KEY POINTS
- Entrée Resources shares surged 20 percent on positive copper assays from the Hugo North Extension.
- New drill results indicate high-grade copper mineralization, reaffirming the deposit’s potential.
- JV complications with OTLLC may lead to arbitration to resolve issues surrounding operational efficiency and Mongolian law compliance.
Shares of Entrée Resources (TSX: ETG) jumped nearly 20 percent following the release of highly promising results from its 2023 drill program at the Hugo North Extension (HNE) porphyry deposit in Mongolia.
This joint venture (JV) project with Rio Tinto subsidiary Oyu Tolgoi LLC (OTLLC) marks another key development for one of the world’s largest high-grade copper deposits.
Strong drill results boost confidence
In addition to previously published high-grade results, the 2023 program found significant copper equivalent (CuEq) mineralization over eight drill holes.
Six subterranean holes yielded grades as high as 2.37 percent CuEq, while two surface holes intersected 1.62 percent CuEq spanning 448 meters.
These findings confirm that Hugo North, and especially the HNE deposit, has the potential to be one of the most significant copper-gold finds in recent memory.
“These outstanding results are entirely consistent with earlier reports, reinforcing the exceptional quality of the deposit,” said Stephen Scott, CEO of Entrée, who expressed excitement.
JV project and future development
Entrée Resources holds a 20 percent participating interest in mineralization extracted below 560 meters and a 30 percent stake in mineralization above that depth under the JV agreement.
According to Mining.com, the latest drill results will contribute to an updated resource model for the HNE deposit, which already holds probable reserves of 40 million tonnes with significant copper, gold, and silver content.
The development of Lift 1, the northern section of the underground mine, is in progress, and Lift 2 is being considered for future expansion. The project is expected to further solidify its position as a leading global copper supplier.
JV complications and path forward
Nonetheless, the existing interactions between Entrée and OTLLC are not quite straightforward as it seemed at the beginning of the project.
Currently, Entrée in the process of negotiating contractual provisions where it wants legal certainty regarding the legal requirement under Mongolian law to transfer from 10 to 34 percent of the economically beneficial interest to the state.
Though CEOP Scott is hopeful for the project to move forward successfully he agrees with the need for a resolution whether through the courts to protect shareholders.
