Preliminary Economic Assessment of Entree Gold's Ann Mason

Preliminary Economic Assessment of Entree Gold's Ann Mason Generates
$1.11 Billion NPV Over 24 Year Initial Mine Life 
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 10/24/12 -- Entree
Gold Inc. (TSX:ETG)(NYSE MKT:EGI)(FRANKFURT:EKA) ("Entree" or the
"Company") today announced that it has received the results of a
positive Preliminary Economic Assessment ("PEA") for its 100%-owned
Ann Mason copper-molybdenum porphyry deposit in Nevada ("Ann Mason"
or the "Project"). The Project is expected to yield a base case
("Base Case"), pre-tax, 7.5% net present value ("NPV7.5") of $1.11
billion and an internal rate of return ("IRR") of 14.8%, using
assumed copper, molybdenum, gold and silver prices of $3.00/lb,
$13.50/lb, $1,200/oz and $22/oz, respectively. Using October 15, 2012
spot commodity prices of $3.71/lb copper, $10.43/lb molybdenum,
$1,736/oz gold and $33.22/oz silver ("Spot Case"), the pre-tax NPV7.5
and IRR increase to $2.54 billion and 22.9%, respectively.  
The PEA envisions an open pit and conventional sulphide flotation
milling operation with an initial 24 year mine life. Over the life of
mine ("LOM"), the Project is estimated to produce an annual average
of 214 million pounds of copper at total cash costs per pound sold,
net of by-product sales, of $1.46 per pound copper. 
PEA Highlights 

--  Base Case, pre-tax NPV7.5 of $1.11 billion, IRR of 14.8%, and payback of
    5.6 years, based on long term metal prices of $3.00/lb copper, $13.50/lb
    molybdenum, $1,200/oz gold and $22/oz silver (Table 1 below). 
--  Spot Case, pre-tax NPV7.5 increases to $2.54 billion, with an IRR of
    22.9%, and payback of 3.8 years, based on October 15, 2012 spot metal
    prices of $3.71/lb copper, $10.43/lb molybdenum, $1,736/oz gold and
    $33.22 /oz silver (Table 1 below). 
--  Development capital costs of approximately $1.28 billion, including
--  Average cash costs (net of by-product sales) of $1.46/lb copper (see
    Non-U.S. GAAP Performance Measurement below). 
--  Net annual undiscounted cash flow over the LOM is approximately $227
    million per year. 
--  100,000 tonnes per day ("tpd") conventional open pit mine utilizing a
    conventional sulphide flotation mill with a 24 year mine life. 
--  LOM production of 5.14 billion pounds of copper and 36.4 million pounds
    of molybdenum. 
--  LOM strip ratio of 2.16:1 waste to mineralized material. 
--  LOM average copper recovery of 93.5%. 
--  Clean copper concentrate grading 30%. 

The Base Case discounted cash flows in the PEA are pre-tax, and are
prepared in compliance with National Instrument 43-101 - Standards of
Disclosure for Mineral Projects ("NI 43-101") of the Canadian
Securities Administrators. The PEA was completed by AGP Mining
Consultants ("AGP"), an independent Canadian-based engineering firm.
Unless otherwise noted, a reference to "$" in this news release is to
United States currency. Due to rounding, some of the totals in the
tables in this news release may not sum exactly. The following table
summarizes the main economic outputs of the discounted cash flow. 

Table 1.  Summary of Ann Mason PEA Key Financial Outputs                    
                                                                  Spot Case 
                               Low Case  Base Case  High Case  (Oct 15/2012)
Copper              $     /lb $    2.75  $    3.00  $    3.25      $   3.71 
Molybdenum          $     /lb $   13.50  $   13.50  $   13.50      $  10.43 
Silver              $     /oz $      15  $      22  $      26      $  33.22 
Gold                $     /oz $   1,100  $   1,200  $   1,300      $  1,736 
NPV (5%)            $ Million $   1,223  $   1,918  $   2,602      $  3,846 
NPV (7.5%)          $ Million $     589  $   1,106  $   1,614      $  2,538 
NPV (10%)           $ Million $     182  $     576  $     964      $  1,669 
IRR                                11.6%      14.8%      17.8%         22.9%
Payback Period          Years       7.1        5.6        4.7           3.8 
Metal Revenue (after                                                        
 smelting, refining,                                                        
 roasting, payable) $ Million $  14,200  $  15,600  $  17,000      $ 19,500 

