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Entree Resources Ltd. Management Reports 2025
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Management Reports
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ENTRÉE RESOURCES
Management’s Discussion and Analysis
Third Quarter Ended September 30, 2025
(Expressed in United States dollars, except per share amounts and where otherwise noted)
November 4, 2025
This Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with the condensed consolidated interim financial statements for the period ended September 30, 2025 and related notes thereto which have been prepared in accordance with IFRS 34, Interim Financial Reporting of the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board, as well as the annual audited consolidated financial statements for the year ended December 31, 2024, which are in accordance with IFRS, and the related MD&A. References to "Entrée" and the "Company" are to Entrée Resources Ltd. and/or one or more of its wholly-owned subsidiaries. For further information on the Company, reference should be made to its continuous disclosure (including its most recently filed annual information form (“AIF”)), which is available on SEDAR+ at www.sedarplus.ca. Information is also available on the Company’s website at www.EntreeResourcesLtd.com. Information on risks associated with investing in the Company’s securities is contained in the Company’s most recently filed AIF. Technical and scientific information under National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”) concerning the Company’s material property, including information about mineral resources and reserves, is contained in the Company’s most recently filed AIF and in its technical report titled "Entrée/Oyu Tolgoi Joint Venture Project, Mongolia, NI 43-101 Technical Report" with an effective date of October 8, 2021 prepared by Wood Canada Limited (“Wood”).
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
Q3 2025 MD&A (table amounts expressed in thousands of US Dollars, except per share amounts and where otherwise noted)
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. See "Entrée/Oyu Tolgoi JV Property – Mongolia – Entrée/Oyu Tolgoi JV Property Exploration and Development – Regional Exploration" below.
Oyu Tolgoi Underground Development Update
The 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 (see "Overview of Business" below). 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.
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Q3 2025 MD&A (table amounts expressed in thousands of US Dollars, except per share amounts and where otherwise noted)
- 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. ("Sandstorm") and Horizon Copper Corp. through its wholly owned subsidiary International Royalty Corporation. See "Overview of Business" below.
OUTLOOK AND STRATEGY
Arbitration Award and Transfer of Entrée/Oyu Tolgoi JV Licences
On 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 the implementation of the Award. Under the terms of the Entrée/Oyu Tolgoi JVA, the Manager (OTLLC) is required to hold all assets, including the Licences, on behalf of the Entrée/Oyu Tolgoi JV participants. OTLLC also has the right to hold the Licenses under the OTIA. Transfer of the Licences to OTLLC, as Manager and owner of an 80% or 70% (depending on the depth of mineralization) participating interest in the Entrée/Oyu Tolgoi JV Property, is necessary to maximize operational efficiencies, provide certainty with respect to taxes and royalties, and minimize delays to Lift 1 Panel 1 lateral development work on the Shivee Tolgoi mining licence area.
In February 2025, OTLLC and Entrée LLC duly executed and lodged License Transfer Agreements (the "License Transfer Agreements") and supporting documentation with the MTA for the assessment of tax on the transfer of the Licences in accordance with applicable laws of Mongolia.
Corporate income tax at a rate of 10% of the value of the Licences (with certain deductions allowed) will be assessed. The methodology to calculate the value of the Licences for corporate income tax purposes is set out in Decree No. 302 passed by the Minister of Finance on December 31, 2019 (the "Methodology"). The calculations must be confirmed by the MTA and taxes assessed and paid before the documentation necessary to affect the transfer of the Licences may be submitted to MRPAM for registration. As part of the Award, the Tribunal issued a final and binding declaration that all fees and taxes assessed on the transfer of the Licences pursuant to applicable laws of Mongolia will be for the account of the Entrée/Oyu Tolgoi JV, with OTLLC contributing the Company's 20% share as a Loan under Section 10.1 of the Entrée/Oyu Tolgoi JVA.
The Company and OTLLC actively engaged with the MTA and provided all materials necessary for the MTA to confirm the calculations of the values of the Licences in accordance with the Methodology. No confirmation was received from the MTA within the timeframe prescribed by law. On May 19, 2025, Entrée LLC lodged a formal complaint with the MTA. On July 3, 2025, the MTA advised Entrée LLC in writing it cannot confirm the calculations of the values of the Licences and provide a tax payment certificate until the percentage of State ownership is determined.
On August 1, 2025, Entrée LLC filed a claim with the Administrative Court of Mongolia seeking an order for the MTA to review and confirm the calculations of values of the Licences in accordance with applicable laws of Mongolia.
Failure to complete the transfer of the Licences to OTLLC in a timely fashion will result in delays, which may be significant, to Oyu Tolgoi Lift 1 Panel 1 lateral development work on the Shivee Tolgoi mining licence area. Such delays 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. See "Critical Accounting Estimates, Risks and Uncertainties" below.
State Ownership
The Company is also focused on the resolution of outstanding issues relating to the State's interest in the Oyu Tolgoi Strategic Deposit. The Minerals Law of Mongolia provides the State may be an up to 34% equity participant with any private legal entity in the exploitation of a mineral deposit of strategic importance (a "Strategic Deposit") where proven
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Q3 2025 MD&A (table amounts expressed in thousands of US Dollars, except per share amounts and where otherwise noted)
reserves were determined through funding sources other than the State budget. The Parliament of Mongolia may determine that the State receive royalty payments in lieu of an equity interest.
On April 9, 2025, the Government of Mongolia adopted Resolution No. 170, which establishes the boundaries of certain mineral deposits of strategic importance, including the Oyu Tolgoi Strategic Deposit. The Licences are included in the boundaries of the Oyu Tolgoi Strategic Deposit. The Minister of Industry and Mineral Resources is assigned to oversee the implementation of Resolution No. 170.
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 EOT's shareholding in OTLLC and 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 Deposit. The Company, together with OTLLC and Rio Tinto, are 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 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.
If the Company is unable to resolve issues regarding the State's interest in a timely fashion or in a manner that is acceptable to the Company, it could have an adverse effect on the business, assets, future cash flow, and financial condition of the Company, and the Company's share price. See "Critical Accounting Estimates, Risks and Uncertainties" below.
Potential Conversion of Entrée/Oyu Tolgoi JVA
The Company and OTLLC remain committed to working towards the potential conversion of the Entrée/Oyu Tolgoi JVA into a more effective agreement of equivalent economic value. The agreement would include a mechanism for the Company to fulfil any obligation under Mongolian law to provide the State 34% of the economic benefit that the Company derives from the area of the Licences. Conversion of the Entrée/Oyu Tolgoi JVA would be subject to Toronto Stock Exchange ("TSX") acceptance and the requirements of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101") applicable to a related party transaction.
