Entree gives update on Mongolia JV licence transfer

Executive Summary

• Entree Resources provided a detailed update on the pending transfer of its Shivee Tolgoi and Javkhlant JV licences to joint‑venture partner Oyu Tolgoi LLC (OTLLC), outlining tax assessment delays with Mongolia’s tax authority and related legal actions.
• The company highlighted ongoing negotiations regarding Mongolian state participation (up to 34 % equity) in the strategic Oyu Tolgoi deposit and recent governmental resolutions that may affect ownership percentages.
• Separate from the licence issue, Entree disclosed that Sandstorm Gold Ltd. and Horizon Copper Corp. have entered into definitive agreements to be acquired by Royal Gold Inc., with expected closings in Q4 2025.

Key Details

• Licence Transfer Process
• On June 6 2025, Entree, OTLLC and Rio Tinto announced a pause on lift‑1 panel‑1 underground development until the JV licences are transferred from Entree LLC to OTLLC.
• February 2025: licence transfer agreements executed following partial arbitration award; lodged with Mongolian Tax Authority (MTA) for tax assessment at 10 % of licence value per Decree No. 302.
• MTA has not confirmed valuation; formal complaint filed May 19 2025; on July 3 2025 MTA indicated inability to issue tax certificate pending determination of State ownership percentage.

• Entree LLC filed a claim with the Administrative Court of Mongolia on Aug 1 2025 seeking court‑ordered confirmation of licence valuations.

• State Participation Issues

• Mongolian Minerals Law permits up to 34 % state equity in strategic deposits; Parliament resolution No. 170 (April 9 2025) places JV licences within Oyu Tolgoi strategic deposit boundaries.
• Entree maintains willingness to allocate 34 % of economic benefit from its 20 % contractual interest, acknowledging existing state share via Erdenes Oyu Tolgoi LLC’s stake in OTLLC.
• New Prime Minister (June 11 2025) and cabinet (June 18 2025) appointed; July 2 2025 Parliament created a temporary oversight committee to investigate valuation and ownership percentages.

• July 23 2025 cabinet resolution directs negotiations with foreign investors, including Entree, to finalize draft agreements on state participation.

• Royal Gold M&A Announcements

• July 7 2025: Sandstorm Gold Ltd. and Horizon Copper Corp. entered into definitive acquisition agreements with Royal Gold Inc.; closings anticipated in Q4 2025 pending regulatory approvals and shareholder votes.
• Horizon Copper holds 50,297,717 common shares (24.25 % of Entree) and warrants for 312,601 shares at $3.00 each (expiring Jan 23 2027).

• Horizon’s agreement with Sandstorm Gold allows use of future JV payments to purchase/deliver gold, silver, and copper credits to Sandstorm.

• Qualified Person

• Robert Cinits, P.Geo., qualified under NI 43‑101, approved the technical information in this release.

Notable Quotes

“Given the critical nature of the transfer of the JV licences to OTLLC, the company wanted to provide an update to shareholders on this and other ongoing issues…” – Stephen Scott, President & CEO
“We are encouraged by the government of Mongolia’s commitment to improving the business environment for foreign investors… Entree is on standby to work with government representatives to resolve all outstanding issues as quickly as possible.” – Stephen Scott

Materiality Assessment: Material – Neutral (the licence transfer and state participation matters have a direct impact on the company’s ability to resume development work and could affect future cash flows, while the Royal Gold transactions are significant corporate events.)