Entree Gold November Corporate Presentation


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Entree Gold November Corporate Presentation

  1. 1. On the Path to Production Copper OxideAnn Mason Ann Mason Project Entrée Gold at Drilling Oyu Tolgoi Headframe November 2012 TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 1
  2. 2. Cautionary StatementThis 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 meaningof 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; therealization 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 andtiming of proposed production figures; government regulation of exploration and mining operations; potential metallurgical recoveries and grades; plans for future exploration and/or developmentprograms 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, thestatements 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 fromfuture 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 andreserve 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 ofcopper, 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 bygovernment 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 riskfactors 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 bythe 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; actualresults 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, graderecovery 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 factorsdescribed 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 recentlyfiled Management’s Discussion and Analysis, both available at www.sedar.com. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and futureevents 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 forward-looking statements.The Companys 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 43-101- Standards of Disclosure for Mineral Projects (“NI 43-101”). 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 43-101. Cautionary Note toUnited States Investors: United States investors are advised that while the terms “measured mineral resources”, “indicated mineral resources” “inferred mineral resources” and “probable mineralreserves” 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 toassume 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 amountof 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 othereconomic 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 “containedounces” 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 gradewithout reference to unit measures. Accordingly, information contained in this corporate update containing descriptions of the Company’s mineral properties may not be comparable to similarinformation 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. Thisinformation 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 ConsultantsPty Ltd, a copy of which is available on SEDAR at www.sedar.com. For additional information regarding the Ann Mason Project, see the News Release dated October 24, 2012. The documents areavailable on SEDAR at www.sedar.com and on the Company’s website. All references to “$” are to U.S. dollars. TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 2
  3. 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 CuN 1,137 Mt @ 0.33% Cu TSX:ETG | NYSE MKT:EGI Cu cut-off 0.2% | FRANKFURT:EKA 873 Mt @ 0.29% Cu 0.2% Cu cut-off 3
  4. 4. On the Path to ProductionHugo North Extension and Heruga, Mongolia Oyu Tolgoi Open Pit Development Nearing Completion Phase I Construction 97% Complete HNE Development Production as early as 2015 TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 4
  5. 5. Resources Indicated Resource 1.1B lbs CuEq* (with 0.5M oz Au) 0.6% Cut-off HNE Inferred Resource 4.1B lbs CuEq* (with 3M oz Au)Indicated Resource 0.6% Cut-off HNE and Heruga 8.2B lbs Cu 0.2% Cut-offInferred 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 43-101 compliant. TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 5
  6. 6. Shareholder Base Fully Diluted 12.0% 57% 10.0% Held by top 12 9.1% Shareholders 7.7% 4.8% 4.1% 2.6% 2.1% 2.1% 1.4% 1.1% 0.2% TSX:ETG | NYSE* Rio Tinto holds beneficial ownership over shares held by Turquoise Hill MKT:EGI | FRANKFURT:EKA 6
  7. 7. Board of DirectorsGreg Crowe President & CEO, DirectorJames Harris Chairman, DirectorMichael Howard Deputy Chairman, DirectorLindsay Bottomer VP Business Development, DirectorPeter Meredith DirectorMark Bailey DirectorAlan Edwards DirectorGorden Glenn Director TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 7
