VANCOUVER, BC, March 31, 2021 /PRNewswire/ - Entrée
Resources Ltd. (TSX: ETG) (OTCQB: ERLFF) (the
"Company" or "Entrée") has today filed its
annual operational and financial results for the year ended
December 31, 2020. All numbers are in
U.S. dollars unless otherwise noted.
2020 HIGHLIGHTS
Oyu Tolgoi Underground
Development
The Oyu Tolgoi project in Mongolia includes two separate land holdings:
the Oyu Tolgoi mining licence, which is held by Entrée's joint
venture partner Oyu Tolgoi LLC ("OTLLC") and the Entrée/Oyu
Tolgoi joint venture property (the "Entrée/Oyu Tolgoi JV
Property"), which is a partnership between Entrée and OTLLC. On
March 8, 2021, OTLLC's 66%
shareholder Turquoise Hill Resources Ltd. ("Turquoise Hill")
provided an update on underground development on the Oyu Tolgoi
mining licence:
- Work on the Oyu Tolgoi underground project has continued to
materially progress in line with the Definitive Estimate (as
defined below) despite COVID-19 controls and ongoing travel
restrictions implemented by the Government of Mongolia. Ongoing impacts to domestic and
international movement could have an impact on key project
milestones on the Oyu Tolgoi mining licence.
- Overall, underground lateral development has now reached 53,000
equivalent metres with development required before first drawbell
on the Oyu Tolgoi mining licence substantially complete. More than
one million tonnes of underground material has moved through Shaft
2 since commissioning and scheduled annual maintenance of Shaft 2
was successfully completed in October
2020 using remote technology. Materials Handling System 1
progress continues with civil work complete on Primary Crusher 1
and steel and cable installation continuing thereon.
- Remobilization of international shaft-sinking specialists
occurred in the fourth quarter 2020. Installation and commissioning
of sinking related equipment continues at Shafts 3 and 4.
Activities at Shaft 4 in the fourth quarter 2020 were focused on
completing all construction and commissioning activities for load
testing and verification in preparation for shaft sinking, which
commenced in early February 2021.
Shafts 3 and 4 will provide ventilation to support the ongoing
development associated with production ramp up for Panels 1 and 2.
Should flight restrictions continue, productivity on the project
and the ability to perform specialized maintenance and
commissioning activities could be impacted. Turquoise Hill
continues to assess any potential implications, particularly for
Panel 1 and Panel 2 ramp-up which Shafts 3 and 4 support.
- In the first quarter 2020, OTLLC submitted a resources and
reserves update for registration pursuant to local regulatory
requirements in Mongolia. On
July 2, 2020, Turquoise Hill
announced the completion of an updated Oyu Tolgoi Feasibility Study
("OTFS20"), which incorporates the new block cave mine
design for Hugo North Lift 1 Panel 0 previously announced by
Turquoise Hill on May 13, 2020. The
expert review of the resources and reserves update is in progress
and OTFS20 is expected to be considered for endorsement by the
Mongolian regulators following registration.
- OTFS20 incorporates an update to the first sustainable
production schedule and capital cost estimates for the underground
mine development based on the new Panel 0 mine design. On
December 18, 2020, Turquoise Hill
announced the completion and delivery by Rio Tinto of the
definitive estimate of cost and schedule (the "Definitive
Estimate"), which refines the analysis contained in OTFS20. The
results of the Definitive Estimate include a revised base case
development capital cost of $6.75
billion for the new design, confirmation that sustainable
first production from the Oyu Tolgoi mining licence is forecast to
occur in October 2022, and
verification that all surface infrastructure required for
sustainable first production from Panel 0 on the Oyu Tolgoi mining
licence is now complete. Additional project infrastructure will
still be needed to support the production ramp-up profile and the
life of mine material handling infrastructure capacity. The
Definitive Estimate also finalized pillar locations on the Panel 0
boundaries and optimized the drawpoint layout to minimize exposure
to the lower fault. OTLLC board approval of the Definitive Estimate
will be considered following registration of the resources and
reserves update and endorsement of OTFS20.
