Entrée/Oyu Tolgoi JV Property Highlights:
- Hugo North Extension Lift 1 Updated Reserve Case After-Tax
NPV(8%) of $114 million
(CAD$139 million*)
- Hugo North Extension Lift 2 Preliminary Economic Assessment
After-Tax NPV(8%) of$306 million (CAD$372 million*)
- First development production from Hugo North Extension Lift
1 expected in 2022
- Significant leverage to copper price as Reserve Case and
Preliminary Economic Assessment use $3.25/lb copper
(All figures are in US dollars unless
otherwise noted; *converted at USD:CAD exchange rate of
1.215)
VANCOUVER, BC, June 15, 2021 /PRNewswire/ - Entrée Resources
Ltd. (TSX: ETG) (OTCQB: ERLFF) (the "Company" or
"Entrée") is pleased to announce the results of an updated
Feasibility Study that was completed on its interest in the
Entrée/Oyu Tolgoi joint venture property (the "Entrée/Oyu Tolgoi
JV Property"). Entrée has a 20% or 30% participating interest
(depending on the depth of mineralization) in the joint venture
(the "Entrée/Oyu Tolgoi JV") with Oyu Tolgoi LLC
("OTLLC") holding the remaining 80% or 70% interest. The
Entrée/Oyu Tolgoi JV Property comprises a significant portion of
the long-life, high-grade Oyu Tolgoi copper-gold mining project in
Mongolia.
Mr. Stephen Scott, Entrée's
President and CEO comments, "We are pleased to report updated
information that aligns Entrée's disclosure with that of other Oyu
Tolgoi project stakeholders on development of the first lift of the
underground mine. Even more exciting is that, based on OTLLC's 2020
Oyu Tolgoi Feasibility Study, first Lift 1 development production
on the Entrée/Oyu Tolgoi JV Property is expected to commence in
2022. What has historically seemed like a long way out is
very fast becoming a reality. Coincident with receiving first
development production, Entrée will retain 10% of the available
cash flow from the sale of its share of production until its share
of joint venture costs is repaid in accordance with the terms of
the Joint Venture Agreement**. We are also looking forward to
completion of Panel 1 optimization studies currently underway that
have potential to further improve Lift 1 economics for the
Entrée/Oyu Tolgoi JV."
The updated Feasibility Study (the "2021 Reserve Case")
is based on mineral reserves attributable to the Entrée/Oyu Tolgoi
JV from the first lift ("Lift 1") of the Hugo North
Extension deposit. Lift 1 of Hugo North (including Hugo North
Extension) is currently in development by project operator Rio
Tinto as an underground block cave with first development
production from Hugo North Extension expected in 2022. By 2030, Oyu
Tolgoi is expected to be the fourth largest copper mine in the
world. The 2021 Reserve Case aligns the Company's disclosure
with that of Turquoise Hill Resources Ltd. ("Turquoise Hill
Resources") with respect to OTLLC's 2020 Oyu Tolgoi Feasibility
Study ("OTFS20") completed on Hugo North (including Hugo
North Extension) Lift 1 (see Turquoise Hill Resources' press
release dated July 2, 2020).
Entrée is also reporting the results of a Preliminary Economic
Assessment ("2021 PEA") on a conceptual second lift
("Lift 2") of the Hugo North Extension deposit. The
2021 PEA is based on Indicated and Inferred Mineral Resources from
Lift 2, as the second potential phase of development and mining on
the Hugo North Extension deposit. Lift 2 is directly below
Lift 1 (see Figure 2 below). There is no overlap in the
Mineral Reserves from the 2021 Reserve Case and the Mineral
Resources from the 2021 PEA. Development and capital
decisions will be required for the eventual development of Lift 2
once production commences at Hugo North Extension Lift 1.
LOM highlights of the production and financial results from the
2021 Reserve Case and the 2021 PEA are summarized in
Table 1.
Table 1. Summary LOM Production and Financial
Results – Entrée/Oyu Tolgoi JV Property
Entrée/Oyu Tolgoi
JV Property
|
Units
|
2021 Reserve
Case
|
2021
PEA
|
Attributable
Financial Results
|
|
|
|
Cash Flow,
pre-tax
|
US$M
|
381
|
1,982
|
NPV(5%),
after-tax
|
US$M
|
160
|
541
|
NPV(8%),
after-tax
|
US$M
|
114
|
306
|
NPV(10%),
after-tax
|
US$M
|
91
|
213
|
|
|
|
|
LOM Recovered
Metal
|
|
|
|
Copper
Recovered
|
Mlb
|
1,249
|
4,564
|
Gold
Recovered
|
koz
|
549
|
2,025
|
Silver
Recovered
|
koz
|
3,836
|
15,067
|
|
|
|
|
LOM Processed
Material
|
|
|
|
Probable Reserve
Feed
|
|
40 Mt @ 1.53% Cu,
0.53 g/t
Au, 3.6 g/t Ag
|
----
|
Indicated Resource
Feed
|
|
----
|
77.9 Mt @ 1.35% Cu,
0.49 g/t
Au, 3.6 g/t Ag (1.64% CuEq)
|
Inferred Resource
Feed
|
|
----
|
87.8 Mt @ 1.35% Cu,
0.49 g/t
Au, 3.6 g/t Ag (1.64% CuEq)
|
Notes:
|
- Long term metal prices used in the net
present value ("NPV") economic analyses for the 2021 Reserve Case
and the 2021 PEA are: copper $3.25/lb, gold $1,591.00/oz, silver
$21.08/oz.
- Mineral Reserves in the 2021 Reserve Case,
and Mineral Resources in the 2021 PEA mine plan are reported on a
100% basis.
- Entrée has a 20% interest in the above
processed material and recovered metal.
- The Mineral Reserves that form the basis of
the 2021 Reserve Case are from a separate portion of the Hugo North
Extension deposit than the Mineral Resources in the 2021 PEA.
- Copper equivalent ("CuEq") is calculated as
shown in the footnote to Table 11 – Entrée/Oyu Tolgoi JV Property
Mineral Resources in this press release.
- 2021 Reserve Case cash flows are discounted
to the beginning of 2021.
- 2021 PEA cash flows are discounted to the
beginning of 2027, the beginning of Hugo North Lift 2 development.
Attributable Entrée JV production begins in 2031 and ramps up to
stable production in 2043. Final Entrée JV attributable production
concludes in 2056.
