Vancouver-based Entrée Resources has formally executed and delivered its joint venture (JV) agreement with Oyu Tolgoi (OTLLC), which the parties have been operating under since the formation of terms in 2008.

“I am extremely happy that the JV agreement has finally been executed after 16 years of operation. Despite being a formality, execution is a necessary step to enable the parties to initiate the transfer of the JV licences to OTLLC in accordance with applicable Mongolian laws and as provided for under the JV agreement.

“We look forward to continuing to work with our partners towards potential conversion of the JV agreement into a more efficient arrangement to the benefit of all stakeholders,” said Entrée president and CEO Stephen Scott.  

“I appreciate the resilience and patience of Entrée’s loyal shareholders as we continue this journey together.”

The JV agreement, effective as of June 30, 2008, was amended on February 3, 2025. It closely follows the form annexed to the 2004 equity participation and earn-in agreement, which was later assigned by Turquoise Hills Resources to OTLLC.

The formal execution of the agreement marks the initial step in implementing the partial final award issued on December 19, 2024, by an international arbitration tribunal in response to Entrée’s arbitration proceedings against OTLLC and Turquoise Hill. The next step involves transferring the Shivee Tolgoi and Javkhlant mining licences from Entrée to OTLLC as the JV’s manager.

All fees and taxes associated with the transfer, as required by Mongolian law, will be covered by the JV, with OTLLC advancing Entrée’s 20% share as a loan. The timely completion of the transfer is critical to minimising delays to Lift 1 Panel 1 lateral underground development at the Hugo North Extension deposit, which is scheduled for completion in 2025.

The tribunal has reserved judgement on Entrée’s claims for specific performance or, alternatively, equitable damages, along with the issue of costs, for a future ruling.

Alongside implementing the award, Entrée and OTLLC have agreed to explore converting the JV agreement into a more effective structure that maintains Entrée’s economic value. This could include a mechanism to fulfil any potential obligation under Mongolian law to share up to 34% of Entrée’s economic benefit from the licence area with the State. Any such conversion would be subject to approval from the TSX.

SHIVEE WEST

When the JV was established in 2008, Entrée retained a 100% interest in the western portion of the Shivee Tolgoi licence, known as the Shivee West property. From 2002 to 2012, extensive exploration work was conducted on the property, but no economically viable precious or base metal mineralisation was identified, and there are no plans for further exploration.

To mitigate the high holding costs of the property (about $350 000 a year), Entrée assessed its options in 2015. After consulting tax and legal advisers, the company determined that incorporating the Shivee West property into the JV was preferable to relinquishing it.

On October 1, 2015, Entrée and Entrée LLC entered into a licence fees agreement with OTLLC, formalising the intent to assign an 80% or 70% (depending on mineralisation depth) beneficial interest in Shivee West to OTLLC. Following this assignment, Entrée’s retained 20% or 30% interest became a carried interest, subject to the loan provisions of the JV agreement, with OTLLC assuming responsibility for all future exploration as the JV manager. Since 2015, licence fees for the Shivee West property have been covered by the JV, with OTLLC advancing Entrée’s 20% share as a loan.