sell our Common Shares in secondary market transactions during the remaining term of the cash-settled contract after the Closing Date, which could affect the trading price of Common Shares during the remaining term of the cash-settled contract.

     In providing the loan, entering into the cash-settled contract and engaging in associated market activity, Citibank has been and would be acting to protect its economic interests, which might conflict with those of the Company and the Shareholders.

     Each of the loan and the cash-settled contract is a separate transaction from the Rights Offering, entered into by Citibank and Mr. Friedland. These transactions will facilitate the participation of Mr. Friedland in the Rights Offering, but they will not affect your rights as a holder of Rights or Common Shares.

     The Company does not make any representation or prediction as to the direction or magnitude of any potential effect that the transactions described above may have on the price of the Common Shares. In addition, the Company does not make any representation that Citibank will engage in the market activity described above or that this market activity, once commenced, will not be discontinued without notice.

The Rights may be void and of no value if the Minimum Subscription Condition is not satisfied or waived by the Company

     The Rights Offering is conditional upon the Minimum Subscription Condition being satisfied prior to the Expiry Time on the Expiry Date. The Minimum Subscription Condition will be satisfied if Rights representing at least 85% of the Rights offered in the Rights Offering are exercised by holders of Rights prior to the Expiry Time on the Expiry Date. If the Minimum Subscription Condition is not satisfied, the Company will be under no obligation to complete the Rights Offering, although the Company will retain sole discretion to waive this condition and complete the Rights Offering. If the Minimum Subscription Condition is not satisfied prior to the Expiry Time on the Expiry Date and the Company does not waive this condition, the Rights will be void and of no value and will no longer be exercisable for any Common Shares. If the Rights Offering does not proceed, the Subscription Payments will be returned promptly to the Subscribers without interest or deduction.

A representative of Rio Tinto has made a number of assertions about the Rights Offering and may take actions to delay or impede the completion of the Rights Offering

     A representative of Rio Tinto has communicated to us a number of assertions, including that he believes that there are superior financing opportunities available to the Company, that the Rights Offering and the Friedland Agreements offend a number of Rio Tinto’s contractual rights, including Rio Tinto’s Right of First Offer, and that we are obligated to make certain additional disclosure regarding the Oyu Tolgoi Project, among other things. The representative has further advised that Rio Tinto is reserving its rights to make an arbitration claim or seek injunctive relief to protect its interests. See “INTENTION OF INSIDERS TO EXERCISE RIGHTS — Rio Tinto’s Intentions”.

     If Rio Tinto does bring an arbitration claim or a claim for injunctive relief, the launch or consummation of the Rights Offering may be delayed or impeded. If the Rights Offering is not completed, we may not be able to raise the capital necessary to fund the anticipated cash obligations and capital expenditures necessary for the development of the Oyu Tolgoi Project, which would have a material adverse impact on the Company and its share price.

No prior trading market for Rights

     There is currently no market through which the Rights may be sold, and if the Rights are listed on the TSX and admitted for trading on the NYSE and NASDAQ, purchasers may not be able to resell Rights acquired. There can be no assurance that an active trading market will develop in the Rights on the TSX, NYSE or NASDAQ, or, if developed, that such market will be sustained. To the extent an active trading market for the Rights does not develop, the pricing of the Rights in the secondary market, the transparency and availability of trading prices and liquidity of the Rights would be adversely affected, which may have a material adverse impact on the Company and its share price.

Exercises of Rights may not be revoked

     Even if the Common Share price declines below the Subscription Price for the Common Shares, resulting in a loss of some or all of the Subscribers’ Subscription Payment, Subscribers may not revoke or change the exercise of Rights after they send in their subscription forms and payment.

A large number of Common Shares may be issued and subsequently sold upon the exercise of Rights

     To the extent that Subscribers that exercise Rights sell the Common Shares underlying such Rights, the market price of our Common Shares may decrease due to the additional selling pressure in the market. The risk of dilution from issuances of Common Shares underlying the Rights may cause shareholders to sell their Common Shares, which may have a material adverse impact on the Company and its share price.

The sale of Common Shares issued upon exercise of the Rights could encourage short sales by third parties which could further depress the price of the Common Shares

     Any downward pressure on the price of Common Shares caused by the sale of Common Shares underlying the Rights could encourage short sales by third parties. In a short sale, a prospective seller borrows Common Shares from a shareholder or broker and sells the borrowed Common Shares. The prospective seller hopes that the Common Share price will decline, at which time the seller can purchase Common Shares at a lower price for delivery back to the lender. The seller profits when the Common Share price declines because it is purchasing Common Shares at a price lower than the sale price of the borrowed Common Shares. Such sales could place downward pressure on the price of our Common Shares by increasing the number of Common Shares being sold, , which may have a material adverse impact on the Company and its share price.

The Subscription Price is not an indication of value

     The US dollar denominated Subscription Price is a price equal to approximately  l % of the weighted average closing price per Common Share on the NYSE over the  l  trading days prior to the date hereof, and the Canadian dollar denominated Subscription Price is a price equal to approximately  l % of the weighted average closing price per Common Share on the TSX over the  l  trading days prior to the date hereof. The Subscription Price was determined by the Board of Directors and was priced to encourage holders of Rights to exercise their Rights and does not bear any relationship to the book value of the Company’s assets, past operations, cash flows, losses, financial condition or any other established criteria for value. Holders of Rights should not consider the Subscription Price as an indication of the Company’s value. After the date of this Prospectus, the Common Shares may trade at prices above or below the Subscription Price.