- The 2021 Reserve Case and 2021 PEA are
exclusive of each other.
- Indicated and Inferred Resource average
expected run-of-mine feed grade of 1.35% copper, 0.49 g/t gold, and
3.6 g/t silver (1.64% CuEq) includes dilution and mine losses.
|
The economic analysis in the 2021 PEA is based on a conceptual
mine plan and does not have as high a level of certainty as the
2021 Reserve Case. The 2021 PEA is preliminary in nature and
includes Inferred Mineral Resources that are considered too
speculative geologically to have the economic considerations
applied to them that would enable them to be categorized as Mineral
Reserves, and there is no certainty that the 2021 PEA will be
realized. Mineral Resources are not Mineral Reserves and do not
have demonstrated economic viability.
In both the 2021 Reserve Case and the 2021 PEA, Entrée is only
reporting the production and cash flows attributable to the
Entrée/Oyu Tolgoi JV Property, not production and cash flows for
other Oyu Tolgoi project areas owned 100% by OTLLC. The production
and cash flows from the 2021 Reserve Case and the 2021 PEA are from
separate parts of the Hugo North Extension deposit and there is no
overlap of the mineralization.
Both the 2021 Reserve Case and the 2021 PEA are based on
information supplied by OTLLC or reported within OTFS20. OTFS20
discusses the mine plan for Lift 1 of the Hugo North (including
Hugo North Extension) underground block cave on both the Oyu Tolgoi
mining licence and the Entrée/Oyu Tolgoi JV Property. Rio Tinto is
managing the construction and eventual operation of Lift 1, as well
as any future development of Lift 2 or other deposits on the
Entrée/Oyu Tolgoi JV Property.
The results of the 2021 Reserve Case and the 2021 PEA will be
summarized by Wood Canada Limited ("Wood") in a National
Instrument ("NI") 43-101 Technical Report that will be filed
under the Company's SEDAR profile at www.sedar.com within
45 days of this news release and on the Company's website.
The Lift 1 mine design presented in OTFS20 and the 2021 Reserve
Case are subject to future refinements and updates. Hugo North
(including Hugo North Extension) Lift 1 surface and underground
drilling programs are ongoing to support the evaluation by OTLLC of
different design and sequencing options for Panels 1 and 2 as part
of OTLLC's planned Pre-Feasibility and Feasibility level work. The
Hugo North Extension deposit is located at the northern portion of
Panel 1.
Neither OTFS20 nor the results of the 2021 Reserve Case and 2021
PEA reflect the impacts of the COVID-19 pandemic, which are ongoing
and continue to be assessed by OTLLC. In particular, progress on
Shafts 3 and 4 has been delayed and the overall impact of these
delays is under review by OTLLC. Shafts 3 and 4 are required to
support production from Panels 1 and 2 during ramp up to 95,000
tonnes per day ("tpd").
On December 18, 2020, Turquoise
Hill Resources announced that a Definitive Estimate that refines
the analysis in OTFS20 and broadly confirms the economics and
assumptions presented therein has been completed and delivered to
OTLLC by Rio Tinto. The Company has not received a copy of the
Definitive Estimate and it was not reviewed or relied upon in the
preparation of the 2021 Reserve Case or the 2021 PEA.
According to Turquoise Hill Resources, the Definitive
Estimate assumes COVID-19 related restrictions in 2021 that are no
more stringent than those experienced in September 2020. Should COVID-19 constraints
continue beyond 2021, should the COVID-19 situation escalate in
2021 leading to additional restrictions, or should COVID-19 related
restrictions or other non-technical criteria result in a delay in
commencement of the undercut, which is currently scheduled for
mid-2021, the development costs and schedule in OTFS20 and the 2021
Reserve Case and 2021 PEA could be negatively impacted.
Entrée/Oyu Tolgoi JV Property
The Entrée/Oyu Tolgoi JV Property comprises a significant
portion of the overall Oyu Tolgoi project area, including the Hugo
North Extension copper-gold deposit on the Shivee Tolgoi mining
licence, the Heruga copper-gold-molybdenum deposit on the Javhlant
mining licence and a large prospective land package with numerous
priority exploration targets (Figure 1). Entrée has a 20%
participating interest in the currently defined mineralization
within the Entrée/Oyu Tolgoi JV with OTLLC holding the remaining
80% interest. Entrée has a 30% participating interest in any
new mineralization that could be discovered between surface and a
depth of 560 metres ("m"). OTLLC has a 100% interest in
other Oyu Tolgoi project areas, including the Oyut open pit, which
is currently in production, and the Hugo North and Hugo South deposits on the Oyu Tolgoi mining
licence.
Notes: Entrée
has a 20% carried interest in the Hugo North Extension and Heruga
mineral resources. Shivee West is subject to a License Fees
Agreement between Entrée and OTLLC and may ultimately be included
in the Entrée/Oyu Tolgoi JV Property. Outlines of mineral
deposits are projected to surface.
|
- The Hugo North Extension deposit (Lift 1 and Lift
2)
-
- Lift 1 is the upper portion of the Hugo North Extension
copper-gold porphyry deposit and forms the basis of the 2021
Reserve Case. It is the northern portion of the Hugo North Lift 1
underground block cave mine plan that is currently in development
on the Oyu Tolgoi mining licence. Starting in 2022, initial
development production is scheduled to start on the Entrée/Oyu
Tolgoi JV Property. Hugo North Extension Lift 1 Probable Mineral
Reserves include 40 million tonnes ("Mt") grading 1.53%
copper, 0.53 grams per tonne ("g/t") gold, and 3.6 g/t
silver.
- Lift 2 is directly below and extends north beyond Lift 1
and is the next potential phase of underground mining on the
Entrée/Oyu Tolgoi JV Property, once Lift 1 mining is complete.
Mineral resources from Lift 2 form the basis of the 2021 PEA mine
plan, which include: 78 Mt (Indicated) and 88 Mt (Inferred). The
average expected run-of-mine feed grade of 1.35% copper, 0.49 g/t
gold, and 3.6 g/t silver (1.64% CuEq) includes dilution and mine
losses.
- The Heruga copper-gold-molybdenum deposit is at the
south end of the Oyu Tolgoi trend of porphyry deposits.
Approximately 93% of the Heruga deposit occurs on the Entrée/Oyu
Tolgoi JV Property where Inferred Mineral Resources include,
1,448 Mt grading 0.41% copper, 0.40
g/t gold, 1.5 g/t silver and 120 parts per million ("ppm")
molybdenum (0.68% CuEq*). While Heruga is not included in the 2021
PEA, it provides opportunity for future exploration and potential
development.
