Entrée Resources Ltd. Annual Operational and Financial Report 2024
Vancouver, British Columbia – March 12, 2025
Entrée Resources Ltd. (TSX: ETG; OTCQB: ERLFF), a Canadian mining company with a distinctive carried joint venture interest in the Oyu Tolgoi copper-gold project in Mongolia, has released its annual operational and financial results for the fiscal year ending December 31, 2024. All figures herein are stated in U.S. dollars unless otherwise specified.
Key Achievements in 2024
Arbitration Outcome and Joint Venture Agreement Update
On December 19, 2024, an international arbitration tribunal issued a partial final award favoring Entrée Resources in its binding arbitration against its joint venture partner Oyu Tolgoi LLC (“OTLLC”) and Turquoise Hill Resources Ltd. The tribunal ruled in Entrée’s favor on all claims, rejecting the counterclaims lodged by the opposing parties.
Following this, on February 3, 2025, Entrée and OTLLC formally executed the Joint Venture Agreement attached to the amended 2004 Equity Participation and Earn-In Agreement. This Entrée/Oyu Tolgoi Joint Venture Agreement (JVA), which governs operational activities and the obligations of each party since 2008, has an effective retrospective date of June 30, 2008, as amended in 2025.
A notable change resulting from this agreement is Entrée’s assignment of either an 80% or 70% beneficial interest (depending on mineralization depth) in the western portion of the Shivee Tolgoi mining licence (the “Shivee West Property”) to OTLLC. This property, formerly 100% owned by Entrée, is now fully integrated within the JVA, extending the definition of “Existing Licences” and “Properties” accordingly. Collectively, the assets under the Shivee Tolgoi and Javkhlant mining licences constitute the “Entrée/Oyu Tolgoi JV Property.”
License Transfer and Compliance Steps
As the JVA stipulates, OTLLC, acting as the joint venture Manager, must hold legal title to the Shivee Tolgoi and Javkhlant mining licences on behalf of the joint venture. To meet this requirement:
- On February 5, 2025, Entrée’s subsidiary, Entrée LLC, and OTLLC formally executed License Transfer Agreements.
- These agreements were submitted to the Mongolian tax authority on February 11, 2025, for tax assessment on the transfer of the licences, a mandatory legal step in Mongolia.
This timely transfer is critical to avoid delays in ongoing underground development activities planned for 2025 in the Hugo North Extension deposit (HNE), specifically related to the Lift 1 Panel 1 lateral development.
Despite the formal execution of the JVA, Entrée and OTLLC are committed to negotiating a potential conversion of this agreement into a more efficient contractual arrangement that maintains equivalent economic value. The revised agreement aims to embed mechanisms addressing obligations under Mongolian law, including sharing up to 34% of the economic benefits with the State. Until finalized, the current JVA governs all development and mining activities.
Entrée/Oyu Tolgoi Joint Venture Property Developments
Underground Development Progress
Lift 1 Panel 1 underground development commenced at the Entrée/Oyu Tolgoi JV Property on October 28, 2024, focused on the southwest corner of the Hugo North Extension deposit. Key works include:
- Initial development of the western ore handling truck chute.
- Progress at the extraction level tipple, which connects the truck chute chamber with haulage and ventilation systems.
By December 31, 2024:
- OTLLC had completed approximately 48 equivalent meters of lateral development on the return air level.
- All excavated rock was classified as waste, with no minerals or saleable products extracted yet.
Continuation of these development activities in 2025 depends on resolving outstanding issues, particularly the transfer of mining licences to OTLLC’s management.
Drilling Programs and Exploration
Entrée undertook extensive drilling in 2024 to support resource modeling and pre-feasibility studies:
- At HNE, 7 surface holes and 25 underground holes totaling over 10,800 meters were drilled, aiming towards the Lift 2 Panel 1 Pre-Feasibility Study and updated resource estimates.
- A significant 1,500-meter drill hole (EJD0099) tested extensions of the Heruga copper-gold-molybdenum deposit to the west; this marked the first drilling at Heruga since 2012.
- Despite approval for further drilling on the Heruga deposit, plans were scrapped due to rig availability, and no Heruga drilling is scheduled for 2025.
Exploration on the Shivee Tolgoi mining licence included detailed investigation of the Airport South, Ulaan Khud, and Ridge targets through drilling, soil sampling, and geophysical surveys. For Javkhlant licence, activities centered around Bumbat Ulaan and the Heruga Trend, integrating drilling, gravity surveys, CSAMT geophysical work, and mapping.
The latest assay results from 2022 to 2024 drilling programs were periodically released and will continue to be reported as received from OTLLC.
Oyu Tolgoi Underground Mine Development
The Oyu Tolgoi project comprises two key holdings:
- The Oyu Tolgoi mining licence (held by OTLLC),
- The Entrée/Oyu Tolgoi JV Property (joint venture between Entrée and OTLLC).
Rio Tinto International Holdings Ltd., owning 66% of OTLLC, manages overall operations.
In January 2025, Rio Tinto reported successful progress on the underground Lift 1 mine, aiming for Oyu Tolgoi to become the world’s fourth largest copper mine by 2030, with an average annual copper production target of approximately 500,000 tonnes between 2028 and 2036.
Recent milestones include:
- Completion of 124 Lift 1 draw bells in Panel 0, including four in Q4 2024.
