June 15, 2010
Files NI 43-101 Technical Report on Hugo North Extension and Heruga
Vancouver, B.C. - Entr�e Gold Inc.
(TSX:ETG; NYSE AMEX:EGI; Frankfurt:EKA � �Entr�e� or the �Company�) has filed a comprehensive NI
43-101 Technical Report (�ETR10�) on SEDAR, which can be viewed in its
entirety on www.sedar.com or Entr�e�s website at www.entreegold.com.
ETR10 outlines the
history and exploration of Entr�e�s Lookout Hill Project in Mongolia and discusses
various scenarios related to the future development of the Oyu Tolgoi mining
complex and, more specifically, the Entr�e-Ivanhoe Joint Venture Property
(�EJV Property�). ETR10 was prepared by AMEC Minproc (�AMEC�) and
includes information from Ivanhoe Mines Ltd.�s (TSX:IVN; NYSE:IVN - �Ivanhoe
Mines�) Integrated Development Plan (�IDP10�) prepared for the Oyu Tolgoi
project, discussed by Ivanhoe Mines in their news release of May 11, 2010 and
recently filed on SEDAR.
Entr�e has supplemented
the work in IDP10 with additional analysis specific to the Company and its
holdings in the Oyu Tolgoi Project area. This additional work has been
prepared by AMEC and Ernst & Young LLP to examine further
aspects of the Mineral Reserve, metal price sensitivities, Real Options
Analysis, Heruga and additional production options. Key portions of the
IDP10 that are pertinent to Entr�e were outlined in the Company�s news
release of May 11, 2010, including the first calculated mineral reserves on
the EJV Property.
The ETR10 and IDP10
present two main complementary development cases:
- Reserve Case (�Reserve Case�), based strictly on Proven and
Probable Mineral Reserves;
- Life of Mine (Sensitivity) Case (�LOM Sensitivity Case�), which
adds a large base of Inferred resources to the Reserve Case.
Further to Entr�e�s news
release of May 11, 2010, AMEC has also prepared a preliminary financial
analysis of two alternative production scenarios (�Alternative Scenarios�)
that contemplate bringing Heruga into production earlier than in the LOM
Sensitivity Case. The potential impact of the Alternative
Scenarios is provided in more detail below.
The results of the
financial analysis for the Reserve Case and the LOM Sensitivity Case in ETR10
are provided in Table 1. Net present values (�NPV�) were calculated
using a discounted cash flow (�DCF�) of 8%. The same long term metal prices
were used as in the Company�s May 11, 2010 news release, however, current
metal prices have been amended. Under the terms of the Entr�e-Ivanhoe
Joint Venture, Entr�e�s share of the development and production costs may be
debt financed by Ivanhoe Mines through a carried interest to
production. Entr�e would then receive 20% of net after tax cash flow
including repayment of debt. Alternatively, Entr�e could also elect to
seek third party financing. The Company will evaluate financing options
as the project advances.
After Tax NPV8%
After Tax NPV8%**
LOM Sensitivity Case
on long term metal prices of: copper US$2.00/lb, gold US$850/oz, silver
US$13.50/oz, molybdenum US$13.50/lb
** Based on recent metal prices of: copper US$3.00/lb, gold US$1200/oz,
silver US$13.50/oz, molybdenum US$13.50/lb
The LOM Sensitivity Case includes Inferred Resources. Under NI 43-101
guidelines inferred resources are too speculative to have economic considerations
applied to them that would allow categorization as mineral reserves, and as
such there is no certainty that the Preliminary Assessment will be
realized. The Reserve Case includes Mineral Reserves identified at
Entr�e�s Hugo North Extension and Ivanhoe Mines� Hugo North underground
operations. There is no contribution from Heruga. Reserves from
the Hugo North Extension are included in the first lift of the underground
block cave mine and production could begin as early as Year 4.