A decline in the market price of the Common Shares may occur

     The trading price of the Common Shares in the future may decline below the Subscription Price. The Company can make no assurance that the Subscription Price will remain below any future trading price for the Common Shares. Future prices of the Common Shares may adjust positively or negatively depending on various factors, including the Company’s future revenues, cash flows and operations and overall conditions affecting the Company’s business, economic trends and the securities markets.

Holders of Rights need to act promptly and follow subscription instructions

     Holders of Rights that elect to purchase Common Shares in this Rights Offering must act promptly to ensure that the entire Subscription Payment for any Rights exercised is paid at the time of subscription and must be received by the Subscription Agent at the Subscription Office, or the guaranteed delivery procedures must have been followed, prior to the Expiry Time on the Expiry Date. Accordingly, Subscribers who hold through a Participant must provide the Participant holding their Rights with instructions and the required payment sufficiently in advance of the Expiry Time on the Expiry Date to permit proper exercise of their Rights. Participants will have an earlier deadline for receipt of instructions and payment. If a Prospectus Holder or a Qualified Holder fails to complete and sign the required subscription forms, send an incorrect Subscription Payment, or otherwise fail to follow the subscription procedures that apply to the exercise of Rights by the holder, the Subscription Agent may, depending on the circumstances, reject the subscription or accept it to the extent of the payment received.

     Neither the Company nor the Subscription Agent undertakes to Subscribers that it will, or will attempt to, correct an incomplete or incorrect subscription form or payment. The Company has the sole discretion to determine whether an exercise of Rights properly follows the subscription procedures.

If you elect to exercise your Rights, your proposed acquisition of Common Shares may be subject to notification obligations under the Hart-Scott-Rodino Act

     If as a result of exercising your Rights you would hold Common Shares worth more than US$63.4 million, including any Common Shares you currently hold, your proposed acquisition may trigger notification obligations under the Hart-Scott-Rodino Act. In these circumstances, you should seek the advice of legal counsel to determine the applicability of the Hart-Scott-Rodino Act to the exercise of your Rights.

Risks Related to the Business

The Company’s stock price may be volatile and you may lose all or part of your investment

     The market price of the Common Shares could fluctuate significantly, in which case you may not be able to resell your Common Shares at or above the Subscription Price. The market price of the Common Shares may fluctuate based on a number of factors including those listed in the Prospectus and incorporated herein by reference and others. Such factors include:

•

the Company’s operating performance and the performance of our competitors and other similar companies;

•

fluctuations in metal prices, including copper and gold, in particular, as well as currency exchange rates and interest rates;

•

the public’s reaction to our press releases, our other public announcements and the Company’s filings with the Canadian Securities Administrators and the SEC;

•

changes in earnings estimates or recommendations by research analysts who track the Common Shares or the stocks of other companies in the Company’s industry;

•

changes in general economic conditions;

•

the number of Common Shares to be publicly traded after the Rights Offering;

•

actions of the Company’s current Shareholders;

•

mining plans for the Oyu Tolgoi Project and the schedule and sequencing for carrying out and completing construction of the Oyu Tolgoi Project;

•

the estimated and actual schedules and costs of bringing the Oyu Tolgoi Project into commercial production;

•

the ability of the Company to arrange acceptable financing commitments for the Oyu Tolgoi Project;

•

target milling rates, mining plans and production forecasts for the coal mine at the Ovoot Tolgoi Coal Project;

•

the estimated and actual schedules for carrying out and completing an expansion of the production capability of the Ovoot Tolgoi Coal Project;

•

the anticipated and actual outcomes with respect to the ongoing marketing of coal products from the Ovoot Tolgoi Coal Project;

•

the anticipated and actual timing of payback of capital invested in the Ovoot Tolgoi Coal Project;

•

the impact of the Company’s arbitration proceedings with Rio Tinto;

•

the impact of amendments to the laws of Mongolia and other countries in which the Company carries on business, particularly with respect to taxation;

•

the Company’s involvement in legal proceedings;

•

the arrival or departure of key personnel, including, in particular, Mr. Robert Friedland;

•

the impact of amendments to the laws of Mongolia and other countries in which the Company carries on business, particularly with respect to taxation;

•

the extent to which, if at all, broker-dealers choose to make a market in the Common Shares;

•

acquisitions, strategic alliances or joint ventures involving the Company or its competitors; and

•

other developments affecting the Company, its industry or its competitors.

     In addition, in recent years the stock market has experienced significant price and volume fluctuations. These fluctuations are often unrelated to the operating performance of particular companies. These broad market fluctuations may cause declines in the market price of the Common Shares. The price of the Common Shares could fluctuate based upon factors that have little or nothing to do with the Company or its performance, and these fluctuations may have a material adverse impact on the Company and its share price.