OVERVIEW OF BUSINESS
Entrée is a mineral resource company with interests in development and exploration properties in Mongolia, Peru and Australia.
The Company's principal asset is its interest in the Entrée/Oyu Tolgoi JV Property – a carried 20% participating interest in two of the Oyu Tolgoi project deposits, and a carried 20% or 30% participating interest (depending on the depth of mineralization) in the surrounding large, underexplored, highly prospective land package located in the South Gobi region of Mongolia. Entrée's joint venture partner, OTLLC, holds the remaining participating interest.
The Oyu Tolgoi project includes the Oyu Tolgoi mining licence, which is 100% owned and held by OTLLC (66% Rio Tinto and 34% the State of Mongolia), and the Entrée/Oyu Tolgoi JV Property, a significant component of the overall project that is under joint venture partnership between OTLLC and Entrée. The Entrée/Oyu Tolgoi JV Property (see Figure 1 below) comprises the Shivee Tolgoi and Javkhlant mining licences, which surround the Oyu Tolgoi mining licence. The Licences are currently held by the Company's wholly owned subsidiary Entrée LLC on behalf of the Entrée/Oyu Tolgoi JV participants. Under the Entrée/Oyu Tolgoi JVA, Entrée has a 20% participating interest with respect to mineralization extracted from deeper than 560 metres below surface and a 30% participating interest with respect to mineralization extracted from above 560 metres depth.
Q3 2025 MD&A (table amounts expressed in thousands of US Dollars, except per share amounts and where otherwise noted)
The Entrée/Oyu Tolgoi JV Property includes the Hugo North Extension (HNE) copper-gold deposit and the majority of the Heruga copper-gold-molybdenum deposit. The resources at Hugo North Extension include a Probable reserve, which is part of the first lift ("Lift 1") of the Oyu Tolgoi underground block cave mining operation. When the Lift 1 underground reaches peak production by ~2030, Oyu Tolgoi is expected to be the fourth largest copper mine in the world.
The Company's corporate headquarters are located in Vancouver, British Columbia, Canada. Field operations are conducted out of local offices in Mongolia.
As at September 30, 2025 and the date of this MD&A, Rio Tinto beneficially owns 32,788,629 common shares, or 15.8% of the outstanding shares of the Company (15.7% as at the date of this MD&A). As at September 30, 2025 and the date of this MD&A, Horizon Copper Corp. beneficially owns 50,297,717 common shares, or 24.25% of the outstanding shares of the Company (24.1% as at the date of this MD&A) and holds non-transferable warrants to purchase 312,601 common shares of the Company at a price of C$3.00 per share expiring January 23, 2027. On October 20, 2025, Royal Gold, through its wholly owned Canadian subsidiary International Royalty Corporation, completed its acquisition of all the issued and outstanding shares of Horizon Copper Corp.
ENTRÉE/OYU TOLGOI JV PROPERTY – MONGOLIA
On October 21, 2021, the Company filed an amended Technical Report (the "2021 Technical Report") for its interest in the Entrée/Oyu Tolgoi JV Property. The 2021 Technical Report has an original effective date of May 17, 2021, and an amended effective date of October 8, 2021.
The 2021 Technical Report discusses a reserve case (the "2021 Reserve Case") based on mineral reserves attributable to the Entrée/Oyu Tolgoi JV Lift 1 of the HNE deposit.
The 2021 Technical Report also discusses a Preliminary Economic Assessment on a conceptual second lift ("Lift 2") of the HNE deposit (the "2021 PEA"). The 2021 PEA is based on Indicated and Inferred mineral resources from Lift 2, as the second potential phase of development and mining on the HNE deposit. Lift 2 is directly below Lift 1 and continues further to the north (see Figure 2 below). There is no overlap in the mineral reserves from the 2021 Reserve Case and the mineral resources from the 2021 PEA. Development and capital decisions will be required for the eventual development of Lift 2 once production commences at HNE Lift 1.
In addition, the Heruga deposit, which is not included in either the 2021 Reserve Case or the 2021 PEA, provides future potential and with further exploration and development could become a completely standalone underground operation.
Both the 2021 Reserve Case and the 2021 PEA are based on information supplied by OTLLC or reported within its 2020 Oyu Tolgoi Feasibility Study ("OTFS20") completed by OTLLC in July 2020.
The 2021 Technical Report has been filed on SEDAR+ and is available for review under the Company's profile on SEDAR+ (www.sedarplus.ca) or on www.EntreeResourcesLtd.com.
Summary and Location of Project
At the time the 2021 Technical Report was prepared, the Entrée/Oyu Tolgoi JV Property was divided into two contiguous areas. The Company was in joint venture with OTLLC over the eastern portion of the Shivee Tolgoi mining licence and all of the Javkhlant mining licence (the "Project Property"). The Company retained a 100% interest in the western portion of the Shivee Tolgoi mining licence, known as the "Shivee West Property".
On February 3, 2025, the Company assigned to OTLLC an 80% or 70% (depending on the depth of mineralization) beneficial interest in the Shivee West Property by amending the definitions of "Existing Licenses" and "Properties" in the Entrée/Oyu Tolgoi JVA to include the Shivee West Property for all purposes under the Entrée/Oyu Tolgoi JVA. The Company was engaged in active exploration of the Shivee West Property until 2012. While the Company identified several zones of gold and copper mineralization, no economic zones of precious or base metals mineralization were outlined.
The Entrée/Oyu Tolgoi JV Property (shown on Figure 1 below) completely surrounds OTLLC's Oyu Tolgoi mining licence and forms a significant portion of the overall Oyu Tolgoi project area. Figure 1 also shows the main mineral deposits that form the Oyu Tolgoi Trend of porphyry deposits.
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Q3 2025 MD&A (table amounts expressed in thousands of US Dollars, except per share amounts and where otherwise noted)
The Entrée/Oyu Tolgoi JV Property is located within the Aimag (province) of Omnogovi in the South Gobi region of Mongolia, about 570 kilometres ("km") south of the capital city of Ulaanbaatar and $80\mathrm{km}$ north of the border with China.
The Entrée/Oyu Tolgoi JV Property hosts:
The Hugo North Extension (HNE) copper-gold porphyry deposit (Lift 1 and Lift 2):
- Lift 1 is the upper portion of the HNE copper-gold porphyry deposit and forms the basis of the 2021 Reserve Case. It is the northern portion of the Lift 1 Panel 1 underground block cave. Lift 1 Panel 1 development work on the Entrée/Oyu Tolgoi JV Property has been paused until the Licences have been transferred from Entrée LLC to OTLLC as Manager on behalf of the Entrée/Oyu Tolgoi JV.
