VANCOUVER, BC, May 8, 2024
/PRNewswire/ - Entrée Resources Ltd. (TSX: ETG) (OTCQB:
ERLFF) – the "Company" or "Entrée") has
today filed its interim financial results for the first quarter
ended March 31, 2024. All numbers are
in U.S. dollars unless otherwise noted.
Q1 2024 HIGHLIGHTS
Oyu Tolgoi Underground Development Update
The Oyu Tolgoi project in Mongolia includes two separate land holdings:
the Oyu Tolgoi mining licence, which is held by Oyu Tolgoi LLC
("OTLLC") and the Entrée/Oyu Tolgoi JV Property, which is a
joint venture partnership between Entrée and OTLLC. Rio Tinto owns
66% of OTLLC and is the manager of operations at Oyu Tolgoi.
- On April 17, 2024, Rio Tinto
announced ramp up of the Oyu Tolgoi Lift 1 underground mine
continues in line with its long-term plan. Oyu Tolgoi is set to
become the world's fourth largest copper mine by 2030 with the
operation expected to deliver average mined copper production of
~500 thousand tonnes per annum between 2028 and 2036.
- OTLLC continues to see strong performance from the Lift 1
underground mine, with a total of 99 Lift 1 draw bells opened from
Panel 0 on the Oyu Tolgoi mining licence, including 13 draw bells
during the quarter ended March 31,
2024. In the first quarter 2024, OTLLC delivered 1.3 million
tonnes of ore milled from Panel 0 on the Oyu Tolgoi mining licence
at an average copper head grade of 1.67%.
- Shaft sinking continued during the first quarter 2024. At the
end of March, Shafts 3 and 4 reached 1,076 metres and 1,150 metres
below ground level, respectively. Final depths required for Shafts
3 and 4 are 1,130 metres and 1,176 metres below ground level,
respectively. Shaft 4 breakthrough (sinking completion) was
achieved in early April. Rio Tinto continues to expect both
shafts to be commissioned in the second half 2024.
- As at March 31, 2024,
construction of the conveyor to surface works was 94% complete.
Commissioning remains on track for the second half 2024.
- Construction works for the concentrator conversion remain on
schedule. Commissioning is expected to be progressively completed
from the fourth quarter 2024 through to the second quarter
2025.
- Construction of primary crusher 2 commenced in December 2023 and is due to be completed by the
end of 2025.
- OTLLC's 2023 Oyu Tolgoi Feasibility Study ("OTFS23") for
the Lift 1 underground mine has been submitted to and is under
review by applicable regulatory bodies in Mongolia. The Lift 1 underground mine
incorporates the development of three panels (Panels 0, 1, and 2).
The Hugo North Extension ("HNE") deposit on the Entrée/Oyu
Tolgoi JV Property is located at the northern portion of Panel
1.
- Drilling programs to support a Lift 2 Pre-Feasibility Study are
in progress. Mineralization from Lift 2 will be included in an
updated resource model for Hugo
North (including Hugo North Extension).
Entrée/Oyu Tolgoi JV Property
- First Lift 1 Panel 1 development work on the Shivee Tolgoi
mining licence is expected to commence in the fourth quarter 2024.
Development work will start in the southwest corner of the HNE
deposit and will establish the initial Panel 1 western ore handling
truck chute, including extraction level tipple development, the
truck chute chamber on the haulage level, and the supporting
ventilation loop with the return air level. OTLLC has advised the
Company all 2024 development will be in rock classified as waste,
which will be stockpiled separately and sampled in accordance with
OTLLC's standard sampling protocols and procedures.
- Underground and surface in-fill diamond drilling at the Hugo
North Extension deposit on the Shivee Tolgoi mining licence is
in progress. Approximately 14,128 metres of underground drilling in
25 holes and 6,840 metres of surface drilling in 4 holes is planned
for 2024. To date, approximately 4,475 metres of underground
drilling in 13 holes and approximately 1,012 metres of surface
drilling in 1 hole has been completed. The principal purpose for
the drilling is to support the Lift 2 Pre-Feasibility Study and
updated resource model for Hugo
North (including Hugo North Extension).
