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Edison Investment Research

Leading International Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

Equity Bottom-Up

<p>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.</p>

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.

Entree Resources - A royal premium awaits

<p>Entr&eacute;e Resources has a 20% participating interest in a JV (EJV) covering part of the Oyu Tolgoi (OT) copper mine in Mongolia. The EJV has the characteristics of a royalty with the benefits of a producer, resulting in low financial risk, low capital development risk and low operational risk. The development of Hugo North Extension (HNE) Lift 1 is fully funded by Entr&eacute;e&rsquo;s JV partner and all development and operations are managed by Rio Tinto. We consider that future development of the deeper parts of HNE (also known as HNE Lift 2) and Heruga should follow the same path as HNE Lift 1, providing Entr&eacute;e shareholders with materially de-risked cash flows for, potentially, several decades.</p>

Entr&eacute;e Resources has a 20% participating interest in a JV (EJV) covering part of the Oyu Tolgoi (OT) copper mine in Mongolia. The EJV has the characteristics of a royalty with the benefits of a producer, resulting in low financial risk, low capital development risk and low operational risk. The development of Hugo North Extension (HNE) Lift 1 is fully funded by Entr&eacute;e&rsquo;s JV partner and all development and operations are managed by Rio Tinto. We consider that future development of the deeper parts of HNE (also known as HNE Lift 2) and Heruga should follow the same path as HNE Lift 1, providing Entr&eacute;e shareholders with materially de-risked cash flows for, potentially, several decades.

Entree Resources - De-risked cash flows from a world-class mine

Canada

Entree Resources Ltd. operates as a mining company. The Company develops and discovers gold and copper resources. Entree Resources is currently conducting exploration on its mineral concessions in Mongolia.

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Entree Resources (ETG CN)

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...

Edison Investment Research

Entree Resources - De-risked cash flows from a world-class mine

Entrée Resources has a 20% participating interest in a JV (EJV) covering part of the Oyu Tolgoi (OT) copper mine in Mongolia. The EJV has the...

Edison Investment Research

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