The PEA is preliminary in nature and includes inferred mineral
resources that are considered too speculative geologically to have
the economic considerations applied to them that would enable them to
be categorized as mineral reserves, and there is no certainty that
the PEA will be realized. Mineral resources that are not mineral
reserves do not have demonstrated economic viability.  
Greg Crowe, President and CEO commented, "This Preliminary Economic
Assessment on Ann Mason is an important milestone in the evolution of
Entree. The results clearly illustrate the potential of our 100%
owned, large tonnage, copper-molybdenum porphyry deposit. The PEA
will assist us in advancing the Project towards development, while
giving us the flexibility to consider various options, including a
strategic partnership on Ann Mason.  
Importantly, Ann Mason is located within the low-risk, mining
friendly state of Nevada, in a historic copper camp where there is
strong local community support for mining. With resource nationalism
on the rise, it is a real advantage to have an advanced property in
Nevada, where clear guidelines and a fair process facilitate the
timely development of mining projects.  
Our next step will be to move towards Pre-Feasibility on Ann Mason.
Future work will include additional drilling, particularly to the
north and west, to potentially extend the mineralization within the
current pit design and reduce the waste-to-mineralization strip
ratio. The high percentage of indicated resources in the current PEA
pit could reduce the amount of drilling required to proceed to
Pre-Feasibility. In addition, we have a land package that covers just
over eight thousand hectares, and have already identified several
other highly prospective exploration targets on the Ann Mason Project
property that warrant additional work, including surface copper oxide
showings and untested geophysical anomalies. The deposit remains open
in several directions, and we are finalizing a resource estimate for
the Blue Hill oxide-copper target, 1.5 kilometres northwest of Ann
Mining Operation  
Open pit mine design and scheduling at Ann Mason has provided the
framework for a mining operation that will be developed through five
phases over a 24 year period, at a mill feed rate of 100,000 tpd.
Mining will use conventional rotary drilling, blasting and loading
with large cable shovels and 360-tonne trucks. The open pit mine is
estimated to contain 562.2 million tonnes ("Mt") of indicated
material, or 67% of the total plant feed. An additional 274.2 Mt of
inferred material will also be directed to the mill or 33% of the
total plant feed. The LOM waste to mineralization strip ratio is
2.16:1. Pit slopes are variable depending on the geotechnical
parameters of the rock types and range from 50 degrees in the
overlying volcanic rocks, to 37 degrees in the porphyry
mineralization. The high ratio of indicated to inferred material in
the process feed emphasizes the high quality of the resource base
used for the PEA and limits the amount of additional drilling
required prior to proceeding to a Pre-Feasibility level. The LOM mill
feed grade averages 0.31% copper, 0.004% molybdenum, 0.03 grams per
tonne ("g/t") gold and 0.58 g/t silver.  
Processing and Metallurgy 
The proposed process plant is sized at 100,000 tpd of mill feed and
will consist of conventional unit operations including gyratory
crushing, SAG and ball mill grinding, rougher flotation, concentrate
regrinding, cleaner flotation, concentrate filtration, and tailings
Metallurgical testing has been completed on samples of drill core at
Metcon Research in Tucson, Arizona. The work was done on four
separate composites representing the two main mineralogical domains,
and consisted of mineralogical characterisation, grindability
testing, and batch and locked cycle flotation testing. Preliminary
grindability work has established that the feed material is of
moderate hardness, with a Bond Ball Work Index of 15.7 kilowatt-hours
per tonne and an Abrasion Index of 0.283. Locked cycle flotation
testing has demonstrated that a simple flotation flow sheet with
moderate grinds, two stages of cleaning, and low reagent additions is
able to generate a saleable copper concentrate, with no penalty
elements identified. Payable by-product levels of gold and silver are
present in the copper concentrates.  
Metallurgical predictions of 93.5% copper recovery to a concentrate
grading 30% copper are based on average values (last four cycles)
from locked cycle test data on the main zone composites, as
summarized in Table 2 below. 

