VANCOUVER, Nov. 14, 2017 /CNW/ - Entrée Resources Ltd.
(TSX:ETG; NYSE American:EGI – the "Company" or
"Entrée") is pleased to report its financial results for the
three and nine months ended September 30,
2017. Details of the Company's third quarter 2017 financial
results are contained in the unaudited consolidated financial
statements and management's discussion and analysis, which are
available on the Company's website at www.EntreeResourcesLtd.com,
on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. All figures
are in US dollars unless otherwise noted.
THIRD QUARTER 2017 HIGHLIGHTS
Entrée/Oyu Tolgoi JV Property
- Entrée has engaged its consultants, Amec Foster Wheeler
Americas Limited ("Amec Foster Wheeler") to commence work on an
updated National Instrument 43-101 Technical Report (the "Technical
Report") on Entrée's 20% participating interest in the Entrée/Oyu
Tolgoi joint venture ("Entrée/Oyu Tolgoi JV") in Mongolia. Completion of the Technical Report
will be a significant milestone for the Company as it will enable
management to discuss preliminary economics for potential future
phases of the Oyu Tolgoi mine, where a significant amount of the
Entrée/Oyu Tolgoi JV's mineralization occurs, thereby helping
investors to understand the underlying value of Entrée's flagship
asset. The updated Technical Report will include:
-
- an updated reserve case for the first lift ("Lift 1") of the
Hugo North Extension block cave on the Entrée/Oyu Tolgoi JV
property. The reserve will be based on information contained within
the 2016 Oyu Tolgoi Feasibility Study finalized in May 2016 by Entrée's joint venture partner Oyu
Tolgoi LLC ("OTLLC"). First development production from Lift 1 on
the Entrée/Oyu Tolgoi JV property is expected in approximately
2021; and
- a Preliminary Economic Assessment of Entrée's interest in both
Lift 2 of the Hugo North Extension copper-gold deposit ("Lift 2")
and the Heruga copper-gold-molybdenum deposit ("Heruga").
- Entrée management visited the Oyu Tolgoi mine in early
September and had an opportunity to tour some of the main surface
infrastructure, including the concentrator and tailings facilities
and to also go underground to observe some of the development work
completed to date. This visit included a review of plans with OTLLC
for the immediate and medium-term future. Entrée is pleased to
report that project development, including both direct production
and supporting infrastructure, appears to be on track and is being
completed to the highest safety and operating standards.
- The development of Shaft 4, which is the first physical
development work on the Entrée/Oyu Tolgoi JV property, is expected
to commence in 2018. Shaft 4 will provide the necessary ventilation
required to support mining of the northern part of the Hugo North
deposit (including Hugo North Extension on the Entrée/Oyu Tolgoi JV
property), which is reported to contain some of the highest-grade
copper-gold mineralization in the entire Oyu Tolgoi project.
Completion of Shaft 4 is expected in 2021.
- As reported by Turquoise Hill Resources Ltd. ("Turquoise Hill")
on November 2, 2017, production from
the Lift 1 underground mine, which starts on OTLLC's Oyu Tolgoi
mining license, remains on track for first draw bell in mid-2020
and sustainable first production in 2021. Activities reported in Q3
2017 include:
-
- Underground lateral development made good progress with
approximately 1.4 equivalent kilometres completed. Since the
re-start of development in 2016, a total of 5.4 equivalent
kilometres of lateral development has been completed.
- The third development crew was deployed. Crews four and five
were in training during the quarter and are expected to be deployed
during Q4 2017. Also during Q3 2017, commissioning of the new 3,500
tonne per day development crusher was completed. With the
deployment of crews four and five, a step up in lateral development
rates is expected to begin in Q4 2017.
- At the end of Q3 2017, Shaft 2 sinking was at 1,249 metres and
work had commenced on the service-level excavation that has a floor
at 1,256 metres. Shaft 2 sinking is expected to be complete in 2017
at a final depth of 1,284 metres with fit out occurring over 2018.
Shaft 2 is key to future increases in lateral development
activity.
- Shaft 5 sinking progressed approximately 214 metres during Q3
2017. During September, the underground team achieved the best
sinking rate for Shaft 5 since project re-start averaging 2.6
metres per day. Sinking of Shaft 5 began slower than expected due
to an extended construction re-start period and lower productivity
with completion now likely in early 2018. When completed, Shaft 5
will be dedicated to ventilation thereby increasing the capacity
for underground activities; however, with good early progress and
continued on-plan lateral development, the completion of Shaft 5
sinking in early 2018 is not expected to materially impact the
lateral development plan.
- Development of the convey-to-surface decline continued to
progress with month-on-month improvement resulting from the use of
project-wide process optimization techniques. The convey-to-surface
system is the eventual route of the full 95,000 tonne per day
underground ore delivery system to the concentrator; however, it is
not a critical path item for first draw bell planned in mid-2020.
Expected completion of the convey-to-surface system is 2022, which
will facilitate the ramp up to full production by 2027.
Corporate
- Q3 2017 net loss from continuing operations, was $0.3 million as compared to Q3 2016 ($1.0 million), a reduction of 70% from the
comparative period of 2016.
- As at September 30, 2017, cash on
hand was $7.7 million with a working
capital balance of $7.8 million.
