overview

OVERVIEW
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Ivanhoe Australia Ltd's (ASX:IVA) objective is to build a
substantial Australian-based company focused on the exploration and
development of its portfolio of mineral projects.
Planning for the development of four separate projects is
underway on projects containing molybdenum, rhenium, copper, gold, zinc,
silver and uranium.
The Cloncurry project has been the subject of exploration and
mining activities by a number of companies over the past 100 years.
Open cut mining of oxide gold deposits was commenced along the
Starra Line in 1988 by Armico Mining, and subsequently underground mining
produced copper/gold concentrate from sulphide ore.
Development of a modern underground mine at Mount Elliott began
in 1993.
Ivanhoe Australia impressed the market this week with a
progressive drilling report that lifted its share price.
It intercepted high-grade molybdenum and rhenium results in the
Merlin project and Ivanhoe's Cloncurry tenements in northwestern
Queensland.
Chief executive officer Peter Reeve said the Merlin discovery had
now been tested by about 90 drill holes and the assay results of 75 drill
holes have been returned.
The Merlin mineralised zone is a clearly defined, high-grade body
of molybdenum (Mo) and rhenium (Re) sulphide mineralisation starting at a
depth of about 100 metres and extending down dip for over 400 metres,
with an indicated strike length of up to 900 metres.
He said results from this recent drilling defined the
highest-grade zone of Merlin encountered so far and exceed the tenor of
the initial Merlin results released in December.
The most significant are:
* MDQ0115 - 38 m @ 1.20pc Mo, 17.29 g/t Re and 0.17pc Cu, from
246 metres;
* MDQ0119 - 58 m @ 2.25pc Mo, 28.99 g/t Re and 0.09pc Cu, from
408 metres, including - 20 m @ 6.26pc Mo, 81.83 g/t Re and 0.14pc Cu,
from 408 metres;
* MDQ0128 - 24 m @ 1.07pc Mo, 16.96 g/t Re and 0.11pc Cu, from
190 metres; and
* MDQ0132 - 50 m @ 1.60pc Mo, 24.34 g/t Re and 0.12pc Cu, from
350 metres.
The company said such high-grade intercepts in these high-value
metals provides it with an outstanding potential development project.
"What makes this project all the more interesting is that rhenium
is quite a remarkable metal and we have found one of the world's
highest-grade sources of the metal," Mr Reeve said.
"Rhenium is a very tight market, with 90 per cent of production
sold on long-term contracts to three major companies, and it trades for
over $US10,000 per kilogram (about $US300 per oz) on the spot market," Mr
Reeve declared.
Rhenium is a very rare silvery metal that often occurs with, and
is recovered with, molybdenum.
It was first identified in 1925 by German scientists, claiming it
is the last naturally occurring chemical element to be discovered.
Current global production totals only approximately 50 tonnes
each year.
An estimated 77 per cent of rhenium is used in super-alloys and
15 per cent is used in petroleum catalysts.
Chile is the world's largest rhenium producer (28 tonnes in
2007), followed by the US and Kazakhstan.
World Reserves are approximately 10,000 tonnes, 80 per cent of
which are in the US, Chile and Canada.
Until recently, market deficits were filled from stockpiles in
Kazakhstan that now are largely depleted.
Rhenium usually is extracted from flue gases from roasting
molybdenum concentrates.
The smelter technology required to perform this recovery is
very expensive, which is a barrier to rhenium recovery.
Rhenium is used for aircraft-engine turbine blades to allow
operation at higher temperatures, which also improves fuel efficiency.
Rocket thrusters, chambers and nozzles made with rhenium have
been tested through 100,000 thermal fatigue cycles without failing.

