Entrée Resources Announces Second Quarter 2024 Results
Entrée Resources Announces Second Quarter 2024 Results
VANCOUVER, British Columbia, Aug. 07, 2024 -- Entrée Resources Ltd. (TSX:ETG; OTCQB:ERLFF – the “ Company” or
“Entrée”) has today filed its interim financial results for the second quarter ended June 30, 2024. All numbers are in U.S.
dollars unless otherwise noted.
Q2 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 July 15, 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 114 Lift 1 draw bells
opened from Panel 0 on the Oyu Tolgoi mining licence, including 14 draw bells during the quarter ended June 30, 2024.
In the second quarter 2024, OTLLC delivered 1.5 million tonnes of ore milled from Panel 0 on the Oyu Tolgoi mining
licence at an average copper head grade of 2.02%.
• The sinking of ventilation Shafts 3 and 4 was completed in April with the shafts reaching their final depths of 1,130
metres and 1,176 metres below ground level, respectively. Rio Tinto continues to expect both shafts to be
commissioned in the second half 2024.
• As at June 30, 2024, construction of the conveyor to surface works was 97% 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 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 HNE 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. As of June 30, 2024, approximately 3,309 metres of underground drilling in 15 holes and
approximately 2,311 metres of surface drilling in 3 holes has been completed on the Shivee Tolgoi mining licence. The
principal purpose for the drilling is to support the Lift 2 Pre-Feasibility Study and updated resource model for Hugo North
(including HNE).
• 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 2012.
• The 2024 exploration program 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. 2024 work on the Javhlant mining licence is focussed on the
Bumbat Ulaan target and the Heruga Trend (Heruga South and Heruga West targets) and will include diamond drilling
and geological and geophysical studies. As of June 30, 2024, one diamond drill hole totalling 1,500 metres has been
completed at the Heruga South target and one diamond drill hole totalling 640 metres has been completed at the
Heruga West target. At Bumbat Ulaan, approximately 1,200 metres of scout reverse circulation drilling in 4 holes is
planned.
• On July 18, 2024, the Company announced additional diamond drill hole results from the 2022 and 2023 drilling
programs over the HNE deposit.
Corporate
• For the three and six month periods ended June 30, 2024, the Company’s operating loss was $0.9 million and $2.0
million, respectively, compared to $1.0 million and $1.9 million for the comparative periods in 2023.
• For the three and six month periods ended June 30, 2024, the operating cash outflow before changes in non-cash
working capital items was $0.9 million and $1.9 million, respectively, compared to $0.9 million and $1.6 million in the
comparative periods in 2023
• As at June 30, 2024, the cash balance was $4.0 million and the working capital balance was $4.0 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. A second arbitration hearing took place in
Toronto on July 10, 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 second quarter
ended June 30, 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., 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.
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 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; the expectations set out in the 2020 Oyu Tolgoi Feasibility Study and the Technical Report
on the Company’s interest in the Entrée/Oyu Tolgoi JV Property; timing and status of Oyu Tolgoi underground development;
the expected timing of first development work on the Shivee Tolgoi mining licence and the potential for delay if the Shivee
Tolgoi mining licence cannot be transferred to OTLLC in a timely fashion; 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, the 2023 Oyu Tolgoi
Feasibility Study, 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 commissioning 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 the 2023 Oyu Tolgoi Feasibility Study; applicable taxes and royalty rates; the future
ownership of the Shivee Tolgoi and Javhlant mining licences; 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,
strategic deposits, 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.