-
Lift 2 is directly below and extends north beyond Lift 1 and is the next potential phase of underground mining on the Entrée/Oyu Tolgoi JV Property, once Lift 1 mining is complete. Mineral resources from Lift 2 form the basis of the 2021 PEA mine plan.
-
The Heruga copper-gold-molybdenum porphyry deposit is at the south end of the Oyu Tolgoi Trend of porphyry deposits. Approximately $93\%$ of the Heruga deposit occurs on the Entrée/Oyu Tolgoi JV Property. While Heruga is not included in the 2021 PEA, it provides opportunity for future exploration and potential development.
A large prospective land package.
Entrée has a $20\%$ or $30\%$ (depending on the depth of mineralization) participating interest in the Entrée/Oyu Tolgoi JV with OTLLC holding the remaining $80\%$ or $70\%$ participating interest. OTLLC has a $100\%$ interest in other Oyu Tolgoi project areas, including the Oyut open pit, which is currently in production, and the Hugo North and Hugo South deposits on the Oyu Tolgoi mining licence.
Figure 1 - Entrée/Oyu Tolgoi JV Property
Q3 2025 MD&A (table amounts expressed in thousands of US Dollars, except per share amounts and where otherwise noted)
Notes:
1. Outline of copper ± gold ± molybdenum porphyry mineralization is projected to surface.
2. Entrée has a 20% participating interest in the Hugo North Extension and Heruga deposits.
Figure 1 shows the location of a north-northeast oriented, west-looking longitudinal section (A-A') through the 12.4 km-long trend of porphyry deposits that comprise the Oyu Tolgoi Trend of porphyry deposits. The longitudinal section is shown on Figure 2 with the Entrée/Oyu Tolgoi JV Property to the right (north) and left (south) of the central portion, the Oyu Tolgoi mining licence, held 100% by OTLLC.
Figure 2 – Section Through the Oyu Tolgoi Trend of Porphyry Deposits
Note: The CuEq formula for Heruga is presented in Note 3 to Table 2 below.
Idealized Longitudinal Section Looking West Entrée/Oyu Tolgoi JV Property, Mongolia
In addition to the two deposits, priority exploration targets have been identified on the Entrée/Oyu Tolgoi JV Property, including Ulaan Khud, Airport South, North of HNE (Ridge), Ductile Shear, East Au, Bumbat Ulaan, Mag West, Railway, West Heruga, and SEIP.
The 2021 Technical Report forms the basis for the scientific and technical information in this MD&A regarding the Entrée/Oyu Tolgoi JV Property. Portions of the information are based on assumptions, qualifications and procedures which are not fully described herein. Reference should be made to the Company's AIF dated March 12, 2025 and to the full text of the 2021 Technical Report, which are available on the Company's website (www.EntreeResourcesLtd.com) or on SEDAR+ (www.sedarplus.ca).
Mineral Resources and Mineral Reserves – Entrée/Oyu Tolgoi JV Property
Entrée/Oyu Tolgoi JV Property mineral reserves are contained within the Hugo North Extension Lift 1 block cave mining plan prepared by OTLLC and used as the basis for OTFS20. The mineral reserve estimate is based on what is deemed minable when considering factors such as the footprint cut-off grade, the draw column shut-off grade, maximum height of draw, consideration of planned dilution and internal waste rock.
The following Entrée/Oyu Tolgoi JV Property Hugo North Extension Lift 1 mineral reserve estimate has an effective date of May 15, 2021.
Q3 2025 MD&A (table amounts expressed in thousands of US Dollars, except per share amounts and where otherwise noted)
Table 1 – Entrée/Oyu Tolgoi JV Property Hugo North Extension Lift 1 Mineral Reserve Estimate
| Entrée/Oyu Tolgoi JV Property – Mineral Reserve
Hugo North Extension Lift 1 | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Classification | Tonnage (Mt) | NSR ($/t) | Cu (%) | Au (g/t) | Ag (g/t) | Contained Metal | | |
| | | | | | | Cu (Mlb) | Au (Koz) | Ag (Koz) |
| Probable | 40 | 97.52 | 1.5 | 0.53 | 3.63 | 1,340 | 676 | 4,613 |
Notes:
1. For the underground block cave, all Indicated mineral resources within the cave outline were converted to Probable mineral reserves. No Proven mineral reserves have been estimated. The estimation includes low-grade Indicated mineral resources and Inferred mineral resource assigned zero grade that is treated as dilution.
2. A column height shut-off net smelter return ("NSR") of $17.84/t was used to define the footprint and column heights. The NSR calculation assumed metal prices of $3.08/lb copper, $1,292.00/oz gold, and $19.00/oz silver. The NSR was calculated with assumptions for smelter refining and treatment charges, deductions and payment terms, concentrate transport, metallurgical recoveries, and royalties using OTLLC's Base Data Template 38.
3. Mineral reserves are reported on a 100% basis. OTLLC has a participating interest of 80%, and Entrée has a participating interest of 20%. Notwithstanding the foregoing, in respect of products extracted from the Entrée/Oyu Tolgoi JV Property pursuant to mining carried out at depths from surface to 560 metres below surface, the participating interest of OTLLC is 70% and the participating interest of Entrée is 30%.
4. Numbers have been rounded as required by reporting guidelines and may result in apparent summation differences.
The following Entrée/Oyu Tolgoi JV Property mineral resources estimates reported in the 2021 Technical Report for the Hugo North Extension and Heruga deposits have an effective date of March 31, 2021. Mineral resources for the Hugo North Extension deposit are reported inclusive of those mineral resources that were converted to mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Table 2 – Entrée/Oyu Tolgoi JV Property Mineral Resources Estimates
| Entrée/Oyu Tolgoi JV Property – Mineral Resources | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Classification | Tonnage (Mt) | Cu (%) | Au (g/t) | Ag (g/t) | Mo (ppm) | CuEq (%) | Contained Metal | |||
| Cu (Mlb) | Au (Koz) | Ag (Koz) | Mo (Mlb) | |||||||
| Hugo North Extension (>0.41% CuEq Cut-Off) | ||||||||||
| Indicated | 120 | 1.70 | 0.58 | 4.3 | n/a | 2.04 | 4,500 | 2,200 | 16,000 | n/a |
| Inferred | 167 | 1.02 | 0.36 | 2.8 | n/a | 1.23 | 3,800 | 1,900 | 15,000 | n/a |
| Heruga (>0.41% CuEq Cut-Off) | ||||||||||
| Inferred | 1,400 | 0.41 | 0.40 | 1.5 | 120 | 0.68 | 13,000 | 18,000 | 66,000 | 370 |
Notes:
1. Metal prices used for copper equivalent ("CuEq") and cut-off grade calculation for both Hugo North Extension and Heruga are: $3.08/lb copper, $1,292.00/oz gold, $19.00/oz silver and $10.00/lb molybdenum (Heruga only). Metallurgical recoveries used for CuEq and cut-off grade calculation at Hugo North Extension are 93% for copper, 80% for gold and 81% for silver. Metallurgical recoveries used for CuEq and cut-off grade calculation at Heruga are 82% for copper, 73% for gold, 78% for silver and 60% for molybdenum.
