Q3 2025 HIGHLIGHTS Entrée/Oyu Tolgoi Joint Venture Mining Licences
During the third quarter 2025, Entrée LLC filed a claim with the Administrative Court of Mongolia seeking an order for the Mongolian tax authority ("MTA") to review and confirm the calculations of values of the Shivee Tolgoi and Javkhlant mining licences (the "Licences") in accordance with applicable laws of Mongolia.
The calculations of values of the Licences for corporate income tax purposes must be confirmed by the MTA and taxes assessed and paid before the documentation necessary to affect the transfer of the Licences to OTLLC may be submitted to the Mineral Resources and Petroleum Authority of Mongolia ("MRPAM") for registration. See "Outlook and Strategy" below.
State Interest in Area of Licences
During the third quarter 2025, the Company continued its efforts to engage with representatives of the Government of Mongolia to resolve issues around the State's interest in the area of the Licences. The State already holds 34% of the economic benefit that OTLLC derives from its 80% contractual interest in the area of the Licences by virtue of Erdenes Oyu Tolgoi LLC's shareholding in OTLLC and the 2009 Oyu Tolgoi Investment Agreement (the "OTIA"). The Company has consistently maintained its willingness to fulfil any obligation under Mongolian law to provide the State 34% of the economic benefit that the Company derives from its 20% contractual interest in the area of the Licences.
On July 2, 2025, the Parliament of Mongolia approved Resolution No. 62 to establish a Temporary Oversight Committee to conduct a special investigation related to the protection of Mongolia's interests and the enhancement of benefits derived from the exploitation of the Oyu Tolgoi strategic group of deposits (the "Oyu Tolgoi Strategic Deposit").
The Company is supporting the activities of the Temporary Oversight Committee by providing all relevant requested information and documentation in a timely manner. To date, the Company has submitted thousands of pages of documents to the Temporary Oversight Committee and has participated in numerous inspector meetings and discussions.
Separately, by Order No. 73 of the Prime Minister of Mongolia dated August 22, 2025, a renewed working group (the "Working Group") led by the Minister of Industry and Mineral Resources was established in order to negotiate the State's interest in the area of the Licenses. The Company received official notice of the formation of the Working Group on September 18, 2025 and on October 17, 2025 the Company responded to a request from the Minister of Industry and Mineral Resources to advise the Working Group of the composition of the Company's negotiating team.
Entrée/Oyu Tolgoi JV Property Update
During the third quarter 2025, Oyu Tolgoi Lift 1 Panel 1 underground development work on the Shivee Tolgoi mining licence area remained paused pending transfer of the Licences from Entrée LLC to OTLLC.
The Entrée/Oyu Tolgoi joint venture ("Entrée/Oyu Tolgoi JV") Management Committee approved a 2025 in-fill diamond drilling program at the Hugo North Extension deposit ("HNE") comprised of ~8,329 metres of drilling on the Shivee Tolgoi mining licence in 19 underground holes and ~9,050 metres of drilling in 5 surface holes. As at September 30, 2025, 2,447 metres of drilling on the Shivee Tolgoi mining licence in 13 underground holes had been completed, with 3 of the underground holes still in progress. In addition, 4,759 metres of drilling in 4 surface holes had been completed. The 2025 drilling program is intended to focus on gaps in the geological model.
An updated resource model to be completed by OTLLC for Hugo North (including HNE) Lifts 1 and 2 is expected in H1 2026.
Regional exploration programs on the area of the Licences continued in the third quarter 2025.
Oyu Tolgoi Underground Development UpdateThe Oyu Tolgoi project in Mongolia includes the Oyu Tolgoi mining licence, which is 100% owned and held by OTLLC and the Entrée/Oyu Tolgoi JV property ("Entrée/Oyu Tolgoi JV Property"), which is the subject of a Joint Venture Agreement with an effective date of June 30, 2008 (the "Entrée/Oyu Tolgoi JVA") between the Company and OTLLC. Rio Tinto International Holdings Ltd. ("Rio Tinto") owns 66% of OTLLC and is the manager of operations at Oyu Tolgoi. On October 14, 2025, Rio Tinto announced back-to-back quarterly production records had been set at Oyu Tolgoi as it ramps up to become the world's fourth largest copper mine by 2030. Refer to Rio Tinto's press release dated October 14, 2025, titled "Rio Tinto releases third quarter 2025 production results" available on its website at www.riotinto.com for further details.
The third quarter 2025 was another record quarter for copper production, despite a planned concentrator shutdown in September (brought forward from October to optimize production sequencing). Higher production was driven by the continued ramp-up, with head grades improving as planned, together with a corresponding uplift in recovery rates.
Year-on-year, the project saw rising contribution from higher-grade underground material, supported by the conveyor to surface.
Rio Tinto noted engagement continues with the Company and the Government of Mongolia on the transfer of the Licences to allow mining in the Panel 1 Entrée/Oyu Tolgoi JV area.
Project ramp-up remains on track to reach an average of ~500 thousand tonnes of copper per year (100% basis and stated as recoverable metal) from 2028 to 2036.
The fifth ball mill load commissioning for the concentrator conversion was completed, which is expected to support higher recovery rates. First ore was successfully processed on September 7, 2025, followed by completion of full-load commissioning tests later in the month.
Primary crusher #2 construction was completed in the third quarter 2025, ahead of plan, with first ore successfully delivered on September 14, 2025.
The concentrator conversion and primary crusher #2 are the last two critical infrastructure components to be completed for the underground project.
Corporate
For the three and nine month periods ended September 30, 2025, the Company's operating loss was $0.6 million and $1.9 million, respectively, compared to $0.7 million and $2.7 million for the comparative periods in 2024. The decrease was due to higher legal costs in 2024 for both commercial negotiations with OTLLC and Rio Tinto and the arbitration proceedings.
For the three and nine month periods ended September 30, 2025, the operating cash outflow before changes in non-cash working capital items was $0.9 million and $1.9 million, respectively, compared to $0.6 million and $2.5 million in the comparative periods in 2024.
As at September 30, 2025, the cash balance was $4.9 million and the working capital balance was $4.9 million.
On October 20, 2025, Colorado-based Royal Gold, Inc. (NASDAQ:RGLD) ("Royal Gold") announced the closing of its previously announced acquisitions of Sandstorm Gold Ltd. and Horizon Copper Corp. through its wholly owned subsidiary International Royalty Corporation.
OUTLOOK AND STRATEGYArbitration Award and Transfer of Entrée/Oyu Tolgoi JV LicencesOn December 19, 2024, a partial final award (the "Award") was made by the three-member international arbitration Tribunal appointed in connection with the Company's binding arbitration proceedings against OTLLC and Turquoise Hill Resources Ltd. (together, the "Respondents"). The Tribunal ruled in favor of the Company on all issues and dismissed the Respondents' counterclaims.
A principal objective of the Company is to affect the transfer of the Licences from the Company's Mongolian subsidiary Entrée LLC to OTLLC in accordance with applicable laws of Mongolia as the next step in ...