The LOM Sensitivity Case
reflects the development flexibility that exists with respect to later phases
of the Oyu Tolgoi group of deposits (including mining of the Heruga and Hugo
North Extension deposits on the EJV Property). Additionally, two
Alternative Scenarios were presented that further reflect the ability of
management to optimize economic returns after commencement of mining. These
scenarios will require separate development decisions in the future, based on
prevailing conditions at the time and the experience obtained from developing
and operating the initial phases of the Project.
Accordingly, the LOM
Sensitivity Case is effectively a Preliminary Assessment and the two
Alternative Scenarios are only production options. The Alternative
Scenarios are recommended in IDP10 as a direction for further study by OT
LLC. Insofar as these scenarios include an economic analysis that is
based, in part, on Inferred Mineral Resources, they do not have as high a
level of certainty as the Reserve Case. Inferred Mineral Resources are
considered too speculative geologically to have the economic considerations
applied to them that would allow them to be categorized as Mineral Reserves,
and there is no certainty that the LOM Sensitivity Case or either of the two
Alternative Scenarios will be realized. Mineral resources in the
indicated and inferred categories within the EJV Property ( Hugo North
Extension and Heruga deposits) have been included in this analysis.
Greg Crowe, President and
CEO of Entr�e commented; �The nature and quality of the Oyu Tolgoi deposits
allows the development team great flexibility in determining how and when
individual deposits are brought on line. Production from Heruga could
be moved to an earlier date than that proposed in the LOM Sensitivity Case
scenario, which would accrue significant economic benefits to all
stakeholders. In addition, exploration is continuing on the joint
venture ground. Discovery of extensions to the existing deposits or the
discovery of new mineralized zones would further enhance the value of the
joint venture ground.�
Deposits such as those
within the Oyu Tolgoi porphyry system (including Hugo North Extension and
Heruga), with mine lives spanning decades, are attractive to major mining
companies. Projects of this magnitude also require thorough expert
evaluation, including financial analysis that uses methodologies such as Real
Options to demonstrate potential long life values.
In the LOM Sensitivity
Case, the Heruga deposit is mined over a 30 year period, commencing in Year
27. On a traditional NPV basis, it currently has little impact on the
economics of the project. For this reason Entr�e commissioned a Real
Options analysis of the LOM Sensitivity Case by Ernst & Young LLP
(outlined in Entr�e�s news release of May 11, 2010 and detail provided in
Due to the nature of the
Oyu Tolgoi deposits, management has the flexibility to consider bringing
Heruga into production earlier. Heruga could be a completely stand
alone underground operation, separate from other underground workings. Thus,
ETR10 includes analysis that are of particular interest to Entr�e by
presenting two Alternative Scenarios that consider advancing development of
the Heruga deposit forward in the production schedule.
The Alternative Scenarios
were prepared to evaluate the development of Heruga as either a large scale
(75,000 tonnes per day) operation or as a smaller, higher grade underground
mine (25,000 tonnes per day). The smaller grade scenario would reduce
the capital infrastructure required and thus provide comparable economic
value to the larger case included in ETR10 and IDP10.
A comparison of the
Alternative Scenarios for Heruga as provided in Table 2 assumes that each
case has the same start date with discounting beginning from the time of the
investment decision. The results attributable to Entr�e as a PreTax NPV for
the Heruga Large Case and Heruga Small Case are shown below. ETR10
shows sensitivities to a range of metal prices and further discussion of
Heruga which was not included in IDP10. As the NPV calculations
presented in Table 1 reflect minimal contribution from Heruga, the
calculations in Table 2 (assuming an earlier development date for Heruga)
would be accretive to the Company.
Alternative Scenario Small Heruga
Alternative Scenario Large Heruga
values, Discounted from beginning of investment decision.