Table 2.  Summary of Ann Mason PEA Metallurgical Results                    
                          Concentrate Grade             Recovery (%)        
                                       Ag     Au                            
Domains              Cu (%) Mo (%)  (g/t)  (g/t)     Cu     Mo     Ag     Au
Chalcopyrite-Bornite   35.8   1.15     69   3.80   93.7   76.9   70.3   78.2
Chalcopyrite           26.7   0.69     22   1.03   93.5   65.8   38.8   44.7

The potential for producing a separate molybdenum concentrate has
also been investigated, but larger scale testing is required in order
to generate grade and recovery estimates, as a consequence of the low
sample head grade. An estimated molybdenum recovery of 50% is based
on early-stage separation testwork.  
Capital Costs 
The pre-production capital cost estimate includes the open pit mine
capital, a 100,000 tpd processing plant, infrastructure (including a
tailings facility, power improvements, water and roads),
environmental costs, owner's and indirect costs and contingency. The
sustaining capital cost includes LOM replacement of mine and other
equipment, tailings expansions, infrastructure upgrades and
reclamation costs. Initial capital and sustaining capital costs are
summarized below in Table 3. 

Table 3.  Summary of Ann Mason PEA Capital Cost Estimates                   
                                         Capital Cost ($ Millions)          
                                Pre-Production     Sustaining               
                                    and Year 1        Capital               
Category                               Capital   (Years 2-24)  Total Capital
Open Pit                           $       358    $       371    $       730
Processing                         $       422    $         4    $       426
Infrastructure                     $       181    $        24    $       205
Environmental                      $         2    $        74    $        75
Owner's and Indirect Costs         $       194    $        44    $       238
Contingency                        $       127    $        44    $       172
Total                              $     1,283    $       562    $     1,845

Operating Costs 
Total LOM mine operating costs for the Project are expected to be
$3.82/tonne of mill feed or $1.18/tonne total material (mill feed
plus waste). LOM copper cash costs are $1.66/lb, or $1.46/lb net of
by-product (molybdenum, gold and silver) credits. Table 4 below shows
a sum of all operating cost categories on a cost per tonne of mill
feed basis over the total tonnage. 

Table 4.  Summary of Ann Mason PEA Operating Cost Estimates                
                                                    Operating Costs         
                                                   $/tonne          $/tonne 
Category                                         Mill Feed    Cu Concentrate
Mining (mill feed and waste)                          3.82               ---
Processing                                            5.13               ---
G&A                                                   0.34               ---
Subtotal On-Site Costs                                9.29               ---
Transportation, Port Costs, Shipping                   ---             88.00

PEA Mineral Resources 
Entree contracted Quantitative Group Pty Ltd ("QG") based in Perth,
Australia to prepare an updated mineral resource estimate for Ann
Mason. The current resource estimate is contained within a
constraining Lerchs-Grossmann ("LG") pit shell, generated by AGP, and
is based on approximately 33,000 metres of recent drilling in 30
holes and approximately 49,000 metres of historic drilling in 116
holes. The resource database also includes re-assaying of 6,333
samples from 44 historical Anaconda core holes, to allow molybdenum,
gold and silver values to be estimated. At a base case lower cut-off
of 0.20% copper, the deposit is estimated to contain an indicated
ineral resource of 1.14 billion tonnes ("Bt") at 0.33% copper and
0.006% molybdenum and an inferred mineral resource of 0.873 Bt at
0.29% copper and 0.004% molybdenum. By-product levels of gold and
silver were also estimated, and are shown in Table 5. The mineral
resource estimate is CIM 2010 compliant and prepared in accordance
with NI 43-101. 