*CuEq for Hugo
North Extension and Heruga is calculated as shown in the footnote
to Table 11 in this press release.
|
Figure 2 shows a north-south oriented, west-looking cross
section through the 12.4 kilometre ("km") trend of porphyry
deposits that comprise the Oyu Tolgoi project. The Entrée/Oyu
Tolgoi JV Property is to the right (north) and left (south) of the
central portion, the Oyu Tolgoi mining licence, held 100% by
OTLLC. The mineralization that is included in the mine plans
for the 2021 Reserve Case and the 2021 PEA, is shown on Figure
2.
Note: The
infrastructure shown for Heruga is conceptual and was used only to
assess reasonable prospects for eventual economic
extraction.
|
Below are some of the key financial assumptions and outputs from
the 2021 Reserve Case and the 2021 PEA. All figures shown for
both cases are reported on a 100% Entrée/Oyu Tolgoi JV basis,
unless otherwise noted. Both cases assume long term metal
prices of $3.25/lb copper,
$1,591/oz gold, and $21.08/oz silver.
2021 Reserve Case Outputs:
- Entrée/Oyu Tolgoi JV Property development production from Hugo
North Extension Lift 1 scheduled to start in 2022 with the first
draw bell in 2026, peak production in 2034, and final production in
2038
- 17-year Lift 1 mine life ("LOM") production (includes
4-years development production followed by 13-years block cave
production; Figure 3)
- Maximum production rate of approximately 25,000 tpd, which is
blended with production from OTLLC's Oyut open pit deposit and Hugo
North deposit to supply a maximum mill throughput rate of 125,000
tpd
- Total recovered metal over the LOM of Hugo North Extension Lift
1: 1,249,000 lbs copper, 549,000 oz gold, 3,836,000 oz silver
- Total direct development and sustaining capital expenditures of
approximately $275.7 million
($55.1 million attributable to
Entrée)
- Entrée LOM average cash cost $1.74/lb payable copper
- Entrée LOM average cash costs after credits ("C1")
$0.85/lb payable copper
- Entrée LOM average all-in sustaining costs ("AISC")
$1.36/lb payable copper
Note: Year 2
represents approximately 2022.
|
2021 PEA Outputs:
- Entrée/Oyu Tolgoi JV Property development production from Hugo
North Extension Lift 2 scheduled to start in approximately 2034
with the first draw bell in 2038, peak production in 2047 and final
production in 2055
- 22-year Lift 2 mine life (4-years development production and
18-years block cave production; Figure 4)
- Maximum production rate of approximately 40,500 tpd, which is
blended with production from OTLLC's Oyut open pit deposit and Hugo
North deposit to supply a maximum mill throughput rate of 125,000
tpd
- Total metal production over the LOM of Hugo North Extension
Lift 2: 4,564,000 lbs copper, 2,025,000 oz gold, 15,067,000 oz
silver
- Total direct development and sustaining capital expenditures of
approximately $1,589.6 million
($319.7 million attributable to
Entrée)
- Entrée LOM average cash cost $1.10/lb payable copper
- Entrée LOM average C1 $0.30/lb
payable copper
- Entrée LOM average AISC $0.92/lb
payable copper
Note: Year 1
represents approximately 2021.
|
The mineral deposits on the Entrée/Oyu Tolgoi JV Property will
be developed, operated and processed by Rio Tinto on behalf of
OTLLC, the manager of the Entrée/Oyu Tolgoi JV.
Note, the 2021 Reserve Case and the 2021 PEA are mutually
exclusive; if the 2021 Reserve Case is developed and brought into
production, the mineralization from Hugo North Extension Lift 2 is
not sterilized or reduced in tonnage or grades. In addition, the
Heruga deposit, which is not included in either the 2021 Reserve
Case or the 2021 PEA, provides a great deal of future potential and
with further exploration and development could become a completely
standalone underground operation, independent of other Oyu Tolgoi
project underground development, and provide considerable
flexibility for mine planning and development.
Processing and Metallurgy
Various phases of metallurgical testing have been completed on
samples of drill core from Hugo North Extension and Heruga.
For Hugo North Extension this work has consisted of mineralogical
characterization, grindability testing, and batch and locked cycle
flotation testing. Locked cycle flotation testing has
demonstrated that a conventional flotation flow sheet with moderate
grinds, two stages of cleaning, and low reagent additions are able
to generate a saleable copper concentrate, with levels of potential
penalty elements identified that can be managed through blending or
occasional penalty charges. Payable by-product levels of gold
and silver are present in the copper concentrates.
Metallurgical predictions for the recovery of copper, gold and
silver from Hugo North Extension Lift 1 are based on formulas
developed by OTLLC for each element and for each of five defined
metallurgical domains. The formulas for copper, gold and silver are
based on mill head grades and by applying several other
parameters. Average copper, gold and silver recoveries over
the life of the 2021 Reserve Case and the 2021 PEA are shown in
Table 2.
New equations for predicting copper grades in concentrate were
also developed by OTTLC for Hugo North Extension Lift 1 and 2
mineralization types. Average copper, gold and silver grades
in the copper concentrate for both Lift 1 and Lift 2 are summarized
in Table 2.
In addition, copper, gold and silver recoveries and respective
grades in the copper concentrate for Heruga mineralization,
previously reported on January 15,
2018 is provided in Table 2.
Table 2. Summary of Entrée/Oyu Tolgoi JV Property
Metallurgical Results
Deposit
|
Copper Concentrate
Grades
|
Recovery
(%)
|
|
Cu
(%)
|
Au
(g/t)
|
Ag
(g/t)
|
Cu
|
Au
|
Ag
|
HNE1 - Lift 1 (2021 Reserve
Case)
|
33.4
|
10.32
|
71.6
|
92.5
|
81.0
|
82.7
|
HNE1 -
Lift 2 (2021 PEA)
|
34.1
|
10.39
|
77.3
|
92.3
|
77.6
|
77.8
|
Heruga –
Resource
|
25
|
24
|
87
|
86.2
|
78.6
|
81.9
|
1HNE =
Hugo North Extension.
|
The process plant will be fed by a mix of mineralization from
the Entrée/Oyu Togoi JV Property and from other Oyu Tolgoi project
deposits and will consist of conventional SAG mill / ball
mill / grinding circuit (SABC) followed by
flotation. A fifth ball mill will be added to the current
plant to achieve a finer primary grind P80 of
150–160 µm for mineralization from Hugo North and Hugo
North Extension. The additional ball mill, together with additional
flotation, regrind, cleaning and concentrate handling capacity,
will provide a maximum rated plant capacity of 42.6 Mt/a (124.8
kt/d) during the period when Hugo North Extension ores are to be
processed. Copper concentrate will be bagged on site and
trucked to a smelter in China.
