VANCOUVER, BC, Jan. 25, 2022 /CNW/ - Entrée
Resources Ltd. (TSX: ETG) (OTCQB: ERLFF) (– the
"Company" or "Entrée") reports that on
January 24, 2022, Turquoise Hill
Resources Ltd. ("Turquoise Hill"), announced the resolution
of key outstanding issues related to the Oyu Tolgoi underground
mine:
- Turquoise Hill and the Government of Mongolia reached a mutual understanding for a
renewed partnership.
- Turquoise Hill and Rio Tinto entered into a binding agreement
that delineates a comprehensive funding arrangement to address
Turquoise Hill's estimated incremental funding requirements to
complete the project.
- The Oyu Tolgoi LLC ("OTLLC") board approved the signing
of an Electricity Supply Agreement to provide Oyu Tolgoi with a
long-term source of power from the Mongolian grid on terms fully
agreed with the Government of Mongolia.
As a result, the OTLLC board unanimously approved commencement
of the undercut to start Hugo North Lift 1 Panel 0 underground mine
production on the Oyu Tolgoi mining licence.
Oyu Tolgoi includes two separate land holdings: the Oyu Tolgoi
mining licence, which is held by Entrée's joint venture partner,
OTLLC, and the Entrée/Oyu Tolgoi JV Property, a partnership between
Entrée and OTLLC. The Hugo North Extension deposit on the
Entrée/Oyu Tolgoi JV Property is located at the northern portion of
Panel 1 and is an integral part of the Lift 1 mine plan.
Stephen Scott, Entrée's President
& CEO commented, "This is great news for Entrée and all Oyu
Tolgoi project stakeholders. Establishing a strong relationship
between all parties going forward is an essential element of
ensuring optimal operational and financial performance at the Oyu
Tolgoi mine for decades to come. Resolution of outstanding issues
has enabled commencement of Panel 0 underground mining
operations. This is a key milestone towards achieving design
production rates from the underground mine which will require
contributions from all three panels in the Lift 1 mine plan,
including Panel 1, a significant portion of which is on the Entrée/
Oyu Tolgoi JV Property. Panel 1 includes some of the highest-grade
mineralization in the entire Oyu Tolgoi combined project area."
Highlights of Turquoise Hill's January
24, 2022 news release include:
- Turquoise Hill has agreed to waive in full the US$2.4 billion carry account loan of the
Government of Mongolia's
state-owned entity which owns its interest in OTLLC ("Erdenes
Oyu Tolgoi").
- Turquoise Hill and Rio Tinto have agreed to an amended and
restated Heads of Agreement (the "Amended HoA"), replacing
the prior Heads of Agreement dated April 9,
2021. The Amended HoA delineates a funding arrangement to
address Turquoise Hill's estimated US$3.4
billion incremental funding requirement. Key elements of the
Amended HoA include:
-
- pursuing the rescheduling of principal repayments of existing
debt ("Re-profiling") to potentially reduce the base case
funding requirement by up to US$1.7
billion;
- seeking to raise up to US$500
million of senior supplemental debt ("SSD");
- Rio Tinto committing to provide a co-lending facility,
incremental to the Re-profiling and the SSD, of up to US$750 million to be made available once
sustainable production from Panel 0 has been achieved (currently
expected in H1 2023);
- Rio Tinto committing to provide a short-term bridge financing
directly to Turquoise Hill by way of one or more secured advances
up to a maximum of US$300 million,
which would be indirectly repaid out of the proceeds of the
US$750 million co-lending facility;
and
- Turquoise Hill agreeing to conduct an equity offering in a form
of its choosing of at least US$650
million (including a Rio Tinto pro
rata participation) by no later than August 31, 2022.
- Once the Mongolian grid is capable of reliably meeting Oyu
Tolgoi's power requirements, the Electricity Supply Agreement
provides the framework for OTLLC to obtain access to a reliable and
secure domestic power source.
Terms agreed between Oyu Tolgoi stakeholders with respect to
project financing and Erdenes Oyu Tolgoi's carry account loan do
not impact the Entrée/Oyu Tolgoi joint venture, which is governed
by the terms of the joint venture agreement between OTLLC and
Entrée.
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. Sandstorm, Rio Tinto and Turquoise Hill
are major shareholders of Entrée, holding approximately 25%, 9% and
7% 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;
timing and status of Oyu Tolgoi underground development; the
expected timing of sustainable production from Panel 0 on the Oyu
Tolgoi mining licence; the nature of Turquoise Hill's ongoing
relationship and interaction with the Government of Mongolia with respect to the continued
operation and development of Oyu Tolgoi following the
implementation of the comprehensive new agreement entered into
between Turquoise Hill, Rio Tinto and the Government of
Mongolia; successful commencement
of the Panel 0 undercut; the amount of any future funding gap to
complete the Oyu Tolgoi project; liquidity, Oyu Tolgoi project
funding sources and Oyu Tolgoi project funding requirements; the
mine design for Hugo North Lift 1 and the related cost and
production schedule implications; capital, financing and project
development risk; the re-design studies for Panel 1 and the
possible outcomes, content and timing thereof; expected copper and
gold grades; the timing and amount of future production and
potential production delays; estimates of capital and
operating costs, mill throughput, cash flows and mine life; the
expectations set out in Entrée's 2021 Technical Report on the
Entrée/Oyu Tolgoi JV Property; anticipated business activities; 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.
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 nature of
the ongoing relationship and interaction between OTLLC, Turquoise
Hill and Rio Tinto and the Government of Mongolia with respect to the continued
operation and development of Oyu Tolgoi following the
implementation of the comprehensive agreement with the Government
of Mongolia; successful
commencement of the Panel 0 undercut; actual timing of first
sustainable production from Panel 0 as well as the lifting of
restrictions by the Government of Mongolia on the ability of OTLLC to incur
additional indebtedness; 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 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 the Amended HoA and the
amount of any additional future funding gap to complete the Oyu
Tolgoi underground project and the amount and potential sources of
additional funding required therefor, all as contemplated by the
Amended HoA, as well as potential delays in the ability of
Turquoise Hill or OTLLC to proceed with the funding elements
contemplated by the Amended HoA; 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
anticipated location of certain infrastructure and sequence of
mining within and across panel boundaries; projected commodity
prices and their market demand; and production estimates and the
anticipated yearly production of copper, gold and silver at the Oyu
Tolgoi underground mine.
Other risks, uncertainties and factors which could cause
actual results, performance or achievements of Entrée to differ
materially from future results, performance or achievements
expressed or implied by forward-looking statements and information
include, amongst others, unanticipated costs, expenses or
liabilities; discrepancies between actual and estimated production,
mineral reserves and resources and metallurgical recoveries;
development plans for processing resources; matters relating to
proposed exploration or expansion; mining operational and
development risks, including geotechnical risks and ground
conditions; regulatory restrictions (including environmental
regulatory restrictions and liability); risks related to
international operations, including legal and political risk in
Mongolia; risks related to the
potential impact of global or national health concerns, including
the COVID-19 (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 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 labor,
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