2. Mineral resources at Hugo North Extension are constrained within a conceptual mining shape constructed at a nominal 0.50% CuEq grade and above a CuEq grade of 0.41% CuEq. The CuEq formula is CuEq = Cu + ((Au * 35.7175) + (Ag * 0.5773)) / 67.9023 taking into account differentials between metallurgical performance and price for copper, gold and silver.
3. The overall geometry and depth of the Heruga deposit make it amenable to underground mass mining methods. Mineral resources are stated above a CuEq grade. The CuEq formula is CuEq = Cu + ((Au * 37.0952) + (Ag * 0.5810) + (Mo * 0.0161)) / 67.9023 taking into account differentials between metallurgical performance and price for copper, gold, silver and molybdenum.
4. A CuEq break-even cut-off grade of 0.41% CuEq for Hugo North Extension mineralization and covers mining, processing and G&A operating cost and the cost of primary and secondary block cave mine development.
5. A CuEq break-even cut-off grade of 0.41% CuEq is used for the Heruga mineralization and covers mining, processing and G&A operating cost and the cost of primary and secondary block cave mine development.
6. Mineral resources are stated as in situ with no consideration for planned or unplanned external mining dilution.
7. Mineral resources are reported on a 100% basis. OTLLC has a participating interest of 80%, and Entrée has a participating interest of 20%. Notwithstanding the foregoing, in respect of products extracted from the Entrée/Oyu Tolgoi JV Property pursuant to mining carried out at depths from surface to 560 metres below surface, the participating interest of OTLLC is 70% and the participating interest of Entrée is 30%.
8. Numbers have been rounded as required by reporting guidelines and may result in apparent summation differences.
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Q3 2025 MD&A (table amounts expressed in thousands of US Dollars, except per share amounts and where otherwise noted)
Underground Development Progress – Oyu Tolgoi Project
Underground Development Update
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.
Technical studies for Panels 1 and 2 mine design and schedule optimization were completed by OTLLC during the second quarter 2023. The HNE deposit on the Entrée/Oyu Tolgoi JV Property is located at the northern portion of Panel 1. On July 11, 2023, Rio Tinto disclosed that:
- The technical studies have resulted in substantially de-risked, resilient mine designs that provide a pathway to ramp-up, flexibility to pursue value creating opportunities and react to future risks, and improved stability, constructability, and operability. The studies also provide a pathway to bring the panels into production faster and maximize the use of the ventilation system.
- Identified risks associated with the previous Panel 1 mine design have been resolved by increasing draw point and rim drive spacing, relocating the central material handling system and return raises outside of the active caving area, and optimally orienting the extraction drives and drill drives.
- Panel 1 production on the Oyu Tolgoi mining licence is anticipated to commence in ~2027.
The technical studies have been incorporated into OTFS23, which is subject to acceptance by applicable regulatory bodies in Mongolia. Refer to Rio Tinto's Oyu Tolgoi Site Visit materials dated July 11, 2023 (and in particular pages 70-83 of "Financial Community Visit to Oyu Tolgoi Site - Slides") available on its website at www.riotinto.com for further details.
The timing of Panel 1 production assumes the timely transfer of the Licences to OTLLC.
Drilling programs to support OTLLC's Lift 2 Pre-Feasibility Study are in progress. OTLLC will include mineralization from Lift 2 in an updated resource model for Hugo North (including Hugo North Extension) anticipated to be completed in H1 2026.
Entrée/Oyu Tolgoi JV Property Exploration and Development
HNE Lift 1 Panel 1 Underground Development
First Lift 1 Panel 1 underground development work on the Shivee Tolgoi mining licence area waste zone commenced in October 2024 in the southwest corner of the HNE deposit in rock classified as waste.
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Q3 2025 MD&A (table amounts expressed in thousands of US Dollars, except per share amounts and where otherwise noted)
On June 6, 2025, the Company, OTLLC, and Rio Tinto separately announced a pause in Oyu Tolgoi Lift 1 Panel 1 underground development work on the Shivee Tolgoi mining licence area. Under the original 2025 Oyu Tolgoi Mine Plan approved by MRPAM, work in the HNE deposit footprint had been conditionally scheduled to commence in June 2025. Development work in the ore zone cannot proceed until transfer of the Licences from Entrée LLC to OTLLC has been completed. See "Outlook and Strategy" above.
Approximately 230 equivalent metres of lateral development primarily on the return air level was completed by OTLLC prior to the pause. The work is part of the Panel 1 western ore handling truck chute design which, when completed, will include extraction level tipple development, which connects the truck chute chamber on the haulage level, and the supporting ventilation loop with the return air level.
Deposit Drilling
For 2025, the Entrée/Oyu Tolgoi JV Management Committee approved an in-fill diamond drilling program at 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.
All underground holes were collared from the Oyu Tolgoi mining licence and drilled onto the Entrée/Oyu Tolgoi JV Property to intersect the Hugo North Extension deposit or areas adjacent to the deposit where mine development infrastructure will be constructed. All surface holes were drilled entirely on the Shivee Tolgoi mining licence. The 2025 drilling program is intended to focus on gaps in the geological model. The Company will continue to report analytical results as they have become available from OTLLC.
Regional Exploration
For 2025, the Entrée/Oyu Tolgoi JV Management Committee approved exploration programs that focus on targets located along the known Oyu Tolgoi porphyry copper mineralization trend, including the Ulaan Khud South, Ridge, Ductile Shear, and Eagle targets on the Shivee Tolgoi mining licence, and the Heruga West, Heruga West-2, SW Heruga, MT11, and Railway targets on the Javkhlant mining licence (see Figure 3 below).
