VANCOUVER, Nov. 13, 2019 /PRNewswire/ - Entrée
Resources Ltd. (TSX: ETG; OTCQB: ERLFF – the
"Company" or "Entrée") has today filed its
interim financial results for the third quarter ended September 30, 2019. All numbers are in U.S.
dollars unless otherwise noted.
Q3 2019 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 JV Property, which is a partnership between
Entrée and OTLLC. On November 4 and
November 12, 2019, OTLLC's 66%
shareholder Turquoise Hill Resources Ltd. ("Turquoise Hill")
provided an update on underground development on the Oyu Tolgoi
mining licence:
- Shaft 2 construction is completed and has entered the final
stages of commissioning. The shaft uses the world's largest
production hoist motor and can carry 300 people in the service
hoist and lift 60 tonne skips in the production hoist. When
operating at maximum capacity, the production hoist has the ability
to lift 35,000 tonnes of material to the surface daily. This is a
critical piece of infrastructure that also provides additional
ventilation capacity and will enable the acceleration of
underground development.
- Shafts 3 and 4 pre sink work is complete with both shafts at 80
metres below the shaft collar as of September 30, 2019. The sinking headframes and
sinking stages for the shafts are being assembled to enable the
hard rock sinking to commence over the coming months.
- Underground development progressed successfully during Q3 2019,
achieving 3.6 total equivalent kilometres, the best quarterly
result to date.
- Since the restart of underground development in May 2016, 28.0 total equivalent kilometres and
22.1 kilometres of lateral development has been completed. In
September 2019, a record 1,385
equivalent metres of lateral underground development was
achieved.
- As previously announced by Turquoise Hill on July 15, 2019, improved information with respect
to rock mass and geotechnical data modelling has confirmed that
there are stability risks associated with components of the mine
design in the 2016 Oyu Tolgoi Feasibility Study. Preliminary
estimates indicate that sustainable first production from the Oyu
Tolgoi mining licence could be delayed by 16 to 30 months compared
to Turquoise Hill's original feasibility study guidance in 2016,
and the development capital spend for the Oyu Tolgoi underground
project may increase by $1.2 billion
to $1.9 billion over the $5.3 billion previously disclosed by Turquoise
Hill. To address these risks, a number of refinements are under
review to determine the final mine design.
- The first of the key decisions that has been made is to retain
a mid-access drive only on the apex level of the mine design of
Panel 0. This is an integral step towards completing the final mine
design, however it is too early to accurately determine the
potential impact on the cost or schedule. Decisions on productivity
levels and key underground infrastructure such as the location and
design of the ore passes and options for panel sequencing, will
need to be completed before an update on the development capital or
schedule can be provided. Turquoise Hill expects decisions
regarding the sequencing of the first panel of mining, Panel 0,
productivity inputs and ore pass locations to be completed by
April 2020. The resulting
Pre-Feasibility Study designs being detailed to Feasibility Study
standard, then scheduled and costed to form a definitive estimate
(the "Definitive Estimate") are due in the second half of
2020.
Entrée/Oyu Tolgoi JV Property
Once OTLLC, Turquoise
Hill and Rio Tinto International Holdings Ltd. ("Rio Tinto")
have determined the preferred mine design approach and delivered
the Definitive Estimate, Entrée will be able to assess the
potential impact on the estimated timing and amount of development
production and initial block cave production from the first lift
(Lift 1) of the Hugo North Extension deposit on the Entrée/Oyu
Tolgoi JV Property and any potential change to Entrée's estimated
share of capital and operating costs. Entrée will continue to
evaluate any information made available to it by Rio Tinto or OTLLC
and will update the market accordingly.
Corporate
- Q3 2019 operating loss was $0.4
million and is comparable to the operating loss of
$0.4 million in Q3 2018.
- Q3 2019 operating cash outflow after working capital was
$0.3 million compared to a
$0.2 million operating cash outflow
in Q3 2018 and, as at September 30,
2019, the cash balance was $5.7
million. The working capital balance as at
September 30, 2019 was $5.8 million.
- On October 1, 2019, the Company's
common shares commenced trading on the Over-the-Counter OTCQB
Venture Market ("OTCQB") under the trading symbol "ERLFF"
and discontinued trading on the NYSE American LLC ("NYSE
American").
OUTLOOK AND STRATEGY
The Company's primary objectives for the 2019 year continue to
include:
- Continuing constructive discussions with the Government of
Mongolia; and
- Working 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. 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 believes that amendments that align the
interests of all stakeholders as they are now understood, would be
in the best interests of the Company and its shareholders 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.
Corporate costs, which include Mongolian site management and
compliance costs, remain estimated to be between $1.4 million and $1.6
million for the full 2019 year. The Company continues to
focus its efforts on conserving cash reserves and remaining prudent
with its expenditures. Voluntarily delisting from the NYSE American
is a clear demonstration of Entrée's commitment to eliminating non
value adding expenditure.
The Company's interim financial statements and Management's
Discussion and Analysis ("MD&A") for the third quarter
ended September 30, 2019 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 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 joint venture, depending on the
depth of mineralization. Sandstorm Gold Ltd., Rio Tinto and
Turquoise Hill are major shareholders of Entrée, holding
approximately 19.6%, 9.5% and 7.9% 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; timing and status of Oyu Tolgoi underground
development, the development options under consideration for the
design of Panel 0 and the related cost and schedule implications;
timing of completion of the Definitive Estimate; 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 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, anticipated capital and operating costs,
anticipated future production and cash flows, the anticipated
location of certain infrastructure and sequence of mining, 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 to construct such a source); 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
and Turquoise Hill with the Government of Mongolia on the continued operation and
development of Oyu Tolgoi and OTLLC internal governance; the
anticipated location of certain infrastructure and sequence of
mining; projected copper, gold and silver 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; the outcome of the
Definitive Estimate; 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;
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, 2018, dated March 29, 2019
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