On the Path to Production

Transcription

1 On the Path to Production Ann Mason Drilling Copper Oxide Ann Mason Project Entrée Gold at Oyu Tolgoi Headframe November

2 Cautionary Statement This corporate update contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of applicable Canadian securities laws. Forward-looking statements include, but are not limited to, statements 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; 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; amount and timing of proposed production figures; 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; uses of funds; proposed acquisitions and dispositions of assets; and future financial performance. While Entrée Gold Inc. ( Entrée or 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 the Company 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, molybdenum and silver will remain relatively stable; the effects of general economic conditions, changing foreign exchange rates and actions by Rio Tinto, joint venture partners and by government authorities including the Government of Mongolia; the availability of capital; that applicable legislation, including legislation with respect to 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 the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risk 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 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 risk factors described in the section entitled Risk Factors in the Company s Annual Information Form dated March 29, 2012 filed with the Canadian Securities Administrators and in the Company s most recently filed Management s Discussion and Analysis, both available at 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. Except as required under applicable securities legislation, the Company undertakes no obligation to update or revise forwardlooking statements. The Company's exploration activities are under the supervision of Robert Cann, P.Geo., Vice President, Exploration of Entrée. Mr. Cann is a qualified person as defined in National Instrument Standards of Disclosure for Mineral Projects ( NI ). Mr. Cann has approved this corporate update. All minerals reserves and mineral resources have been calculated in accordance with the standards of the Canadian Institute of Mining, Metallurgy and Petroleum and NI Cautionary Note to United States Investors: United States investors are advised that while the terms measured mineral resources, indicated mineral resources inferred mineral resources and probable mineral reserves are recognized and required by Canadian regulations, the United States Securities and Exchange Commission (SEC) does not recognize them. United States investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be upgraded to a higher category, or converted into mineral reserves. Inferred mineral resources have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally minable. Disclosure of contained ounces is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute reserves as in place tonnage and grade without reference to unit measures. Accordingly, information contained in this corporate update containing descriptions of the Company s mineral properties 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. The information in this corporate update is for informational purposes only. Readers should not rely on the information for any purpose other than to gain general knowledge of Entrée. This information is not intended to be, and should not be construed as, part of an offering or solicitation of securities. For additional information regarding Lookout Hill, see the technical report titled "Technical Report 2012 on the Lookout Hill Property" dated March 29, 2012 ("LHTR12") prepared by AMC Consultants Pty Ltd, a copy of which is available on SEDAR at For additional information regarding the Ann Mason Project, see the News Release dated October 24, The documents are available on SEDAR at and on the Company s website. All references to $ are to U.S. dollars. 2

3 On the Path to Production Ann Mason, Nevada City of Yerington Pit outline Indicated Inferred 8.2 billion lbs Cu 5.6 billion lbs Cu 1, % Cu % Cu N TSX:ETG NYSE MKT:EGI 0.2% Cu FRANKFURT:EKA cut-off 0.2% Cu cut-off 3

4 On the Path to Production Hugo North Extension and Heruga, Mongolia Oyu Tolgoi Open Pit Development Nearing Completion Phase I Construction 97% Complete HNE Development Production as early as

5 Resources Indicated Resource 1.1B lbs CuEq* (with 0.5M oz Au) 0.6% Cut-off HNE Indicated Resource 8.2B lbs Cu 0.2% Cut-off Inferred Resource 4.1B lbs CuEq* (with 3M oz Au) 0.6% Cut-off HNE and Heruga Inferred Resource 5.6B lbs Cu 0.2% Cut-off HNE = Hugo North Extension Note: 5.4B lbs Cu 0.3% Cut-off Indicated Resource and 2.6B lbs Cu Inferred Resource at 0.3% Cut-off at Ann Mason *CuEq estimated using US$1.35/lb Cu, US$650/oz Au, US$10/lb Mo. Figures are NI compliant. 5

6 Shareholder Base Fully Diluted 12.0% 10.0% 9.1% 57% Held by top 12 Shareholders 7.7% 4.8% 4.1% 2.6% 2.1% 2.1% 1.4% 1.1% 0.2% * Rio Tinto holds beneficial ownership over shares held by Turquoise Hill 6

7 Board of Directors Greg Crowe James Harris Michael Howard Lindsay Bottomer Peter Meredith Mark Bailey Alan Edwards Gorden Glenn President & CEO, Director Chairman, Director Deputy Chairman, Director VP Business Development, Director Director Director Director Director 7

8 Financial Information Treasury (As of September 30, 2012) ~Cdn$6.6 million Issued and Outstanding Options - 9,223,000 (Average price ~Cdn$1.98) Fully Diluted 52 week High / Low Analyst Coverage 128,877, ,100,243 Cdn$1.77 / $0.39 TD Newcrest Hallgarten & Co. LLC CIBC 8

