Entree Gold Inc. (TSX:ETG)(NYSE MKT:EGI)(NYSE
Amex:EGI)(FRANKFURT:EKA)("Entree" or the "Company") has today filed
its interim operational and financial results for the quarter ended
September 30, 2012.
Greg Crowe, President and CEO commented, "During this most
recently completed quarter, we focused on preparing a Preliminary
Economic Assessment for our Ann Mason deposit in Nevada and
completing our Shivee West work program in Mongolia. We reached a
major milestone when we announced the results of our first economic
valuation of Ann Mason subsequent to quarter end, on October 24,
2012. In Mongolia, a power purchase agreement between Oyu Tolgoi
LLC ("OTLLC") and the Inner Mongolia Power Corporation has been
completed and commencement of phase 1 commercial production at Oyu
Tolgoi is expected in the coming months."
Highlights for the quarter ended September 30, 2012 and beyond
include:
Mongolia
Lookout Hill Joint Venture
Development of the Oyu Tolgoi mining complex continues at a
rapid pace, with Turquoise Hill Resources announcing on November 5,
2012, that OTLLC has signed a binding power purchase agreement with
the Inner Mongolia Power Corporation. Phase 1 construction is
essentially complete and Oyu Tolgoi in now on the verge of
commercial production. First development ore from the Southern Oyu
open pits has been delivered to the crusher, and commissioning of
the plant is in progress. As this project advances, the Company
looks forward to development production from the Lift 1 underground
operations on the Entree-OTLLC joint venture ground expected as
early as 2015.
Entree's joint venture partner, OTLLC, continues to explore
various targets on the Entree-OTLLC joint venture ground. One
diamond drill is currently operating north of the Hugo North
Extension deposit along the OT Trend.
Shivee West
Entree has identified two gold zones, Zone III and the Argo
Zone, on its 100% owned ground. Trenching in 2012 has confirmed and
expanded the mineralization discovered last year by reverse
circulation ("RC") drilling, returning up to 81.4 grams/tonne gold
over 3 metres within a broader mineralized zone approximately 400
metres long by 130 metres wide. The Argo Zone mineralization is
near surface and warrants further exploration.
USA
Ann Mason, Nevada
Entree's second major asset is the Ann Mason Project in the
Yerington district of Nevada. The project is well located close to
major infrastructure and in a low-risk, mining friendly
jurisdiction.
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 at total cash costs per
pound sold, net of by-product sales, of $1.46 per pound copper (see
"non-U.S. GAAP performance measures" below). 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.
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 most directions.
Other high-priority targets on the Ann Mason Project require
further exploration and development. 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.
Corporate Summary
For the three months ended September 30, 2012, net loss
decreased to $1,899,158 compared to a net loss of $3,506,238 in the
three months ended September 30, 2011. During the three months
ended September 30, 2012, Entree incurred lower operating
expenditures, primarily from decreased exploration expenses on the
Ann Mason Project, relative to the three months ended September 30,
2011. In addition to these decreased operating expenditures, the
Company recorded a deferred income tax recovery in the period and
decreased losses from equity investee resulting from a decreased
loss from the Entree-OTLLC joint venture.
SELECTED FINANCIAL INFORMATION
----------------------------------------------------------------------------
As at September As at September
30, 2012 30, 2011
(US$) (US$)
----------------------------------------------------------------------------
Working capital(1) 6,735,338 10,321,520
Total assets 67,327,578 64,897,779
Total long term liabilities 12,939,869 13,727,938
----------------------------------------------------------------------------
(1) Working Capital is defined as Current Assets less Current Liabilities
The Company's Interim Financial Statements and accompanying
management's discussion and analysis for the quarter ended
September 30, 2012 and its Annual Information Form for the year
ended December 31, 2011 are available on the Company website, on
SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Unless
otherwise noted, all figures in this news release are reported in
United States dollars.
"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.
QUALIFIED PERSON
Robert Cann, P.Geo., Entree's Vice-President Exploration, and a
Qualified Person as defined by NI 43-101, has approved the
technical information in this news 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 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 the Ann Mason copper-molybdenum deposit as well as
the Blue Hill copper deposit within the rejuvenated Yerington
copper camp.
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, commencement of 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,
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, Turquoise Hill Resources,
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;
joint venture risks; 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 and the Company's most
recent Management's Discussion and Analysis 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.
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.
Contacts: Entree Gold Inc. Mona Forster Executive Vice President
604-687-4777 or Toll Free: 866-368-7330 604-687-4770
(FAX)mforster@entreegold.com www.entreegold.com
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