Table 5.  Ann Mason Pit-Constrained Mineral Resources (S. Jackson, August   
          14, 2012)                                                         
Cut-off       Tonnes                                         lb Cu     lb Mo
(% Cu)     (million)   Cu (%)   Mo (%) Au (g/t) Ag (g/t) (billion) (billion)
0.15           1,233     0.31    0.006     0.02     0.55      8.53      0.16
0.20           1,137     0.33    0.006     0.02     0.57      8.15      0.15
0.25             912     0.35    0.006     0.03     0.60      7.02      0.12
0.30             639     0.38    0.006     0.03     0.64      5.37      0.09
0.35             388     0.42    0.007     0.03     0.69      3.58      0.06
Cut-off       Tonnes                                         lb Cu     lb Mo
(% Cu)     (million)   Cu (%)   Mo (%) Au (g/t) Ag (g/t) (billion) (billion)
0.15           1,017     0.27    0.004     0.03     0.61      6.16      0.10
0.20             873     0.29    0.004     0.03     0.65      5.59      0.08
0.25             594     0.32    0.004     0.04     0.73      4.20      0.05
0.30             330     0.36    0.004     0.04     0.81      2.60      0.03
0.35             152     0.40    0.004     0.04     0.86      1.34      0.01
1.  The mineral resource estimate has an effective date of August 14, 2012
    and was prepared by Scott Jackson, F.AusIMM from QG. 

Mineral resources that are not mineral reserves do not have
demonstrated economic viability. 
Although the mineral resources previously reported in March 2012 are
not significantly different than the total mineralized inventory,
which forms the basis of the current estimate, approximately 14% of
the previously reported mineralization at the 0.20% copper cut-off
now occurs outside of the resource constraining pit shell and
therefore is not included in the current estimate. Further
exploration may bring a portion of this additional mineralization
into a resource category. 
The key estimation parameters used by QG for the Ann Mason estimate
are as follows: 

--  Copper was interpolated using a single estimation domain created using
    an approximate 0.15% copper threshold. A similar but smaller domain was
    built for molybdenum using a 0.005% threshold. 
--  Assays were composited to 5 metres in line. 
--  Copper and molybdenum variograms show that there is not a high degree of
    anisotropy; there is a moderate nugget effect and ranges up to 300
    metres were modelled. 
--  Inside the copper domain, composites above 2% were given a restricted
    range of influence (40 metres). For molybdenum, a similar strategy was
    applied at 0.01% molybdenum. 
--  Estimation of 40 x 40 x 15 metre blocks was by Ordinary Kriging. 
--  Density in the mineralized porphyry was based on 4,051 wax-immersion
    determinations and a Kriging model was built. In the volcanics above the
    Singatse Fault a single bulk density value (2.34) based on 130
    measurements was used. 
--  The resource was classified into inferred or indicated using a number of
    factors, taking into account confidence in the model, d
ata spacing and
    various complementary geostatistical parameters, as follows: 
    --  Indicated: Material inside the 0.15% copper domain, with a spacing
        of approximately 100 x 75 metres or less and a slope of regression
        (a measure of conditional bias) above 0.7. 
    --  Inferred: Material inside the 0.15% copper domain with a spacing of
       greater than 100 metres but less than 175 metres (i.e. the rest of
        the copper domain). 
    --  Not Classified: All material outside the 0.15% copper domain or
        below the economic pit shell. 

The current Ann Mason mineral resource has been constrained by an LG
economic pit shell by AGP, using the following parameters: 

--  3-year trailing average gross metal values of $3.61/lb copper, $14.94/lb
    molybdenum, $1,425/oz gold, and $27.91/oz silver. 
--  Metallurgical recoveries of 92% copper, 50% molybdenum, 50% gold and 55%
--  Mining costs: $1.09/tonne base cost to the 1605 metre level then
    increasing by $0.02/tonne/15 metres bench below that level. 
--  Process and general management and administration ("G&A") costs of
    $6.12/tonne ($5.82/tonne process plus $0.30/tonne G&A). 
--  Pit slopes of 52 degrees in the volcanic rock and 44 degrees in the
    porphyry mineralization. 