9 Growth Through Exploration & Acquisitions USA Nevada Ann Mason Deposit Blue Hill Deposit New Mexico Lordsburg Oak Grove Peru Lukkacha Mongolia Hugo North Extension Heruga Shivee West Australia Blue Rose Mystique 9

10 USA 10

11 The Nevada Advantage Top global mining jurisdiction Limited political risk Long history of mining Yerington, MacArthur and Minnesota Mines Local community support Clear permitting guidelines Excellent infrastructure Power, road, water and rail near project Year round accessibility 11

12 Yerington, Nevada USA Underdeveloped camp Significant copper discoveries Camp contains >20 billion pounds Cu No major company investment Nearby deposits include: Yerington Mine - Quaterra Produced 1.9 Billion lbs Cu ( ) MacArthur - Quaterra 0.68 Billion lbs 0.21% Pumpkin Hollow - Nevada Copper 5.8 Billion lbs 0.48% (M&I; OP & U/G) 12

13 Ann Mason Project PEA Highlights Proposed 100,000 tpd Open pit mine Sulphide flotation mill 24 year initial mine life NPV7.5 Base Case $1.11 billion IRR 14.8% 5.6 years payback (Cu$3.00 / Mo$13.50 / Au$1200 / Ag$22) NPV7.5 Spot Case (Oct 15, 2012 prices) $2.54 billion IRR 22.9% 3.8 years payback (Cu$3.71 / Mo$10.43 / Au$1736 / Ag$33.22) Note: The PEA is preliminary in nature, it 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. Mineralized resources that are not mineral reserves do not have demonstrated economic viability. 13

14 Ann Mason Project PEA Highlights Unit Base Case* Spot Case** Copper $/lb $3.00 $3.71 NPV (5%) $ Million $1,918 $3,846 NPV (7.5%) $ Million $1,106 $2,538 NPV (10%) $ Million $576 $1,669 IRR % 14.8% 22.9% Payback Period Years Metal Revenue (after smelting, refining, roasting, payable) $ Million $15,600 $19,500 *Cu$3.00 / Mo$13.50 / Au$1200 / Ag$22 **Cu$3.71 / Mo$10.43 / Au$1736 / Ag$33.22 (Oct 15/2012) 14

15 Ann Mason Project PEA Highlights Item Development capital costs Average cash costs (net of by-product sales) LOM Net annual undiscounted cash flow Amount $1.28 billion $1.46/lb copper $227 million LOM Strip ratio 2.16:1 LOM Average copper recovery 93.5% Copper concentrate grade 30% LOM Copper production 5.14 billion pounds 15

16 Ann Mason Deposit Cu-Mo porphyry 2.3 km by 1.3 km >1 km depth Open Cu recovery >93% High quality Cu concentrate 16

17 Ann Mason Deposit Section 304,300 E See Appendix A for grade of each mineral used to establish the copper equivalent grades. Not compliant 17

18 Ann Mason Deposit Section 4,317,700 N See Appendix A for grade of each mineral used to establish the copper equivalent grades. Not compliant 18

19 Ann Mason Deposit Advancing to PEA 8.2 Billion lbs Cu Indicated 5.6 Billion lbs Cu Inferred (0.2% Cu cut-off) 1, % Cu Indicated % Cu Inferred (0.2% Cu cut-off) 19

20 Ann Mason - Blue Hill Schematic Long Section OPEN OPEN 20

21 Blue Hill Deposit Near surface oxide Cu and underlying Cu-Mo porphyry Inferred Mineral Resources Zone Cut-off (Cu%) Tonnes (Million) Cu (%) Cu (Million lb) Oxide/Mixed Sulphide Shallow oxide mineralization Sulphide mineralization Below oxides & continuing SE Column leaching testwork Average 85% Cu recovery (91 day column leach test) Fast extraction (60% recovery in 10 days) Mineral resources that are not mineral reserves do not have demonstrated economic viability. 21

22 Ann Mason Project Exploration potential Untested IP targets Between Ann Mason and Blue Hill Blackjack targets Untested Magnetic target Roulette Exploration potential Majority of project untested Limited outcrop 22

23 Porphyry Related Copper Deposits Western North America % Copper Red Chris* Schaft Creek Pumpkin Hollow Rosemont Copper Creek Chino Bagdad Highland Valley Gibraltar Ann Mason 1.1 Bt Mt Milligan* Copper Mountain Ajax Excelsior Mineral Park * Poplar Billion Tonnes Tyrone Yerington 0.2 Sierrita MacArthur *CuEq Inferred resources not included. Additional Ann Mason inferred resources: 873 million tonnes averaging 0.29% Cu at 0.2% Cu cut-off. Sourced from publically available documents. 23

24 Other Properties Lordsburg Porphyry discovery District known for vein style deposits Intercepts to 0.44% CuEq* over 60 m Further exploration planned Oak Grove New target Magnetic anomaly similar to Chino Mine Near producing Tyrone Mine * Copper equivalent estimated using $1.35/lb Cu and $650/oz Au. Intercept contains 0.31% Cu and 0.21 g/t Au. 24