- The Hugo North (including Hugo North Extension) Lift 1 mine
plan incorporates the development of three panels and in order to
reach the full sustainable production rate of 95,000 tonnes per day
from the underground operations, all three panels need to be in
production. The Hugo North Extension deposit on the Entrée/Oyu
Tolgoi JV Property is located at the northern portion of Panel
1.
- Turquoise Hill has advised that several mining studies are in
progress, which are focused on the evaluation of different design
and sequencing options for Panels 1 and 2 as part of OTLLC's
planned Pre-Feasibility and Feasibility Study level work. These
studies are underpinned by additional geology and geotechnical data
that is being collected from underground and surface drilling. The
data collection is complete for Panel 0 and the focus of data
collection and analysis has now shifted to Panel 1 and Panel 2.
Data collection and analysis is being prioritized to complete study
work in line with mining progression
Corporate
- During Q3 2020, the Company closed a non-brokered private
placement of 10,278,000 units of the Company at a price of
C$0.43 per unit for gross proceeds of
approximately C$4.4 million. Each
unit consists of one common share and one-half of one transferable
common share purchase warrant (each whole warrant, a
"Warrant"). Each Warrant entitles the holder to purchase one
additional common share of the Company at a price of C$0.60 per share for a period of three years
following the date of issuance.
- For the full 2020 year, the operating loss was $2.3 million compared to an operating loss of
$2.1 million in 2019.
- For the full 2020 year, operating cash outflow before working
capital was $1.5 million compared to
an operating cash outflow before working capital of $1.5 million in 2019.
- As at December 31, 2020, cash was
$7.3 million and the working capital
balance was $7.3 million.
- The Company recognizes the unprecedented situation surrounding
the ongoing COVID-19 pandemic and is closely monitoring the effect
of the COVID-19 pandemic on its business and operations and will
continue to update the market on the impacts to the Company's
business and operations in relation to these extraordinary
circumstances.
OUTLOOK AND STRATEGY
The Company's primary objective
for the 2021 year is to work with other Oyu Tolgoi stakeholders to
advance potential amendments to the joint venture agreement (the
"Entrée/Oyu Tolgoi JVA") that currently governs the
relationship between Entrée and OTLLC and upon finalization,
transfer the Shivee Tolgoi and Javhlant mining licences to OTLLC as
manager of the Entrée/Oyu Tolgoi joint venture (the "Entrée/Oyu
Tolgoi JV"). The form of Entrée/Oyu Tolgoi JVA was agreed
between the parties in 2004, prior to the execution of the Oyu
Tolgoi Investment Agreement and commencement of underground
development. The Company currently is registered in Mongolia as the 100% ultimate holder of the
Shivee Tolgoi and Javhlant mining licences.
The Company believes that amendments that align the interests of
all stakeholders as they are now understood would be in the best
interests of all stakeholders, provided there is no net erosion of
value to Entrée. No agreements have been finalized and there are no
assurances agreements may be finalized in the future.
In addition, the Company is currently in the process of
reviewing the data and assumptions underlying OTFS20, the OTFS20
block cave designs, updated costs and schedules and the updated
mineral resources and reserves in order to assess the potential
impact on the Entrée/Oyu Tolgoi JV Property resources and reserves
and the assumptions and outputs from the Company's 2018 Technical
Report. The Company will update the market following completion of
its review and assessment.
SUMMARY OF OPERATING RESULTS
Operating
Loss
For the full 2020 year, the operating loss was
$2.3 million compared to an operating
loss of $2.1 million in 2019.
Project expenditures in 2020 included expenditures of $0.2 million for administration costs in
Mongolia compared to $0.2 million in the comparative 2019
period. Holding costs on all other properties in 2020 and
2019 were insignificant.