2021 RESERVE CASE
2021 Reserve Case Mining Methods
Underground mining on the Entrée/Oyu Tolgoi JV Property is
planned to be by large-scale panel caving, which is a variation of
block caving. The size, geotechnical characteristics and
depth of mineralization at the deposits on the Entrée/Oyu Tolgoi JV
Property make block caving the best suited mining method, and
although the method has large, early capital investment
requirements, it is highly productive and has low operating
costs.
The overall Hugo North and Hugo North Extension mine design in
OTFS20 for Lift 1 consists of 211 km of lateral development,
five shafts (for access for mining personnel and equipment,
for production, and for intake and exhaust ventilation) and
a decline tunnel from surface. None of this infrastructure
occurs on the Entrée/Oyu Tolgoi JV Property, except for
approximately 15.4 km of lateral underground development.
The caved material will primarily be transported to surface
along conveyors in the decline tunnel, however a portion may be
hauled to surface through one of the shafts. The underground
mine will operate at a nominal 95 ktpd, which will be a blend of
mineralization from other Oyu Tolgoi project deposits with
mineralization from the Entrée/Oyu Tolgoi JV Property at rates
averaging approximately 6,404 tpd over the life of the 2021 Reserve
Case (note this average feed production rate includes the years of
low-tonnage development production for Lift 1).
2021 Reserve Case Capital and Operating Costs
Under the terms of the Entrée/Oyu Tolgoi JV, OTLLC is
responsible for 80% of all costs incurred on the Entrée/Oyu Tolgoi
JV Property for the benefit of the Entrée/Oyu Tolgoi JV,
including capital expenditures, and Entrée is responsible for the
remaining 20%. In accordance with the terms of the Entrée/Oyu
Tolgoi JV, Entrée has elected to have OTLLC debt finance Entrée's
share of costs for approved programs and budgets, with interest
accruing at OTLLC's actual cost of capital or prime +2%, whichever
is less, at the date of the advance. Debt repayment may be made in
whole or in part from (and only from) 90% of monthly available cash
flow arising from the sale of Entrée's share of products. Available
cash flow means all net proceeds of sale of Entrée's share of
products in a month less Entrée's share of costs of Entrée/Oyu
Tolgoi JV activities for the month that are operating costs
under Canadian generally-accepted accounting principles.
The following is a description of how Entrée recognizes its
share of Oyu Tolgoi project capital costs, specifically, the timing
of recognition under the terms of the Entrée/Oyu Tolgoi JV and
generally accepted accounting principles.
Under the terms of the Entrée/Oyu Tolgoi JV, any mill, smelter
and other processing facilities and related infrastructure will be
owned exclusively by OTLLC and not by Entrée. Mill feed from
the Entrée/Oyu Tolgoi JV Property will be transported to the
concentrator and processed at cost (using industry standards for
calculation of cost including an amortization of capital
costs). Underground infrastructure on the Oyu Tolgoi mining
licence is also owned exclusively by OTLLC, although the Entrée/Oyu
Tolgoi JV will eventually share usage once underground development
crosses onto the Entrée/Oyu Tolgoi JV Property. As a result of
this, Entrée recognizes those capital costs incurred by OTLLC on
the Oyu Tolgoi mining licence as an amortization charge for capital
costs that will be calculated in accordance with Canadian generally
accepted accounting principles determined yearly based on the
estimated tonnes of concentrate produced for Entrée's account
during that year relative to the estimated total life-of-mine
concentrate to be produced (for processing facilities and related
infrastructure), or the estimated total life-of-mine tonnes to be
milled from the relevant deposit(s) (in the case of underground
infrastructure). The charge is made to Entrée's operating account
when the Entrée/Oyu Tolgoi JV mine production is actually
milled.
For direct capital cost expenditures on the Entrée/Oyu Tolgoi JV
Property, Entrée will recognize its proportionate share of costs at
the time of actual expenditure.
The capital and operating costs in the 2021 Reserve Case are
based on estimates prepared for OTFS20.
A summary of the amortization charges for capital costs incurred
by OTLLC on the Oyu Tolgoi mining licence for the 2021 Reserve Case
is shown in Table 3. A summary of the Entrée/Oyu Tolgoi JV capital
expenditures, including expansion and sustaining capital for the
2021 Reserve Case is shown in Table 4. The 2021 Reserve Case
has incorporated a capital expenditure contingency of 15.1%.
The overall accuracy of the capital cost estimates is within
±20%.
Table 3. Entrée/Oyu Tolgoi JV Property – 2021 Reserve Case
Amortized Capital Costs
|
|
2021 Reserve
Case
|
|
Description
|
Unit
|
Entrée/Oyu
Tolgoi JV
|
Entrée 20%
Attributable
|
|
|
Amortization
Charges for OTLLC Capital Costs(1)(2)
|
|
|
|
|
Hugo North Lift #1 U/G
Construction
|
$ M
|
574.5
|
114.9
|
|
Infrastructure &
Central Heating Plant
|
$ M
|
58.9
|
11.8
|
|
Tailings Storage
Facility and Infrastructure Sustaining Capital
|
$ M
|
39.0
|
7.8
|
|
Concentrator
Sustaining Capital
|
$ M
|
8.0
|
1.6
|
|
Concentrator
Expansion
|
$ M
|
17.0
|
3.4
|
|
Total Facilities
Capital
|
$ M
|
697.3
|
139.5
|
|
Notes: (1) OTLLC
capital costs are inclusive of indirect costs, Mongolian custom
duties and VAT and contingency. Figures have been rounded as
required by reporting guidelines and may result in apparent
summation differences.
|
Table 4. Entrée/Oyu Tolgoi JV Property - 2021 Reserve Case
Mine Development and Sustaining Capital
|
|
2021 Reserve
Case
|
|
Description
|
Unit
|
Entrée/Oyu
Tolgoi JV
|
Entrée 20%
Attributable
|
|
|
Underground Mine
Development
|
$ M
|
275.7
|
55.1
|
|
Note: Capital costs
are inclusive of indirect costs, Mongolian custom duties and VAT
and contingency.
|
The average LOM operating costs for the Entrée/Oyu Tolgoi
JV Property 2021 Reserve Case (including amortization charges
for capital costs incurred by OTLLC on the Oyu Tolgoi mining
licence) are shown in Table 5.
