An updated mining plan based on reserves only ("Reserve Case") and derived from the latest OTLLC technical, production and cost data was released by Turquoise Hill Resources Ltd. in March 2013 ("2013 OTTR"). Entree today filed a separate technical report dated March 28, 2013 ("LHTR13"), which discusses the impact of the updated mine plan on the Entree-OTLLC joint venture property.
Highlights of this report include:
-- Lift 1 of Hugo North (which includes Hugo North Extension) is the most significant value driver for the entire Oyu Tolgoi mining complex. -- Hugo North Extension ("HNE") hosts the highest valued ore of all the deposits outlined in the Reserve Case, with a net smelter returns ("NSR") value of $95.21/tonne. This has increased almost 20% compared to the NSR value of $79.40/tonne in Entree's March 2012 technical report ("LHTR12") (news release dated March 30, 2012). -- Hugo North Extension has the highest average grade of all the Oyu Tolgoi deposits at 1.73% copper, 0.62 grams per tonne ("g/t") gold and 3.74 g/t silver.-- Underground shaft development on Hugo North Extension is projected to commence in 2016, with first Lift 1 development production commencing in 2019, ramping up to commercial production in 2023.-- Base case cut-off grade for resources decreased from 0.6% copper equivalent ("CuEq") to 0.37% CuEq (in line with estimated Hugo North Lift 1 mining cut-off costs). At this new base case cut-off, the Heruga deposit has increased in size from 910 million tonnes to over 1.8 billion tonnes. Concurrently, the grade has decreased to 0.38% copper, 0.36 g/t gold and 110 parts per million ("ppm") molybdenum from the LHTR12 reserve case of 0.48% copper, 0.49 g/t gold and 141 ppm molybdenum.-- NPV (at an 8% discount) ("NPV8") for Lift 1 Reserve Case Hugo North Extension is now $110 million after tax.-- NPV8 for Lift 1 Reserve Case Hugo North Extension, using the SEC Industry Guide 7 three year trailing averages is US$150 million after tax.-- A significant portion of the mineralization on the Entree-OTLLC joint venture property has not been included in the updated mining plan and remains in the mineral resource category, including Hugo North Extension - Lift 2 and the Heruga deposit.-- Scenarios for mining Lift 2 at Hugo North Extension and Heruga at 75,000 tonnes per day are considered, with a decision point in 2015.-- Expansion studies are under consideration, with a feasibility study expected mid-2014. AMC Consultants Pty Ltd ("AMC") noted that further design work could identify opportunities to improve project economics through cost reductions and mine plan optimization. This may result in further positive changes to the joint venture property development schedule that could bring first joint venture property ore forward relative to the current plan.-- Underground lateral development at the Hugo North deposit was, as planned, suspended in February 2012 to enable the upgrading of hoisting equipment at Shaft 1 and restarted during the third quarter of 2012 following the completion of the upgrade. Approximately 1,500 metres of lateral development were achieved from mid-September 2012 to the end of December 2012 after the completion of the shaft changeover.-- Exploration drilling of targets on the joint venture property continued in 2012 with over 16,000 metres drilled on the Entree-OTLLC joint venture property.