Entree Resources pauses Oyu Tolgoi Lift 1 Panel 1 development work

Entree Resources (ERLFF) announces the Entree/Oyu Tolgoi joint venture has paused Oyu Tolgoi Lift 1 Panel 1 underground lateral development work on the Shivee Tolgoi mining licence in Mongolia. The work commenced in October 2024 in rock classified as waste. As at May 30, 2025, ~230 equivalent metres of lateral development primarily on the return air level had been completed by the Company’s joint venture partner Oyu Tolgoi. Stephen Scott, the Company’s President and CEO, commented, “We are obviously very disappointed that we have been unable to achieve a timely transfer of title to the JV mining licences, necessitating this pause. The parties have always intended for OTLLC, the 80% owner and Manager of the Entree/Oyu Tolgoi JV, to hold title to the Shivee Tolgoi and Javkhlant mining licences on behalf of the JV participants. It is a requirement of the 2008 Joint Venture Agreement and contemplated in the 2009 Oyu Tolgoi Investment Agreement. Entree and OTLLC commenced the transfer process in February 2025 and will continue to work with representatives of the Government of Mongolia to complete the transfers as soon as possible in accordance with applicable laws of Mongolia. Our top priority is to try to reduce the adverse economic impact on all Oyu Tolgoi project stakeholders, including the people of Mongolia, that will result from a Panel 1 underground development delay.” Under the 2025 Oyu Tolgoi Mine Plan approved by the Mineral Resources and Petroleum Authority of Mongolia, work in the Hugo North Extension deposit footprint was conditionally scheduled to commence in June 2025. As previously disclosed, work in the HNE deposit cannot proceed until the Licences have been transferred from Entree to OTLLC as Manager on behalf of the Entree/Oyu Tolgoi JV participants. OTLLC has advised the Company it will now shift its focus to Lift 1 Panel 2 South on its 100% owned Oyu Tolgoi mining licence to minimize adverse operational and financial impacts. At this time, while the Entree/Oyu Tolgoi JV partners remain hopeful that any delay will be brief, the parties are unable to determine how long the pause will be due to ongoing uncertainty about timing for completion of the Licence transfers. In February 2025, following a partial final award made by the three-member international arbitration Tribunal appointed in connection with the Company’s binding arbitration proceedings against OTLLC, Entree and OTLLC executed License Transfer Agreements to govern the transfer of the Licences. The parties jointly lodged the License Transfer Agreements and supporting documentation with the Mongolian tax authority for the assessment of tax on the transfer of the Licences in accordance with applicable laws of Mongolia. The Entree/Oyu Tolgoi JV partners continue to work diligently and cooperatively with the Mongolian tax authority, however, to date no assessment has been delivered. The methodology of calculation must be confirmed by the Mongolian tax authority and taxes paid before the documentation necessary to affect the transfer of the Licences may be submitted to MRPAM for registration. If Lift 1 Panel 1 lateral development work is significantly delayed, it could have an adverse effect on development costs and schedule, the business, assets, future cash flow, and financial condition of the Company, and the Company’s share price.