Table 5. Entrée/Oyu Tolgoi JV Property - 2021 Reserve
Case Average Operating Costs
Description
|
Unit
|
2021
Reserve
Case
|
Mining
|
$/t
processed
|
8.75
|
Processing
|
$/t
processed
|
7.44
|
Infrastructure and
Other Operating
|
$/t
processed
|
2.32
|
Amortized Mining
Costs
|
$/t
processed
|
15.93
|
Amortized Process
Costs
|
$/t
processed
|
0.63
|
Amortized Tailings
Costs
|
$/t
processed
|
0.98
|
Total Refining &
Transportation Costs
|
$/t
processed
|
7.33
|
Total Operating
Expenditure
|
$/t
processed
|
43.39
|
Administration Charge
(2% during development; 2.5% during
production) and annual licence fees
|
$/t
processed
|
1.50
|
Total
|
$/t
processed
|
44.89
|
Note: Figures have
been rounded as required by reporting guidelines and may result in
apparent summation differences.
|
Mine site cash costs are shown in Table 6. Cash costs are those
costs relating to the direct operating costs of the mine site,
including mining, concentration, tailings, operational support
costs, infrastructure, smelting and refining and administration
fees. Total cash costs after credits (C1 costs) are the cash
costs less the revenue from the gold and silver by-products.
The all-in sustaining cost (AISC) is calculated according to World
Gold Council guidance. It is the C1 costs plus mineral
royalty and capital costs. AISC costs exclude income tax and
financing charges. The underground mining operating cost
estimates have incorporated a 5.6% contingency. The sustaining
capital costs includes a 7.45% contingency.
Table 6. Entrée/Oyu Tolgoi JV Property Mine Cash
and All-in Sustaining Costs for Entrée's 20% Attributable
Portion
Description
|
Unit
|
2021 Reserve
Case Average
|
Mine site cash
cost
|
$/lb payable
copper
|
1.45
|
TC/RC, royalties and
transport
|
$/lb payable
copper
|
0.28
|
Total cash costs
before credits
|
$/lb payable
copper
|
1.74
|
Gold
credits
|
$/lb payable
copper
|
(0.82)
|
Silver
credits
|
$/lb payable
copper
|
(0.07)
|
Total cash costs after
credits
|
$/lb payable
copper
|
0.85
|
Total all-in
sustaining costs after credits
|
$/lb payable
copper
|
1.36
|
Notes: TC/RC =
treatment and refining charges; Figures have been rounded as
required by reporting guidelines and may result in apparent
summation differences.
|
2021 PEA
The 2021 PEA is a second lift done at the conceptual level based
solely on Indicated and Inferred Mineral Resources from Hugo North
Extension Lift 2, directly below Lift 1 from the 2021 Reserve Case
(see Figure 2 above).
The 2021 PEA mine plan is partly based on Inferred Mineral
Resources that are considered too speculative geologically to have
the economic considerations applied to them that would enable them
to be categorized as Mineral Reserves, and there is no certainty
that the 2021 PEA based on these Mineral Resources will be
realized. Mineral Resources are not Mineral Reserves and do
not have demonstrated economic viability.
The current level of knowledge regarding Lift 2 suggests that
block/panel caving is appropriate for the deposit, similar to that
proposed for Lift 1.
The existing Hugo North Extension Lift 1 infrastructure will be
used to support the Lift 2 mine. It is anticipated that
access to the Hugo North Extension Lift 2 area will be by a decline
system from Lift 1, an extension to Shaft 4, and internal
ventilation shafts or raises to provide ventilation.
Mineralization would be crushed and conveyed to surface by a
two-leg extension to the Lift 1 incline conveyor system.
Current Hugo North Extension mine planning and optimization
indicates that the ideal elevation for Lift 2 is approximately
400 m below Lift 1 (~1,700 m below
surface).
Initial mill feed delivery from the Hugo North Lift 2 is assumed
to begin in 2027 when development commences in the Hugo North Lift
2 area on the Oyu Tolgoi mining licence. Development of Hugo
North Extension Lift 2 on the Entrée/Oyu Tolgoi JV Property is
anticipated to begin in 2031 with stable production in 2043.
The peak production from Hugo North Extension Lift 2 is expected to
be approximately 40,500 t/d in 2047, and the average life of mine
production rate (2031–2056) is planned at about 17,500 t/d.
2021 PEA Capital and Operating Costs
Capital cost and sustaining cost estimates were prepared as
separate and independent estimates by OTLLC. Wood reviewed
the estimates and accepts them as reasonable. The same
assumptions regarding the treatment of the capital and operating
expenditures and debt repayment, as described above under the 2021
Reserve Case, also apply for the 2021 PEA.
A summary of the amortization charges for capital costs incurred
by OTLLC on the Oyu Tolgoi mining licence for the 2021 PEA is shown
in Table 7. A summary of the Entrée/Oyu Tolgoi JV capital
expenditures, including expansion and sustaining capital for the
2021 PEA is shown in Table 8.
Table 7. 2021 PEA Amortized Capital
Amortization
Charges for OTLLC Capital Costs
|
Unit
|
Entrée/Oyu
Tolgoi JV
|
Entrée 20%
Attributable
|
Tailings storage
facility & infrastructure sustaining capital
|
US$ M
|
169.0
|
33.8
|
Concentrator
sustaining capital
|
US$ M
|
32.3
|
6.5
|
Total Facilities
Capital
|
US$
M
|
201.2
|
40.2
|
Notes:
Capital costs are inclusive of indirect costs,
Mongolian custom duties, VAT, and contingency. Figures have
been rounded as required by reporting guidelines and may result in
apparent summation differences.
|
Table 8. 2021 PEA Mine Development and Sustaining
Capital
Entrée/Oyu Tolgoi
JV Property Mine Development & Sustaining
Capital
|
Unit
|
Entrée/Oyu
Tolgoi JV
|
Entrée 20%
Attributable
|
Underground
Development Capital
|
US$ M
|
1,173.7
|
234.7
|
Underground
Sustaining Capital
|
US$ M
|
424.9
|
85.0
|
Total Development
& Sustaining Capital
|
US$
M
|
1,598.6
|
319.7
|
Notes:
Capital costs are inclusive of indirect costs,
Mongolian custom duties, VAT, and contingency. Figures have
been rounded as required by reporting guidelines and may result in
apparent summation differences.
|
The average LOM operating costs for the Entrée/Oyu Tolgoi
JV Property 2021 PEA (including amortization charges for
capital costs incurred by OTLLC on the Oyu Tolgoi mining licence)
are shown in Table 9.