Rio Tinto could be able to significantly influence the Company’s business and affairs

     Rio Tinto owns in the aggregate approximately 34.9% of the Common Shares (or approximately 44% assuming exercise in full of Rio Tinto’s warrants, as further described in “PRINCIPAL HOLDERS OF SECURITIES”). If all of the Rights are exercised, Rio Tinto’s ownership percentage will remain the same. On the other hand, if Rio Tinto is the only Subscriber or one of a number of Subscribers who exercise a relatively small number of Rights, and the Minimum Subscription Condition is waived, Rio Tinto’s aggregate ownership of Common Shares will increase substantially. Rio Tinto is not subject to the Standstill Limit on acquisition of additional Common Shares described herein under “CERTAIN AGREEMENTS OF THE COMPANY” in respect of Common Shares acquired in the Rights Offering. Accordingly, if the Rights Offering is completed, Rio Tinto will continue to exercise significant influence over the policies, business and affairs of the Company, the outcome of any significant corporate transaction or other matter, and all matters requiring a stockholder vote, including the composition of the Board of Directors, the adoption of amendments to the Company’s restated certificate of incorporation, as amended, and the approval of mergers or sales of substantially all of the Company’s assets. Through existing contractual arrangements, Rio Tinto has among other rights, a right of first offer in respect of any equity financing that the Company proposes to undertake and a right of first refusal with respect to any proposed disposition by the Company of an interest in the Oyu Tolgoi Project. For more information on this right of first offer reference is made to the section of the AIF entitled “GENERAL DEVELOPMENT OF THE BUSINESS — Rio Tinto Transactions”. This concentration of ownership in Rio Tinto’s hands also may delay, defer or even prevent a change in control of the Company and may make some transactions more difficult or impossible without the support of Rio Tinto, which may have a material adverse impact on the Company and its share price.

     In addition, under the Private Placement Agreement, Rio Tinto has the right to nominate an additional two members of the Board of Directors in addition to the current three Rio Tinto nominees. Rio Tinto is also able to significantly influence the management, development and operation of the Oyu Tolgoi Project through its representatives on the Technical Committee. Rio Tinto appointees represent a majority of the members of the Technical Committee, and it is entitled to control the ongoing decisions made by the Technical Committee. The interests of Rio Tinto may conflict with the interests of the Company. In addition, although the Technical Committee oversees and supervises the development, operation and management of the Oyu Tolgoi Project, the board of directors of OT LLC must also approve certain development, operational and management matters relating to the project. The board of directors of OT LLC may not agree with the views of the Technical Committee, which could result in the disruption, delay or suspension of development and operational activity, which in turn could result in significantly increased costs to the Company and adversely affect its share price.

Failure by all stakeholders of the Oyu Tolgoi Project to reach a consensus on the IDP Review Process in a timely manner could potentially affect the project’s current development schedule

     The objective of the IDP Review is to establish a consensus among the stakeholders of the Oyu Tolgoi Project as to the optimal project development plans, parameters and schedules. However, representatives of Ivanhoe and Rio Tinto on the Technical Committee have expressed differing opinions on several issues that could affect aspects of project development, including the determination and timing of capital and operating costs and project scheduling. The extent to which these differences of opinion will be resolved or will become matters of disagreement depends upon the results of ongoing and future evaluations and consultations, which are not reasonably determinable at this time. Failure to reach a timely consensus by all Oyu Tolgoi Project stakeholders could delay the completion of the IDP Review Process and could potentially affect the project’s current development schedule, which in turn could result in significantly increased costs to the Company. Any delay to the Oyu Tolgoi Project development schedule may have a material adverse impact on the Company and its share price.

If the arbitration proceeding initiated by Rio Tinto is not resolved in our favour, Rio Tinto may acquire control of the Company after the expiration of the Standstill Limit and without making an offer to all other Shareholders

     On July 9, 2010, Rio Tinto notified the Company that it was commencing an arbitration proceeding under the terms of the Private Placement Agreement, seeking a series of declarations to the effect that the operation of the Shareholder Rights Plan interferes with certain of Rio Tinto’s contractual rights under the Private Placement Agreement. The Company’s position is that nothing in the Private Placement Agreement prohibits the Company from implementing the Shareholder Rights Plan and that nothing in the Shareholder Rights Plan breaches any of Rio Tinto’s existing contractual rights under the Private Placement Agreement. The arbitration proceeding initiated by Rio Tinto is at a preliminary stage and it is uncertain when it will be completed or what its outcome will be.

     If the arbitration proceeding initiated by Rio Tinto is not resolved in the Company’s favour, the Shareholder Rights Plan may be declared invalid. Rio Tinto’s Standstill Limit provided for in the Private Placement Agreement will expire on October 18, 2011. Without a valid Shareholder Rights Plan in place at that time, Rio Tinto may acquire control of the Company with or without the consent of the Board of Directors and without making an offer to all other Shareholders, which may have a material adverse impact on the Company and its share price.

If the Rights Offering is not successful, the Company may not be able to raise the proceeds necessary to fund its anticipated cash obligations and capital expenditures

     If the Rights Offering is not successful, the Company may not be able to raise the proceeds necessary to fund its anticipated cash obligations and capital expenditures. If this happens, the Company may be forced to raise funds from alternative sources on less favourable terms, which may have a material adverse impact on the Company and its share price.

The Company does not expect to pay dividends for the foreseeable future

     The Company has not paid any dividends to date and it does not intend to declare dividends for the foreseeable future, as it anticipates that it will reinvest future earnings, if any, in the development and growth of the Oyu Tolgoi Project and its business generally. Therefore, investors will not receive any funds unless they sell their Common Shares, and Shareholders may be unable to sell their shares on favourable terms or at all. The Company cannot give any assurance of a positive return on investment or that investors will not lose the entire amount of their investment in Common Shares. Prospective investors seeking or needing dividend income or liquidity should not purchase Common Shares.

Future sales may affect the market price of the Common Shares

     In order to finance future operations, the Company may need to raise funds through the issuance of additional Common Shares or the issuance of debt instruments or other securities convertible into Common Shares. The Company cannot predict the size of future issuances of Common Shares or the issuance of debt instruments or other securities convertible into shares additional issuances of Common Shares will in all likelihood tend to depress the market price of the Common Shares.