On the Shivee Tolgoi mining licence, the approved exploration program includes 5 diamond drill holes totaling 4,740 metres, 2,420 surface gravity survey stations, 1,428 CSAMT geophysical survey stations, 464 rock-chip samples, and laboratory assaying of 2,635 samples inclusive of drill cores, rock-chip, and QAQC samples. As at September 30, 2025, a total of 3,822.1 metres of diamond drilling had been completed, with one of the planned holes still in progress and one pending. Drill core sampling is ongoing and assay results are pending. Rock-chip sampling was completed during the second quarter 2025 and surface gravity survey activities were completed during the third quarter 2025. Field work preparation for CSAMT geophysical survey work was in progress.
On the Javkhlant mining licence, the approved exploration program includes 4 diamond drill holes totaling 3,780 metres, 2,857 surface gravity survey stations, 1,714 CSAMT geophysical survey stations, 412 rock-chip samples, 147 hectares of geological outcrop mapping, and laboratory assaying of 2,443 samples inclusive of drill cores, rock-chip, and QAQC samples. Diamond drilling totaling 3,461 metres in 4 holes and drill core sampling was completed in the third quarter 2025. Assay results are pending. Rock-chip sampling was completed during the second quarter 2025 and geological outcrop mapping terminated in the third quarter 2025 at ~88% complete. Surface gravity survey activities were completed during the third quarter 2025 and field work preparation for CSAMT geophysical survey work was in progress.
In addition, other desktop works such as prospect-scale 3D geological modelling integrating all available exploration data are planned for the Ulaan Khud South, Heruga West, Heruga West-2, SW Heruga, and MT11 targets.
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Q3 2025 MD&A (table amounts expressed in thousands of US Dollars, except per share amounts and where otherwise noted)
Figure 3: Plan View of Approved 2025 Regional Exploration Programs
Qyu Tolgoi Deposits
2025 Drilling Sites
Geological Mapping Area
Target Area Boundary
Rock-chip Sampling Sites
Mineral Licence Boundary
CSAMT Survey Stations
3D Modelling Area
Entrée/Qyu Tolgoi JV Property
Gravity Survey Stations
Modified version of original figure provided by OTLLC.
20% of expenditures on the Entrée/Oyu Tolgoi JV Property will be contributed by OTLLC on Entrée's behalf as a Loan in accordance with Article 10 of the Entrée/Oyu Tolgoi JVA.
Q3 2025 Financial Review
Entrée expenses related to Mongolian operations included expenditures of $0.2 million for strategic and administration costs in Mongolia. The Company focused its efforts on resolving outstanding issues around the State's interest in the area of the Licences and the transfer of the Licences to OTLLC in order to minimize delays to Lift 1 Panel 1 underground development work at the HNE deposit.
Costs were related to legal and tax advisory consultants to assist in the process in Q3 2025, which also included costs related to the arbitration. The costs in the comparative period of 2024 included similar professional fees.
Q3 2025 MD&A (table amounts expressed in thousands of US Dollars, except per share amounts and where otherwise noted)
SUMMARY OF CONSOLIDATED FINANCIAL OPERATING RESULTS
Operating Results
The Company’s operating results for the three and nine months ended September 30 were:
| Three months ended September 30 | Nine months ended September 30 | |||
|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |
| Expenses | ||||
| Project expenditures | $ 187 | $ 255 | $ 459 | $ 1,337 |
| General and administrative | 401 | 396 | 1,354 | 1,280 |
| Depreciation | 26 | 30 | 83 | 91 |
| Operating loss | 614 | 681 | 1,896 | 2,708 |
| Foreign exchange loss (gain) | 640 | (172) | (126) | 235 |
| Interest income | (49) | (52) | (145) | (181) |
| Interest expense | 178 | 121 | 523 | 351 |
| Loss from equity investee | 616 | 152 | 1,327 | 285 |
| Finance costs | 7 | 12 | 24 | 34 |
| Deferred revenue finance costs | 1,254 | 1,192 | 3,643 | 3,513 |
| Loss for the period | 3,260 | 1,934 | 7,142 | 6,945 |
| Other comprehensive (income) loss | ||||
| Foreign currency translation | (1,488) | 953 | 2,359 | (1,278) |
| Total comprehensive loss | $ 1,772 | $ 2,887 | $ 9,501 | $ 5,667 |
| Net loss per common share | ||||
| Basic and fully diluted | $ (0.02) | $ (0.01) | $ (0.03) | $ (0.01) |
| Total assets | $ 6,945 | $ 4,472 | $ 6,945 | $ 4,472 |
| Total non-current liabilities | $ 83,295 | $ 74,521 | $ 83,295 | $ 74,521 |
Operating Loss:
During the three and nine months ended September 30, 2025, the Company’s operating loss was $0.6 million and $1.9 million, respectively, compared to an operating loss of $0.7 million and $2.7 million, respectively, for the comparative periods in 2024.
Project expenditures in both 2025 and 2024 included legal, professional and advisory fees related to the arbitration proceedings, commercial negotiations regarding the potential conversion of the Entrée/Oyu Tolgoi JVA to an alternate arrangement and resolving outstanding issues around the State’s interest in the area of the Licences and the transfer of the Licences to OTLLC. With the arbitration decision in Q4 2024, the associated costs began to wind down resulting in lower legal and professional costs.
For the three and nine months ended September 30, 2025, general and administration increased primarily due to higher exchange filing fees, while depreciation expenditures were in line with the comparable periods in 2024.
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Q3 2025 MD&A (table amounts expressed in thousands of US Dollars, except per share amounts and where otherwise noted)
Non-operating Items:
The foreign exchange loss (gain) in Q3 2025 and Q3 2024 were primarily the result of movements between the C$ and US dollar as the Company holds its cash in both currencies and the Loan payable to OTLLC is denominated in US dollars (see "Loan Payable to OTLLC" below).
Interest expense was primarily related to the Loan payable to OTLLC pursuant to the Entrée/Oyu Tolgoi JVA and is subject to a variable interest rate.
The amount recognized as a loss from equity investee is related to exploration costs on the Entrée/Oyu Tolgoi JV Property.
Deferred revenue finance costs are related to recording the non-cash finance costs associated with the deferred revenue balance, specifically the Sandstorm stream (see "Deferred Revenue – Sandstorm" below).
The total assets as at September 30, 2025 were higher than at September 30, 2024 due to a higher cash balance from a private placement which closed in January 2025.
The application of the Company's accounting policy for the capitalization of mineral property development costs required determination that key development milestones have been achieved. These milestones include obtaining sufficient financial resources, permits, and licences to develop the mineral property. The Company considered the start of development activities on Lift 1 Panel 1 of the Oyu Tolgoi underground block cave mining operation on the Shivee Tolgoi mining licence as having achieved the development milestones. Accordingly, the Company began capitalizing the development costs incurred on Lift 1 Panel 1 on the Entrée/Oyu Tolgoi JV Property in October 2024. As at September 30, 2025, the Company has capitalized $1.1 million (December 31, 2024 - $0.2 million) as Property and Equipment in relation to these development costs.
