Engineering work on the concentrator, conducted mostly in North America, was 72% complete and has addressed design requirements for a larger facility. Contracts related to civil work and structural steel designs, as well as bidding for the mechanical, electrical, and piping package, have been evaluated. Engineering is largely completed for the major infrastructure components, with support from third-party engineering firms in China and North America. Projects consist of a large-diameter water pipeline to supply the concentrator and camp, an 80-km road to China, an airstrip, a temporary diesel-fueled power station and general site infrastructure. Detailed engineering on the key packages is approaching completion; detailed design on most packages is expected to be completed in late 2009.

The engineering and construction execution work for Shaft No. 2 continued in North Bay, Canada, and is scheduled to be completed during the first quarter of 2009. Construction of the shaft at Oyu Tolgoi was suspended in December 2006 and the site remains on care and maintenance. Most long-lead equipment has been ordered and is awaiting manufacture. Engineering for the coal-fired power plant, being conducted in Beijing, was 30% complete.

Work also has continued on schedule for the engineering of the Lift 1 underground block cave at Oyu Tolgoi. Emphasis has been on finalizing the mine design and detailing the rock-handling system to transport ore from the cave to the surface. Work also continued on development scheduling, ventilation and services.

Ivanhoe in 2006 formed a strategic partnership with Rio Tinto, which has invested in Ivanhoe and through a joint technical committee is handling most of the engineering, construction and operational aspects of Oyu Tolgoi development.

Additionally, Ivanhoe announced in December 2008 that recent exploration drilling at Oyu Tolgoi has discovered a new zone of high-grade gold and copper mineralization which reportedly has characteristics of earlier high-grade discoveries at the Hugo Dummett and Southwest Oyu deposits.

The Oyu Tolgoi mineralized structural corridor, as currently defined, now has a total strike length in excess of 20 km—encompassing Oyu Tolgoi in the center and more recent extensions to the south and north onto the joint Ivanhoe-Entrée agreement area. The latest discovery, according to the company, is significant because it indicates that there is a strong probability of an additional gold-rich copper deposit between the previously discovered Heruga deposit and the Southwest Oyu deposit. An objective of ongoing drilling is to establish whether there is a continuous, high-grade mineralized connection between the major Oyu Tolgoi desposits to the north and the more recently discovered Heruga deposit to the south.

The discovery, which is open to expansion in all directions, is s located in the 3- km gap between the Heruga deposit, which was discovered on the joint Ivanhoe-Entrée license area in 2007, and Ivanhoe’s Southern Oyu deposits that were delineated by Ivanhoe’s earlier exploration between 2001 and 2005.