VANCOUVER, BC, April 9, 2021 /PRNewswire/ - Entrée
Resources Ltd. (TSX: ETG) (OTCQB: ERLFF) – the
"Company" or "Entrée") reports that on
April 9, 2021, Turquoise Hill
Resources Ltd. ("Turquoise Hill"), announced they have
reached a binding agreement ("Heads of Agreement") with Rio
Tinto on a funding plan to complete the construction of Lift 1 of
the Oyu Tolgoi underground project ("Oyu Tolgoi") in
Mongolia.
The Hugo North Extension deposit on the Entrée/Oyu Tolgoi JV
Property is an integral part of the Lift 1 mine plan.
Stephen Scott, Entrée's President
& CEO commented, "This is great news for all Oyu Tolgoi project
stakeholders, including Entrée. Ensuring remaining necessary
capital funding is in place eliminates a key Oyu Tolgoi underground
project execution risk. Achievement of this very important
milestone moves the project one step closer to completion."
Highlights of the Heads of Agreement include:
- Addresses the estimated remaining funding required of
approximately US$2.3
billion1 and replaces the previous non-binding
Memorandum of Understanding entered on September 2, 2020.
- Pursue re-profiling of existing project debt to better align
with the revised mine plan, project timing and cash flows to reduce
the currently projected funding requirements of Oyu Tolgoi LLC
("OTLLC") by up to US$1.4
billion.
- Seek to raise up to US$500
million in senior supplemental debt ("SSD") under the
existing project financing arrangements from selected international
financial institutions.
- Rio Tinto is committed to address any potential shortfalls from
the re-profiling and additional SSD of up to US$750 million by providing a senior co-lending
facility (the "Co-Lending Facility") on the same terms as
OTLLC's project financing.
- Turquoise Hill has committed to complete an equity offering of
common shares for up to US$500
million in the form of, and at Turquoise Hill's discretion,
either (i) a rights offering of common shares or (ii) a public
offering or private placement of common shares, in either case
sufficient to satisfy any remaining funding shortfall of up to
US$500 million within six months of
the Co-Lending Facility becoming available.
- The Heads of Agreement is subject to securing approval by OTLLC
and any required support from the Government of Mongolia.
1 The
estimated remaining funding requirement is based on the terms of
the Heads of Agreement and current anticipated copper prices, among
other factors, and does not include funding, if any, which may
become required for a power plant.
|
Oyu Tolgoi includes two separate land holdings: the Oyu Tolgoi
mining licence, which is held by Entrée's joint venture partner,
OTLLC, and the Entrée/Oyu Tolgoi joint venture property
("Entrée/Oyu Tolgoi JV Property"), which is a partnership
between Entrée and OTLLC.
ABOUT ENTRÉE RESOURCES LTD.
Entrée Resources
Ltd. is a well-funded Canadian mining company with a unique carried
joint venture interest on a significant portion of one of the
world's largest copper-gold projects – the Oyu Tolgoi project in
Mongolia. Entrée has a 20% or 30% carried participating
interest in the Entrée/Oyu Tolgoi JV, depending on the depth of
mineralization. Sandstorm, Rio Tinto and Turquoise Hill are major
shareholders of Entrée, holding approximately 23%, 9% and 8% of the
shares of the Company, respectively. More information about
Entrée can be found at www.EntreeResourcesLtd.com.
This News Release contains forward-looking statements within
the meaning of the United States Private Securities Litigation
Reform Act of 1995 and forward-looking information within the
meaning of applicable Canadian securities laws with
respect to corporate strategies and plans; requirements for
additional capital; uses of funds and projected expenditures; the
expectations set out in OTLLC's 2020 Oyu Tolgoi Feasibility Study;
timing and status of Oyu Tolgoi underground development; the mine
design for Hugo North Lift 1 and the related cost and production
schedule implications; future commodity prices; estimates of
capital and operating costs, mill throughput, cash flows and mine
life; capital, financing and project development risk; the
potential outcome of discussions between the Government of
Mongolia, Rio Tinto, OTLLC and
Turquoise Hill on a range of issues; anticipated business
activities; and future financial performance.