  8. 8. Financial InformationTreasury (As of September 30, 2012) ~Cdn$6.6 millionIssued and Outstanding 128,877,243Options - 9,223,000 (Average price ~Cdn$1.98)Fully Diluted 138,100,24352 week High / Low Cdn$1.77 / $0.39Analyst Coverage TD Newcrest Hallgarten & Co. LLC CIBC TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 8
  9. 9. Growth Through Exploration & AcquisitionsUSANevada MongoliaAnn Mason Deposit Hugo North ExtensionBlue Hill Deposit Heruga Shivee WestNew MexicoLordsburgOak Grove AustraliaPeru Blue RoseLukkacha Mystique TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 9
  11. 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 TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 11
  12. 12. Yerington, NevadaUSA 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 (1918-1982) · MacArthur - Quaterra 0.68 Billion lbs Cu @ 0.21% · Pumpkin Hollow - Nevada Copper 5.8 Billion lbs Cu @ 0.48% (M&I; OP & U/G) TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 12
  13. 13. Ann Mason ProjectPEA 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. TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 13
  14. 14. Ann Mason ProjectPEA Highlights Unit Base Case* Spot Case**Copper $/lb $3.00 $3.71NPV (5%) $ Million $1,918 $3,846NPV (7.5%) $ Million $1,106 $2,538NPV (10%) $ Million $576 $1,669IRR % 14.8% 22.9%Payback Period Years 5.6 3.8Metal Revenue $ Million $15,600 $19,500(after smelting, refining, roasting, payable)*Cu$3.00 / Mo$13.50 / Au$1200 / Ag$22**Cu$3.71 / Mo$10.43 / Au$1736 / Ag$33.22 (Oct 15/2012) TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 14
  15. 15. Ann Mason ProjectPEA Highlights Item AmountDevelopment capital costs $1.28 billionAverage cash costs (net of by-product sales) $1.46/lb copperLOM – Net annual undiscounted cash flow $227 millionLOM – Strip ratio 2.16:1LOM – Average copper recovery 93.5%Copper concentrate grade 30%LOM – Copper production 5.14 billion pounds TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 15
  16. 16. Ann Mason DepositCu-Mo porphyry  2.3 km by 1.3 km  >1 km depth  Open  Cu recovery >93%  High quality Cu concentrate TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 16
  17. 17. Ann Mason DepositSection 304,300 E See Appendix A for grade of each mineral used to establish the copper equivalent grades. TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA Not 43-101 compliant 17
  18. 18. Ann Mason DepositSection 4,317,700 N See Appendix A for grade of each mineral used to establish the copper equivalent grades. TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA Not 43-101 compliant 18
  19. 19. Ann Mason DepositAdvancing to PEA 8.2 Billion lbs Cu Indicated 5.6 Billion lbs Cu Inferred (0.2% Cu cut-off) 1,137 Mt @ 0.33% Cu Indicated 873 Mt @ 0.29% Cu Inferred (0.2% Cu cut-off) TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 19
  20. 20. Ann Mason - Blue HillSchematic Long Section OPEN OPEN TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 20
  21. 21. Blue Hill Deposit Near surface oxide Cu and underlying Cu-Mo porphyry Inferred Mineral Resources Cut-off Tonnes Cu Cu Zone (Cu%) (Million) (%) (Million lb)Oxide/Mixed 0.10 72.13 0.17 277.49Sulphide 0.15 49.86 0.23 253.46  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. TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 21
  22. 22. Ann Mason ProjectExploration potential Untested IP targets  Between Ann Mason and Blue Hill  Blackjack targets Untested Magnetic target  Roulette Exploration potential  Majority of project untested  Limited outcrop TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 22
  23. 23. Porphyry Related Copper Deposits Western North America 1.5 Red Chris* 0.5 Pumpkin Hollow 1.0 Schaft Creek Rosemont Copper Creek Chino 0.5 0.4 % Copper Ajax Billion Tonnes Mt Milligan* Bagdad Excelsior Mineral Park * 0.3 Ann Mason Tyrone Copper 1.1 Bt Mountain Poplar Gibraltar Yerington Highland Valley MacArthur 0.2 Sierrita*CuEqInferred 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. TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 23
  24. 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 TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 24 * Copper equivalent estimated using $1.35/lb Cu and $650/oz Au. Intercept contains 0.31% Cu and 0.21 g/t Au.
