Vancouver, B.C., May 14, 2019 – Entrée Resources Ltd. (TSX:ETG; NYSE American:EGI – the “Company” or “Entrée”) has today filed its interim financial results for the first quarter ended March 31, 2019. All numbers are in U.S. dollars unless otherwise noted.
Q1 2019 HIGHLIGHTS
Entrée/Oyu Tolgoi JV Property – 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 April 15, 2019, Turquoise Hill Resources Ltd. (“Turquoise Hill”) provided an update on underground development on the Oyu Tolgoi mining licence:
During the first quarter of 2019, work continued on critical Shaft 2 equipping activities, central heating plant, mine infrastructure, underground materials handling systems and on priority underground development. Pre-sinking works for Shaft 3 and Shaft 4 have also commenced.
Rio Tinto International Holdings Ltd. (“Rio Tinto”), as project manager, has advised Turquoise Hill that the fit-out and commissioning work on Shaft 2 (the main production and services shaft) is now expected to be completed by the end of October 2019.
As previously announced by Turquoise Hill, more detailed geotechnical information and different ground conditions have required a review of the mine design and the development schedule. The impact of these changes, including the further delay to Shaft 2, will be included in the definitive estimate review, which is expected to be completed towards the end of 2019. Turquoise Hill will also explore potential mitigation options.
Entrée is not currently aware of any expected delays to development production or initial block cave production from the first lift (Lift 1) of the Hugo North Extension deposit on the Entrée/Oyu Tolgoi JV Property resulting from delays to individual activities at the Oyu Tolgoi project. Entrée will evaluate any information made available to it by Rio Tinto or OTLLC and will update the market accordingly.
Corporate
During Q1 2019, the Company disposed of all its investment in Anglo Pacific Group PLC common shares for net proceeds of $1.0 million and realized a $0.1 million gain.
Q1 2019 operating loss was $0.4 million compared to an operating loss of $0.5 million in Q1 2018. The 20% reduction was related to lower administrative costs in Q1 2019.
Q1 2019 operating cash outflow after working capital was $0.7 million compared to a $0.2 million operating cash outflow in Q1 2018 and, as at March 31, 2019, cash and short-term investments balance was $6.5 million. The working capital balance as at March 31, 2019 was $6.4 million.
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 between $1.2 million and $1.5 million for the full 2019 year. The Company continues to focus its efforts on conserving cash reserves and remaining prudent with its expenditures.
The Company’s interim financial statements and Management’s Discussion and Analysis (“MD&A”) for the first quarter ended March 31, 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 16%, 9% and 8% of the shares of the Company, respectively. More information about Entrée can be found at www.EntreeResourcesLtd.com.
FURTHER INFORMATION
David Jan
Investor Relations
Entrée Resources Ltd.
Tel: 604-687-4777 | Toll Free: 1-866-368-7330
E-mail: djan@EntreeResourcesLtd.com
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