Total non-current liabilities have increased since September 30, 2024 due to recording the non-cash deferred revenue finance costs and additions to the Loan payable to OTLLC balance.
Quarterly Financial Data – 2 year historic trend
| Q3 25 | Q2 25 | Q1 25 | Q4 24 | Q3 24 | Q2 24 | Q1 24 | Q4 23 | |
|---|---|---|---|---|---|---|---|---|
| Project expenditures | $ 187 | $ 121 | $ 151 | $ 202 | $ 255 | $ 456 | $ 626 | $ 325 |
| General and administrative | 401 | 494 | 459 | 690 | 396 | 443 | 441 | 633 |
| Share-based compensation | - | - | - | 1,208 | - | - | - | 1,029 |
| Depreciation | 26 | 29 | 28 | 27 | 30 | 30 | 31 | 28 |
| Operating loss | 614 | 644 | 638 | 2,127 | 681 | 929 | 1,098 | 2,015 |
| Foreign exchange (gain) loss | 640 | (757) | (9) | 1,182 | (172) | 113 | 294 | (151) |
| Interest expense, net | 129 | 123 | 126 | 95 | 69 | 56 | 45 | 22 |
| Loss from equity investee | 616 | 648 | 63 | 2,782 | 152 | 71 | 62 | 447 |
| Deferred revenue finance costs | 1,254 | 1,221 | 1,168 | 1,181 | 1,192 | 1,168 | 1,153 | 1,133 |
| Finance costs | 7 | 9 | 8 | 9 | 12 | 11 | 11 | 12 |
| Net loss | $ 3,260 | $ 1,888 | $ 1,994 | $ 7,376 | $ 1,934 | $ 2,348 | $ 2,663 | $ 3,478 |
| Basic/diluted loss per share | $ (0.02) | $ (0.01) | $ (0.01) | $ (0.04) | $ (0.01) | $ (0.01) | $ (0.01) | $ (0.02) |
| USD:CAD FX Rate(1) | 1.39 | 1.36 | 1.44 | 1.44 | 1.35 | 1.369 | 1.355 | 1.323 |
- USD:CAD foreign exchange rate was the quarter ended rate per the Bank of Canada.
Project expenditures in Q3 2025 were related to arbitration proceedings and the Company's efforts to resolve outstanding issues around the State's interest in the area of the Licences and the transfer of the Licences to OTLLC.
Costs were related to legal and tax advisory consultants to assist in the process in Q3 2025, which also included costs related to the arbitration.
General and administrative expenses in Q3 2025 were consistent compared to Q3 2024 and is mainly related to regulatory costs and compensation costs.
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Q3 2025 MD&A (table amounts expressed in thousands of US Dollars, except per share amounts and where otherwise noted)
Share-based compensation expenditures in Q4 2024 and Q4 2023 included share options and deferred share unit ("DSU") grants.
Interest expense, net, consists of accrued interest on the Loan payable to OTLLC, net of interest income earned on cash balances.
The loss from equity investee was related to the Entrée/Oyu Tolgoi JV Property and fluctuations were due to exploration activities and foreign exchange changes.
LIQUIDITY AND CAPITAL RESOURCES
| Three months ended September 30 | Nine months ended September 30 | |||
|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |
| Cash flows used in operating activities | ||||
| - Before changes in non-cash working capital items | $ (860) | $ (589) | $ (1,903) | $ (2,505) |
| - After changes in non-cash working capital items | (806) | (616) | (1,613) | (2,535) |
| Cash flows from / (used in) financing activities | 173 | (13) | 4,072 | (65) |
| Net cash (outflows) / inflows | (633) | (629) | 2,459 | (2,600) |
| Effect of exchange rate changes on cash | (86) | 39 | 108 | (57) |
| Cash balance | $ 4,945 | $ 3,434 | $ 4,945 | $ 3,434 |
Cash outflows after changes in non-cash working capital items in the three month period ended September 30, 2025 were higher than in 2024 due to the timing of invoice payments. Cash outflows after changes in non-cash working capital items in the nine month period ended September 30, 2025 were lower than in 2024 due to lower project expenditures.
Cash flows from financing activities in the three month period ended September 30, 2025 were due to funds received from share option exercises. Cash flows from financing activities in the nine month period ended September 30, 2025 were also due to a non-brokered private placement which closed in January 2025.
The Company is a development stage company and has not generated positive cash flows from its operations. As a result, the Company has been dependent on equity and production-based financings for additional funding. Working capital on hand at September 30, 2025 was approximately $4.9 million.
On January 24, 2025, the Company closed a non-brokered private placement issuing 2,577,700 units at a price of C$2.21 per unit for aggregate gross proceeds of C$5.7 million ($4.0 million). Each unit consists of one common share of the Company and one-half of one non-transferable common share purchase warrant. Each whole warrant (a "Warrant") will entitle the holder to acquire one additional common share of the Company at a price of C$3.00 per share for a period of 2 years. No finder's fees were paid in connection with the private placement.
Management believes it has adequate financial resources to satisfy its obligations over the next 12-month period and beyond.
Loan Payable to Oyu Tolgoi LLC
Under the terms of the Entrée/Oyu Tolgoi JVA, the Company has elected to have OTLLC contribute funds to approved Entrée/Oyu Tolgoi JV programs and budgets on the Company's behalf, each such contribution to be treated as a non-recourse loan ("Loan"). Interest on each Loan advance shall accrue at an annual rate equal to OTLLC's actual cost of capital or the prime rate of the Royal Bank of Canada, plus two percent (2%) per annum, whichever is less, as at the date of the advance. The Loan will be repayable by the Company monthly from ninety percent (90%) of the Company's share of available cash flow from the Entrée/Oyu Tolgoi JV. In the absence of available cash flow, the Loan will not be repayable. The Loan is not expected to be repaid within one year.
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Q3 2025 MD&A (table amounts expressed in thousands of US Dollars, except per share amounts and where otherwise noted)
Contractual Obligations
As at September 30, 2025, the Company had the following contractual obligations outstanding:
| Total | Less than 1 year | 1 - 3 years | 3-5 years | More than 5 years | |
|---|---|---|---|---|---|
| Lease commitments | $ 263 | $ 126 | $ 137 | $ - | $ - |
SHAREHOLDERS' DEFICIENCY
The Company's authorized share capital consists of unlimited common shares without par value.
