UPDATE 2-Ivanhoe says Mongolia project ahead of schedule

* Sets 2011 capital budget for Oyu Tolgoi at $2.3 billion

* Yr net loss 42 cents/shr vs 69 cents/shr a year earlier

* Shares down 0.26 percent at C$26.77 on TSX

(Figures in U.S. dollars)

TORONTO, March 28 (Reuters) – Ivanhoe Mines Ltd

The massive project, which Ivanhoe is being developing in
partnership with Anglo-Australian miner Rio Tinto (RIO.AX: Quote, Profile, Research)
(RIO.L: Quote, Profile, Research), is expected to begin commercial production in the
first half of 2013.

Rio Tinto currently owns a 42.1 percent stake in Ivanhoe
and can gradually raise this stake up to 49 percent. The Oyu
Tolgoi project itself is 66 percent owned by Ivanhoe with the
government of Mongolia owning the remainder.

Ivanhoe estimates capital expenditures on the project will
be about $2.3 billion in 2011. Ivanhoe said as of March 28, its
consolidated cash position was about $1.9 billion.

Ivanhoe also reported a full-year net loss of $211.5
million, or 42 cents a share. That compared with a full-year
net loss of $280.2 million, or 69 cents a share in 2009.

Shares fell as much at 3.45 percent to C$25.91, but soon
recovered to C$26.77.
(Reporting by Euan Rocha and Julie Gordon, editing by Gerald
E. McCormick)

UPDATE 2-Ivanhoe says Mongolia project ahead of schedule