Entree Resources - A royal premium awaits

Entrée’s carried interest in the JV (EJV) in part of the Oyu Tolgoi (OT) copper-gold mine in Mongolia confers the characteristics of a royalty company with the benefits of a producer. The key advantage is that Entrée’s JV partner, OTLLC, limits counterparty risk by affording Entrée a favourable debt account (c 5.2% interest pa dependent on RBC rates) to cover JV obligations. As Entrée’s share of OT production ramps up, debt repayments are made from 90% of attributable cash flows with excess amounts paid back to Entrée. This debt-carry mechanism effectively doubles the return on investment on Entrée’s shares relative to the IRR based on valuing the 2018 PEA outcome as a pre-development project level royalty. No other royalty company has this loan account mechanism positively affecting its cash flows. Entrée has also released its full NI43-101 technical report on the 2018 Reserve Case for developing Hugo North Extension (HNE) Lift 1, as well as a fully costed PEA-level scenario including HNE Lift 2 and its more distal project, Heruga (which is also within the area of the Entrée JV agreement) into the overall mine plan with HNE Lift 1.