Entree Gold Announces Fiscal Year 2012 Results and Reviews Corporate Highlights
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 04/02/13 -- Entree
Gold Inc. (TSX:ETG)(NYSE MKT:EGI)(FRANKFURT:EKA) ("Entree" or the
"Company") has today filed its annual operational and financial
results for the year ended December 31, 2012. The Company's Annual
Report on Form 40-F has been filed with the SEC, and is available on
the Company website at www.entreegold.com. Shareholders can receive a
free hard copy of the Company's audited Annual Financial Statements
upon request. All dollar figures in this news release are in United
States currency unless otherwise noted.
Greg Crowe, President and CEO commented, "The year 2012 was dominated
by global economic contractions. In spite of the fact that copper and
gold prices remained relatively strong, the junior resource industry
was hit particularly hard. One of the major impacts of this
contraction was that traditional financing sources for junior
resource companies evaporated. Entree was successful in securing a
financing package of approximately $55 million from Sandstorm Gold
Ltd. (see news release of February 15, 2013) tied to two of Entree's
main assets in Nevada and Mongolia. The equity private placement
component of this financing resulted in Sandstorm becoming one of our
largest shareholders. This financing package provides an independent
third party endorsement of our assets and has left Entree in a strong
financial position in these challenging economic times.
Entree also significantly advanced the Ann Mason Project in 2012.
This resulted in the completion of a positive Preliminary Economic
Assessment on the Ann Mason deposit (see news release of October 24,
2012) and the first resource estimate for the Blue Hill copper oxide
and sulphide deposit (see news release of October 29, 2012). The Ann
Mason deposit, located in the mining friendly and politically stable
jurisdiction of Nevada, returned a base case net present value of
$1.1 billion and a mine life of over 24 years at an average annual
production rate of 100,000 tonnes per day. Both Ann Mason and Blue
Hill have scope for optimization and expansion."
Greg Crowe further noted, "Ongoing issues between Rio Tinto and the
Mongolian government, in this Pres
idential election year in Mongolia,
have featured prominently in resource sector news. Entree, as a joint
venture partner on a portion of the Oyu Tolgoi mining complex, has
also experienced the negative effects of this uncertainty in
Mongolia. In February 2013, the Mineral Resources Authority of
Mongolia ("MRAM") temporarily suspended Entree's ability to sell or
transfer the joint venture licenses that host the Hugo North
Extension and Heruga deposits. Entree is in discussions with the
Government of Mongolia, as well as Rio Tinto and Oyu Tolgoi LLC
("OTLLC"), regarding this matter."
Highlights for the year ended December 31, 2012 and subsequent
developments through March 31, 2013 include:
Lookout Hill Joint Venture
In 2012, development and construction at the Oyu Tolgoi mining
complex advanced on schedule, with phase 1 achieving over 99%
completion at the end of the year. First ore was mined from OTLLC's
Southern Oyu open pit deposits, a Power Purchase Agreement was signed
with China in November, the concentrator was commissioned in December
and first concentrate was produced in January 2013. OTLLC is on track
for first commercial production from the Southern Oyu open pits in
mid-2013, subject to the resolution of certain issues between the
Government of Mongolia, OTLLC and Rio Tinto.
An updated mining plan based on reserves only ("Reserve Case") and
derived from the latest OTLLC technical, production and cost data was
released by Turquoise Hill Resources Ltd. in March 2013 ("2013
OTTR"). Entree today filed a separate technical report dated March
28, 2013 ("LHTR13"), which discusses the impact of the updated mine
plan on the Entree-OTLLC joint venture property.
Highlights of this report include:
-- Lift 1 of Hugo North (which includes Hugo North Extension) is the most
significant value driver for the entire Oyu Tolgoi mining complex.
-- Hugo North Extension ("HNE") hosts the highest valued ore of all the
deposits outlined in the Reserve Case, with a net smelter returns
("NSR") value of $95.21/tonne. This has increased almost 20%
compared to the NSR value of $79.40/tonne in Entree's March 2012
technical report ("LHTR12") (news release dated March 30, 2012).