Table 9. 2021 PEA Average Operating Costs
Description
|
Unit
|
2021
PEA
|
Mining
|
$/t
processed
|
9.21
|
Processing
|
$/t
processed
|
7.47
|
Infrastructure and
Other Operating
|
$/t
processed
|
2.32
|
Amortized Mining
Costs
|
$/t
processed
|
0.00
|
Amortized Process
Costs
|
$/t
processed
|
0.19
|
Amortized Tailings
Costs
|
$/t
processed
|
1.02
|
Total Refining &
Transportation Costs
|
$/t
processed
|
7.17
|
Total Operating
Expenditure
|
$/t
processed
|
27.40
|
Administration Charge
(2% during development; 2.5% during
production) and annual licence fees
|
$/t
processed
|
0.85
|
Total
|
$/t
processed
|
28.25
|
Note: Figures have
been rounded as required by reporting guidelines and may result in
apparent summation differences.
|
Mine site cash costs are shown in Table 10. Refer to the
text pertaining to Table 6 (2021 Reserve Case) for a description of
how these costs are calculated.
Table 10. 2021 PEA Mine Cash and All-in Sustaining
Costs for Entrée's 20% Attributable Portion
Description
|
Unit
|
2021 PEA
Average
|
Mine site cash
cost
|
$/lb payable
copper
|
0.82
|
TC/RC, royalties and
transport
|
$/lb payable
copper
|
0.28
|
Total cash costs
before credits
|
$/lb payable
copper
|
1.10
|
Gold
credits
|
$/lb payable
copper
|
(0.73)
|
Silver
credits
|
$/lb payable
copper
|
(0.07)
|
Total cash costs
after credits
|
$/lb payable
copper
|
0.30
|
Total all-in
sustaining costs after credits
|
$/lb payable
copper
|
0.92
|
Notes: TC/RC =
treatment and refining charges; Figures have been rounded as
required by reporting guidelines and may result in apparent
summation differences.
|
The cash flows in the 2021 Reserve Case and 2021 PEA are based
on information provided by OTLLC, including mining schedules and
annual capital and operating cost estimates, as well as Entrée's
interpretation of the commercial terms applicable to the Entrée/Oyu
Tolgoi JV, and certain assumptions regarding taxes and royalties.
The cash flows have not been reviewed or endorsed by OTLLC. There
can be no assurance that OTLLC or its shareholders will not
interpret certain terms or conditions, or attempt to renegotiate
some or all of the material terms governing the joint venture
relationship, in a manner which could have an adverse effect on
Entrée's future cash flow and financial condition.
The cash flows also assume that Entrée will ultimately have the
benefit of the standard royalty rate of 5% of sales value, payable
by OTLLC under the Oyu Tolgoi Investment Agreement. Unless and
until Entrée finalizes agreements with the Government of
Mongolia or other Oyu Tolgoi
stakeholders, there can be no assurance that the Entrée/Oyu Tolgoi
JV will not be subject to additional taxes and royalties, such as
the surtax royalty which came into effect in Mongolia on January 1,
2011, which could have an adverse effect on Entrée's future
cash flow and financial condition. In the course of finalizing such
agreements, Entrée may have to make certain concessions, including
with respect to the economic benefit of Entrée's interest in the
Entrée/Oyu Tolgoi JV Property, Entrée's direct or indirect
participating interest in the Entrée/Oyu Tolgoi JV or the
application of a special royalty (not to exceed 5%) to Entrée's
share of the Entrée/Oyu Tolgoi JV Property mineralization or
otherwise.
Mineral Resources and Mineral Reserves – Entrée/Oyu Tolgoi JV
Property
The Entrée/Oyu Tolgoi JV Property Mineral Resource estimate for
the Hugo North Extension deposit has an effective date of
March 31, 2021. Mineral
Resources are reported inclusive of those Mineral Resources that
were converted to Mineral Reserves. Mineral Resources that
are not Mineral Reserves do not have demonstrated economic
viability.
The Entrée/Oyu Tolgoi JV Mineral Resource estimate for the
Heruga deposit has an effective date of March 31, 2021.
The Mineral Resources on the Entrée/Oyu Tolgoi JV Property are
provided in Table 11.
Table 11. Entrée/Oyu Tolgoi JV Property Mineral
Resources
Entrée/Oyu Tolgoi
JV Property– Mineral Resources
|
Classification
|
Tonnage
(Mt)
|
Cu
(%)
|
Au
(g/t)
|
Ag
(g/t)
|
Mo
(ppm)
|
CuEq
(%)
|
Contained
Metal
|
Cu
(Mlb)
|
Au
(Koz)
|
Ag
(Koz)
|
Mo
(Mlb)
|
Hugo North
Extension (≥0.41% CuEq Cut-Off)
|
Indicated
|
120
|
1.70
|
0.58
|
4.3
|
n/a
|
2.04
|
4,500
|
2,200
|
16,000
|
n/a
|
Inferred
|
167
|
1.02
|
0.36
|
2.8
|
n/a
|
1.23
|
3,800
|
1,900
|
15,000
|
n/a
|
Heruga
(≥0.41% CuEq Cut-Off)
|
Inferred
|
1,400
|
0.41
|
0.40
|
1.5
|
120
|
0.68
|
13,000
|
18,000
|
66,000
|
370
|
1
|
Mineral Resources
have an effective date of 31 March, 2021. Mr. Christopher
Wright, P. Geo, a Wood employee, is the Qualified Person
responsible for the Mineral Resource estimate.
|
2
|
Mineral Resources are
reported inclusive of those Mineral Resources that were converted
to Mineral Reserves. Mineral Resources that are not Mineral
Reserves do not have demonstrated economic viability.
|
3
|
Metal prices used for
copper equivalent and cut off grade calculation for both Hugo North
Extension and Heruga are: $3.08/lb copper, $1,292.00/oz gold and
$19.00/oz silver. Metallurgical recoveries used for copper
equivalent and cut-off grade calculation at Hugo North Extension
are 93% for copper, 80% for gold and 81% for silver.
