Vancouver, B.C., May 12, 2022 – 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, 2022. All numbers are in U.S. dollars unless otherwise noted.

Q1 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 May 10, 2022, OTLLC’s 66% shareholder Turquoise Hill Resources Ltd. (“Turquoise Hill”) provided an update on Oyu Tolgoi underground development:

COVID-19 cases identified at Oyu Tolgoi trended downward in the first quarter 2022. Onsite workforce numbers over the quarter increased to approximately 90% of plan with mobilization of personnel across multiple work-fronts. COVID-19 related restrictions for international arrivals to Mongolia have been lifted and international flights have resumed across the region. Safety continues to be OTLLC’s top priority and controls remain in place at site to protect the workforce.
On January 24, 2022, Turquoise Hill announced the resolution of key outstanding issues related to the Oyu Tolgoi underground mine:
Turquoise Hill and the Government of Mongolia reached a mutual understanding for a renewed partnership.
Turquoise Hill and Rio Tinto entered into a binding agreement that delineates a comprehensive funding arrangement to address Turquoise Hill’s estimated incremental funding requirements to complete the project.
The OTLLC board approved the signing of an Electricity Supply Agreement to provide Oyu Tolgoi with a long-term source of power from the Mongolian grid on terms fully agreed with the Government of Mongolia. Power will be delivered pursuant to the agreement once certain technical conditions are satisfied.
During the first quarter 2022, several significant milestones were achieved including the commencement of the Panel 0 undercut on the Oyu Tolgoi mining licence, and commissioning of Material Handling System 1 and the first on-footprint truck chute. Undercut blasting and on-footprint construction work, including roadways and steel set construction, continues to progress well ahead of the first drawbell blast expected in the third quarter 2022. Infrastructure to support production ramp up also progressed during the quarter, including completion of the conveyor to surface decline mining and transfer chamber mass excavation.
The Shaft 3 headframe was commissioned and sinking commenced on March 31, 2022 from a cumulative depth of 83 metres below ground level. Shaft 4 sinking re-started on March 25, 2022 after work was interrupted on February 17, 2022 due to an electrical fault. Shaft 4 advancement is 190 metres below ground level as at March 31, 2022. Although progress of these shafts continued during the quarter, challenges with sinking rates continue.
As previously disclosed, the first Panel 1 draw bell is now expected in H1 2027 rather than H2 2026 due to later than planned commencement of the Panel 0 undercut on the Oyu Tolgoi mining licence, lateral development scope changes, impacts of COVID-19 on development progression and delays to the forecast completion dates for Shafts 3 and 4. 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. The Hugo North Extension deposit on the Entrée/Oyu Tolgoi JV Property is located in the northern portion of Panel 1.
A 2022 cost and schedule update for the underground project is currently under review by Turquoise Hill. As part of the update, schedules for Shafts 3 and 4 are under review, and a program of work is underway to maximize the productivity of their development. The potential impact of any further schedule slippage to Shafts 3 and 4 on the timing of Panels 1 and 2 is under review but is not expected by Turquoise Hill to result in equivalent delays to Panels 1 and 2 given the current underground development approach and further mitigation opportunities under investigation.
Surface and underground drilling programs on the Oyu Tolgoi mining licence and the Entrée/Oyu Tolgoi JV Property will support the evaluation by OTLLC of different design and sequencing options for Lift 1 Panels 1 and 2. OTLLC has planned a total of 25,000 metres of Hugo North (including Hugo North Extension) Lift 1 drilling for 2022 and 2023 to increase orebody knowledge and extend the current mine design. Most of the drill metres are into potential future mining areas which are on the Lift 1 horizon and currently excluded from the mineral reserve. In the first quarter 2022, the focus of the drilling program was the northern part of Lift 1, Panel 1 and the southern part of Lift 1, Panel 2. OTLLC has scheduled the Lift 1 Panel 1 design optimization study for completion in early 2023.
In addition, OTLLC has planned approximately 100,000 metres of Hugo North (including Hugo North Extension) Lift 2 drilling over the next four years (2022-2025) to improve orebody knowledge and geotechnical modelling of Lift 2.

Entrée/Oyu Tolgoi JV Property Update

For 2022, the Entrée/Oyu Tolgoi joint venture (the “Entrée/Oyu Tolgoi JV”) has approved an amended budget for Lift 1 and Lift 2 Panel 1 drilling on the Entrée/Oyu Tolgoi JV Property, targeting the Hugo North Extension deposit. The revised drill plan now comprises 18 underground holes (totalling 7,893 metres) and two surface holes (totalling 3,560 metres). The underground holes will all be collared from the Oyu Tolgoi licence and cross onto the Entrée/Oyu Tolgoi JV ground. The drill plan and timing of the drilling are subject to change.
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.

Corporate

Q1 2022 operating loss was $0.6 million compared to an operating loss of $0.5 million in Q1 2021.
Q1 2022 operating cash outflow before working capital was $0.5 million compared to an operating cash outflow before working capital of $0.4 million in Q1 2021.
As at March 31, 2022, the cash balance was $8.5 million and the working capital balance was $8.5 million.

OUTLOOK AND STRATEGY

With the commencement of the Lift 1 Panel 0 undercut, Turquoise Hill’s renewed partnership with the Government of Mongolia and execution of a comprehensive funding plan for the world class Oyu Tolgoi underground mine, Entrée’s primary objective for the 2022 year is 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 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.

The Company’s interim financial statements and Management’s Discussion and Analysis (“MD&A”) for the first quarter ended March 31, 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. Sandstorm, 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