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 March 1,

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; future cash flows; the potential development of future phases of the Oyu Tolgoi mining complex, including Lift 2 of the Hugo North Extension deposit and the Heruga deposit; 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, Turquoise Hill Resources, Oyu Tolgoi LLC 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 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; risks related to having a minority interest in a joint venture; 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 the technical information in 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. In this presentation, all dollar amounts are expressed in United States dollars. 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 technical report titled Preliminary Economic Assessment on the Ann Mason Project, Nevada, U.S.A. with an effective date of October 24, 2012, prepared by AGP Mining Consultants Inc., Quantitative Group Pty Ltd and Porcupine Engineering Services Inc., a copy of which is available on SEDAR at 2

3 On the Path to Production Ann Mason, Nevada City of Yerington Pit outline Indicated 8.2 billion lbs Cu Inferred 5.6 billion lbs Cu 1, % Cu % Cu TSX:ETG 0.2% Cu NYSE cut-off MKT:EGI FRANKFURT:EKA 0.2% Cu cut-off Looking southeast Deposit is approx. 2.3 X 1.3 km 3

4 On the Path to Production Hugo North Extension and Heruga, Mongolia Power purchase agreement concluded November 2012 Oyu Tolgoi open pit commercial production ~H1/2013 HNE development production as early as

5 Resources Indicated Resource 1.1B lbs CuEq* (with 0.5M oz Au) % CuEq 0.6% Cut-off HNE Indicated Resource 8.2B lbs Cu 1, % Cu 0.2% Cut-off Inferred Resource 4.1B lbs CuEq* (with 3M oz Au) % CuEq 0.6% Cut-off HNE and Heruga Inferred Resource 5.6B lbs Cu % 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 $1.35/lb Cu, $650/oz Au, $10/lb Mo. Figures are NI compliant. 5

6 Shareholder Base Fully Diluted 11.5% 10.6% 8.8% 8.0% 62.4% Held by top 12 Shareholders 6.8% 4.3% 4.0% 3.6% 1.9% 1.8% 1.0% 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) Funding Agreement (February 2013) Equity Private Placement (March 2013) Ann Mason NSR (February 2013) Issued and Outstanding Options 9,223,000 (Average price ~CAD$1.98) ~CAD$6.6 million US$40 million CAD$10 million US$5 million 146,734,385 Fully Diluted Options 155,957, Week High/Low CAD$1.38 / $0.39 Analyst Coverage TD Newcrest Hallgarten & Co. CIBC 8

9 Sandstorm Financing Package Entrée received ~US$55 million: US$40 million upfront deposit CAD$10 million private placement (17,857,142 shares at CAD$0.56/share) US$5 million for a 0.4% NSR royalty on Ann Mason and Blue Hill deposits, Nevada 9

10 Financing Package Highlights Multi-faceted deal from sophisticated investor with long term vision Limited shareholder dilution Provides sufficient funding to advance key assets and other projects for several years 10

11 Financing Package Details Entrée will use production cash flow from its mineral properties to acquire and deliver metal credits to Sandstorm in an amount equal to: 25.7% and 33.8% of Entrée s share of gold and silver by-products produced from Heruga and Hugo North Extension deposits, respectively 2.5% of Entrée s share of copper produced from Heruga and Hugo North Extension deposits This represents approximately 11% of Entrée s portion of the Lookout Hill mineralization 11

12 Growth Through Exploration & Acquisitions USA Nevada Ann Mason Deposit Blue Hill Deposit Mongolia Hugo North Extension Heruga Shivee West New Mexico Lordsburg Oak Grove Peru Lukkacha Australia Blue Rose Mystique 12

13 USA 13

14 The Nevada Advantage Top global mining jurisdiction Low 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 14

15 Yerington, Nevada USA Underdeveloped camp Significant copper discoveries Camp contains >25 billion pounds Cu No major company investment Nearby deposits include: Yerington Mine - Quaterra Produced 1.9 Billion lbs Cu ( ) MacArthur Cu Ox - Quaterra 0.68 Billion lbs 0.21% Pumpkin Hollow - Nevada Copper 5.8 Billion lbs 0.48% (M&I; OP & U/G) 15

16 Ann Mason Project PEA Highlights Proposed 100,000 tpd Open pit mine Sulphide flotation mill 24 year initial mine life NPV 7.5 Base Case $1.11 billion, IRR 14.8%, 5.6 years payback Cu $3.00 / Mo $13.50 / Au $1200 / Ag $22 NPV 7.5 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. 16

17 Ann Mason Project PEA Highlights Unit Base Case* Alternative 1 Alternative 2 Spot Case** Copper $/lb $3.00 $3.25 $3.50 $3.71 NPV (5%) $ Million $1,918 $2,568 $3,217 $3,846 NPV (7.5%) $ Million $1,106 $1,589 $2,073 $2,538 NPV (10%) $ Million $576 $946 $1,315 $1,669 IRR % 14.8% 17.7% 20.4% 22.9% Payback Period Years Net Metal Revenue (after smelting, refining, roasting, payable) $ Million $15,600 $16,916 $18,202 $19,500 *Cu $3.00 / Mo $13.50 / Au $1200 / Ag $22 **Cu $3.71/lb / Mo $10.43/lb / Au $1736/oz / Ag $33.22/oz (October 15, 2012) 17

