Vancouver, B.C., November 9, 2022 – 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, 2022. All numbers are in U.S. dollars unless otherwise noted.

Q3 2022 HIGHLIGHTS

Oyu Tolgoi Underground Development Update

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 October 17, 2022, OTLLC’s 66% shareholder Turquoise Hill Resources Ltd. (“Turquoise Hill”) provided an update on Oyu Tolgoi underground development:

Safety continues to be OTLLC’s top priority and COVID-19 controls remain in place at site to protect OTLLC’s work force. COVID-19 cases identified at Oyu Tolgoi continued at low levels in the third quarter 2022 and the testing regime has been eased. Following the recent relaxation of COVID-19 government-initiated restrictions in Mongolia, OTLLC has progressively restarted work on project facilities with workforce numbers now at full capacity.
Construction of the final major stage of materials handling infrastructure continues, including civil and underground works for the conveyor to surface. Undercut blasting and on-footprint construction work continued to progress during the third quarter 2022. Commissioning of the second truck chute has commenced, and the 8th draw bell was fired on October 13, 2022, both ahead of schedule. Sustainable production from Panel 0 on the Oyu Tolgoi mining licence is now anticipated in the first quarter 2023.
The Shaft 3 headframe was commissioned and sinking commenced on March 31, 2022, with the cumulative sinking level at 298 metres below ground level as at October 2, 2022. Shaft 4 advancement was 418 metres below ground level as at October 2, 2022. The rate of progress in shafts improved during the quarter due to the optimization work program to maximize the productivity of their development. Continued progress on the program is necessary to remain aligned with the 2022 cost and schedule update, which identified an approximate 15-month delay in the commissioning of Shafts 3 and 4 from the schedule in the Definitive Estimate. As previously disclosed, Turquoise Hill now expects Shafts 3 and 4 to be commissioned in the first half 2024, and progress continues to be closely monitored. Shafts 3 and 4 are required to provide ventilation to support production from Panels 1 and 2 during ramp up to 95,000 tonnes per day. Turquoise Hill currently expects the first Panel 1 draw bell in the first half 2027. The Hugo North Extension deposit on the Entrée/Oyu Tolgoi JV Property is located in the northern portion of Panel 1.
Design optimization work for Lift 1 on the Oyu Tolgoi mining licence and the Entrée/Oyu Tolgoi JV Property continues with the aim of minimizing risk and maximizing productivity. The Lift 1 Panel 1 design optimization study remains on track for completion in the first half 2023.
On September 5, 2022, Turquoise Hill announced it has entered into an arrangement agreement with Rio Tinto plc and Rio Tinto International Holdings Limited (“Rio Tinto”) pursuant to which Rio Tinto will acquire the approximately 49% of the issued and outstanding shares of Turquoise Hill that Rio Tinto does not currently own for C$43.00 in cash per share, subject to approval by Turquoise Hill minority shareholders and other customary closing conditions. The special meeting of Turquoise Hill shareholders to consider and approve the statutory plan of arrangement is currently scheduled for November 15, 2022. Rio Tinto’s stated purpose for the acquisition is to strengthen its copper portfolio and create a more efficient ownership and governance structure for the Oyu Tolgoi project. If the transaction is successfully completed, Rio Tinto will have a 66% interest in deposits on the Oyu Tolgoi mining licence and a 52.8% interest in the Hugo North Extension and Heruga deposits on the Entrée/Oyu Tolgoi JV Property.

Entrée/Oyu Tolgoi JV Property Update

For Panel 1 drilling on the Entrée/Oyu Tolgoi JV Property, the Entrée/Oyu Tolgoi joint venture (the “Entrée/Oyu Tolgoi JV”) has approved a 2022 budget with diamond drill holes targeting Hugo North Extension Lifts 1 and 2. The holes are collared from underground drill stations along the eastern boundary of the porphyry mineralized footprint on the Oyu Tolgoi mining licence crossing onto the Entrée/Oyu Tolgoi JV Property. As at the end of October 2022, 14 underground holes have been drilled on the Entrée/Oyu Tolgoi JV Property totalling 6,083.3 metres. In addition, two surface diamond drill holes totalling ~3,550 metres are in progress, with hole EGD173 currently at a depth of 1,698 meters (planned depth 1,800 metres) and hole EGD161 currently at a depth of 364 metres (planned depth 1,750 metres). The two surface holes will be entirely on the Entrée/Oyu Tolgoi JV Property and will target the northern portion of the Hugo North Extension deposit. The Lift 1 Panel 1 geological model is expected to be finalized in the first quarter 2023, following which a decision will be made as to whether more Lift 1 drilling will be required. The Company has received preliminary results from a portion of the underground holes and is in the process of collating and modelling the data.
With the relaxation of COVID-19 related restrictions in Mongolia, exploration drilling programs resumed in 2022. On the Shivee Tolgoi mining licence, six reverse circulation (“RC”) holes totalling 1,500 metres and one 800 metre diamond drill hole have been completed at the Ulaan Khud target. In addition, three diamond drill holes totalling 2,200 metres have been completed at the Airstrip target. Analytical results are pending. On the Javhlant mining licence, five RC holes totalling 1,500 metres were planned for each of the Bumbat Ulaan and West Mag targets in 2022. Two RC holes totalling 600 metres were completed at the West Mag target; the remaining three holes were cancelled following engagement with one of the local herders. The five RC holes planned for the Bumbat Ulaan target were not completed due to the recent commissioning of the Tavan Tolgoi-Gashuunsukhait railway.
The Company continues to monitor the situation in Mongolia including with respect to possible delays to commencement of Panel 1. The Company will assess the potential impact of any delays as it becomes aware of them and will update the market accordingly.
On May 26, 2022, the Company announced it has commenced binding arbitration proceedings to seek declarations and orders for specific performance relating to certain provisions of the Equity Participation and Earn-in Agreement (the “Earn-in Agreement”) with Turquoise Hill dated October 15, 2004, as amended and subsequently assigned to OTLLC and the Joint Venture Agreement appended to the Earn-in Agreement (the “Entrée/Oyu Tolgoi JVA”). The parties have been operating under the terms of the Entrée/Oyu Tolgoi JVA since OTLLC completed its earn-in obligations on the Entrée/Oyu Tolgoi JV Property in 2008. The Company will provide updates on the arbitration as developments warrant.