-- Hugo North Extension has the highest average grade of all the Oyu
Tolgoi deposits at 1.73% copper, 0.62 grams per tonne ("g/t") gold
and 3.74 g/t silver.
-- Underground shaft development on Hugo North Extension is projected to
commence in 2016, with first Lift 1 development production commencing in
2019, ramping up to commercial production in 2023.
-- Base case cut-off grade for resources decreased from 0.6% copper
equivalent ("CuEq") to 0.37% CuEq (in line with estimated Hugo North
Lift 1 mining cut-off costs). At this new base case cut-off, the Heruga
deposit has increased in size from 910 million tonnes to over 1.8
billion tonnes. Concurrently, the grade has decreased to 0.38% copper,
0.36 g/t gold and 110 parts per million ("ppm") molybdenum from the
LHTR12 reserve case of 0.48% copper, 0.49 g/t gold and 141 ppm
-- NPV (at an 8% discount) ("NPV8") for Lift 1 Reserve Case Hugo North
Extension is now $110 million after tax.
-- NPV8 for Lift 1 Reserve Case Hugo North Extension, using the SEC
Industry Guide 7 three year trailing averages is US$150 million after
-- A significant portion of the mineralization on the Entree-OTLLC joint
venture property has not been included in the updated mining plan and
remains in the mineral resource category, including Hugo North Extension
- Lift 2 and the Heruga deposit.
-- Scenarios for mining Lift 2 at Hugo North Extension and Heruga at 75,000
tonnes per day are considered, with a decision point in 2015.
-- Expansion studies are under consideration, with a feasibility study
expected mid-2014. AMC Consultants Pty Ltd ("AMC") noted that further
design work could identify opportunities to improve project economics
through cost reductions and mine plan optimization. This may result in
further positive changes to the joint venture property development
schedule that could bring first joint venture property ore forward
relative to the current plan.
-- Underground lateral development at the Hugo North deposit was, as
planned, suspended in February 2012 to enable the upgrading of hoisting
equipment at Shaft 1 and restarted during the third quarter of 2012
following the completion of the upgrade. Approximately 1,500 metres of
lateral development were achieved from mid-September 2012 to the end of
December 2012 after the completion of the shaft changeover.
-- Exploration drilling of targets on the joint venture property continued
in 2012 with over 16,000 metres drilled on the Entree-OTLLC joint
The Company's updated technical report, titled "Technical Report 2013
on the Lookout Hill Property" ("LHTR13"), is available on SEDAR and
www.sedar.com. LHTR13 is dated March 28, 2012 and was prepared by AMC
Consultants Pty Ltd in Adelaide, Australia.
During 2012, Entree continued to explore its adjacent 35,173 hectare,
100% owned Shivee West property. The 2012 trenching program on Shivee
West expanded the new gold zone ("Argo Zone") for an additional 140
metres further north from the mineralized area defined by 2011
reverse circulation drilling and the Argo Zone now measures
approximately 400 metres long by 130 metres wide. The property
remains prospective for additional discoveries.
Of significance on the Argo Zone:
-- Trench sampling returned 81.4 g/t gold over 3 metres, confirming and
expanding 2011 high-grade surface values.
-- The combined Zone III and Argo Zones now extend over 600 metres north-
south and over widths from 50 to 150 metres.
-- Mineralization is hosted in quartz-veined felsic volcanic rocks
associated with a 2.5 kilometre long magnetic low.
Other Mongolia Matters
Following the signing of the binding Power Purchase Agreement with
China in early November 2012, electrical transmission lines for power
to the Oyu Tolgoi mine became operational.
On February 14, 2013, Turquoise Hill announced that the feasibility
study for the expansion of operations of Oyu Tolgoi (including Lift 1
of the Entree-OTLLC Joint Venture's Hugo North Extension deposit) is
expected to be completed in the first half of 2014, as Turquoise Hill
continues to pursue value engineering and optimization.
