Entrée Resources Announces Third Quarter 2017 Financial Results
ENTRÉE RESOURCES ANNOUNCES THIRD QUARTER 2017 FINANCIAL RESULTS
Vancouver, B.C., November 14, 2017 – Entrée Resources Ltd. (TSX:ETG; NYSE American :EGI – the
"Company" or "Entrée") is pleased to report its financial results for the three and nine months ended
September 30, 2017. Details of the Company’s third quarter 2017 financial results are contained in the
unaudited consolidated financial statements and management’s discussion and analysis, which are
available on the Company’s website at www.EntreeResourcesLtd.com, on SEDAR at www.sedar.com and
on EDGAR at www.sec.gov. All figures are in US dollars unless otherwise noted.
THIRD QUARTER 2017 HIGHLIGHTS
Entrée/Oyu Tolgoi JV Property
• Entrée has engaged its consultants, Amec Foster Wheeler Americas Limited ( "Amec Foster
Wheeler") to commence work on an updated National Instrument 43 -101 Technical Report (the
"Technical Report") on Entrée’s 20% participating interest in the Entrée/Oyu Tolgoi joint venture
("Entrée/Oyu Tolgoi JV ") in Mongolia. Completion of the Technical Report will be a significant
milestone for the Company as it will enable management to discuss preliminary economics for
potential future phases of the Oyu T olgoi mine, where a significant amount of the Entrée/Oyu
Tolgoi JV’s mineralization occurs, thereby helping investors to understand the underlying value of
Entrée’s flagship asset. The updated Technical Report will include:
- an updated reserve case for the first lift ("Lift 1") of the Hugo North Extension block cave on
the Entrée/Oyu Tolgoi JV property. The reserve will be based on information contained within
the 2016 Oyu Tolgoi Feasibility Study finalized in May 2016 by Entrée’s joint venture partner
Oyu Tolgoi LLC ("OTLLC"). First development production from Lift 1 on the Entrée/Oyu Tolgoi
JV property is expected in approximately 2021; and
- a Preliminary Economic Assessment of Ent rée’s interest in both Lift 2 of the Hugo North
Extension copper-gold deposit ( "Lift 2") and the Heruga copper -gold-molybdenum deposit
("Heruga").
• Entrée management visited the Oyu Tolgoi mine in early September and had an opportunity to
tour some of the main surface infrastructure, including the concentrator and tailings facilities and
to also go underground to observe some of the development work completed to date . This visit
included a review of plans with OTLLC for the immediate and medium -term future. Entrée is
pleased to report that project development, including both direct production and supporting
infrastructure, appears to be on track and is being completed to the highest safety and operating
standards.
• The development of Shaft 4, whic h is the first physical development work on the Entrée/Oyu
Tolgoi JV property, is expected to commence in 2018. Shaft 4 will provide the necessary
ventilation required to support mining of the northern part of the Hugo North deposit (including
Hugo North Extension on the Entrée/Oyu Tolgoi JV property), which is reported to contain some
- 2 -
of the highest-grade copper-gold mineralization in the entire Oyu Tolgoi project. Completion of
Shaft 4 is expected in 2021.
• As reported by Turquoise Hill Resources Ltd. ("Turquoise Hill") on November 2, 2017, production
from the Lift 1 underground mine, which starts on OTLLC’s Oyu Tolgoi mining license, remains on
track for first draw bell in mid-2020 and sustainable first production in 2021. Activities reported
in Q3 2017 include:
- Underground lateral development made good progress with approximately 1.4 equivalent
kilometres completed. Since the re -start of development in 2016, a total of 5.4 equivalent
kilometres of lateral development has been completed.
- The third development crew was deployed. Crews four and five were in training during the
quarter and are ex pected to be deployed during Q4 20 17. Als o during Q 3 20 17,
commissioning of the new 3,500 tonne per day development crusher was completed. With
the deployment of crews four and five, a step up in lateral development rates is expected to
begin in Q4 2017.