The Company may be limited in its ability to enforce the Investment Agreement against a sovereign government

     The Company, OT LLC, a subsidiary owned as to 66% by the Company, Rio Tinto and the Government of Mongolia are parties to an investment agreement dated October 6, 2009 (the “Investment Agreement”). In addition to providing legal, administrative and tax stability for the Oyu Tolgoi Project during its term, the Investment Agreement also imposes numerous obligations and commitments upon the Government of Mongolia that provide clarity and certainty in respect of the development and operation of the Oyu Tolgoi Project. The Investment Agreement also includes an arbitration clause that requires the parties to resolve disputes through international commercial arbitration procedures. Nevertheless, if and to the extent that the Government of Mongolia does not observe the terms and conditions of the Investment Agreement, there may be limitations on the Company’s ability to enforce the terms of the Investment Agreement against the Government of Mongolia, which is a sovereign entity, regardless of the outcome of an arbitration proceeding. Without an effective means of enforcing the terms of the Investment Agreement, the Company could be deprived of substantial rights and benefits arising from its investment in the Oyu Tolgoi Project with little or no recourse against the Government of Mongolia for fair and reasonable compensation. Such an outcome would have a material adverse impact on the Company and its share price.

The Investment Agreement includes a number of future covenants that may be outside of the control of the Company to complete

     The Investment Agreement commits the Company to perform a number of obligations in respect of the development and operation of the Oyu Tolgoi Project. While performance of many of these obligations is within the effective control of IVN, the scope of certain obligations may be open to interpretation. The performance of other obligations may require co-operation from third parties or may be dependent upon circumstances that are not necessarily within the control of the Company. For example:

•

the Company is obligated to obtain project financing for the development of the Oyu Tolgoi Project within two years following the effective date of the Investment Agreement and to commence commercial production within five years of securing such financing. There is a risk that OT LLC will be unable to obtain sufficient project financing within the stipulated time or that, in order to meet the project financing requirement in a timely manner, OT LLC will be required to accept financing terms that are less advantageous than those that might have been available had there been no deadline for obtaining such financing. There is also a risk that unanticipated construction delays or other unforeseen development problems may cause delays in commencement in commercial production or that unforeseen mining or processing difficulties are encountered that prevent OT LLC from attaining the required commercial production levels;

•

the Company is obligated to utilize only Mongolian power sources within four years of commencing commercial production. Such sources of power may not be available or may be available upon commercial terms that are less advantageous than those available from other potential power suppliers;

•

Mongolian nationals must represent at least 90% of the Oyu Tolgoi Project work force once commercial production is attained and 50% of such project’s engineers must be Mongolian nationals within five years, increasing to 70% after 10 years. While IVN has a plan for achieving these targets, success in doing so is contingent upon the availability of a sufficient number of qualified personnel, which is not wholly within the Company’s control.

•

the Company is obligated to use Mongolian services, transportation and freight facilities on a priority basis. Such services and facilities may not be available to the extent required or may be available upon commercial terms that are less advantageous than those available from other sources.

•

OT LLC has community development commitments and social responsibility obligations. There is a risk that OT LLC will be unable to meet the expectations or demands of relevant community stakeholders to the extent contemplated to allow OT LLC to meet its commitments under the Investment Agreement.

•

The extension of the term of the Investment Agreement from 30 years to 50 years is subject to a number of conditions, including IVN having demonstrated that the Oyu Tolgoi Project has been operated in accordance with industry best practices in terms of national and community benefits, environment and health and safety practices. The inherently subjective nature of these criteria creates the risk that the Company and the Government of Mongolia may disagree as to whether the conditions for extending the term of the Investment Agreement have been met.

     Despite the Company’s best efforts, such provisions are not necessarily within its control and non-fulfillment may result in default under the Investment Agreement. Such a default could result in termination of the Investment Agreement or damages accruing, which may have a material adverse impact on the Company and its share price.

The Oyu Tolgoi Project will be operated as a corporate/government joint venture and will be subject to joint venture risk

     Although the OT LLC shareholders’ agreement entered into by and among two wholly-owned, indirect subsidiaries of the Company, Erdenes, a company controlled by the Mongolian Government and OT LLC, contemplates that the Company will maintain a controlling interest in the Oyu Tolgoi Project, the Government of Mongolia will also hold a significant stake in what is effectively a corporate joint venture involving a government entity. In addition, a portion of the Hugo North mineral deposit of the Oyu Tolgoi Project is subject to a joint venture agreement between the Company and Entrée Gold LLC (“Entrée”), whereby the Company holds an 80% interest and Entrée holds a 20% interest in minerals below 560 metres located in such portion of the Oyu Tolgoi Project, and the Company holds a 70% interest and Entrée holds a 30% interest in minerals above 560 metres located in such portion of the Oyu Tolgoi Project. As such, the Oyu Tolgoi Project is, to a certain extent, a joint venture within a joint venture. Therefore, the Company will be subject, on multiple levels, to all of the risks to which participants in mining joint ventures are typically exposed. Such risks include the potential for disputes respecting development, operation and financing matters resulting from differing levels of sophistication in relevant business and technical matters, inequality of bargaining power and incompatible long-term strategic and economic objectives.

