VANCOUVER, Aug. 2, 2018 /CNW/ - Entrée Resources Ltd.
(TSX:ETG; NYSE American:EGI – the "Company" or
"Entrée") has today filed its interim financial results for
the second quarter ended June 30,
2018. All numbers are in U.S. dollars unless otherwise
noted.
Q2 2018 HIGHLIGHTS
Entrée/Oyu Tolgoi JV Property – Mongolia
As reported by Turquoise Hill
Resources Ltd. ("Turquoise Hill") on July
31, 2018:
- Oyu Tolgoi underground development continued to progress during
Q2 2018 including underground lateral development, the fit out of
Shaft 2, support infrastructure and the convey-to-surface
decline.
- Completion of Shaft 5 sinking in March
2018 was followed in Q2 2018 by the installation of
permanent ventilation fans and commissioning of the now fully
operational expanded Shaft 5 ventilation system.
- During Q2 2018, Shaft 2 stripping and bracket installation was
completed while cable and pipe work commenced. Fit out of Shaft 2
is expected to occur throughout 2018.
- Following reduced advancement during the Shaft 5 ventilation
system completion, in June 2018 a
record-level of equivalent underground development was achieved
with 0.9 kilometres completed.
- Progress overall during Q2 2018 was 2.4 equivalent kilometres
with a total of 12.7 equivalent kilometres of lateral development
completed since the re-start of development. During 2018,
underground development is expected to advance approximately 10.0
kilometres.
- During Q2 2018, earthworks for Shafts 3 and 4 continued and the
sinking package was awarded in July
2018.
- Per the Oyu Tolgoi Investment Agreement, Oyu Tolgoi LLC
("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.
- Production from first draw bell remains planned for mid-2020
and sustainable first production from the Oyu Toloi mining licence
in 2021.
Cañariaco Project Royalty – Peru
On June 8,
2018, the Company completed the sale of its 0.5% net smelter
returns royalty (the "Royalty") on Candente Copper Corp.'s
Cañariaco Copper Project in Northern
Peru to Anglo Pacific Group PLC ("Anglo Pacific"), a public
company listed on the London Stock Exchange and the Toronto Stock
Exchange. Under the sales agreement with Anglo Pacific, the Company transferred all the
issued and outstanding shares of its subsidiaries that directly or
indirectly hold the Royalty to Anglo
Pacific for consideration of $1.0
million, payable by the issuance of 478,951 Anglo Pacific common shares, which has resulted
in a gain of $0.4 million, net of
transaction costs. In addition, Entrée retains the right to a
portion of any future royalty income received by Anglo Pacific in relation to the Royalty as
follows:
- 20% of any royalty payment received for any calendar quarter up
to and including December 31,
2029;
- 15% of any royalty payment received for any calendar quarter
commencing January 1, 2030 up to and
including the quarter ending December 31,
2034; and
- 10% of any royalty payment received for any calendar quarter
commencing January 1, 2035 up to and
including the quarter ending December 31,
2039.
Corporate
- Q2 2018 net loss was $0.2 million
as compared to Q2 2017 ($0.7 million)
which is a reduction of 71% from the comparative period of 2017 and
for the 2018 year to date, net loss was $0.9
million, which is a reduction of 53% compared to the
comparative period of 2017 ($1.9
million). The reduction in the net loss was due to the gain
on the sale of the Royalty and lower administration costs in the
current periods.
- Q2 2018 operating cash outflow after working capital was
$0.6 million (Q2 2017 cash outflow
was $1.1 million) and for the 2018
year to date, operating cash outflow after working capital was
$0.7 million (2017 year to date cash
outflow was $2.0 million).
- The cash balance as at June 30,
2018 was $6.2 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
Americas Limited (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 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, remained 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 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, 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.
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