Near Term Development and Exploration Plans  
With the com
pletion of a positive PEA study, Entree now expects to
advance to a Pre-Feasibility level on the Project. Future work will
include additional drilling, particularly to the north and west of
the Ann Mason deposit to potentially extend the mineralization within
the current pit design and reduce the waste-to-mineralization strip
ratio. In addition to the exploration potential, further work aimed
at reducing the Base Case economic cut-off has the potential to
convert existing waste material in the PEA plan into mill feed.
Continued strength in metal prices and enhancements in recoveries can
assist in lowering the mill cut-off and have the potential to provide
more tonnage for mining. This will be reviewed as the Project
progresses to the Pre-Feasibility study stage.  
Several other high-priority targets on the Ann Mason Project property
require further exploration and development. These include the Blue
Hill, Roulette and Blackjack (induced polarization ("IP") and
copper-oxide) targets and the Minnesota copper skarn target. In the
Blackjack area, IP and surface copper oxide exploration targets have
been identified for drill testing. The Minnesota skarn target
requires further drilling to test deeper IP and magnetic anomalies. 
On the near-surface Blue Hill oxide target (1.5 kilometres northwest
of the Ann Mason deposit), copper oxide mineralization extends from
surface to a maximum depth of 185 metres (ave
rage approximately 125
metres), over an area of 800 by 500 metres and remains open to the
northwest and southeast. Drilling of the underlying sulphide target
remains sparse, but has identified a target more than one kilometre
in width which remains open in most directions with potential for
expansion. Blue Hill has not been incorporated into the current PEA
study, however, an initial mineral resource estimate is being
finalized and will be released shortly. 
Non-U.S. GAAP Performance Measurement 
"Cash Costs" is a non-U.S. GAAP Performance Measurement. This
performance measure is included because this statistic is widely
accepted as the standard of reporting cash costs of production in
North America. This performance measure does not have a meaning
within U.S. GAAP and, therefore, amounts presented may not be
comparable to similar data presented by other mining companies. This
performance measure should not be considered in isolation as a
substitute for measures of performance in accordance with U.S. GAAP. 
The PEA was completed independently by AGP Mining Consultants Inc.
("AGP"), Toronto and Quantitative Group Pty Ltd ("QG"), Perth,
Australia. The information in this news release that relates to the
PEA was prepared by: Scott Jackson, F.AusIMM, Principal of QG; Gordon
Zurowski, P.Eng., Principal Mining Engineer (AGP); and Lyn Jones,
P.Eng., Senior Associate Metallurgist (AGP). 
Robert Cinits, P.Geo., Director, Technical Services with Entree, a
Qualified Person as defined by NI 43-101, approved this news release. 
A NI 43-101 compliant Technical Report, supporting the PEA and
updated mineral resource estimate ("PEA Report") will be filed on
SEDAR within 45 days. 
Entree Gold Inc. is a Canadian mineral exploration company balancing
opportunity and risk with key assets in Mongolia and Nevada. As a
joint venture partner with a carried interest on a portion of the Oyu
Tolgoi mining complex in Mongolia, Entree Gold has a unique
opportunity to participate in one of the world's largest copper-gold
projects managed by a premier mining company - Rio Tinto. Oyu Tolgoi,
with its series of deposits containing copper, gold and molybdenum,
has been under exploration and development since the late 1990s.
Phase 1 is on the verge of production, and Entree Gold could see
first development production from the joint venture ground as early
as 2015.  
In addition to being on the path to production in Mongolia, Entree
Gold has been advancing its Ann Mason Project in one of the world's
most favourable mining jurisdictions, Nevada. The Ann Mason Project
hosts a sizeable copper and molybdenum porphyry deposit within the
rejuvenated Yerington copper camp. Based on the PEA announced in
October, 2012, the Ann Mason Project is expected to yield a Base Case
pre-tax, 7.5% net present value of $1.11 billion and an internal rate
of return of 14.8%, using assumed copper, molybdenum, gold and silver
prices of $3.00/lb, $13.50/lb, $1,200/oz and $22/oz.  
Rio Tinto and Turquoise Hill Resources (formerly Ivanhoe Mines) are
major shareholders of Entree, holding approximately 13% and 11% of
issued and outstanding shares, respectively. Rio Tinto, through its
majority ownership of Turquoise Hill Resources, beneficially owns