The Government of Mongolia T-Bill may remain illiquid beyond the stated maturity date

     On October 20, 2009, as an adjunct to the Investment Agreement, OT LLC purchased a treasury bill (the “T-Bill”) from the Mongolian Government, with a face-value of US$115.0 million, for US$100.0 million. The T-Bill will mature on October 20, 2014. Mongolia continues to maintain a relatively high level of debt and, as such, its debt securities carry a higher level of risk than similar securities issued by countries with lower debt and more developed economies. There is no assurance that IVN will be able to readily convert the T-Bill into cash upon the stated maturity date, and the inability to do so could have a material adverse impact on the Company’s cash position, which may have a material adverse impact on the Company and its share price.

There can be no assurance that the Company will be capable of raising the additional funding that it needs to carry out its development and exploration objectives

     Carrying out the development and exploration of the Oyu Tolgoi Project and the various other mineral properties in which the Company holds interests depends upon its ability to obtain financing through capital markets, sales of non-core assets or other means. The Company expects to be able to meet short-term cash requirements for the development of the Oyu Tolgoi Project and its other projects from its existing financial resources, but these funds will not be sufficient to meet all anticipated development expenditure requirements. The Series B Warrants and the Series C Warrants held by Rio Tinto may, if exercised in full, account for a portion of the development cost of the Oyu Tolgoi Project, but will be insufficient to fund the entire development cost and, in any case, there is no assurance that Rio Tinto will fully exercise either the Series B Warrants or the Series C Warrants, both of which are exercisable at the sole discretion of Rio Tinto. Even if Rio Tinto fully exercises the Series B Warrants and the Series C Warrants, the Company will require access to additional sources of capital to complete the development of the Oyu Tolgoi Project and to advance the development of its other mineral properties. The terms of the Investment Agreement oblige the Company to obtain, within two years of the Effective Date of the Investment Agreement, project financing sufficient to complete the development activities necessary to establish commercial production. Market volatility in precious and base metals may affect the terms upon which debt financing or equity financing is available. The Company operates in a region of the world that is prone to economic and political upheaval and instability, which may make it more difficult for the Company to obtain debt financing from project lenders. Failure to obtain additional financing on a timely basis may cause the Company to postpone its development plans, forfeit rights in some or all of its properties or joint ventures or reduce or terminate some or all of its operations, which may have a material adverse impact on the Company and its share price.

Lack of infrastructure in proximity to the Company’s material properties could adversely affect mining feasibility

     The Oyu Tolgoi Project is located in an extremely remote area in the South Gobi Region of Mongolia, which currently lacks basic infrastructure, including sources of electric power, water, housing, food and transport necessary to develop and operate a major mining project. While the Company has established the limited infrastructure necessary to conduct its current exploration and development activities, substantially greater sources of power, water, physical plant and transportation infrastructure in the area will need to be established before it can conduct mining operations. In addition, satisfactory agreements for the purchase of power will

have to be entered into, and any necessary government approvals or licenses obtained. Lack of availability of the means and inputs necessary to establish such infrastructure may adversely affect mining feasibility. Establishing such infrastructure will, in any event, require significant financing, identification of adequate sources of raw materials and supplies and necessary cooperation from national and regional governments, none of which can be assured. The Ovoot Tolgoi Coal Project is similarly located in a remote area of southern Mongolia and, although it is in commercial production, it faces the same challenges that come from operating in such a remote location.

The resource and reserve estimates for the Company’s and its subsidiaries’ projects incorporated by reference in this Prospectus are estimates only and are subject to change based on a variety of factors, some of which are beyond its or its subsidiaries’ control. The Company and its subsidiaries’ actual production, revenues and capital expenditures may differ materially from these estimates

     The estimates of reserves and resources incorporated by reference in this Prospectus, including the anticipated tonnages and grades that will be achieved or the indicated level of recovery that will be realized, are estimates and no assurances can be given as to their accuracy. Such estimates are, in large part, based on interpretations of geological data obtained from drill holes and other sampling techniques. Actual mineralization or formations may be different from those predicted. It may also take many years from the initial phase of drilling before production is possible, and during that time the economic feasibility of exploiting a deposit may change. Reserve and resource estimates are materially dependent on prevailing metal prices and the cost of recovering and processing minerals at the individual mine sites. Market fluctuations in the price of metals or increases in the costs to recover metals from the Company’s and its subsidiaries’ mining projects may render the mining of ore reserves uneconomical and materially adversely affect its and its subsidiaries’ operations. Moreover, various short-term operating factors may cause a mining operation to be unprofitable in any particular accounting period.

     Prolonged declines in the market price of metals may render reserves containing relatively lower grades of mineralization uneconomic to exploit and could reduce materially the Company’s and its subsidiaries’ reserves and resources. Should such reductions occur, material write-downs of the Company’s and its subsidiaries’ investment in mining properties or the discontinuation of development or production might be required, and there could be material delays in the development of new projects, increased net losses and reduced cash flow. The estimates of mineral reserves and resources attributable to a specific property are based on accepted engineering and evaluation principles. The estimated amount of contained metals in proven and probable mineral reserves does not necessarily represent an estimate of a fair market value of the evaluated properties.

     There are numerous uncertainties inherent in estimating quantities of mineral reserves and resources. The estimates incorporated by reference in this Prospectus are based on various assumptions relating to commodity prices and exchange rates during the expected life of production, mineralization of the area to be mined, the projected cost of mining, and the results of additional planned development work. Actual future production rates and amounts, revenues, taxes, operating expenses, environmental and regulatory compliance expenditures, development expenditures, and recovery rates may vary substantially from those assumed in the estimates. Any significant change in these assumptions, including changes that result from variances between projected and actual results, could result in material downward revision to current estimates, which may have a material adverse impact on the Company and its share price.