- At the end of Q3 2017, Shaft 2 sinking was at 1,249 metres and work had commenced on the
service-level excavation that has a floor at 1,256 metres. Shaft 2 sinking is expected to be
complete in 2017 at a final depth of 1,284 metres with fit out occurring over 2018. Shaft 2 is
key to future increases in lateral development activity.
- Shaft 5 sinking progressed approximately 214 metres during Q3 2017. During September, the
underground team achieved the best sinking rate for Shaft 5 since project re-start averaging
2.6 metres per day. Sinking of Shaft 5 began slower than expected due to an extended
construction re-start period and lower productivity with completion now likely in early 2018.
When completed, Shaft 5 will be dedicated to ventilation thereby increasing the capacity for
underground activiti es; however, with good early progress and continued on -plan lateral
development, the completion of Shaft 5 sinking in early 2018 is not expected to materially
impact the lateral development plan.
- Development of the convey-to-surface decline continued to progress with month-on-month
improvement resulting from the use of project -wide process optimization techniques. The
convey-to-surface system is the eventual route of the full 95,000 tonne per day underground
ore delivery system to the concentrator; however, it is not a critical path item for first draw
bell planned in mid -2020. Expected completion of the convey -to-surface system is 2022,
which will facilitate the ramp up to full production by 2027.
Corporate
• Q3 2017 net loss from continuing operations, was $0.3 million as compared to Q3 2016 ($1.0
million), a reduction of 70% from the comparative period of 2016.
• As at September 30, 2017, cash on hand was $7.7 million with a working capital balance of $7.8
million.
OUTLOOK AND STRATEGY
Entrée/Oyu Tolgoi JV Property
Amec Foster Wheeler has completed its initial data review, and has commenced work on an updated
Technical Report relating to Entrée’s 20% participating interest in the Entrée/Oyu Tolgoi JV in Mongolia.
As previously noted, the updated Technical Report will include an updated reserve case for Lift 1 of the
Hugo North Extension block cave on the Entrée/Oyu Tolgoi JV property and a Preliminary Economic
Assessment of Entrée’s interest in both Lift 2 and Heruga . The updated reserve case will be based on
- 3 -
information contained within the 2016 Oyu Tolgoi Feasibility Study finalized in May 2016 by Entrée’s joint
venture partner OTLLC. First development production from Lift 1 on the Entrée/Oyu Tolgoi JV property is
expected in approximately 2 021. The Company estimates the cost to be approximately $0.5 million to
complete and publish the report. The Technical Report is expected to be completed by January 2018.
Corporate
With the completion of the restructuring done early in the year and the commencement of the Technical
Report, the Company’s focus will be to maximize investor awareness of the impending Technical Report
and what the results of this report mean to the Company and all stakeholders, both current and potential.
Corporate costs going forward are estimated at $0.3 million per quarter, which include marketing and
compliance costs, and the Company continues to estimate total corporate co sts of between $1.6 million
and $1.8 million for the 2017 year.
QUALIFIED PERSON
Robert Cinits, P.Geo., Entrée's Vice President, Corporate Development, a Qualified Person as defined by
National Instrument 43-101, has approved the technical information in this release.
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. The Entrée/Oyu Tolgoi joint venture property includes the Hugo North Extension and Heruga
copper-gold deposits, as well as a large underexplored, highly prospective land package. Rio Tinto is
managing the construction of Lift 1 of the Hugo North underground block cave on both the Oyu Tolgoi
mining license and the Entrée/Oyu Tolgoi joint venture property. Lift 1 underground development is fully
financed. Entrée has a 20% carried participating interest in the Entrée/Oyu Tolgoi joint venture, with a
30% interest in all mineralization identified above 560 metres elevation from the Entrée/Oyu Tolgoi joint
venture property. Sandstorm Gold Ltd., Rio Tinto and Turquoise Hill Resources Ltd. are major shareholders
of Entrée, holding approximately 14%, 10% and 8% of the shares of the Company , respectively. More
information about Entrée can be found at www.EntreeResourcesLtd.com.