- OTLLC is also proposing approximately 8,785 metres of diamond
drilling in 5 surface holes on the Heruga deposit (Javhlant mining
licence) in 2024 to increase ore body knowledge and support an
Order of Magnitude Study. No drilling has been conducted on the
Heruga deposit since 2008.
- The 2024 exploration program planned for the Shivee Tolgoi
mining licence will focus on the Airstrip, Ulaan Khud South and
Ridge targets, including approximately 2,500 metres of diamond
drilling in 2 inclined holes (one at Ulaan Khud South (~1,300
metres) and the other at the Ridge target (~1,200 metres), located
midway between Ulaan Khud and Hugo North Extension) and geological
and geophysical studies. On the Javhlant mining licence, work will
be conducted on the Bumbat Ulaan target and the Heruga Trend
(Heruga South and Heruga West targets). One diamond drill hole is
planned for each of the Heruga South (~1,300 metres) and Heruga
West (~600 metres) targets as well as geological and geophysical
studies. At Bumbat Ulaan, approximately 1,200 metres of scout
reverse circulation drilling in 4 holes is planned.
Corporate
- For the Q1 2024 period, the Company's operating loss was
$1.1 million compared to $0.9 million in Q1 2023. The increase was
mainly due to legal costs for both commercial negotiations with
OTLLC and Rio Tinto and the arbitration proceedings.
- For the Q1 2024 period, the operating cash outflow before
changes in non-cash working capital items was $1.0 million compared to $0.7 million in Q1 2023.
- As at March 31, 2024, the cash
balance was $5.1 million and the
working capital balance was $4.9
million.
OUTLOOK AND STRATEGY
Entrée's primary objective is to confirm the transfer of the
Shivee Tolgoi and Javhlant mining licences from the Company's
Mongolian subsidiary to OTLLC as contemplated by the joint venture
agreement between the Company and OTLLC (the "Entrée/Oyu Tolgoi
JVA"), either in conjunction with finalization, execution, and
closing of an agreement with OTLLC to restructure or amend the
existing Entrée/Oyu Tolgoi JVA to streamline the operating
environment for both parties, or enforcement of certain provisions
of the 2004 Equity Participation and Earn-in Agreement and
Entrée/Oyu Tolgoi JVA pursuant to binding arbitration proceedings
commenced by the Company in 2022. The Company currently is
registered in Mongolia as the 100%
ultimate holder of the licences.
The commencement of arbitration proceedings followed protracted
discussions with Rio Tinto and OTLLC to confirm the transfer of the
Shivee Tolgoi and Javhlant mining licences to OTLLC. The
arbitration was commenced in Vancouver,
British Columbia under the International Commercial
Arbitration Act (British
Columbia). A three-member Tribunal has been appointed and
the first arbitration hearing took place in Vancouver on April
8 and 9, 2024.
Notwithstanding the ongoing arbitration proceedings, the Company
remains committed to achieving a commercial resolution with Rio
Tinto and OTLLC. Any definitive agreement reached between the
Company and OTLLC to restructure or amend the existing Entrée/Oyu
Tolgoi JVA would be subject to Toronto Stock Exchange acceptance
and the requirements of Multilateral Instrument 61-101 –
Protection of Minority Security Holders in Special
Transactions applicable to a related party transaction. There
are no assurances that a definitive agreement will be finalized and
executed, or if finalized and executed, that the transaction would
close.
The Company has also been in discussions with Erdenes Oyu Tolgoi
LLC (the State-owned company that holds the Government's 34%
interest in OTLLC) regarding the potential for the Government of
Mongolia and Erdenes Oyu Tolgoi
LLC to conclude an agreement with the Company for the State to
share in 34% of the economic benefit of the Company's interest in
the Entrée/Oyu Tolgoi JV Property. The Minerals Law of Mongolia provides the State may share in up to
34% of the economic benefit derived from exploitation of a mineral
deposit of strategic importance where proven reserves were
determined through funding sources other than the State budget. The
Hugo North Extension copper-gold deposit on the Shivee Tolgoi
mining licence and the Heruga copper-gold-molybdenum deposit on the
Javhlant mining licence are mineral deposits of strategic
importance.
