Ms. Penny Schattenkirk reports

EARLY WARNING REPORT FILED PURSUANT TO CANADA'S NATIONAL INSTRUMENT 62-103

This news release is issued by Ivanhoe Industries LLC pursuant to the early warning requirements of Canada's National Instrument 62-103 with respect to common shares and warrants of Kaizen Discovery Inc.

On Jan. 11, 2017, Kaizen completed a rights offering, where Ivanhoe Industries affiliate HPX TechCo Inc. exercised 138,699,460 rights issued by Kaizen to acquire 46,233,153 Kaizen common shares. In addition, as partial consideration for entering into a standby commitment agreement with Kaizen (see Ivanhoe Industries news release and early warning report dated Nov. 18, 2016), HPX acquired 2.1 million non-transferable warrants, with each warrant entitling HPX to acquire one Kaizen share at an exercise price of 15.5 cents per share at any time on or before Jan. 11, 2022. The rights offering and standby agreement are more fully described in Ivanhoe's early warning report and news release dated Nov. 18, 2016.

The offering was fully subscribed, and therefore HPX was not required to acquire any Kaizen shares beyond its basic pro rata entitlement pursuant to the standby agreement. As a result, the issuance of the 46,233,153 Kaizen shares to HPX did not affect its securityholding percentage of Kaizen, which remained at 66.82 per cent.

All of the securities described in this release as owned by or to be subscribed by HPX are and will be beneficially owned and controlled by Ivanhoe Industries.

Ivanhoe Industries, through HPX, is acquiring these shares for investment purposes. Depending on economic or market conditions or matters relating to Kaizen, Ivanhoe Industries or HPX may choose to either acquire or dispose of additional Kaizen common shares.

For further information and to obtain a copy of the early warning report filed under applicable Canadian provincial securities legislation in connection with the transactions hereunder, please go to the Kaizen's profile on SEDAR, or contact Penny Schattenkirk at 604-689-8765.