Mining projects are sensitive to the volatility of metal prices

     The long-term viability of the Oyu Tolgoi Project depends in large part on the world market prices of copper and gold. The market prices for these metals are volatile and are affected by numerous factors beyond the Company’s control. These factors include international economic and political trends, expectations of inflation, global and regional demand, currency exchange fluctuations, interest rates and global or regional consumption patterns, speculative activities, increased production due to improved mining and production methods and economic events, including the performance of Asia’s economies.

     The aggregate effect of these factors on metals prices is impossible to predict. Should prevailing metal prices remain depressed or below variable production costs of the Company’s current and planned mining operations for an extended period, losses may be sustained and, under certain circumstances, there may be a curtailment or suspension of some or all of its mining, development and exploration activities. The Company would also have to assess the economic impact of any sustained lower metal prices on recoverability and, therefore, the cut-off grade and level of its reserves and resources. These factors could have an adverse impact on the Company’s future cash flows, earnings, results of operations, stated reserves and financial condition, which may have a material adverse impact on the Company and its share price.

     The following table sets forth for the periods indicated (1) the London Metals Exchange’s high, low and average settlement prices for copper in U.S. dollars per pound and (2) the high, low and average London afternoon fixing prices for gold.

		Copper												Gold
Year		High				Low				Average				High				Low				Average
2005		$	2.11			$	1.39			$	1.67			$	536			$	411			$	444
2006		$	3.99			$	2.06			$	3.05			$	725			$	524			$	604
2007		$	3.77			$	2.37			$	3.23			$	841			$	604			$	695
2008		$	4.08			$	1.26			$	3.15			$	1,011			$	713			$	872
2009		$	3.33			$	1.38			$	2.34			$	1,213			$	810			$	972

The Company’s ability to carry on business in Mongolia is subject to legal and political risk

     Although the Company expects that the Investment Agreement will bring significant stability and clarity to the legal, political and operating environment in which it will develop and operate the Oyu Tolgoi Project, the Company is still subject to legal and political risks in Mongolia.

     The Ovoot Tolgoi Coal Project is not covered by the Investment Agreement. SGQ holds its interest in its Mongolian mineral exploration and development projects indirectly through mining licences and exploration licences, and the rights with respect to those activities may be subject to changes in legislation or government regulations or changes in political attitudes within Mongolia.

     The Investment Agreement is expected to mitigate a significant degree of political risk. Nevertheless, there is still a risk, particularly with respect to investments not covered by the Investment Agreement, that the Government of Mongolia may change its policies to discourage foreign investment, mining projects may be nationalized or other government limitations, restrictions or requirements not currently foreseen may be implemented. There can be no assurance that the Company’s assets will not be subject to nationalization, requisition or confiscation, whether legitimate or not, by any authority or body.

     There is no assurance that provisions under Mongolian law for compensation and reimbursement of losses to investors under such circumstances would be effective to restore the full value of the Company’s original investment or to compensate for the loss of the current value of the Mongolian projects. Insofar as the Government of Mongolia is a sovereign entity against which the terms of the Investment Agreement may be unenforceable, this risk applies to the Oyu Tolgoi Project despite the provisions of the Investment Agreement respecting nationalization and expropriation. Similarly, other projects in Mongolia in which the Company holds a direct or indirect interest that are not covered by the Investment Agreement, such as the Ovoot Tolgoi Coal Project, may be affected in varying degrees by, among other things, government regulations with respect to restrictions on production, price controls, export controls, income taxes, environmental legislation, mine safety and annual fees to maintain mineral licences in good standing. There can be no assurance that Mongolian laws protecting foreign investments will not be amended or abolished or that existing laws will be enforced or interpreted to provide adequate protection against any or all of the risks described above.

     The legal framework in Mongolia is, in many instances, based on recent political reforms or newly enacted legislation, which may not be consistent with long-standing local conventions and customs. Although legal title risks in respect of the Oyu Tolgoi Project are expected to be significantly mitigated by the terms of the Investment Agreement, there may still be ambiguities, inconsistencies and anomalies in the other agreements, licences and title documents through which the Company holds its interests in other mineral resource properties in Mongolia, or the underlying legislation upon which those interests are based, which are atypical of more developed legal systems and which may affect the interpretation and enforcement of the Company’s rights and obligations. Local institutions and bureaucracies responsible for administrating laws may lack a proper understanding of the laws or the experience necessary to apply them in a modern business context. Many laws have been enacted, but in many instances they are neither understood nor enforced and may be applied in an inconsistent, arbitrary and unfair manner, while legal remedies may be uncertain, delayed or unavailable. For decades Mongolians have looked to politicians and bureaucrats as the sources of the “law”. This has changed in theory, but often not in practice. With respect to most day-to-day activities in Mongolia government civil servants

interpret, and often effectively make, the law. This situation is gradually changing but at a relatively slow pace. Accordingly, while the Company believes that it has taken the legal steps necessary to obtain and hold its property and other interests in Mongolia, there can be no guarantee that such steps will be sufficient to preserve those interests.