The Company's interim financial statements and Management's
Discussion and Analysis ("MD&A") for the first quarter
ended March 31, 2024 are available on
the Company's website at www.EntreeResourcesLtd.com, on SEDAR+ at
www.sedarplus.ca, and on OTC Markets at www.otcmarkets.com.
QUALIFIED PERSON
Robert Cinits, P.Geo., consultant to Entrée and the Company's
former Vice President, Corporate Development, and a Qualified
Person as defined by National Instrument 43-101 – Standards of
Disclosure for Mineral Projects, has approved the technical
information in this release. For further information on the
Entrée/Oyu Tolgoi JV Property, see the Company's Technical Report,
titled "Entrée/Oyu Tolgoi Joint Venture Project, Mongolia, NI 43-101 Technical Report", with an
effective date of October 8, 2021,
available on the Company's website at www.EntreeResourcesLtd.com,
and on SEDAR+ at www.sedarplus.ca.
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 joint
venture, depending on the depth of mineralization. Horizon Copper
Corp. and Rio Tinto are major shareholders of Entrée, beneficially
holding approximately 24% and 16% of the shares of the Company,
respectively. More information about Entrée can be found at
www.EntreeResourcesLtd.com.
This News Release contains 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; arbitration proceedings,
including the potential benefits, timing and outcome of arbitration
proceedings; the Company's plans to continue discussions with OTLLC
and Rio Tinto regarding a potential restructuring or amendment of
the Entrée/Oyu Tolgoi JVA; the Company's plans to continue
discussions with Erdenes Oyu Tolgoi LLC regarding the potential for
the Government of Mongolia and
Erdenes Oyu Tolgoi LLC to conclude an agreement with the Company
for the State to share in 34% of the economic benefit of the
Company's interest in the Entrée/Oyu Tolgoi JV Property; the
Company's ability to transfer the Shivee Tolgoi and Javhlant mining
licences to OTLLC either in conjunction with finalization and
execution of a restructured or amended agreement with OTLLC, or
enforcement of certain provisions of the Earn-in Agreement and
Entrée/Oyu Tolgoi JVA pursuant to binding arbitration proceedings;
the potential for Entrée to be included in or otherwise receive the
benefits of the Oyu Tolgoi Investment Agreement; timing and status
of Oyu Tolgoi underground development; the expected timing of first
development work on the Shivee Tolgoi mining licence and first
production from Lift 1 Panel 1; the nature of the ongoing
relationship and interaction between OTLLC and Rio Tinto and the
Government of Mongolia and Erdenes
Oyu Tolgoi LLC with respect to the continued operation and
development of Oyu Tolgoi; the technical studies for Lift 1 Panels
1 and 2, OTFS23, the Lift 2 Pre-Feasibility Study, the Heruga Order
of Magnitude Study, and the updated resource model for Hugo North (including Hugo North Extension)
Lifts 1 and 2 and the possible outcomes, content and timing
thereof; the timing and progress of the sinking of Shafts 3 and 4;
timing and amount of production from Lifts 1 and 2 of the
Entrée/Oyu Tolgoi JV Property, potential production delays and the
impact of any delays on the Company's cash flows, expected copper,
gold and silver grades, liquidity, funding requirements and
planning; future commodity prices; the estimation of mineral
reserves and resources; projected mining and process recovery
rates; estimates of capital and operating costs, mill and
concentrator throughput, cash flows and mine life; capital,
financing and project development risk; mining dilution;
discussions with the Government of Mongolia, Erdenes Oyu Tolgoi LLC, Rio Tinto,
and OTLLC on a range of issues including Entrée's interest in the
Entrée/Oyu Tolgoi JV Property, the Shivee Tolgoi and Javhlant
mining licences and certain material agreements; potential actions
by the Government of Mongolia with
respect to the Shivee Tolgoi and Javhlant mining licences and
Entrée's interest in the Entrée/Oyu Tolgoi JV Property; potential
size of a mineralized zone; potential expansion of mineralization;
potential discovery of new mineralized zones; potential
metallurgical recoveries and grades; plans for future exploration
and/or development programs and budgets; permitting time lines;
anticipated business activities; proposed acquisitions and
dispositions of assets; and future financial performance.