23.6% of Entree's issued and outstanding shares. 
This News Release contains forward-looking statements and
forward-looking information (together, "forward-looking statements")
within the meaning of applicable securities laws and the United
States Private Securities Litigation Reform Act of 1995, with respect
to the estimation of mineral resources, the realization of mineral
resource estimates, future mineral production, costs of production
and capital expenditures, the availability of project financing,
potential size of a mineralized zone, potential expansion of
mineralization, the timing and results of future resource estimates,
potential type(s) of mining operation, amount or timing of proposed
production figures, permitting timelines, government regulation of
exploration and mining operations, potential metallurgical recoveries
and grades, plans for future exploration and/or development programs
and budgets, anticipated business activities, corporate strategies,
uses of funds and future financial performance. In certain cases,
forward-looking statements can be identified by the use of words such
as "plans", "expects" or "does not expect", "is expected", "budget",
"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" or "will be taken", "occur" or "be
achieved". While Entree 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
Entree's future performance and are subject to risks, uncertainties,
assumptions and other factors which could cause actual results to
differ materially from future results expressed or implied by such
forward-looking statements. Such factors and assumptions include,
amongst others, that the size, grade and continuity of deposits and
resource and reserve estimates have been interpreted correctly from
exploration results; that the results of preliminary test work are
indicative of what the results of future test work will be; that the
prices of copper, gold, silver and molybdenum and foreign exchange
rates will remain relatively stable; the effects of general economic
conditions, including inflation; future actions by Rio Tinto, joint
venture partners and government authorities including the Government
of Mongolia; the availability of capital; that applicable
legislation, including legislation with respect to taxation, will not
materially change; uncertainties associated with legal proceedings
and negotiations; 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, performances or achievements of Entree to
be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements.
Such factors include, among others, risks related to international
operations, including legal and political risk in Mongolia; recent
global financial conditions; actual results of current exploration
activities; changes in project parametres 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; possible variations in
ore reserves, grade recovery and rates; 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 described in the Company's Annual Information Form for
the financial year ended December 31, 2011, dated March 29, 2012
filed with the Canadian Securities Administrators and available at 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. 
Cautionary Note to U.S. Readers Concerning Estimates of Measured,
Indicated and Inferred Mineral Resources 
The terms "mineral resource", "measured mineral resource", "indicated
mineral resource" and "inferred mineral resource" are defined in and
required to be disclosed by NI 43-101; however, these terms are not
defined terms under the Securities Exchange Commission's Industry
Guide 7 and normally are not permitted to be used in reports and
registration statements filed with the SEC. Investors are cautioned
not to assume that all or any part of mineral deposits in these
categories will ever be converted into reserves. "Inferred mineral
resources" have a great amount of uncertainty as to their existence,
and great uncertainty as to their economic and legal feasibility. It
cannot be assumed that all or any part of an inferred mineral
resource will ever be upgraded to a higher category. Under Canadian
rules, estimates of inferred mineral resources may not form the basis
of feasibility or pre-feasibility studies, except in rare cases. 
Accordingly, information contained in this news release containing
descriptions of our mineral deposits may not be comparable to similar
information made public by U.S. companies subject to the reporting
and disclosure requirements under the United States federal
securities laws and the rules and regulations thereunder. 
Entree Gold Inc.
Mona Forster
Executive Vice President
604-687-4777 or Toll Free: 866-368-7330
604-687-4770 (FAX)
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