In certain cases, forward-looking statements and information
can be identified by words such as "plans", "expects" or "does not
expect", "is expected", "budgeted", "scheduled", "estimates",
"forecasts", "intends", "anticipates", or "does not anticipate" or
"believes" or variations of such words and phrases or statements
that certain actions, events or results "may", "could", "would",
"might", "will be taken", "occur" or "be achieved". While the
Company has based these forward-looking statements on its
expectations about future events as at the date that such
statements were prepared, the statements are not a guarantee of
Entrée's future performance and are based on numerous assumptions
regarding present and future business strategies, the correct
interpretation of agreements, laws and regulations, local and
global economic conditions and negotiations and the environment in
which Entrée will operate in the future, including commodity
prices, projected grades, projected dilution, anticipated capital
and operating costs, anticipated future production and cash flows,
the anticipated location of certain infrastructure and sequence of
mining within and across panel boundaries, the construction and
continued development of the Oyu Tolgoi underground mine and the
status of Entrée's relationship and interaction with the Government
of Mongolia, OTLLC, Rio Tinto and
Turquoise Hill. With respect to the construction and continued
development of the Oyu Tolgoi underground mine, important risks,
uncertainties and factors which could cause actual results to
differ materially from future results expressed or implied by such
forward-looking statements and information include, amongst others,
the timing and cost of the construction and expansion of mining and
processing facilities; the timing and availability of a long term
domestic power source for Oyu Tolgoi (or the availability of
financing for OTLLC or the Government of Mongolia to construct such a source); the
willingness of third parties to extend existing power arrangements;
the potential impact of COVID-19, including any restrictions
imposed by health and governmental authorities relating thereto;
the ability of OTLLC to secure and draw down on the supplemental
debt under the Oyu Tolgoi project finance facility and the
availability of additional financing on terms reasonably acceptable
to OTLLC, Turquoise Hill and Rio Tinto to further develop Oyu
Tolgoi; the impact of changes in, changes in interpretation to or
changes in enforcement of, laws, regulations and government
practises in Mongolia; delays, and
the costs which would result from delays, in the development of the
underground mine; the status of the relationship and interaction
between OTLLC, Rio Tinto, Turquoise Hill and the Government of
Mongolia on the continued
operation and development of Oyu Tolgoi, future funding plans and
requirements and OTLLC internal governance (including the outcome
of any such interactions or discussions); the willingness and
ability of the parties to the Oyu Tolgoi Underground Mine
Development and Financing Plan to amend or replace the agreement;
the nature and quantum of the current and projected economic
benefits to Mongolia resulting
from the continued operation of Oyu Tolgoi; the anticipated
location of certain infrastructure and sequence of mining within
and across panel boundaries; projected commodity prices and their
market demand; and production estimates and the anticipated yearly
production of copper, gold and silver at the Oyu Tolgoi underground
mine.
Other risks, uncertainties and factors which could cause
actual results, performance or achievements of Entrée to differ
materially from future results, performance or achievements
expressed or implied by forward-looking statements and information
include, amongst others, unanticipated costs, expenses or
liabilities; discrepancies between actual and estimated production,
mineral reserves and resources and metallurgical recoveries;
development plans for processing resources; matters relating to
proposed exploration or expansion; mining operational and
development risks, including geotechnical risks and ground
conditions; regulatory restrictions (including environmental
regulatory restrictions and liability); risks related to
international operations, including legal and political risk in
Mongolia; risks related to the
potential impact of global or national health concerns, including
the COVID-19 pandemic; risks associated with changes in the
attitudes of governments to foreign investment; risks associated
with the conduct of joint ventures; inability to upgrade Inferred
mineral resources to Indicated or Measured mineral resources;
inability to convert mineral resources to mineral reserves;
conclusions of economic evaluations; fluctuations in commodity
prices and demand; changing foreign exchange rates; the speculative
nature of mineral exploration; the global economic climate;
dilution; share price volatility; activities, actions or
assessments by Rio Tinto, Turquoise Hill or OTLLC and by government
authorities including the Government of Mongolia; the availability of funding on
reasonable terms; the impact of changes in interpretation to or
changes in enforcement of laws, regulations and government
practices, including laws, regulations and government practices
with respect to mining, foreign investment, royalties and taxation;
the terms and timing of obtaining necessary environmental and other
government approvals, consents and permits; the availability and
cost of necessary items such as water, skilled labour,
transportation and appropriate smelting and refining arrangements;
unanticipated reclamation expenses; changes to assumptions as to
the availability of electrical power, and the power rates used in
operating cost estimates and financial analyses; changes to
assumptions as to salvage values; ability to maintain the social
licence to operate; accidents, labour disputes and other risks of
the mining industry; global climate change; title disputes;
limitations on insurance coverage; competition; loss of key
employees; cyber security incidents; misjudgements in the course of
preparing forward-looking statements; as well as those
factors discussed in the Company's most recently filed
MD&A and in the Company's Annual Information Form for the
financial year ended December 31,
2020, dated March 31, 2021
filed with the Canadian Securities Administrators and available at
www.sedar.com. Although the Company has attempted to identify
important factors that could cause actual actions, events or
results to differ materially from those described in
forward-looking statements, there may be other factors that cause
actions, events or results not to be as anticipated, estimated or
intended. There can be no assurance that forward-looking statements
will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on
forward-looking statements. The Company is under no obligation to
update or alter any forward-looking statements except as required
under applicable securities laws.
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SOURCE Entrée Resources