Metallurgical recoveries used for copper equivalent and cut-off
grade calculation at Heruga are 82% for copper, 73% for gold, 78%
for silver and 60% for molybdenum.
|
4
|
Mineral Resources at
Hugo North Extension are constrained within a conceptual mining
shape constructed at a nominal 0.50% copper equivalent (CuEq) grade
and above a CuEq grade of 0.41% CuEq. The CuEq formula is
CuEq = Cu + ((Au * 35.7175) + (Ag * 0.5773)) / 67.9023 taking into
account differentials between metallurgical performance and price
for copper, gold and silver.
|
5
|
The overall geometry
and depth of the Heruga deposit make it amenable to underground
mass mining methods. Mineral Resources are stated above
a copper equivalent (CuEq) grade. The CuEq formula is CuEq =
Cu + ((Au * 37.0952) + (Ag * 0.5810) + (Mo * 0.0161)) / 67.9023
taking into account differentials between metallurgical performance
and price for copper, gold, silver and molybdenum.
|
6
|
A CuEq break-even
cut-off grade of 0.41% CuEq for Hugo North Extension mineralization
and covers mining, processing and G&A operating cost and the
cost of primary and secondary block cave mine
development.
|
7
|
A CuEq break-even
cut-off grade of 0.41% CuEq is used for the Heruga mineralization
and covers mining, processing and G&A operating cost and the
cost of primary and secondary block cave mine development.
|
8
|
Mineral Resources are
stated as in situ with no consideration for planned or unplanned
external mining dilution.
|
9
|
Mineral Resources are
reported on a 100% basis. OTLLC has a participating interest
of 80%, and Entrée has a participating interest of 20%.
Notwithstanding the foregoing, in respect of products extracted
from the Entrée/Oyu Tolgoi JV Property pursuant to mining carried
out at depths from surface to 560 m below surface, the
participating interest of OTLLC is 70% and the participating
interest of Entrée is 30%.
|
10
|
Numbers have been
rounded as required by reporting guidelines and may result in
apparent summation differences.
|
Entrée/Oyu Tolgoi Mineral Reserves
Entrée/Oyu Tolgoi JV Property Mineral Reserves are contained
within the Hugo North Extension Lift 1 block cave mining plan
(Table 12). The mine design work on Hugo North Lift 1,
including the Hugo North Extension, was prepared by OTLLC
and was used as the basis for the OTFS20.
The Mineral Reserve estimate is based on what is deemed minable
when considering factors such as the footprint cut-off grade, the
draw column shut-off grade, maximum height of draw, consideration
of planned dilution and internal waste rock.
The Mineral Reserve estimate only considers Mineral Resources in
the Indicated category and engineering that has been carried out to
a Feasibility level or better to state the underground Mineral
Reserve. There is no Measured Mineral Resource currently
estimated within the Hugo North Extension deposit. Copper and
gold grades for the Inferred Mineral Resources within the block
cave shell were set to zero and such material was assumed to be
dilution. The block cave shell was defined by a $17.84/t net smelter return ("NSR").
Future mine planning studies may examine lower shut-offs.
Table 12. Hugo North Extension Lift 1 Mineral Reserves
Statement
|
|
Entrée/Oyu Tolgoi
JV Property – Mineral Reserve
Hugo North
Extension Lift 1
|
Classification
|
Tonnage
|
NSR
|
Cu
|
Au
|
Ag
|
Contained
Metal
|
(Mt)
|
($/t)
|
(%)
|
(g/t)
|
(g/t)
|
Cu
(Mlb)
|
Au
(Koz)
|
Ag
(Koz)
|
Probable
|
40
|
96.97
|
1.5
|
0.53
|
3.6
|
1,340
|
676
|
4,613
|
1
|
Mineral Reserves were
estimated by OTLLC personnel. Piers Wendlandt, P.E., a Wood
employee, is the Qualified Person who reviewed and accepts
responsibility for the Mineral Reserve estimate. The estimate
has an effective date of 15 May, 2021.
|
2
|
For the underground
block cave, all Indicated Mineral Resources within the cave outline
were converted to Probable Mineral Reserves. No Proven
Mineral Reserves have been estimated. The estimation includes
low-grade Indicated Mineral Resource and Inferred Mineral Resource
assigned zero grade that is treated as dilution.
|
3
|
A column height
shut-off NSR of $17.84/t was used to define the footprint and
column heights. The NSR calculation assumed metal prices of
$3.08/lb Cu, $1,292.00/oz Au, and $19.00/oz Ag. The NSR was
calculated with assumptions for smelter refining and treatment
charges, deductions and payment terms, concentrate transport,
metallurgical recoveries, and royalties using OTLLC's Base Data
Template 38. Mineral Reserves are reported on a 100%
basis. OTLLC has a participating interest of 80%, and Entrée
has a participating interest of 20%. Notwithstanding the
foregoing, in respect of products extracted from the Entrée/Oyu
Tolgoi JV Property pursuant to mining carried out at depths from
surface to 560 m below surface, the participating interest of OTLLC
is 70% and the participating interest of Entrée is 30%.
|
4
|
Numbers have been
rounded as required by reporting guidelines and may result in
apparent summation differences
|
Exploration Potential
The areas to the north of Hugo North Extension and to the south
of Heruga remain under-explored and are attractive prospects for
future exploration. In addition, early-stage exploration has
been continuing by OTLLC on other parts of the Entrée/Oyu Tolgoi JV
Property and has included reconnaissance evaluation, geological
mapping, rock and soil sampling, geophysics and limited amounts of
shallow reverse circulation drilling. The work has outlined
strong prospects at the West Mag, Castle Rock, Bumbat Ulaan
and Southeast IP exploration areas and indicates the potential for
near-surface porphyry and epithermal-style copper and/or gold
mineralization to occur in areas outside the main Oyu Tolgoi
trend. OTLLC will continue to evaluate these prospects during
2022. Entrée retains a 30% participating interest in any new
mineralization identified between surface and 560 m depth.
