Updated Feasibility Study For Entree/Oyu Tolgoi Joint Venture Property

VANCOUVER - Entree Resources Ltd. reported on the updated Feasibility Study that was completed on its interest in the Entree/Oyu Tolgoi joint venture property. Entree has a 20% or 30% participating interest (depending on the depth of mineralization) in the joint venture with Oyu Tolgoi LLC (OTLLC) holding the remaining 80% or 70% interest. The Entree/Oyu Tolgoi JV Property comprises a significant portion of the long-life, high-grade Oyu Tolgoi copper-gold mining project in Mongolia.

Stephen Scott, President and CEO, said, "We are pleased to report updated information that aligns Entree's disclosure with that of other Oyu Tolgoi project stakeholders on development of the first lift of the underground mine. Even more exciting is that, based on OTLLC's 2020 Oyu Tolgoi Feasibility Study, first Lift 1 development production on the Entree/Oyu Tolgoi JV Property is expected to commence in 2022.  What has historically seemed like a long way out is very fast becoming a reality.  Coincident with receiving first development production, Entrée will retain 10% of the available cash flow from the sale of its share of production until its share of joint venture costs is repaid in accordance with the terms of the Joint Venture Agreement. We are also looking forward to completion of Panel 1 optimization studies currently underway that have potential to further improve Lift 1 economics for the Entree/Oyu Tolgoi JV."

The updated Feasibility Study (the "2021 Reserve Case") is based on mineral reserves attributable to the Entree/Oyu Tolgoi JV from the first lift ("Lift 1") of the Hugo North Extension deposit.  Lift 1 of Hugo North (including Hugo North Extension) is currently in development by project operator Rio Tinto as an underground block cave with first development production from Hugo North Extension expected in 2022. By 2030, Oyu Tolgoi is expected to be the fourth largest copper mine in the world.  The 2021 Reserve Case aligns the Company's disclosure with that of Turquoise Hill Resources Ltd. ("Turquoise Hill Resources") with respect to OTLLC's 2020 Oyu Tolgoi Feasibility Study ("OTFS20") completed on Hugo North (including Hugo North Extension) Lift 1.

Entree is also reporting the results of a Preliminary Economic Assessment ("2021 PEA") on a conceptual second lift ("Lift 2") of the Hugo North Extension deposit.  The 2021 PEA is based on Indicated and Inferred Mineral Resources from Lift 2, as the second potential phase of development and mining on the Hugo North Extension deposit.  Lift 2 is directly below Lift 1.  There is no overlap in the Mineral Reserves from the 2021 Reserve Case and the Mineral Resources from the 2021 PEA.  Development and capital decisions will be required for the eventual development of Lift 2 once production commences at Hugo North Extension Lift 1.

The economic analysis in the 2021 PEA is based on a conceptual mine plan and does not have as high a level of certainty as the 2021 Reserve Case. The 2021 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 2021 PEA will be realized. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.

In both the 2021 Reserve Case and the 2021 PEA, Entree is only reporting the production and cash flows attributable to the Entree/Oyu Tolgoi JV Property, not production and cash flows for other Oyu Tolgoi project areas owned 100% by OTLLC. The production and cash flows from the 2021 Reserve Case and the 2021 PEA are from separate parts of the Hugo North Extension deposit and there is no overlap of the mineralization.    

Both the 2021 Reserve Case and the 2021 PEA are based on information supplied by OTLLC or reported within OTFS20. OTFS20 discusses the mine plan for Lift 1 of the Hugo North (including Hugo North Extension) underground block cave on both the Oyu Tolgoi mining license and the Entree/Oyu Tolgoi JV Property. Rio Tinto is managing the construction and eventual operation of Lift 1, as well as any future development of Lift 2 or other deposits on the Entrée/Oyu Tolgoi JV Property.

The results of the 2021 Reserve Case and the 2021 PEA will be summarized by Wood Canada Limited ("Wood") in a National Instrument ("NI") 43-101 Technical Report that will be filed under the Company's SEDAR profile at www.sedar.com within 45 days of this news release and on the Company's website.

The Lift 1 mine design presented in OTFS20 and the 2021 Reserve Case are subject to future refinements and updates. Hugo North (including Hugo North Extension) Lift 1 surface and underground drilling programs are ongoing to support the evaluation by OTLLC of different design and sequencing options for Panels 1 and 2 as part of OTLLC's planned Pre-Feasibility and Feasibility level work. The Hugo North Extension deposit is located at the northern portion of Panel 1.

Neither OTFS20 nor the results of the 2021 Reserve Case and 2021 PEA reflect the impacts of the COVID-19 pandemic, which are ongoing and continue to be assessed by OTLLC. In particular, progress on Shafts 3 and 4 has been delayed and the overall impact of these delays is under review by OTLLC. Shafts 3 and 4 are required to support production from Panels 1 and 2 during ramp up to 95,000 tonnes per day ("tpd").

On December 18, 2020, Turquoise Hill Resources announced that a Definitive Estimate that refines the analysis in OTFS20 and broadly confirms the economics and assumptions presented therein has been completed and delivered to OTLLC by Rio Tinto. The Company has not received a copy of the Definitive Estimate and it was not reviewed or relied upon in the preparation of the 2021 Reserve Case or the 2021 PEA.  According to Turquoise Hill Resources, the Definitive Estimate assumes COVID-19 related restrictions in 2021 that are no more stringent than those experienced in September 2020. Should COVID-19 constraints continue beyond 2021, should the COVID-19 situation escalate in 2021 leading to additional restrictions, or should COVID-19 related restrictions or other non-technical criteria result in a delay in commencement of the undercut, which is currently scheduled for mid-2021, the development costs and schedule in OTFS20 and the 2021 Reserve Case and 2021 PEA could be negatively impacted.

The Entree/Oyu Tolgoi JV Property comprises a significant portion of the overall Oyu Tolgoi project area, including the Hugo North Extension copper-gold deposit on the Shivee Tolgoi mining license, the Heruga copper-gold-molybdenum deposit on the Javhlant mining license and a large prospective land package with numerous priority exploration targets. Entree has a 20% participating interest in the currently defined mineralization within the Entree/Oyu Tolgoi JV with OTLLC holding the remaining 80% interest.  Entree has a 30% participating interest in any new mineralization that could be discovered between surface and a depth of 560 meters ("m"). OTLLC has a 100% interest in other Oyu Tolgoi project areas, including the Oyut open pit, which is currently in production, and the Hugo North and Hugo South deposits on the Oyu Tolgoi mining license.