18 Ann Mason Project PEA Highlights Development capital costs (pre-production + Year 1) Average cash costs (net of by-product sales) LOM Net annual undiscounted cash flow $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 18

19 Ann Mason Deposit Cu-Mo porphyry 2.3 x 1.3 x 1 km Open Copper recovery >93% High quality copper concentrate 19

20 Ann Mason Section 304,300 E Not compliant See Appendix A for grade of each mineral used to establish the copper equivalent grades. 20

21 Ann Mason Section 4,317,700 N Not compliant See Appendix A for grade of each mineral used to establish the copper equivalent grades. 21

22 Ann Mason Deposit 8.2 Billion lbs Cu Indicated 5.6 Billion lbs Cu Inferred (0.2% Cu cut-off) 1, % Cu Indicated % Cu Inferred 22

23 Ann Mason - Blue Hill Schematic Long Section OPEN OPEN 23

24 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. Deposit outline projected to surface. 24

25 Cornerstones Jurisdiction Politically stable Certainty of process History of mining Infrastructure Power, water, road, rail Size Potential major company target Metallurgy High liberation Clean concentrate Low acid generation Caution 25

26 Game Changers Ann Mason Expansion Potential to lower strip ratio Potential to increase tonnage and mine life Investigate higher grade core at depth Blue Hill Expansion Sulphide early mill feed Oxide potential SX-EW Exploration potential Additional copper oxide Majority of project untested IP targets 26

27 % Copper Porphyry Related Copper Deposits Western North America 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. 27

28 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. 28

29 Mongolia 29

30 Strategic Partners Entrée OTLLC Joint Venture Hugo North Extension & Heruga Rio Tinto (11%)* 51% of Turquoise Hill Commitment to funding development at Oyu Tolgoi 80/70% Oyu Tolgoi LLC 20/30% Entrée Gold Turquoise Hill (9%)* 66% of Oyu Tolgoi Entrée-OTLLC JV $35,000,000 JV earn-in 34% 66% ~9% ~11% >$54 million to date Mongolian Government Turquoise Hill 51% Rio Tinto Carried Interest 20% or 30% Debt financed at prime +2% *Issued & Outstanding Rio Tinto beneficial ownership is now 20.7% due to majority ownership of Turquoise Hill 30

31 Shivee Tolgoi - Oyu Tolgoi Trends 31

32 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 32

33 Hugo North Extension Development 650 m Modified from LHTR12 Entrée has a 20% interest in the mineralization of the Hugo North Extension deposit 33

34 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 34

35 Hugo North Extension & Heruga On the Path to Production Current Premier asset High grade long life OT open pit commercial production as early as H1/2013 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 35

36 Building Value Resources inventory and relative NPV Lookout Hill Mongolia NPV8 = $129 Million Underground reserve Ann Mason Deposit Nevada Hugo North Extension Heruga NPV7.5 = $1.1 Billion Open pit mine resources PEA Inferred Indicated Mineral resources that are not mineral reserves do not have demonstrated economic viability. 36

37 TEV / M&I Resources (US$/lbs) Select Copper Developers TEV/M&I Copper Resources 1 $0.070 $0.060 $0.050 $0.040 Average: $0.032 $0.030 $0.020 $0.010 $0.000 Candente Entrée Gold² Exeter Coro Northern Dynasty Lumina Copper Curis Western Copper Redhawk Resources Sunridge Nevada Copper Quaterra Resources Nova Copper Copper Fox Polymet Mining NGEX Augusta 1 Market data as of January 16, Shown on an attributable basis. 2 Entrée Gold measured and indicated resource includes 8.15B lbs from Ann Mason and 0.93B lbs from Hugo North Extension Note: TEV refers to total enterprise value, which is the sum of market capitalization, debt & minority interests, less cash on hand. Note: Prepared for Entrée Gold using Bloomberg Financial Markets and company reports. Information has not been independently verified. 37

38 Advancing Ann Mason Blue Hill resource estimate Ann Mason updated resource estimate PEA Exploration Baseline studies and EIS Drilling Geotechnical Permitting Metallurgy Pre-feasibility? Feasibility? 38 38

39 Advancing Joint Venture Hugo North Extension and Heruga Drilling Shivee Tolgoi Drilling Javhlant Updated mine plan expected H1-14 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 39 39

40 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. 40

41 Share Price Copper Resources vs. Share Price $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $ Rio Investment HNE Discovery Share price 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 Sandstorm Financing Package Ann Mason PEA Billion Pounds Copper $ Indicated (Billion lbs) Inferred (Billion lbs) Ann Mason at 0.2% Cu Cut-off 41

42 Monica Hamm Manager Investor Relations TSX:ETG NYSE MKT:EGI FRANKFURT:EKA 42

43 Appendix A Ann Mason Deposit: Significant Drill Intercepts Reported as of July 30, 2012 * Copper Equivalent is calculated using assumed metal prices of : copper US$2.50/lb, molybdenum US$15.00/lb, gold US$1000/oz, and silver US$15.00/oz and assumed recoveries relative to copper of: molybdenum 70%, gold 85% and silver 85%. 43