*Based on long term metal prices of: copper US$2.00/lb, gold US$850/ox,
silver US$13.50/oz, molybdenum US$13.50/lb
** Based on recent metal prices of: copper US$3.00/lb, gold US$1200/ox,
silver US$13.50/oz, molybdenum US$13.50/lb
Moving Heruga production forward would have a significant impact on the
economics of the deposit. The analysis includes Inferred resources under NI
43-101 guidelines inferred resources are too speculative to have economic
considerations applied to them that would allow categorization as mineral
reserves, and as such there is no certainty that the preliminary assessment
will be realized.
The NPV calculations for
the Alternative Scenarios for Heruga are preliminary and may not be
realized. These studies, however, illustrate the potential unrealized
value of Heruga which cannot be documented in a standard NPV calculation
based on currently defined reserves. The discovery and development of
any additional economic mineralization through exploration will only increase
the value of the EJV Property.
of ETR10 and Qualified Persons
ETR10 was prepared under
the supervision of AMEC Minproc Limited. Bernard Peters, as Lookout Hill
Technical Report Study Director for AMEC Minproc Limited and Qualified Person
as defined in National Instrument 43-101, has reviewed, verified and approved
the technical contents of this news release.
The Qualified Persons and
their areas of responsibility in relation to the Technical Report are:
- Bernard Peters, B.Eng. (Mining), M. AusIMM (201743), employed by
AMEC Minproc Limited as Principal Mining Consultant, was responsible for
the overall preparation of the report and, in particular, the open-pit
mineral reserve estimate of the Technical Report.
- Scott Jackson, B.Sc. (Hons), CFSG, M. AusIMM (201735), employed
by Quantitative Geoscience Pty. Ltd. (trading as �Quantitative Group�
and �QG�) as Principal Consultant, was responsible for preparation of
the Mineral Resources.
- John Vann, B.App.Sc., B.Sc. (Hons), M.Sc., F.Aus.I.M.M. (103352),
F.A.I.G., M.S.E.G, employed by Quantitative Geoscience Pty. Ltd. (trading as �Quantitative
Group� and �QG�) as Principal Consultant, was responsible for
preparation of the Mineral Resources.
- Albert Chance, B.App.Sc.,
Association of Professional Engineers of the Province of British
Columbia (no. 16370), an employee of Golder Associates Ltd., was
responsible for preparation of the subsection on OT LLC Licence Open Pit
- George R Stephan, E.M.
(Engineer of Mines), MBA, Qualified Professional Member Mining and
Metallurgical Society of America an employee of Stantec Mining (formerly
McIntosh Engineering), was responsible for the underground mineral
reserve estimate of the Technical Report.
- Jarek Jakubec, C.Eng., an
employee of SRK Consulting Inc., was responsible for preparation of the
subsection on Underground Mine Geotechnical Sections
- Dean David, B.App.Sc.
(Metallurgy),F AusIMM.(102351), employed by AMEC Minproc Limited
as Process Consultant, was responsible for preparation of the Processing
- Bruce Brown, PE.PhD., employed
by Rio Tinto Technology and Innovation as Principal Advisor � Water,
Waste and Tailings, was responsible for preparation of the Tailing
Storage Facility Sections.
Please click here to view the Lookout Hill Property Technical
ABOUT ENTR�E GOLD INC.
Entr�e Gold Inc. is a Canadian mineral exploration company focused on the
worldwide exploration and development of gold and copper prospects. The
Company flagship property is in Mongolia, where it holds two mining licences
(Shivee Tolgoi and Javhlant) and one exploration licence (Togoot). Lookout
Hill completely surrounds the 8,500-hectare Oyu Tolgoi project of Ivanhoe
Mines, and hosts the Hugo North Extension copper-gold deposit and the Heruga
copper-gold-molybdenum deposit. A portion of the Shivee Tolgoi mining
licence and the entirety of the Javhlant mining licence are subject to a
joint venture with Ivanhoe Mines, through its subsidiary Oyu Tolgoi LLC
(formerly known as Ivanhoe Mines Mongolia Inc. XXK � �IMMI�).