25 Mongolia 25

26 Strategic Partners Entrée Rio Tinto (13%)* 51% of Turquoise Hill 20/30% ~13% Commitment to funding development at Oyu Tolgoi Joint Venture Entrée OTLLC Hugo North Extension & Heruga 80/70% Rio Tinto Turquoise Hill (11%)* 66% of Oyu Tolgoi Entrée-OTLLC JV Oyu Tolgoi LLC 34% 66% ~11% 51% US$35,000,000 JV earn-in >US$54 million to date Entrée 20% - OTLLC 80% (deep) Entrée 30% - OTLLC 70% (shallow) Mongolian Government Turquoise Hill Carried Interest *Issued & Outstanding Rio Tinto beneficial ownership is now 23.6% due to majority ownership of Turquoise Hill 26

27 Shivee Tolgoi - Oyu Tolgoi Trends 27

28 Oyu Tolgoi Trend *Indicated resource grade; HNE inferred resource grade = 1.4% CuEq **Inferred resource grade Modified from LHTR12 Mineral reserves are not additive to the mineral resources Copper equivalent estimated using $1.35/lb Cu, $650/oz Au, $10/lb Mo. A 0.6% CuEq cut-off was used Phase 2 does not include mine plan for Lift 2 extraction 28

29 Hugo North Extension Development 650 m Modified from LHTR12 Entrée has a 20% interest in the mineralization of the Hugo North Extension deposit 29

30 Entrée-OTLLC JV Deposit Resources Entrée ownership - 20% Carried Interest Hugo North Extension Cu-Au Heruga Cu-Au-Mo Probable Mineral Reserves * 27Mt ore 1.85% Cu and 0.72 g/t Au 1B lbs Cu / 0.53M oz Au Indicated Resources ** Inferred Resources ** 5.6B lbs CuEq 117 million tonnes *** % Cu, 0.61 g/t Au 4.6B lbs Cu / 2.3M oz Au 2.8B lbs CuEq 95.5 million tonnes *** % Cu, 0.31 g/t Au 2.4B lbs Cu / 0.95M oz Au 17.4B lbs CuEq 910 million tonnes*** 0.48% Cu, 0.49 g/t Au, 0.014% Mo 9.6B lbs Cu / 14M oz Au *The mineral reserves are not additive to the mineral resources. ** Copper equivalent estimated using $1.35/lb Cu, $650/oz Au, $10/lb Mo. *** 0.6% CuEq cutoff. Mineral resources that are not mineral reserves do not have demonstrated economic viability. HERUGA HUGO NORTH EXTENSION 30

31 Hugo North Extension & Heruga On the Path to Production Current Premier asset High grade long life OT Phase I construction 97% complete Entrée carried by debt financing at prime +2% Timeline for Entrée s Assets Development Production from HNE as early as year potential mine life LOM Case: HNE1+HNE2+Heruga HNE & Heruga Deposits remain open 31

32 Building Value Resources inventory and relative NPV Lookout Hill Mongolia NPV = $129 Million Underground reserve Ann Mason Nevada Hugo North Extension Heruga NPV = $1.1 Billion Open pit mine resources Inferred Indicated Mineral resources that are not mineral reserves do not have demonstrated economic viability. 32

33 Advancing Ann Mason Blue Hill resource estimate Ann Mason updated resource estimate PEA Exploration Baseline studies Drilling Geotechnical Permitting Metallurgy Pre-feasibility? Feasibility? 33 33

34 Advancing Joint Venture Hugo North Extension and Heruga Drilling Shivee Tolgoi Drilling Javhlant Lift 1 development Hugo North Extension development and production HNE Lift 1 production to 2030 HNE Lift 2 production to year potential production in LOM case 34 34

35 Billion lbs Current Copper Assets B lbs Cu Ann Mason 0.2 % Cu cut-off 8.2B lbs Cu B lbs CuEq* (with 3M oz Au) HNE & Heruga 0.6% CuEq cut-off 0 1.1B lbs CuEq* (with 0.5M oz Au) Indicated Inferred *CuEq estimated using $1.35/lb Cu, $650/oz Au, $10/lb Mo. Figures are NI Compliant. 35

36 Share Price Copper Resources vs. Share Price $4.00 Share price $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 Rio Investment HNE Discovery Mongolian Windfall Tax Falling Metal Prices IVN Deal Rio-IVN Exercise 2005 Warrants IVN-Rio Deal Heruga Discovery BMO Financing Investment Agreement Withdrawal of Windfall Tax PacMag Acquisition Ann Mason Updated Mineral Resources Ann Mason PEA Billion Pounds Copper $ Indicated (Billion lbs) Inferred (Billion lbs) 0 *0.2% Cu Cut-off 36

37 Appendix A 37

38 Mona Forster Executive Vice President TSX:ETG NYSE MKT:EGI FRANKFURT:EKA 38