On February 27, 2013, notice (the "Notice") was delivered to Entree
by MRAM regarding Entree's mining licences in Mongolia. The Notice,
which is not explicitly concerned with the issuance of the mining
licences, further advises that any transfer, sale or lease of the
Shivee Tolgoi and Javhlant mining licences is temporarily suspended.
The mining licences have not been revoked or cancelled. Entree is
currently working to determine the full implications of the Notice
and to resolve the temporary suspension of the transfer, sale or
lease of the licences.
On March 25, 2013, Turquoise Hill announced that project financing
for the Oyu Tolgoi mining complex continues to progress with the
boards of the European Bank of Reconstruction and Development and the
International Finance Corporation approving their respective
participation in late February. Bids have been received from a number
of banks that would allow Turquoise Hill to achieve its project
financing target of $3 billion to $4 billion and discussions are
ongoing with the lenders to finalize the terms of those offers.
Turquoise Hill anticipates the closing of final binding documentation
and project financing funding to occur in the first half of 2013.
Ann Mason, Nevada
Entree's second major project is the Ann Mason Project in the
Yerington district of Nevada. On October 24, 2012, the Company
announced the results of a positive Preliminary Economic Assessment
("PEA") for its 100%-owned Ann Mason copper-molybdenum porphyry
deposit in Nevada. Ann Mason is expected to yield a 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, the pre-tax NPV7.5 and IRR increase to $2.54
billion and 22.9%, respectively. Preliminary metallurgical test
results from Ann Mason are very encouraging and indicate potential
for a high quality copper concentrate with no deleterious elements.
The PEA envisions an open pit and conventional sulphide flotation
milling operation with an initial 24 year mine life. Over the life of
mine, Ann Mason is estimated to produce an annual average of 214
million pounds of copper. 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.
Entree reported the first resource estimate for the Blue Hill copper
deposit, located 1.5 kilometres northwest of the Ann Mason
copper-molybdenum porphyry deposit, on October 29, 2012. Combined
inferred oxide and mixed resource categories total 72.13 million
tonnes ("Mt") averaging 0.17% copper (at a 0.10% copper cut-off), or
277.5 million pounds of copper. The underlying inferred sulphide
resource is estimated to contain 49.86 Mt averaging 0.23% copper at a
0.15% copper cut-off.
Preliminary metallurgy suggests the oxide and mixed copper
mineralization at Blue Hill is amenable to low-cost, heap leach and
solvent extraction/electrowinning processing. Average copper recovery
in the oxide mineralization in column leach testing is 86%, while the
mixed material returned 83% recovery (refer to News Release dated
July 26, 2012). The underlying sulphide-copper mineralization has
only been tested with ten widely spaced holes and remains open in
Further exploration is planned on other high-priority targets on the
Ann Mason Project. In the Blackjack area, induced polarization and
surface copper oxide exploration targets have been identified and
provide new targets for drill testing. The area between Ann Mason and
Blue Hill also remains highly prospective and underexplored.
On November 15, 2012, the Company filed an updated technical report
on the Ann Mason Project titled "Preliminary Economic Assessment on
the Ann Mason Project, Nevada, USA." The report was prepared by AGP
Mining Consultants Inc., and a copy is filed on SEDAR at
Other Corporate Highlights
-- In January 2012, the underwriters for the Company's November 2011
marketed offering exercised their over-allotment option pursuant to
which the Company issued 1,150,000 common shares at a price of C$1.25
per share. Rio Tinto elected to exercise its pre-emptive rights and
purchased an additional 170,455 shares at a price of C$1.25 per share.
The total gross proceeds from the over allotment were $1,628,583.
-- Gorden Glenn was appointed to Entree's board of directors on June 18,
-- Comprehensive financing package with Sandstorm Gold Ltd. was closed
subsequent to December 31, 2012. The financing package consists of three
-- Equity participation and funding agreement ("Funding Agreement")
that provides for a $40 million upfront deposit and ongoing payments
from Sandstorm. In return, Entree will use future payments that it
receives from its mineral property interests to purchase and deliver
metal credits, in amounts that are primarily indexed to Entree's
share of gold and silver by-products and, to a lesser extent, copper
production from the Company's joint venture property in Mongolia.