SHARE PRICE MOVEMENTS
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Shares of Ivanhoe yesterday rose 16c to $1.06, making a gain of
26c in the last two sessions. Rolling high for the half year is $1.16 and
low 15c. The company has 62.6 million on issue with a market cap of $66.4
million.
On January 14 Ivanhoe reported significant drill intercepts which
expanded the Swan high-grade copper-gold zone at its Mount Elliott
project in northwest Queensland.
Mr Reeve disclosed that drilling at Swan had significantly
expanded the mineralisation on the zone's eastern and western flanks.
Drill hole MEQ1194 on the eastern flank intersected 342 metres @
1.53 per cent copper equivalent (eCu) and indicates the presence of a
large, near-surface zone of additional higher grade mineralisation
between the Swan high-grade zone (HGZ) and the original Mount Elliott
mine.
The most significant new results in this zone were:
(Eastern Flank)
* MEQ1194 - 342 metres @ 1.21pc Cu and 0.80 g/t Au (1.53pc eCu)
from 292 metres;
* MEQ1196 - 114 metres @ 0.92pc Cu and 0.76 g/t Au (1.22pc eCu)
from 180 metres;
Western Flank
* MEQ1187 - 102 metres @ 0.84pc Cu and 0.52 g/t Au (1.05pc eCu)
from 612 metres;
* MEQ1188 - 128 metres @ 0.82pc Cu and 0.48 g/t Au (1.01pc eCu)
from 552 metres; and
* MEQ1189 - 135 metres @ 1.25pc Cu and 0.76 g/t Au (1.56pc eCu)
from 551 metres.
Following the company's release of the initial Mount Elliott
resource estimate in September, the objective of the ongoing infill
drilling program has been to expand the Swan HGZ and investigate
additional trends of the higher grade mineralisation.
The new results highlight the strong east-west axis of the
higher-grade Swan mineralisation and further indicate the possibility of
connections between the Swan HGZ and the other zones, including Swell and
the original Mount Elliott mine.

BACKGROUND
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Ivanhoe Australia joined the ASX list on August 6, 2008.
The company, through Ivanhoe Cloncurry Mines, acquired the IAL
mining tenements in late 2003 and commenced low-level exploration over
the following three years while activity was focused on Mongolia.
This activity then increased following the more complete
delineation of the Oyu Tolgoi orebody in Mongolia.
As part of its acquisition of the IAL tenements, Ivanhoe
Australia obtained an extensive and valuable database of technical
information relating to the mining exploration and drilling undertaken by
the previous project owners.
In May 2007 an interest in EXCO Resources, which was active in
the region, was acquired, and a joint venture on EXCO's southern
tenements entered into.
Exploration prospectivity on Ivanhoe's tenements and in the
Cloncurry region remains very high.
Ore from the Starra Line series of mines, Mount Elliott and, for
a very short period, from two small open pits at Victoria and one open
pit at Lady Ella, was treated through a mill located adjacent to the
Starra Line mines.
This mill has now been removed.
Project production since start-up in 1988 to closure in 2003
totalled approximately 217,700 tonnes of copper and 1.02 million ounces
of gold from a mined tonnage of approximately 12.9 million tonnes
averaging 3.10g/t Au and 2.38pc Cu.
In 2002 Selwyn Mines experienced difficulties due to ore
production from the Starra and Mount Elliott mines not being able to
sustain the required treatment rate during a period of low copper and
gold prices.
The Selwyn Mines operation closed as a consequence.
Ivanhoe Australia's exploration drilling program commenced in
August 2004 on the partially drilled copper gold targets at the Swan zone
at Mount Elliott and secondary copper Mount Dore prospect, followed by
geophysical surveys and drilling at Metal Ridge and Amethyst Castle.
Strong results from the Swan zone led to Ivanhoe Australia
instigating an intensive drilling program designed to test mineralisation
at depth which demonstrated a style similar to the Ernest Henry mine,
owned by Xstrata, to the north of Ivanhoe Australia's tenements, and the
Osborne mine, owned by Barrick, to the south.
The exploration pre 2006 on the tenements within the Cloncurry
project was focussed on shallow drilling in the range of 200 to 400
metres.
The delineation of near surface deposits underpinned the
exploration strategy of previous owners which were primarily focused on
generating high-grade mill feed to maintain cash flow.
As a result of that approach, Ivanhoe Australia believes that the
potential for larger scale IOCG targets was not tested at depth below
surface indications or where geophysical surveys indicated that deposits
could exist at depth.
As at 30 June 2008, Ivanhoe had completed 125 holes totalling
94.6 kilometres at Mount Elliott.
Recent drilling here has focussed on exploring for a link between
the Mount Elliott, Swell and Swan zones at depth and to the north and
infill drilling prior to resource estimation.
The mineralisation encountered thus far at Mount Elliott is open
to the north at depth and to the west.
At Mount Dore an additional 45 diamond drill holes have now been
completed since 2004 bringing the total to 104 diamond drill holes.
Ivanhoe Australia has also partly completed a reverse circulation
drilling program up dip and to the north of the know Mount Dore
mineralisation.
In total 35 holes were drilled in this program to 30 June 2008.
On the Starra Line of deposits previous mining, during periods of
low metal prices, concentrated on extracting thin high-grade zones within
the thick mineralised ironstone rocks.
Current metal prices warrant re-evaluating mining the wider zones
at a lower cut-off grade.
There is also an excellent potential to extend the currently
defined deposits down plunge and to test at depth and along strike for
new deposits.