General and administration expenditures in 2020 were
$1.4 million and were consistent with
the same period in 2019.
Depreciation expenses in 2020 were consistent with the same
period in 2019.
Non-operating Items
The foreign exchange gain in 2020
was primarily the result of movements between the C$ and U.S.
dollar as the Company holds its cash in both currencies and the
loan payable is denominated in U.S. dollars.
Interest expense was primarily related to the loan payable to
OTLLC pursuant to the Entrée/Oyu Tolgoi JVA and is subject to a
variable interest rate.
The amount recognized as a loss from equity investee is related
to exploration costs on the Entrée/Oyu Tolgoi JV Property.
Deferred revenue finance costs are related to recording the
non-cash finance costs associated with the deferred revenue
balance, specifically the Sandstorm Gold Ltd. stream.
The total assets as at December 31,
2020 were higher than at December 31,
2019 due to funds received from the non-brokered private
placement completed during Q3 2020 while total non-current
liabilities were higher due to recording the non-cash deferred
revenue finance costs for the 2020 year.
The Company's Annual Financial Statements and Management's
Discussion and Analysis ("MD&A"), and Annual Information
Form are available on the Company's website at
www.EntreeResourcesLtd.com and on SEDAR at www.sedar.com. The
Company's Annual Report on Form 20-F ("Annual Report") has
been filed with the U.S. Securities and Exchange Commission
("SEC"), and is available on the Company's website
at www.EntreeResoucesLtd.com and on EDGAR at
www.sec.gov. Shareholders can receive a hard copy of the
Company's audited Annual Financial Statements upon request.
QUALIFIED PERSON
Robert Cinits, P.Geo., consultant to
Entrée and the Company's former Vice President, Corporate
Development, and a Qualified Person as defined by National
Instrument 43-101 – Standards of Disclosure for Mineral
Projects, has approved the technical information in this
release. For further information on the
Entrée/Oyu Tolgoi JV Property, see the Company's Technical Report,
titled "Entrée/Oyu Tolgoi Joint Venture Project, Mongolia, NI 43-101 Technical Report", with an
effective date of January 15, 2018,
available on SEDAR at www.sedar.com.
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, Rio Tinto and Turquoise Hill are major
shareholders of Entrée, holding approximately 23%, 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
expectations set out in OTLLC's OTFS20 and the Company's 2018
Technical Report on the Company's interest in the Entrée/Oyu Tolgoi
JV Property; timing and status of Oyu Tolgoi underground
development; the mine design for Hugo North Lift 1 Panel 0 and the
related cost and production schedule implications; 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; timing and amount of production from Lift 1 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;
future commodity prices; the potential impact of COVID-19 on Oyu
Tolgoi underground development and the Company's business,
operations and financial conditions; the estimation of mineral
reserves and resources; 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 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 be included in or
otherwise 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 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,
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 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 ability of OTLLC to secure and draw down on the supplemental
debt under the Oyu Tolgoi project finance facility and the
availability of additional financing on terms reasonably acceptable
to OTLLC, Turquoise Hill and Rio Tinto to further develop Oyu
Tolgoi; 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 status of the relationship and interaction
between OTLLC, Rio Tinto, Turquoise Hill and the Government of
Mongolia on the continued
operation and development of Oyu Tolgoi, future funding plans and
requirements and OTLLC internal governance (including the outcome
of any such interactions or discussions); the willingness and
ability of the parties to the Oyu Tolgoi Underground Mine
Development and Financing Plan to amend or replace the 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.
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 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 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; title disputes;
limitations on insurance coverage; competition; loss of key
employees; cyber security incidents; misjudgements in the course of
preparing forward-looking statements; as well as 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,
2020, dated March 31, 2021
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.
Accordingly, readers should not place undue reliance on
forward-looking statements. The Company is under no obligation to
update or alter any forward-looking statements except as required
under applicable securities laws.
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SOURCE Entrée Resources