Under the terms of the joint venture, Entr�e is carried through to
production, at its election, by debt financing from Ivanhoe Mines with
interest accruing at Ivanhoe Mines� actual cost of capital or prime +2%,
whichever is less, at the date of the advance. Debt repayment may be
made in whole or in part from (and only from) 90% of monthly available cash
flow arising from its sale of product. Such amounts will be applied
first to payment of accrued interest and then to repayment of
principal. Available cash flow means all net proceeds of sale of
Entr�e�s share of products in a month less Entr�e�s share of costs of
operations for the month.
The Company continues to explore its landholdings in Mongolia while also
evaluating new opportunities throughout eastern Asia. Entr�e is
exploring the Huaixi copper project in Zhejiang Province in China, under the
terms of an agreement with the No. 11 Geological Brigade.
In North America, the Company is exploring for porphyry-related copper
systems in Arizona and New Mexico under two agreements with Empirical
Discovery LLC. In 2009, Entr�e optioned two contiguous properties, Blackjack
and Roulette, in the Yerington porphyry copper district of Nevada through
option agreements with HoneyBadger Exploration Ltd. and Bronco Creek
In November 2009, Entr�e announced an agreement with PacMag Metals
Limited to implement Australian Schemes of Arrangement to acquire all of the
issued shares and options of PacMag. PacMag holds the rights to land
contiguous with the Blackjack and Roulette properties and hosts the Ann Mason
deposit. The shareholders and optionholders of PacMag voted overwhelmingly in
favour of the merger by Schemes of Arrangement on June 4, 2010. The
merger was approved by the Federal Court of Australia on June 15, 2010, when
the Second Court Hearing was convened and the transaction becomes effective
June 16, 2010. In British Columbia, Entr�e has the right to earn 100%
interest in the early stage copper-molybdenum Crystal property through an
agreement with Taiga Consultants Ltd.
The Company is also seeking additional opportunities to utilize its
expertise in exploring for deep and/or concealed ore deposits. With a
treasury of approximately C$38 million, the Company is well funded for future
Rio Tinto and Ivanhoe Mines are major shareholders of Entr�e, holding
approximately 15% and 14% of issued and outstanding shares, respectively.
Monica Hamm, Manager, Investor Relations
Entr�e Gold Inc.
Toll Free: 866-368-7330
News Release contains forward-looking statements. Forward-looking statements
are statements which relate to future events. In some cases, you
can identify forward-looking statements by terminology such as �may�,
�should�, �expects�, �plans�, �anticipates�, �believes�, �estimates�,
�predicts�, �potential� or �continue� or the negative of these terms or other
comparable terminology. These
include, but are not limited to: timing for first production; successful
resolution of regulatory and administrative issues related to the timing of
commencement of full construction of the Oyu Tolgoi Project; the estimated
timing and cost of bringing the Oyu Tolgoi Project into commercial
production; anticipated future production and cash flows; target milling
rates; the ability of the partners to arrange financing for construction of
the Oyu Tolgoi Project; the Schemes of Arrangement with PacMag, the impact of
amendments to the laws of Mongolia and other countries in which Entr�e
carries on business; and other statements that are not historical facts.
These statements are only predictions and involve known and unknown risks,
uncertainties and other factors that may cause our or our industry�s actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.
While these forward-looking
statements, and any assumptions upon which they are based, are made in good
faith and reflect our current judgment regarding the direction of our
business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions or other future
performance suggested herein. Except as required by applicable law, including
the securities laws of the United States, the Company does not intend to
update any of the forward-looking statements to conform these statements to
actual results. Readers are referred to the sections entitled �Risk Factors�
in the Company�s periodic filings with the British Columbia Securities
Commission, which can be viewed at www.SEDAR.com, and with the United States Securities and
Exchange Commission, which can be viewed at www.SEC.gov.
1201 - 1166 Alberni Street
Canada V6E 3Z3
Telephone: (604) 687-4777
Facsimile: (604) 687-4770
(NYSE Amex: EGI)