As at September 30, 2025, the Company had 207,900,936 shares issued and outstanding. As at the date of this MD&A, the Company had 208,435,024 shares issued and outstanding.
As noted above, on January 24, 2025, the Company closed a non-brokered private placement issuing 2,577,700 units at a price of C$2.21 per unit for aggregate gross proceeds of C$5.7 million ($4.0 million).
Share Purchase Warrants
As part of the Company's January 24, 2025 private placement, the Company issued 1,288,850 Warrants. Each Warrant entitles the holder to acquire one common share of the Company at a price of C$3.00 per share for a period of 2 years.
At the date of this MD&A, the following Warrants were outstanding:
| Number of Warrants (000's) | Warrant exercise price C$ | Expiry date |
|---|---|---|
| 1,289 | 3.00 | January 23, 2027 |
Stock Option Plan
As at September 30, 2025, the Company had 3,571,153 share options outstanding and exercisable. As at the date of this MD&A, the Company had 2,886,153 share options outstanding and exercisable.
Under the Company's Stock Option Plan, an option holder may elect to terminate an option, in whole or in part and, in lieu of receiving shares to which the terminated option relates (the "Designated Shares"), receive the number of shares, disregarding fractions, which, when multiplied by the weighted average trading price of the shares on the TSX during the five trading days immediately preceding the day of termination (the "Fair Value" per share) of the Designated Shares, has a total dollar value equal to the number of Designated Shares multiplied by the difference between the Fair Value and the exercise price per share of the Designated Shares.
The following is a summary of share options outstanding and exercisable as at the date of this MD&A:
| Number of share options (000's) | Exercise price per share option (C$) | Expiry date |
|---|---|---|
| 170 | 0.51 | Dec 2025 |
| 799 | 0.77 | Dec 2026 |
| 1,022 | 0.82 – 1.14 | Apr - Nov 2027 |
| 622 | 1.28 | Nov 2028 |
| 273 | 2.06 | Nov 2029 |
| 2,886 |
Deferred share units (DSUs)
DSUs are granted to the Company's directors and executives as a part of compensation under the terms of the Company's Deferred Share Unit Plan (the "DSU Plan"). Typically, DSUs vest when certain conditions as stated in the
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Q3 2025 MD&A (table amounts expressed in thousands of US Dollars, except per share amounts and where otherwise noted)
DSU Plan are met, except in the event of an earlier change of control, in which case, the DSUs will vest fully upon such change of control.
At September 30, 2025, the following DSUs were outstanding and fully vested:
| Number of DSUs (000's) | |
|---|---|
| Outstanding | 2,972 |
DEFERRED REVENUE - SANDSTORM
The Company has an agreement (the "Sandstorm Agreement") to use future payments that it receives from its mineral property interests to purchase and deliver gold, silver and copper credits to Sandstorm.
Under the terms of the Sandstorm Agreement, Sandstorm provided the Company with a net deposit of C$30.9 million (the "Deposit") in exchange for the future delivery of gold, silver and copper credits equivalent to:
- 28.1% of Entrée's share of gold and silver, and 2.1% of Entrée's share of copper, produced from the Shivee Tolgoi mining licence (excluding the western portion formerly known as the Shivee West Property); and
- 21.3% of Entrée's share of gold and silver, and 2.1% of Entrée's share of copper, produced from the Javkhlant mining licence.
Upon the delivery of metal credits, Sandstorm will make a cash payment to the Company equal to the lesser of the prevailing market price and $220 per ounce of gold, $5 per ounce of silver and $0.50 per pound of copper (subject to inflation adjustments). After approximately 8.6 million ounces of gold, 40.3 million ounces of silver and 9.1 billion pounds of copper have been produced from the Project Property the cash payment will be increased to the lesser of the prevailing market price and $500 per ounce of gold, $10 per ounce of silver and $1.10 per pound of copper (subject to inflation adjustments). To the extent that the prevailing market price is greater than the amount of the cash payment, the difference between the two will be credited against the Deposit.
The Deposit has been accounted for as deferred revenue on the statement of financial position and is subject to foreign currency fluctuations upon conversion to US dollars at each reporting period. The Deposit contains a significant financing component and, as such, the Company recognizes a financing charge at each reporting period and grosses up the deferred revenue balance to recognize the significant financing element that is part of this contract at a discount rate of 8%. For the nine-month period ended September 30, 2025, the deferred revenue finance costs totaled $3.6 million (2024 - $3.5 million).
Further information in relation to the Sandstorm Agreement is available in the Company's AIF dated March 12, 2025.
On October 20, 2025, Royal Gold, through its wholly owned Canadian subsidiary International Royalty Corporation, completed its acquisition of all the issued and outstanding shares of Sandstorm. Subsequently, Royal Gold, International Royalty Corporation, and Sandstorm undertook an internal corporate reorganization whereby Sandstorm amalgamated with and into International Royalty Corporation.
OTHER DISCLOSURES
Off-Balance Sheet Arrangements
Entrée has no off-balance sheet arrangements except for the contractual obligation noted above.
Related Party Transactions
The Company's related parties include key management personnel and directors. Direct remuneration paid to the Company's directors and key management personnel for the three and nine month periods ended September 30 were as follows:
| Three months ended September 30 | Nine months ended September 30 | |||
|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |
| Directors' fees | $ 49 | $ 51 | $ 147 | $ 155 |
| Salaries and benefits | $ 201 | $ 198 | $ 597 | $ 596 |
Q3 2025 MD&A (table amounts expressed in thousands of US Dollars, except per share amounts and where otherwise noted)
As of September 30, 2025, included in the accounts payable and accrued liabilities balance on the condensed consolidated interim statement of financial position is $0.1 million (December 31, 2024 - $0.04 million) due to the Company's directors and key management personnel.
Upon a change of control of the Company, amounts totaling $1.4 million (December 31, 2024 - $1.3 million) may become payable to certain officers and management personnel of the Company.
Financial Instruments
a) Fair value classification of financial instruments
The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (prices) or indirectly (derived from prices). Level 3 inputs are for the assets or liabilities that are not based on observable market data (unobservable inputs).
The Company's financial instruments consist of cash and cash equivalents, receivables, deposits, accounts payable and accrued liabilities, loan payable and lease liabilities.
The carrying values of cash and cash equivalents, receivables and accounts payable and accrued liabilities approximate their fair value due to their short terms to maturity.