FURTHER INFORMATION
David Jan
Investor Relations
Entrée Resources Ltd.
Tel: 604-687-4777 | Toll Free: 1-866-368-7330
E-mail: [email protected]
This news release contains forward-looking statements within the meaning of the United States Private Securities Litig ation 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; the value and potential value of assets and the ability of Entrée to maxi mize returns to
shareholders; anticipated future production, capital and operating costs, cash flows and mine life; completion of an updated Technical Report that
includes a Preliminary Economic Assessment of Entrée’s interest in Lift 2 of the Hugo North Extension deposit and the Heruga deposit; the expected
timing of first physical development on the Entrée/Oyu Tolgoi joint venture property; the expected timing for completion of Shaft 4; the expected
timing of first development production from Lift 1 of the Hugo North Extension deposit; construction and continued development of the Oyu Tolgoi
underground mine; anticipated business activities; proposed acquisitions and dispositions of assets; and future financial performance.
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, local and global economic conditions, legal proceedings and negotiations and the environment in which the Company
will operate in the future, including the price of copper, gold and silver, and the status of the Company’s relationship and interaction with the
Government of Mongolia, Oyu Tolgoi LLC (“OTLLC”), Rio Tinto and Turquoise Hill Resources Ltd. (“Turquoise Hill”). With respect to the construction
- 4 -
and continued development of the Oyu Tolgoi underground mine, important risks, uncertainties and factors which could cause ac tual 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 power source for the Oyu
Tolgoi underground mine; the ability of OTLLC to draw down on the supplemental debt under the Oyu Tolgoi project finance facility an d the
availability of additional financing on terms reasonably acceptable to OTLLC, Turquoise Hill and Rio Tinto to further develo p Oyu Tolgoi; delays,
and the costs which would result from delays, in the development of the underground mine; projected copper, gold and silver prices and demand;
and production estimates and the anticipated yearly production of copper, gold and silver at the Oyu Tolgoi underground mine. Other uncertainties
and factors which could cause actual results to differ materially from future results 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; the size, grade and continuity of deposits not being interpreted correct ly from exploration
results; the results of preliminary test work not being indicative of the results of future test work; fluctuations in commodity prices and demand;
changing foreign exchange rates; actions by Rio Tinto, Turquoise Hill and/or OTLLC and by government authorities including th e Government of
Mongolia; the availability of funding on reasonable terms; the impact of changes in interpretation to or changes in enforceme nt 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 power, water, skilled labour, transportati on and appropriate smelting and refining arrangements; and
misjudgments in the course of preparing forward-looking statements.
In addition, there are also known and unknown risk factors which may cause the actual results, performance or achievements of the Company to
be materially different from any future results, performance or achievements expressed or implied by the forward -looking statements and
information. Such factors include, among others, risks related international operations, including legal and political risk in Mongolia; risks
associated with changes in the attitudes of governments to foreign investment; risks associated with the conduct of joint ventures; discrepancies
between actual and anticipated production, mineral reserves and resources and metallurgical recoveries; global financial cond itions; changes in
project parameters as plans continue to be refined; inabil ity to upgrade Inferred mineral resources to Indicated or Measured mineral resources;
inability to convert mineral resources to mineral reserves; conclusions of economic evaluations; future prices of copper, gol d, silver and
molybdenum; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry;
delays in obtaining government approvals, permits or licen ses or financing or in the completion of development or construction activities;
environmental risks; title disputes; limitations on insurance coverage; as well as those factors discussed in the Company’s most recently filed
Management’s Discussion and Analysis and in the Company’s Annual Information Form for the financial year ended De cember 31, 2016, dated
March 10, 2017 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 b e no assurance that
forward-looking statements will prove to be accurate, as a ctual 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.