Recent and future amendments to Mongolian laws could adversely affect the Company’s mining rights in the Oyu Tolgoi Project or make it more difficult or expensive to develop the project and carry out mining

     The Government of Mongolia has, in the past, expressed its strong desire to foster, and has to date protected the development of, an enabling environment for foreign investment. The Company believes that the successful negotiation of the Investment Agreement in respect of the Oyu Tolgoi Project clearly demonstrates the level of commitment of the current government to continue to do so. However, there are political constituencies within Mongolia that have espoused ideas that would not be regarded by the international mining industry as conducive to foreign investment if they were to become law or official government policy. This was evidenced by revisions to Mongolia’s Minerals Law in 2006. At present, the Company has no reason to believe that the Government of Mongolia intends to sponsor or that Parliament intends to enact amendments to the Minerals Law or other legislation that would be materially adverse to the interests of international investors in Mongolia’s mining sector, including those of the Company. Nevertheless, there can be no assurance that the present government or a future government will refrain from enacting legislation or adopting government policies that are adverse to the Company’s interests or that impair its ability to develop and operate the Oyu Tolgoi Project, the Ovoot Tolgoi Coal Project or other projects on the basis presently contemplated, which may have a material adverse impact on the Company and its share price.

Changes in, or more aggressive enforcement of, laws and regulations could adversely impact the Company’s business

     Mining operations and exploration activities are subject to extensive laws and regulations. These relate to production, development, exploration, exports, imports, taxes and royalties, labour standards, occupational health, waste disposal, protection and remediation of the environment, mine decommissioning and reclamation, mine safety, toxic substances, transportation safety and emergency response and other matters.

     Compliance with these laws and regulations increases the costs of exploring, drilling, developing, constructing, operating and closing mines and other facilities. It is possible that the costs, delays and other effects associated with these laws and regulations may impact the Company’s decision as to whether to continue to operate in a particular jurisdiction or whether to proceed with exploration or development of properties. Since legal requirements change frequently, are subject to interpretation and may be enforced to varying degrees in practice, the Company is unable to predict the ultimate cost of compliance with these requirements or their effect on operations. Furthermore, changes in governments, regulations and policies and practices could have an adverse impact on the Company’s future cash flows, earnings, results of operations and financial condition, which may have a material adverse impact on the Company and its share price.

The Company is subject to substantial environmental and other regulatory requirements and such regulations are becoming more stringent. Non-compliance with such regulations, either through current or future operations or a pre-existing condition could materially adversely affect it

     All phases of the Company’s operations are subject to environmental regulations in the various jurisdictions in which it operates. For example, the Oyu Tolgoi Project is subject to a requirement to meet environmental protection obligations. The Company must complete an Environmental Protection Plan for Government approval and complete a report prepared by an independent expert on environmental compliance every three years.

     Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.

     Environmental legislation is evolving in a manner which will likely require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. There is no assurance that future changes in environmental regulation, if any, will not adversely affect the Company’s operations. Environmental hazards may exist on the properties in which the Company and its subsidiaries hold interests which are presently unknown to the Company and which have been caused by

previous or existing third party owners or operators of the properties. Government approvals and permits are also often required in connection with various aspects of the Company’s operations. To the extent such approvals are required and not obtained, the Company may be delayed or prevented from proceeding with planned exploration or development of its mineral properties, which may have a material adverse impact on the Company and its share price.

     Amendments to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on the Company and cause increases in capital expenditures or production costs or reductions in levels of production at producing properties or require abandonment or delays in development of new mining properties, which may have a material adverse impact on the Company and its share price.

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

     The Company has received exemptions from liability from relevant governmental authorities for environmental damage caused by previous mining operations at current and former mining projects, including at the Kyzyl Shear Project in Kazakhstan and the Cloncurry Project in Australia. There is a risk, however, that, if an environmental accident occurred at those sites, it may be difficult or impossible to assess the extent to which environmental damage was caused by the Company’s activities or the activities of other operators. In that event, the liability exemptions could be ineffective and possibly worthless, which may have a material adverse impact on the Company and its share price.

The actual cost of developing the Oyu Tolgoi Project may differ materially from the Company’s estimates and involve unexpected problems or delays

     The estimates incorporated by reference in this Prospectus regarding the development and operation of the Oyu Tolgoi Project are based on the IDP. The IDP established estimates of resources, construction and development costs, operating costs and project economic returns based, in part, on assumptions about future metal prices and future cost inputs, determined as at June 2010 and variances in these inputs, as well as other inputs that form the basis of the IDP, may result in operating costs, construction and development costs, production and economic returns that differ materially from those anticipated by the IDP and future development reports. Development programs and budgets for the Oyu Tolgoi Project are within the jurisdiction of the Technical Committee and if there are any disagreements between the Company and Rio Tinto with respect to development programs and budgets for the Oyu Tolgoi Project, Rio Tinto has the deciding vote. If Rio Tinto causes the Technical Committee to pursue a development plan that is significantly different than the one contemplated by the IDP, the operating costs, construction and development costs, production and economic returns anticipated by any such revised development plan may also differ materially from those currently anticipated by the IDP. Accordingly, the Company’s actual financing requirements for the project could be materially greater, and the actual development and production schedule for the project could be materially longer, than the IDP contemplates, which in turn could adversely affect the Company’s financial performance and condition, which may have a material adverse impact on the Company and its share price.

     There are also a number of uncertainties inherent in the development and construction of any new mine, including the Oyu Tolgoi Project. These uncertainties include:

•

the timing and cost, which can be considerable, of the construction of mining and processing facilities;

•

the availability and cost of skilled labour, power, water and transportation;

•

the availability and cost of appropriate smelting and refining arrangements;

•

the need to obtain necessary environmental and other government permits, and the timing of those permits; and

•

the availability of funds to finance construction and development activities.