  25. 25. MongoliaTSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 25
  26. 26. Strategic Partners Rio Tinto (13%)* Entrée 51% of Turquoise Hill 20/30% Commitment to funding development ~13% at Oyu Tolgoi Joint Venture Entrée – OTLLC Turquoise Hill (11%)* Hugo North Extension Rio 66% of Oyu Tolgoi & Heruga Tinto 80/70% Entrée-OTLLC JV ~11% US$35,000,000 JV earn-in Oyu Tolgoi LLC >US$54 million to date 51% Entrée 20% - OTLLC 80% (deep) 34% 66% Entrée 30% - OTLLC 70% (shallow) Carried Interest Mongolian Turquoise Hill Government *Issued & Outstanding Rio Tinto beneficial ownership is now 23.6% due to majority ownership of Turquoise Hill TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 26
  27. 27. Shivee Tolgoi - Oyu Tolgoi Trends TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 27
  28. 28. Oyu Tolgoi Trend*Indicated resource grade; HNE inferred resource grade = 1.4% CuEq **Inferred resource gradeModified from LHTR12Mineral reserves are not additive to the mineral resourcesCopper equivalent estimated using $1.35/lb Cu, $650/oz Au, $10/lb Mo. A 0.6% CuEq cut-off was usedPhase 2 does not include mine plan for Lift 2 extraction TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 28
  29. 29. Hugo North Extension Development 650 mModified from LHTR12Entrée has a 20% interest in the mineralization of the Hugo North Extension deposit TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 29
  30. 30. Entrée-OTLLC JV Deposit Resources Entrée ownership - 20% Carried Interest Hugo North Extension Heruga Cu-Au Cu-Au-MoProbableMineral 27Mt oreReserves* 1.85% Cu and 0.72 g/t Au 1B lbs Cu / 0.53M oz AuIndicatedResources** 5.6B lbs CuEq 117 million tonnes*** - 1.80% Cu, 0.61 g/t Au 4.6B lbs Cu / 2.3M oz AuInferred 2.8B lbs CuEq 17.4B lbs CuEqResources** 95.5 million tonnes***- 1.15% Cu, 0.31 g/t Au 910 million tonnes*** 2.4B lbs Cu / 0.95M oz Au 0.48% Cu, 0.49 g/t Au, 0.014% Mo 9.6B lbs Cu / 14M oz Au HUGO *The mineral reserves are not additive to the mineral resources. NORTH ** Copper equivalent estimated using $1.35/lb Cu, $650/oz Au, $10/lb Mo. EXTENSION *** 0.6% CuEq cutoff. Mineral resources that are not mineral reserves do not have demonstrated economic viability. HERUGA TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 30
  31. 31. Hugo North Extension & HerugaOn the Path to ProductionCurrent  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 2015  50+ year potential mine life  LOM Case: HNE1+HNE2+Heruga  HNE & Heruga Deposits remain open TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 31
  32. 32. Building ValueResources inventory and relative NPV Lookout Hill Ann Mason Mongolia Nevada NPV = $129 Million Underground reserve 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. TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 32
  33. 33. Advancing Ann Mason 2012 2013 2014 2015 2016+Blue Hill resourceestimate PEAAnn Mason updatedresource estimateExploration Baseline studies Drilling Geotechnical Permitting Metallurgy Pre-feasibility? TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA Feasibility? 33 33
  34. 34. Advancing Joint VentureHugo North Extension and Heruga2012 2013 2014 2015 2070+Drilling Shivee TolgoiDrilling JavhlantLift 1 development Hugo North Extension development and production HNE Lift 1 production to 2030 HNE Lift 2 production to 2044 50+ year potential production in LOM case TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 34 34
  35. 35. Current Copper Assets 12 10 8 Ann MasonBillion lbs 0.2 % Cu cut-off 5.6B lbs Cu 6 8.2B lbs Cu 4 HNE & Heruga 2 4.1B lbs CuEq* 0.6% CuEq cut-off (with 3M oz Au) 1.1B lbs CuEq* (with 0.5M oz Au) 0 Indicated Inferred *CuEq estimated using $1.35/lb Cu, $650/oz Au, $10/lb Mo. Figures are NI 43-101 Compliant. TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 35
  36. 36. Copper Resources vs. Share Price $4.00 Share price 20 $3.50 Billion Pounds Copper Heruga Investment Discovery Agreement $3.00 Rio-IVN Exercise 16 Share Price BMO 2005 Financing Mongolian Windfall Tax Warrants Falling Metal Prices $2.50 Rio Investment PacMag Ann 12 Acquisition Mason $2.00 Withdrawal of Windfall Tax Updated Mineral HNE Resources Discovery $1.50 IVN-Rio 8 Deal $1.00 IVN Deal 4 Ann Mason $0.50 PEA $0.00 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Indicated (Billion lbs) Inferred (Billion lbs) TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 36*0.2% Cu Cut-off
  37. 37. Appendix A TSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 37
  38. 38. Mona Forster – Executive Vice President mforster@entreegold.com 604-687-4777 www.entreegold.comTSX:ETG | NYSE MKT:EGI | FRANKFURT:EKA 38