The company announced yesterday a 39% increase in the measured and indicated resource estimates at the property, about 40 kilometres north of the Mongolia-China border.

New data from ongoing drilling work at the deposit led to a reassessment of the geologic model by United States consulting company Norwest Corporation of Salt Lake City.

Norwest's estimates of the coal contained in the South, East and West fields now stand at 116 million tonnes of measured and indicated resources plus an additional inferred resource of approximately 42Mt.

Initial coal-quality testing ranks the Nariin Sukhait coal as high-volatile bituminous coal.

The company said exploration drilling was continuing with new resource estimates for the South, East and West fields expected before year-end.

“Norwest also expects to be providing resource estimates on four additional areas at Nariin Sukhait that have shown encouraging initial results,” the company said.

If negotiations with the Mongolian Government are successful and the issue of a mining licence is timely, initial production from the Ivanhoe properties could start as early as the second half of 2006.

Ivanhoe said the shipping terminus for a newly constructed, 450-kilometre Chinese rail line is expected to be operational into the border area by the end of this year.

Ivanhoe is listed on the Toronto and New York stock exchanges.