In certain cases, forward-looking 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 this forward-looking information on its
expectations about future events as at the date that such
information was prepared, the information is not a guarantee of
Entrée's future performance and is based on numerous assumptions
regarding present and future business strategies; the correct
interpretation of agreements, laws and regulations; the
commencement and conclusion of arbitration proceedings, including
the potential benefits, timing and outcome of arbitration
proceedings; the potential benefits, timing and outcome of
discussions with Erdenes Oyu Tolgoi LLC, OTLLC, and Rio Tinto; the
future ownership of the Shivee Tolgoi and Javhlant mining licences;
that the Company will continue to have timely access to detailed
technical, financial, and operational information about the
Entrée/Oyu Tolgoi JV Property, the Oyu Tolgoi project, and
government relations to enable the Company to properly assess, act
on, and disclose material risks and opportunities as they arise;
local and global economic conditions and the environment in which
Entrée will operate in the future, including commodity prices,
projected grades, projected dilution, anticipated capital and
operating costs, including inflationary pressures thereon resulting
in cost escalation, and 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; the status of Entrée's relationship and
interaction with the Government of Mongolia, Erdenes Oyu Tolgoi LLC, OTLLC, and
Rio Tinto; and the Company's ability to operate sustainably, its
community relations, and its social licence to operate.
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
information include, amongst others, the current economic climate
and the significant volatility, uncertainty and disruption arising
in connection with the Ukraine
conflict; the nature of the ongoing relationship and interaction
between OTLLC, Rio Tinto, Erdenes Oyu Tolgoi LLC and the Government
of Mongolia with respect to the
continued operation and development of Oyu Tolgoi along with the
implementation of Resolution 103; the continuation of undercutting
in accordance with the mine plans and designs in OTFS23; applicable
taxes and royalty rates; the amount of any future funding gap to
complete the Oyu Tolgoi project and the availability and amount of
potential sources of additional funding; the timing and cost of the
construction and expansion of mining and processing facilities;
inflationary pressures on prices for critical supplies for Oyu
Tolgoi resulting in cost escalation; the ability of OTLLC or the
Government of Mongolia to deliver
a domestic power source for Oyu Tolgoi (or the availability of
financing for OTLLC or the Government of Mongolia to construct such a source) within
the required contractual timeframe; sources of interim power;
OTLLC's ability to operate sustainably, its community relations,
and its social licence to operate in Mongolia; 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
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 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; risks associated with
changes in the attitudes of governments to foreign investment;
risks associated with the conduct of joint ventures, including the
ability to access detailed technical, financial and operational
information; risks related to the Company's significant
shareholders, and whether they will exercise their rights or act in
a manner that is consistent with the best interests of the Company
and its other shareholders; 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 or
OTLLC and by government stakeholders or authorities including
Erdenes Oyu Tolgoi LLC and 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; global conflicts;
natural disasters; the impacts of civil unrest; the impacts of the
Ukraine conflict; breaches of the
Company's policies, standards and procedures, laws or regulations;
trade tensions between the world's major economies; increasing
societal and investor expectations, in particular with regard to
environmental, social and governance considerations; the impacts of
technological advancements; title disputes; limitations on
insurance coverage; competition; loss of key employees; cyber
security incidents; misjudgements in the course of preparing
forward-looking information; and 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, 2023, dated March 8, 2024 filed with the Canadian Securities
Administrators and available at www.sedarplus.ca. 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 information, 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 information will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such information. Accordingly, readers should not
place undue reliance on forward-looking information. The Company is
under no obligation to update or alter any forward-looking
information except as required under applicable securities
laws.
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SOURCE Entrée Resources