OUTLOOK AND STRATEGY
Entrée/Oyu Tolgoi JV Property
Amec Foster Wheeler has
completed its initial data review, and has commenced work on an
updated Technical Report relating to Entrée's 20% participating
interest in the Entrée/Oyu Tolgoi JV in Mongolia.
As previously noted, the updated Technical Report will include an
updated reserve case for Lift 1 of the Hugo North Extension block
cave on the Entrée/Oyu Tolgoi JV property and a Preliminary
Economic Assessment of Entrée's interest in both Lift 2 and Heruga.
The updated reserve case will be based on information contained
within the 2016 Oyu Tolgoi Feasibility Study finalized in
May 2016 by Entrée's joint venture
partner OTLLC. First development production from Lift 1 on the
Entrée/Oyu Tolgoi JV property is expected in approximately 2021.
The Company estimates the cost to be approximately $0.5 million to complete and publish the
report. The Technical Report is expected to be completed by
January 2018.
Corporate
With the completion of the restructuring
done early in the year and the commencement of the Technical
Report, the Company's focus will be to maximize investor awareness
of the impending Technical Report and what the results of this
report mean to the Company and all stakeholders, both current and
potential. Corporate costs going forward are estimated at
$0.3 million per quarter, which
include marketing and compliance costs, and the Company continues
to estimate total corporate costs of between $1.6 million and $1.8 million for the 2017
year.
QUALIFIED PERSON
Robert Cinits, P.Geo., Entrée's Vice
President, Corporate Development, a Qualified Person as defined by
National Instrument 43-101, has approved the technical information
in this release.
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. The Entrée/Oyu Tolgoi joint venture property
includes the Hugo North Extension and Heruga copper-gold deposits,
as well as a large underexplored, highly prospective land package.
Rio Tinto is managing the construction of Lift 1 of the Hugo North
underground block cave on both the Oyu Tolgoi mining license and
the Entrée/Oyu Tolgoi joint venture property. Lift 1 underground
development is fully financed. Entrée has a 20% carried
participating interest in the Entrée/Oyu Tolgoi joint venture, with
a 30% interest in all mineralization identified above 560 metres
elevation from the Entrée/Oyu Tolgoi joint venture property.
Sandstorm Gold Ltd., Rio Tinto and Turquoise Hill Resources Ltd.
are major shareholders of Entrée, holding approximately 14%, 10%
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; requirements for additional
capital; uses of funds; the value and potential value of assets and
the ability of Entrée to maximize returns to shareholders;
anticipated future production, capital and operating costs, cash
flows and mine life; completion of an updated Technical Report that
includes a Preliminary Economic Assessment of Entrée's interest in
Lift 2 of the Hugo North Extension deposit and the Heruga deposit;
the expected timing of first physical development on the Entrée/Oyu
Tolgoi joint venture property; the expected timing for completion
of Shaft 4; the expected timing of first development production
from Lift 1 of the Hugo North Extension deposit; construction and
continued development of the Oyu Tolgoi underground mine;
anticipated business activities; proposed acquisitions and
dispositions of assets; and future financial performance.
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, local and global
economic conditions, legal proceedings and negotiations and the
environment in which the Company will operate in the future,
including the price of copper, gold and silver, and the status of
the Company's relationship and interaction with the Government of
Mongolia, Oyu Tolgoi LLC
("OTLLC"), Rio Tinto and Turquoise Hill Resources Ltd. ("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 power source
for the Oyu Tolgoi underground mine; the ability of OTLLC to 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; delays, and the costs which would
result from delays, in the development of the underground mine;
projected copper, gold and silver prices and demand; and production
estimates and the anticipated yearly production of copper, gold and
silver at the Oyu Tolgoi underground mine. Other
uncertainties and factors which could cause actual results to
differ materially from future results 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; the size, grade and continuity of
deposits not being interpreted correctly from exploration results;
the results of preliminary test work not being indicative of the
results of future test work; fluctuations in commodity prices and
demand; changing foreign exchange rates; actions by Rio Tinto,
Turquoise Hill and/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 power, water,
skilled labour, transportation and appropriate smelting and
refining arrangements; and misjudgments in the course of preparing
forward-looking statements.
In addition, there are also known and unknown risk factors
which may cause the actual results, performance or achievements of
the Company to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements and information. Such factors include,
among others, risks related 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; discrepancies between actual
and anticipated production, mineral reserves and resources and
metallurgical recoveries; global financial conditions; changes in
project parameters as plans continue to be refined; inability to
upgrade Inferred mineral resources to Indicated or Measured mineral
resources; inability to convert mineral resources to mineral
reserves; conclusions of economic evaluations; future prices of
copper, gold, silver and molybdenum; failure of plant, equipment or
processes to operate as anticipated; accidents, labour disputes and
other risks of the mining industry; delays in obtaining government
approvals, permits or licenses or financing or in the completion of
development or construction activities; environmental risks; title
disputes; limitations on insurance coverage; as well as those
factors discussed in the Company's most recently filed Management's
Discussion and Analysis and in the Company's Annual Information
Form for the financial year ended December
31, 2016, dated March 10, 2017
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.
SOURCE Entrée Resources