VANCOUVER, Nov. 8, 2018 /PRNewswire/ - Entrée Resources
Ltd. (TSX:ETG; NYSE American:EGI – the "Company" or
"Entrée") has today filed its interim financial results for
the third quarter ended September 30,
2018. All numbers are in U.S. dollars unless otherwise
noted.
Q3 2018 HIGHLIGHTS
Entrée/Oyu Tolgoi JV Property – Mongolia
On November 1, 2018, Turquoise Hill Resources Ltd.
("Turquoise Hill") provided the following update on underground
development on the Oyu Tolgoi mining licence. The Oyu Tolgoi
project 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:
- During Q3 2018, underground lateral development progressed 3.0
equivalent kilometres for a cumulative total of 15.7 equivalent
kilometres since project restart. Until the completion of Shaft 2,
Oyu Tolgoi is expected to experience similar, but not increased,
development rates as seen in Q3 2018.
- By the end of 2018, underground development is expected to have
completed approximately 11 kilometres of equivalent development
through a mixture of mass excavation and lateral development.
- During Q3 2018, Shaft 2 collar doors and controls were
commissioned and mechanical installation of the rock breaker on the
shaft's jaw crusher was completed. Also, development of the
convey-to-surface decline continued to progress with the permanent
ventilation facility being commissioned and becoming
operational.
- Rio Tinto International Holdings Ltd. ("Rio Tinto"), in its
role as manager of Oyu Tolgoi, has undertaken its second annual
schedule and cost re-forecast for the project and, based on
preliminary results, has notified Turquoise Hill of a delay to
achievement of sustainable first production from the Oyu Tolgoi
mining licence which is now expected to occur by the end of Q3 2021
instead of Q1 2021. This is a result of certain delays including,
but not limited to, the completion of Shaft 2, which includes over
four months of schedule contingency, and challenging ground
conditions. At this time, Entrée has no information to suggest that
this will impact timing of future development or production
schedules on the Entrée/Oyu Tolgoi JV Property.
- First draw bell remains on track for mid-2020, partly due to a
change in the draw bell sequencing strategy.
- Per the Oyu Tolgoi Investment Agreement, OTLLC has been
exploring two domestic power options – a power plant built and
operated by OTLLC at the mine site or an independent power producer
located at the Tavan Tolgoi coal field. A final decision on the
outcome, cost and financing of a domestic power supply has not been
concluded.
Corporate
- Q3 2018 net loss was $0.4 million
which was an increase compared to Q3 2017 ($0.1 million) due mainly to foreign exchange
variances on the cash balance. For the 2018 year to date, net loss
was $1.2 million which is a reduction
of 43% compared to the same period of 2017 ($2.1 million). The reduction in the year to date
net loss was due to the sale of the Company's 0.5% net smelter
returns royalty on the Cañariaco project in Peru in Q2 2018 and lower administration costs
in the current periods.
- Q3 2018 operating cash outflow after working capital was
$0.2 million as compared to
$0.6 million in Q3 2017 and for the
2018 year to date, operating cash outflow after working capital was
$1.0 million compared to $2.4 million in the same period of 2017. The
reduction in operating cash outflow after working capital was due
to lower net losses in the current periods.
- The cash balance as at September 30,
2018 was $6.0 million.
OUTLOOK AND STRATEGY
Entrée/Oyu Tolgoi JV Property
With the completion and
filing of its updated technical report titled "Entrée/Oyu Tolgoi
Joint Venture Project, Mongolia,
NI 43-101 Technical Report" with an effective date of January 15, 2018 prepared by Amec Foster Wheeler
(the "2018 Technical Report") in Q1 2018, the Company is now
focused on:
- Assessing opportunities to crystallize value ahead of
production from the Entrée/Oyu Tolgoi JV Property.
- Streamlining Entrée's joint venture interest.
- Educating the market about the opportunities associated with
Entrée's interest in the Entrée/Oyu Tolgoi JV Property.
- Working with Entrée's joint venture partner to advance any
exploration opportunities on the Entrée/Oyu Tolgoi JV Property that
may exist, including several near surface targets that have been
identified.
Corporate
- The Company remains focused on maximizing investor awareness of
the results of the 2018 Technical Report and what this report means
to the Company and all stakeholders, both current and
potential.
- Corporate costs, which include Mongolian site management and
compliance costs, remain estimated to be between $1.2 million and $1.5
million for the full 2018 year.
The Company's interim financial statements and Management's
Discussion and Analysis ("MD&A") 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., Entrée's Vice President, Corporate
Development, 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.
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; the value and
potential value of assets and the ability of Entrée to maximize
returns to shareholders; timing and status of development of the
Oyu Tolgoi underground mine; plans for future exploration
and/or development programs and budgets; anticipated
business activities; proposed acquisitions and dispositions of
assets; and future financial performance.
In certain cases, forward-looking statements and information
can be identified by the use of 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, local
and global economic conditions, and the environment in which Entrée
will operate in the future, including the price of copper, gold and
silver, anticipated capital and operating costs, anticipated future
production and cash flows and the status of Entrée's relationship
and interaction with the Government of Mongolia, OTLLC, Rio Tinto and Turquoise Hill
on the Entrée/Oyu Tolgoi joint venture and the continued
development of the Entrée/Oyu Tolgoi JV Property. With respect to
the 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 the Oyu Tolgoi underground mine
(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; 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; development
plans for processing resources; matters relating to proposed
exploration or expansion; mining operational and development risks;
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 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; geotechnical or hydrogeological
considerations during mining being different from what was assumed;
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; and misjudgements 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
Entrée 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 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; 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 licences 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 MD&A and in the Company's Annual
Information Form for the financial year ended December 31, 2017, dated March 8, 2018 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