VANCOUVER, May 8, 2018 /CNW/ - 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,
2018. All numbers are in U.S. dollars unless otherwise
noted.
Q1 2018 HIGHLIGHTS
Entrée/Oyu Tolgoi JV Property
- On January 15, 2018, the Company
reported the results of an updated Technical Report titled
"Entrée/Oyu Tolgoi Joint Venture Project, Mongolia, NI 43-101 Technical Report" (the
"2018 Technical Report") that was completed by Amec Foster
Wheeler Americas Limited on the Company's carried 20% interest in
the Entrée/Oyu Tolgoi joint venture property in Mongolia (the "Entrée/Oyu Tolgoi JV
Property"). Oyu Tolgoi LLC ("OTLLC") holds the remaining
80% interest. The Entrée/Oyu Tolgoi JV Property comprises a
significant portion of the long-life, high-grade Oyu Tolgoi
copper-gold mining project in Mongolia. The 2018 Technical Report discusses
two development scenarios, an updated reserve case for Lift 1 of
the joint venture's Hugo North Extension deposit and a Life-of-Mine
Preliminary Economic Assessment ("2018 PEA") that includes
mineralization from Lift 2 and Heruga.
-
- On February 28, 2018, the Company
filed the 2018 Technical Report on SEDAR and on the Company's
website.
- Lift 1 underground development highlights (as reported by
Turquoise Hill Resources Ltd. ("Turquoise Hill"))
include:
-
- The main focus of underground development programs at the Oyu
Tolgoi project during 2017 was underground lateral development,
sinking of Shafts 2 and 5, support infrastructure and the
convey-to-surface system.
- Sinking of Shaft 5 was completed in March 2018 at a final depth of 1,178 metres.
During the fourth quarter of 2017, installation of the shaft
exhaust fan commenced and is on target to be finished in early
second quarter 2018. Shaft 5 is 6.7 metres in diameter and will be
dedicated to ventilation thereby increasing the capacity for
underground activities.
- The sinking of Shaft 2 was completed in January 2018 with fit out expected to occur over
2018. Shaft 2 will be used for access, production and
ventilation.
- During the fourth quarter of 2017 project operator Rio Tinto
undertook a schedule and cost review and reported there were no
material changes in project scope, cost or schedule.
- OTLLC continues to plan for first draw bell on its 100% owned
Oyu Tolgoi mining licence in mid-2020 and sustainable first
production from the Oyu Tolgoi mining licence in 2021.
Corporate
- On February 5, 2018, Mark Bailey was appointed to the role of
Non-Executive Chair of the Board. Mr. Bailey succeeded The Rt.
Honourable Lord Howard of Lympne, who retired from his position as
a director and Non-Executive Chair of the Board. Dr. Michael Price was also appointed to the Board of
Directors to fill the vacancy created by Lord Howard's
retirement.
- Q1 2018 net loss was $0.7 million
as compared to Q1 2017 ($1.3 million)
which was a reduction of 46% from the comparative period of
2017.
- Q1 2018 operating cash outflow after working capital was
$0.2 million (Q1 2017 - $1.2 million) and as at March 31, 2018, cash on hand was $6.6 million.
OUTLOOK AND STRATEGY
Entrée/Oyu Tolgoi JV Property
With the completion and filing of the 2018 Technical Report, 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 risk profile 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
Throughout 2018, the Company's focus will be to maximize
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,
marketing and compliance costs, continue to be estimated between
$1.2 million and $1.5 million for the full 2018 year.
SUMMARY OF FINANCIAL OPERATING RESULTS
For the three-months ended March 31,
2018, the Company's net loss from continuing operations was
$0.7 million compared to $1.1 million and $1.3
million for the comparative periods of 2017 and 2016,
respectively. The reduction from 2016 to 2018 was due to both a
reduction in exploration related expenditures and foreign exchange
fluctuations primarily related to the USD:CAD exchange rate.
Exploration costs were lower in both 2018 and 2017 compared to
2016 due to a reduction in staffing and general administrative
costs in Mongolia.
General and administration expenditures in 2018 were lower than
the same period in 2017 due to one-time strategic reorganization
costs in 2017. The expenditures in 2018 were similar to the
same period in 2016.
The total assets as at March 31,
2018 are substantially lower than the comparative periods
due to the completion of the restructuring and resulting roll out
of the Company's U.S. assets and $8,843,232 in cash and cash equivalents into
Mason Resources Corp. in Q2 2017. The non-current liabilities
as at March 31, 2018 is comparable to
the balance at March 31, 2017 and at
March 31, 2016.
The Company's Interim Financial Statements and Management's
Discussion and Analysis ("MD&A") are available on the
Company 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% carried
participating interest in the Entrée/Oyu Tolgoi joint venture, with
a 30% interest in all mineralization identified above 560 metres
elevation on the Entrée/Oyu Tolgoi JV Property. Sandstorm Gold
Ltd., Rio Tinto and Turquoise Hill 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; uses of funds; the value and
potential value of assets and the ability of Entrée to maximize
returns to shareholders; construction and continued 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, Oyu Tolgoi LLC ("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 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 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. The 2018 PEA is based on a conceptual mine plan that includes
Inferred resources. Numerous assumptions were made in the
preparation of the 2018 PEA, including with respect to mineability,
capital and operating costs, production schedules, the timing of
construction and expansion of mining and processing facilities, and
recoveries, that may change materially once production commences at
Hugo North Extension Lift 1 and additional development and capital
decisions are required. Any changes to the assumptions underlying
the 2018 PEA could cause actual results to be materially different
from any future results, performance or achievements expressed or
implied by forward-looking statements and information relating to
the 2018 PEA.
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 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