-- CAD$10 million private placement pursuant to which Entree issued
17,857,142 shares to Sandstorm at a price of CAD$0.56 per share.
-- US$5 million payment for a 0.4% NSR royalty on the Ann Mason and
Blue Hill deposits in Nevada.
-- For the year ended December 31, 2012, net loss decreased to
US$15,196,129 ($0.12 per share) compared to a net loss of US$17,140,208
($0.15 per share) for the year ended December 31, 2011.
For the year ended December 31, 2012, the Company incurred a net loss
of US$15,196,129 ($0.12 per share) compared to a net loss of
US$17,140,208 ($0.15 per share) for the year ended December 31, 2011.
The decrease in net loss is due to lower operating expenditures,
primarily from decreased exploration expenses on the Ann Mason
Project. In addition, a decreased loss from the Entree-OTLLC joint
venture property resulted in decreased losses from equity investee.
As at December 31, 2012, the Company had working capital of
US$4,699,256, including cash of US$4,255,508.
SELECTED FINANCIAL INFORMATION
As at December 31, As at December 31,
Working capital (1)
Total assets 64,173,530 74,589,810
Total long term liabilities 15,286,041 13,720,492
(1) Working Capital is defined as Current Assets less Current Liabilities
The Company's Annual Financial Statements, management's discussion
and analysis ("MD&A") and Annual Information Form are available on
the Company website, on SEDAR at www.sedar.com and on EDGAR at
Robert Cann, P.Geo., Entree's Vice-President, Exploration, a
Qualified Person as defined by NI 43-101, has approved the technical
information contained in this release.
ABOUT ENTREE GOLD INC.
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 one of the premier mining companies - Rio Tinto.
Oyu Tolgoi, with its series of deposits containing copper, gold and
molybdenum, has been under exploration and development since the late
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 the Ann Mason copper-molybdenum deposit as well as the Blue
Hill copper deposit within the rejuvenated Yerington copper camp.
Sandstorm, Rio Tinto and Turquoise Hill are major shareholders of
Entree, holding approximately 12%, 11% and 9% of issued and
outstanding shares, respectively.
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 future prices of copper, gold, molybdenum and silver; the
estimation of mineral reserves and resources; the realization of
mineral reserve and resource estimates; future mineral production;
costs of production and capital expenditures; the availability of
project financing; future cash flows; the potential development of
future phases of the Oyu Tolgoi mining complex, including Lift 1 and
Lift 2 of the Hugo North Extension deposit and the Heruga deposit;
statements concerning the expected timing of initial production from
Lift 1 of the Oyu Tolgoi block underground cave mine; discussions
with third parties regarding material agreements; potential actions
by the Government of Mongolia with respect to the Shivee Tolgoi and
Javhlant mining licences and the Company's interest in the Joint
Venture Property; statements regarding the expected release date of
the feasibility study for the Oyu Tolgoi mining complex; potential
size of a mineralized zone; potential expansion of mineralization;
potential discovery of new mineralized zones; the timing and results
of future resource and reserve estimates; potential types of mining
operations; government regulation of exploration and mining
operations; potential metallurgical recoveries and grades; plans for
future exploration and/or development programs and budgets;
permitting time lines; anticipated business activities; corporate
strategies; requirements for additional capital;
uses of funds; 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 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 and information. 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,
molybdenum and silver will remain relatively stable; the effects of
general economic conditions, changing foreign exchange rates and
actions by Rio Tinto, Turquoise Hill and/or OTLLC and by government
authorities including the Government of Mongolia; the availability of
capital; that applicable legislation, including legislation with
respect to mining, foreign investment, royalties and 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 and information. Such
factors include, among others, risks related to international
operations, including legal and political risk in Mongolia; risks
associated with the conduct of joint ventures; recent global
financial conditions; actual results of current exploration
activities; 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; 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, 2012, dated March 28, 2013
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.
Entree Gold Inc.
Manager, Investor Relations
604-687-4777 or Toll Free: 866-368-7330
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