- Delivery of 2.1 million tonnes of milled ore at a 1.96% average copper grade in Q4 2024.
- Commissioning Ventilation Shafts 3 and 4 in Q3 2024 to enhance mine airflows.
- Successful initiation of ore conveyor operations to surface at 1,300 meters depth as of October 2024, with ongoing commissioning projected through Q2 2025.
- Scheduled commissioning of concentrator conversion and primary crusher 2 construction, both expected to complete by the end of 2025.
- Collective Labour Agreement renewal finalized in November 2024, effective for three years.
- Planned mining in 2025 to focus on Panels 0 and 2, with development planned for Panel 1 on both the Oyu Tolgoi mining licence and the Entrée/Oyu Tolgoi JV Property.
- Ongoing Mongolian regulatory review of the 2023 Oyu Tolgoi Feasibility Study (OTFS23), which covers the Lift 1 underground mine including Panels 0, 1, and 2.
Corporate Financial Highlights
Financial Performance
- Entrée reported an operating loss of $4.8 million for 2024, slightly higher than the $4.5 million loss in 2023. The increase primarily reflects legal fees attributable to arbitration proceedings.
- Operating cash outflows before working capital adjustments were $3.3 million in 2024, compared to $3.1 million in 2023.
- As of December 31, 2024, cash reserves stood at $2.4 million, with working capital at $2.6 million.
- In a capital raise on January 24, 2025, Entrée closed a non-brokered private placement, issuing 2,577,700 units at C$2.21 each, raising approximately C$5.7 million before fees.
Assets and Liabilities
- Total assets decreased from 2023 primarily due to lower cash balances, partially offset by the capitalization of $0.2 million in development costs related to Lift 1 Panel 1 activities.
- Non-current liabilities increased due to accrual of deferred revenue finance costs and additions to the loan payable to OTLLC.
Strategic Outlook and Forward Plans
Entrée’s principal strategy focuses on full implementation of the arbitration Award, specifically the prompt transfer of the Shivee Tolgoi and Javkhlant mining licences from Entrée LLC to OTLLC. This transfer not only complies with legal obligations but is essential for efficient operations, accurate tax and royalty determinations, and uninterrupted advancement of underground development work at HNE scheduled for 2025.
Completion of licence transfers depends on tax assessments and payments in Mongolia; the process follows strict government procedures including potential corporate income and value-added tax obligations based on licence valuations as per Mongolian financial decree.
The arbitration tribunal has ruled that all taxes and fees arising from licence transfers are chargeable to the joint venture, with OTLLC expected to finance Entrée’s 20% share via an internal loan mechanism.
While ongoing, Entrée and OTLLC intend to negotiate a potential conversion of the current JVA into a more effective agreement, incorporating obligations to share economic benefits with the Mongolian State (up to 34%), as mandated by Mongolia’s Minerals Law for strategic mineral deposits. Notably, the Oyu Tolgoi group — including Hugo North Extension and Heruga deposits — are classified as strategic deposits by Mongolia’s Parliament.
If licence transfers and Award implementation are delayed, development activities at the Entrée/Oyu Tolgoi JV Property could experience setbacks.
Summary of Operating Results
- Operating losses totaled $4.8 million in 2024, versus $4.5 million in the previous year, with increased legal and advisory expenses linked to arbitration and JVA negotiations.
- Other expenses including general administration, share-based compensation, and depreciation remained consistent with 2023.
- Foreign exchange variations largely due to fluctuations between Canadian and U.S. dollars influenced financial results.
- Interest expenses relate mostly to the OTLLC loan payable, which carries a variable rate.
- Losses from equity investees correspond to exploration costs on the Entrée/Oyu Tolgoi JV Property.
- Deferred revenue finance costs pertain to non-cash accounting entries linked to streaming arrangements.
Entrée’s detailed Annual Financial Statements, Management Discussion & Analysis (MD&A), and Annual Information Form are publicly available upon request.
Qualified Person Statement
Robert Cinits, P.Geo., a Qualified Person under National Instrument 43-101 standards, has reviewed and approved the technical details included in this report. For comprehensive technical data, refer to Entrée’s NI 43-101 Technical Report on the Entrée/Oyu Tolgoi JV Project effective October 8, 2021.
About Entrée Resources Ltd.
Entrée Resources Ltd. is a financially strong Canadian mineral exploration company holding a significant carried joint venture interest in a large portion of the Oyu Tolgoi copper-gold project in Mongolia. The Company owns either a 20% or 30% carried participating interest in its joint venture property, depending on mineralization depth. Major shareholders include Horizon Copper Corp. and Rio Tinto, holding approximately 24% and 16% respectively.
Forward-Looking Statements Disclaimer
This report contains forward-looking statements regarding Entrée’s operations, arbitration proceedings, joint venture agreements, exploration, development plans, financial outlook, and other business activities. These statements are subject to risks and uncertainties including geopolitical tensions, regulatory changes, commodity price volatility, financing availability, project execution risks, the impact of global economic and political conditions, and numerous other factors which may cause actual outcomes to differ materially.
Readers are cautioned not to place undue reliance on forward-looking information. Entrée undertakes no obligation to update these statements except as required by law.
For further inquiries, please contact:
David Jan
Investor Relations
Entrée Resources Ltd.
Tel: 604-687-4777 | Toll Free: 1-866-368-7330
Email: [email protected]