Corporate

Operating loss was $0.5 million and $1.8 million for the three and nine month periods of 2022, respectively, compared to $0.5 million and $1.6 million in the comparative periods of 2021.
Operating cash outflow before changes in non-cash working capital items was $0.5 million and $1.7 million for the three and nine month periods of 2022, respectively, compared to $0.5 million and $1.5 million in the comparative periods of 2021.
As at September 30, 2022, the cash balance was $7.1 million and the working capital balance was $7.1 million.

OUTLOOK AND STRATEGY

Entrée’s primary objective for the 2022 year is to confirm the transfer of the Shivee Tolgoi and Javhlant mining licences to OTLLC as manager of the Entrée/Oyu Tolgoi JV either in conjunction with finalization and execution of amendments to the Entrée/Oyu Tolgoi JVA, or enforcement of certain provisions of the Earn-in Agreement and Entrée/Oyu Tolgoi JVA pursuant to binding arbitration proceedings. The Company is also advancing discussions with Erdenes Oyu Tolgoi LLC regarding a potential acquisition by the Government of Mongolia of 34% of the Company’s economic interest in the Entrée/Oyu Tolgoi JV Property in connection with the transfer of the licences. The Company currently is registered in Mongolia as the 100% ultimate holder of the Shivee Tolgoi and Javhlant mining licences.

As previously disclosed by the Company, the contract area defined in the 2009 Oyu Tolgoi Investment Agreement among the Government of Mongolia, OTLLC, Rio Tinto and Turquoise Hill (the “Oyu Tolgoi Investment Agreement”) includes the Javhlant and Shivee Tolgoi mining licences. However, at the time of negotiation of the Oyu Tolgoi Investment Agreement, the Company was not made a party to the Oyu Tolgoi Investment Agreement, and as such does not have any direct rights or benefits under the Oyu Tolgoi Investment Agreement.

Entrée has been engaged in discussions with stakeholders of the Oyu Tolgoi project, including the Government of Mongolia, OTLLC, Erdenes Oyu Tolgoi LLC, Turquoise Hill and Rio Tinto, since February 2013. The discussions to date have focused on issues arising from Entrée’s exclusion from the Oyu Tolgoi Investment Agreement, including the fact that the Government of Mongolia does not have a full 34% interest in the Entrée/Oyu Tolgoi JV Property; the fact that the mining licences integral to future underground operations are held by more than one corporate entity; and the fact that Entrée does not benefit from the stability that it would otherwise have if it were a party to the Oyu Tolgoi Investment Agreement. In order to receive the benefits of the Oyu Tolgoi Investment Agreement, the Government of Mongolia may require the Company to agree to certain concessions, including with respect to Entrée’s economic interest in the Entrée/Oyu Tolgoi JV Property.

The Company believes that amending the Entrée/Oyu Tolgoi JVA to align the interests of all stakeholders as they are now understood, transferring the licences to OTLLC as manager of the Entrée/Oyu Tolgoi JV, and resolving outstanding issues arising from Entrée’s exclusion from the Oyu Tolgoi Investment Agreement would be in the best interests of all stakeholders, provided there is no material net erosion of value to Entrée. No agreements have been finalized and there are no assurances agreements may be finalized in the future.

The Company’s interim financial statements and Management’s Discussion and Analysis (“MD&A”) for the third quarter ended September 30, 2022 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 (the “2021 Technical Report”), titled “Entrée/Oyu Tolgoi Joint Venture Project, Mongolia, NI 43-101 Technical Report”, with an effective date of October 8, 2021, available on the Company’s website at www.EntreeResourcesLtd.com, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

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. Horizon Copper Corp., 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.

FURTHER INFORMATION
David Jan
Investor Relations
Entrée Resources Ltd.
Tel: 604-687-4777 | Toll Free: 1-866-368-7330

E-mail: djan@EntreeResourcesLtd.com

ENTREE RESOURCES LTD
Today Vol. 107.300
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