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.Entree Resources is engaged in the exploration of mineral resource properties in Mongolia, the United States, Australia and Peru. Co. is in the exploration stage, but has an interest in two advanced properties. Co.'s two principal assets are the Ann Mason copper-molybdenum project in Nevada, and Co.'s interest in the EntrA(c)e/Oyu Tolgoi JV Property in Mongolia, which hosts a copper-gold porphyry system.
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