Data Verification - Technical Discussion
Chris Wright, P.Geo from Wood
visited the Oyu Tolgoi site three times between August 2017 and June
2018 while he was an employee of Rio Tinto. Site
visits included an overview of the district geology, exposures in
the South Oyut open pit, review of drill core, core storage and
sampling facilities. Over 11 months from August 2017 to June
2018 Mr. Wright did extensive work with South Oyut and Hugo
North Mineral Resource and metallurgical databases and block models
in the construction of geometallurgical models for South Oyut and
Hugo North. In March 2021, as a
Wood employee, Mr. Wright conducted a review of the Heruga drilling
and block model and carried out interviews with OTLLC staff to
confirm the database cut-off dates, block model estimation dates
and that there are no material changes to the Mineral Resource
databases since the database closure and model estimation for
either the Heruga or Hugo North deposits.
The data verification completed by Mr. Wright, which is
consistent with data verification by personnel from OTLLC and its
predecessor companies, and the independent data verification
completed by others, are sufficient to conclude the drill hole
database is reasonably free of errors and suitable to support
Mineral Resource estimation.
TECHNICAL REPORT
Further technical information supporting the disclosure in this
news release, including data verification, key assumptions,
parameters, risks and other factors, will be provided in the NI
43-101 Technical Report that the Company will file under the
Company's SEDAR profile at www.sedar.com within 45 days
of this news release and on the Company's website.
NON-IFRS PERFORMANCE MEASUREMENT
Non-IFRS Performance Measurement: "Cash costs after credits"
(C1) and all-in sustaining cost (ASIC) are non-IFRS performance
measurements. These performance measurements are included because
these statistics are widely accepted as the standard of reporting
cash costs of production in North
America. These performance measurements do not have a
meaning within IFRS and, therefore, amounts presented may not be
comparable to similar data presented by other mining companies.
These performance measurements should not be considered in
isolation as a substitute for measures of performance in accordance
with IFRS.
ABOUT THE ENTRÉE/OYU TOLGOI JV PROPERTY
The Oyu Tolgoi project includes two separate land holdings: the
Oyu Tolgoi mining licence, which is held 100% by OTLLC (66%
Turquoise Hill Resources; 34% Government of Mongolia), and the Entrée/Oyu Tolgoi JV
Property, which is a partnership between Entrée and OTLLC. Rio
Tinto is managing the construction of Lift 1 of the Hugo North
underground block cave on both the Oyu Tolgoi mining licence and
the Entrée/Oyu Tolgoi JV Property. The portion of the Hugo North
copper-gold deposit that lies on the Entrée/Oyu Tolgoi JV Property
is known as Hugo North Extension. The Entrée/Oyu Tolgoi JV Property
also includes the Heruga copper-gold-molybdenum deposit and a large
prospective land package.
QUALIFIED PERSONS
Chris Wright, P.Geo, Kirk
Hanson, P.E., Piers Wendlandt, P.E, Dean
David, FAusIMM, Greg
Henderson, FAusIMM, and Peter Yuan, P.E from Wood are all
Qualified Persons as defined by National Instrument 43-101, and
have approved the scientific and 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. Entrée has a 20% or 30%
carried participating interest in the Entrée/Oyu Tolgoi JV,
depending on the depth of mineralization. Sandstorm Gold Ltd., Rio
Tinto and Turquoise Hill Resources Ltd. are major shareholders of
Entrée, holding approximately 24%, 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
value and potential value of assets and the ability of Entrée to
maximize returns to shareholders; timing and status of Oyu Tolgoi
underground development; the expected 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 and gold grades, liquidity,
funding requirements and planning; the re-design
studies for Panels 1 and 2 of Hugo North (including Hugo North
Extension) Lift 1 and the possible outcomes, content and timing
thereof; the future prices of copper, gold, molybdenum and
silver; the potential impact of COVID-19 on Oyu Tolgoi underground
development and the Company's business, operations and financial
condition; the estimation of Mineral Reserves and Resources; the
realization of Mineral Reserve and Resource estimates; projected
mining and process recovery rates; estimates of capital and
operating costs, mill throughput, cash flows and mine life;
capital, financing and project development risk; mining dilution;
discussions with the Government of Mongolia, Rio Tinto, OTLLC and Turquoise Hill
Resources 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; the
potential for Entrée to receive the benefits of the Oyu Tolgoi
Investment Agreement or another similar agreement; the potential
for the Government of Mongolia to
seek to directly or indirectly invest in Entrée's interest in the
Hugo North Extension and Heruga deposits; 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 statements and information
can be identified by the use of 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,
and 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 Resources.
- 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 implementation and successful execution of the funding plan
that is the subject of a Heads of Agreement between Rio Tinto and
Turquoise Hill Resources and the amount of any additional future
funding gap to complete the Oyu Tolgoi underground project as well
as the amount and potential sources of additional funding required
therefor, all as contemplated by the Heads of Agreement; the impact
of changes in, changes in interpretation to or changes in
enforcement of, laws, regulations and government practices in
Mongolia; delays, and the costs
which would result from delays, in the development of the
underground mine; the status of the relationship and interactions
and discussions between OTLLC, Rio Tinto and Turquoise Hill
Resources with the Government of Mongolia on the continued operation and
development of Oyu Tolgoi and OTLLC internal governance (including
the outcome of any such interactions or discussions); the
willingness and ability of the parties to the Oyu Tolgoi Investment
Agreement and the 2015 Oyu Tolgoi Underground Mine Development and
Financing Plan to amend or replace either such 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.
- The 2021 PEA is based on a conceptual mine plan that
includes Inferred resources. Numerous assumptions were made in the
preparation of the 2021 PEA, including with respect to mineability,
capital and operating costs, production schedules, the timing of
construction and expansion of mining and processing facilities, and
recoveries, that may change materially once production commences at
Hugo North Extension Lift 1 and additional development and capital
decisions are required. Any changes to the assumptions underlying
the 2021 PEA could cause actual results to be materially different
from any future results, performance or achievements expressed or
implied by forward-looking statements and information relating to
the 2021 PEA.
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 (coronavirus) 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 Resources 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
license to operate; accidents, labor 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; misjudgments in the course of
preparing forward-looking statements; and those factors discussed
in the section entitled "Critical Accounting Estimates, Risks and
Uncertainties" in the Company's most recently filed Management's
Discussion & Analysis and in the section entitled "Risk
Factors" in the Company's Annual Information Form for the year
ended December 31,
2020 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. Except as required under applicable
securities legislation, the Company undertakes no obligation to
publicly update or revise forward-looking statements, whether as a
result of new information, future events, or otherwise.
Accordingly, readers should not place undue reliance on
forward-looking statements.
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SOURCE Entrée Resources