     The cost, timing and complexities of mine construction and development are increased by the remote location of a property such as the Oyu Tolgoi Project. It is common in new mining operations to experience unexpected problems and delays during development, construction and mine start-up. In addition, delays in the commencement of mineral production often occur. Accordingly, there is no assurance that future development activities will result in profitable mining operations.

The Company’s ability to obtain dividends or other distributions from its subsidiaries may be subject to restrictions imposed by law, foreign currency exchange regulations and financing arrangements

     The Company conducts its operations through subsidiaries. Its ability to obtain dividends or other distributions from its subsidiaries may be subject to restrictions on dividends or repatriation of earnings under applicable local law, monetary transfer restrictions and foreign currency exchange regulations in the jurisdictions in which the subsidiaries operate. The subsidiaries’ ability to pay dividends or make other distributions to the Company is also subject to their having sufficient funds to do so. If the subsidiaries are unable to pay dividends or make other distributions, the Company’s growth may be inhibited unless it is able to obtain additional equity or debt financing on acceptable terms. In the event of a subsidiary’s liquidation, the Company may lose all or a portion of its investment in that subsidiary. The Company will be able to rely on the terms of the Investment Agreement to pay dividends out of Mongolia, subject to certain restrictions contained in the Investment Agreement but will be unable to do so in respect of projects that are not covered by the terms of the Investment Agreement, which may have a material adverse impact on the Company and its share price.

There can be no assurance that the interest held by the Company in its exploration, development and mining properties is free from defects or that material contractual arrangements between it and entities owned or controlled by foreign governments will not be unilaterally altered or revoked

     The Company has investigated its rights to explore and exploit its various properties and, to the best of its knowledge, those rights are in good standing but no assurance can be given that such rights will not be revoked, or significantly altered, to its detriment. There can also be no assurance that the Company’s rights will not be challenged or impugned by third parties. The Company has also applied for rights to explore, develop and mine various properties, but there is no certainty that such rights, or any additional rights applied for, will be granted on terms satisfactory to the Company or at all, which may have a material adverse impact on the Company and its share price.

The proceeds from the sale of the Savage River Project are dependent on iron ore prices and the remaining supply of ore at the Savage River Project

     The remaining portion of the proceeds payable to the Company from its sale of the Savage River iron ore project located in Tasmania, Australia are deferred, and the amount of such payments are dependent on prevailing prices for iron ore (as represented by the Nibrasco/JSM pellet price) in the year that the compensation is paid and the total tonnage of iron ore pellets sold from the Savage River Project in that year. Such prices are very volatile and in the past prices have suffered significant declines. Lower prices mean lower corresponding payments to the Company. In addition, while current reserve and resource estimates indicate that the mine will be capable of producing sufficient ore to meet the desired tonnes per year threshold for the term of deferred payments, there is no assurance that these estimates will actually bear themselves out. If insufficient ore is actually present to produce the desired threshold amount of ore, then the corresponding payments to the Company will be lower, which may have a material adverse impact on the Company and its share price.

Competition for new mining properties by larger, more established companies may prevent the Company from acquiring interests in additional properties or mining operations

     Significant and increasing competition exists for mineral acquisition opportunities throughout the world. As a result of this competition, some of which is with large, better established mining companies with substantial capabilities and greater financial and technical resources, the Company may be unable to acquire rights to exploit additional attractive mining properties on terms it considers acceptable. Accordingly, there can be no assurance that the Company will acquire any interest in additional operations that would yield reserves or result in commercial mining operations, which may have a material adverse impact on the Company and its share price.

There is no assurance that the Company will be capable of consistently producing positive cash flows

     The Company has paid no dividends on its Common Shares since incorporation and does not anticipate doing so in the foreseeable future. The Company has not, to date, produced positive cash flows from operations, and there can be no assurance of its ability to operate its projects profitably. While the Company may in the future generate additional working capital through the operation, development, sale or possible syndication of its properties, there is no assurance that the Company will be capable of producing positive cash flow on a consistent basis or that any such funds will be available for exploration and development programs, which may have a material adverse impact on the Company and its share price.

There is no guarantee that any exploration activity will result in commercial production of mineral deposits

     Development of a mineral property is contingent upon obtaining satisfactory exploration results. Mineral exploration and development involves substantial expenses and a high degree of risk, which even a combination of experience, knowledge and careful evaluation may not be able to adequately mitigate. There is no assurance that additional commercial quantities of ore will be discovered on any of the Company’s exploration properties. There is also no assurance that, even if commercial quantities of ore are discovered, a mineral property will be brought into commercial production. The discovery of mineral deposits is dependent upon a number of factors, not the least of which is the technical skill of the exploration personnel involved. The commercial viability of a mineral deposit, once discovered, is also dependent upon a number of factors, some of which are the particular attributes of the deposit, such as size, grade and proximity to infrastructure, metal prices and government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals, and environmental protection. In addition, assuming discovery of a commercial ore body, depending on the type of mining operation involved, several years can elapse from the initial phase of drilling until commercial operations are commenced. Most of the above factors are beyond the control of the Company.

The Company cannot insure against all of the risks associated with mining

     Exploration, development and production operations on mineral properties involve numerous risks and hazards, including:

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rock bursts, slides, fires, earthquakes or other adverse environmental occurrences;

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industrial accidents;

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labour disputes;

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political and social instability;

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technical difficulties due to unusual or unexpected geological formations;