VANCOUVER, BC, May 14, 2021 /PRNewswire/ - Entrée
Resources Ltd. (TSX: ETG) (OTCQB: ERLFF) – the
"Company" or "Entrée") has today filed its
interim financial results for the first quarter ended March 31, 2021. All numbers are in U.S. dollars
unless otherwise noted.
Q1 2021 HIGHLIGHTS
Oyu Tolgoi Underground Development Update – Mongolia
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 May 12, 2021, OTLLC's 66%
shareholder Turquoise Hill Resources Ltd. ("Turquoise Hill")
provided an update on underground development on the Oyu Tolgoi
mining licence:
- The COVID-19 situation in Mongolia remains fragile and subject to rapid
change despite a widespread vaccination program. OTLLC is
constantly adapting to the changing circumstances to prioritize the
health and safety of its employees.
- During the first quarter 2021, the Oyu Tolgoi underground
project was impacted by COVID-19 cases at site, requiring OTLLC to
periodically suspend work as a health and safety precaution.
COVID-19 measures implemented by OTLLC, including restrictions on
travel from Ulaanbaatar to site, have significantly impacted the
number of workers that remain at site to continue underground
development. Turquoise Hill expects that COVID-19 restrictions will
continue to impact underground construction and development in the
second quarter 2021 and is working with OTLLC and Rio Tinto
International Holdings ("Rio Tinto") to monitor and assess
the situation.
- On April 9, 2021, Turquoise Hill
announced that it has reached a binding agreement (the "Heads of
Agreement") with Rio Tinto on a funding plan to complete the
construction of Lift 1 of the Oyu Tolgoi underground project,
including Lift 1 of the Hugo North Extension deposit on the
Entrée/Oyu Tolgoi JV Property. Successful implementation of the
Heads of Agreement is subject to achieving alignment with the
relevant stakeholders in addition to Rio Tinto (including existing
lenders, any potential new lenders and the Government of
Mongolia), market conditions and
other factors.
- Achievement of the technical criteria required for a mid-2021
commencement of the undercut on the Oyu Tolgoi mining licence
remains on track. However, the exact timing of the undercut is
under increasing pressure due to the rapidly evolving recent
COVID-19 impacts. Non-technical criteria, including confirmation of
necessary regulatory and legislative approvals required by the
Government of Mongolia, are still
pending and are critical elements for consideration to proceed with
the decision to commence the undercut. Turquoise Hill is working
with OTLLC and other stakeholders to ensure that important aspects
for a successful project are met prior to commencing the
undercut.
- At the end of the first quarter 2021, cumulative underground
development progress is 56,264 equivalent metres with cumulative
conveyor to surface advancement of 13,832 equivalent metres.
Progress in March was impacted by COVID-19 restrictions and
controls and Turquoise Hill anticipates that development rates will
continue to be impacted into the second quarter 2021. Although
development work has slowed, almost all of the development required
for the commencement of the undercut is complete.
- Ongoing work suspensions continue to affect progress on Shafts
3 and 4 and the overall impact of these delays is under review.
Progress remains dependent on mobilizing key vendors and additional
sinking resources into country and cleared from quarantine.
Additional shaft sinking specialists are in Mongolia and are expected to arrive on site in
May 2021. Shafts 3 and 4 are not
required to support Panel 0 commencement, however they are required
to support production from Panels 1 and 2 during ramp up to 95,000
tonnes per day.
- 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.
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,
which was ongoing during the first quarter 2021. As more drilling
is completed, mine design refinements and updates will be
communicated by Turquoise Hill. Turquoise Hill expects the first of
these design updates in the second half of 2021.
Corporate
- Q1 2021 operating loss was $0.5
million compared to an operating loss of $0.4 million in Q1 2020.
- Q1 2021 operating cash outflow before working capital was
$0.4 million and was consistent with
the comparative quarter of Q1 2020.
- As at March 31, 2021, the cash
balance was $6.9 million and the
working capital balance was $6.9
million. The Company holds the majority of its cash in
Canadian currency.
- 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 2009 Oyu Tolgoi Investment Agreement among
the Government of Mongolia, OTLLC,
Rio Tinto and Turquoise Hill 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.
The Company's interim financial statements and Management's
Discussion and Analysis ("MD&A") for the first quarter
ended March 31, 2021 are available on
the Company's website at www.EntreeResourcesLtd.com, on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov.
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 NI 43-101, has
approved the technical information in this
release. For further information on the
Entrée/Oyu Tolgoi JV Property, see the Company's Technical Report
(the "2018 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
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 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; uses of funds and
projected expenditures; requirements for additional capital; 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; the
potential impact of COVID-19 (coronavirus) on Oyu Tolgoi
underground development and the Company's business, operations and
financial condition; the estimation of mineral reserves and
resources; 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;
permitting time lines; anticipated business activities; 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 interactions
and discussions between OTLLC, Rio Tinto and Turquoise Hill 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.
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 associated with
changes in the attitudes of governments to foreign investment;
risks associated with the conduct of joint ventures; risks related
to the potential impact of global or national health concerns,
including the COVID-19 (coronavirus) pandemic; 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