The following table summarizes the classification and carrying values of the Company's financial instruments at September 30, 2025:
| FVTPL | Amortized cost (financial assets) | Amortized cost (financial liabilities) | Total | |
|---|---|---|---|---|
| Financial assets | ||||
| Cash and cash equivalents | $ - | $ 4,945 | $ - | $ 4,945 |
| Receivables | - | 30 | - | 30 |
| Deposits | - | 12 | - | 12 |
| Total financial assets | $ - | $ 4,987 | $ - | $ 4,987 |
| Financial liabilities | ||||
| Accounts payable and accrued liabilities | $ - | $ - | $ 179 | $ 179 |
| Lease liabilities | - | - | 286 | 286 |
| Loan payable | - | - | 18,872 | 18,872 |
| Total financial liabilities | $ - | $ - | $ 19,337 | $ 19,337 |
CRITICAL ACCOUNTING ESTIMATES, RISKS AND UNCERTAINTIES
The preparation of consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.
Measurement of the Company's assets and liabilities is subject to risks and uncertainties, including those related to reserve and resource estimates; title to mineral properties; future commodity prices; costs of future production; future costs of restoration provisions; political risk; changes in government legislation and regulations; future income tax amounts; the availability of financing; and various operational factors. The Company's estimates identified as being critical are substantially unchanged from those disclosed in the MD&A for the year ended December 31, 2024.
Entrée is a mineral exploration and development company and is exposed to a number of risks and uncertainties due to the nature of the industry in which it operates and the present state of development of its business and the foreign jurisdictions in which it carries on business; some of these risks and uncertainties have been discussed elsewhere in
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Q3 2025 MD&A (table amounts expressed in thousands of US Dollars, except per share amounts and where otherwise noted)
this MD&A. The discussion in this MD&A is not inclusive of all material risks and uncertainties. The material risks and uncertainties affecting Entrée, their potential impact, and the Company's principal risk-management strategies are substantially unchanged from those disclosed in the Company's AIF dated March 12, 2025 in respect of the year ended December 31, 2024, which is available on SEDAR+ at www.sedarplus.ca, OTC Markets at www.otcmarkets.com and on the Company's website at www.EntreeResourcesLtd.com.
INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for designing internal control over financial reporting, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. No change in the Company's internal control over financial reporting occurred during the period beginning on July 1, 2025 and ended on September 30, 2025 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
FORWARD LOOKING INFORMATION
This MD&A contains forward-looking information within the meaning of applicable Canadian securities laws.
Forward-looking information includes, but is not limited to, statements with respect to corporate strategies and plans; requirements for additional capital; uses of funds and projected expenditures; arbitration proceedings, including the potential benefits, timing and outcome of arbitration proceedings; the Company's plans to continue discussions with OTLLC and Rio Tinto regarding a potential conversion of the Entrée/Oyu Tolgoi JVA; the Company's efforts to continue discussions with representatives of the Government of Mongolia and Erdenes Oyu Tolgoi LLC ("EOT") regarding the potential for the State to receive 34% of the economic benefit that the Company derives from its 20% contractual interest in the area of the Licences pursuant to applicable laws of Mongolia; the Company's ability to transfer the Shivee Tolgoi and Javkhlant mining licences to OTLLC pursuant to the License Transfer Agreements; the potential for Entrée to be included in or otherwise receive the benefits of the OTIA; the expectations set out in OTFS20 and the 2021 Technical Report on the Company's interest in the Entrée/Oyu Tolgoi JV Property; timing and status of Oyu Tolgoi underground development; the expected timing of development work on the Shivee Tolgoi mining licence and the potential for delay, which may be significant, if the Shivee Tolgoi mining licence cannot be transferred to OTLLC in a timely fashion; the nature of the ongoing relationship and interaction between the Company, OTLLC and Rio Tinto and the Government of Mongolia and EOT with respect to the continued operation and development of the Oyu Tolgoi project, the transfer of the Licences, and State participation in the area of the Licences; the technical studies for Lift 1 Panels 1 and 2, OTFS23, the Lift 2 Pre-Feasibility Study, and the updated resource model for Hugo North (including Hugo North Extension) Lifts 1 and 2 and the possible outcomes, content and timing thereof; timing and amount of production from Lift 1 of the Entrée/Oyu Tolgoi JV Property, potential production delays and the impact of any delays on the Company's cash flows, expected copper, gold and silver grades, liquidity, funding requirements and planning; future commodity prices; the estimation of mineral reserves and resources; projected mining and process recovery rates; estimates of capital and operating costs, mill and concentrator throughput, cash flows and mine life; capital, financing and project development risk; mining dilution; potential actions by the Government of Mongolia with respect to the Shivee Tolgoi and Javkhlant mining licences and Entrée's interest in the Entrée/Oyu Tolgoi JV Property; potential size of a mineralized zone; potential expansion of mineralization; potential discovery of new mineralized zones; potential metallurgical recoveries and grades; plans for future exploration and/or development programs and budgets; permitting time lines; anticipated business activities; proposed acquisitions and dispositions of assets; and future financial performance.
In certain cases, forward-looking information can be identified by words such as "plans", "expects" or "does not expect", "is expected", "budgeted", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "does not anticipate" or "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", "will be taken", "occur" or "be achieved". While the Company has based this forward-looking information on its expectations about future events as at the date that such information was prepared, the information is not a guarantee of Entrée's future performance and is based on numerous assumptions regarding present and future business strategies; the correct interpretation of agreements, laws and regulations; the commencement and conclusion of arbitration proceedings, including the potential benefits, timing and outcome of arbitration proceedings; the Company's ability to engage in discussions and negotiations with the Government of Mongolia and EOT and the potential timing and outcome of any such discussions; the future ownership of the Shivee Tolgoi and Javkhlant mining licences; that the Company will continue to have timely access to detailed technical, financial, and operational information about the Entrée/Oyu Tolgoi JV Property, the Oyu Tolgoi project, and
Q3 2025 MD&A (table amounts expressed in thousands of US Dollars, except per share amounts and where otherwise noted)
government relations to enable the Company to properly assess, act on, and disclose material risks and opportunities as they arise; local and global economic conditions and the environment in which Entrée will operate in the future, including commodity prices, projected grades, projected dilution, anticipated capital and operating costs, including inflationary pressures thereon resulting in cost escalation, and anticipated future production and cash flows; the anticipated location of certain infrastructure and sequence of mining within and across panel boundaries; the construction and continued development of the Oyu Tolgoi underground mine; the status of Entrée's relationship and interaction with the Government of Mongolia, EOT, OTLLC, and Rio Tinto; and the Company's ability to operate sustainably, its community relations, and its social licence to operate.
With respect to the construction and continued development of the Oyu Tolgoi underground mine, important risks, uncertainties and factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking information include, amongst others, an uncertain and unstable global economic and political environment, including China-U.S. tensions and the indirect impacts of the war in Ukraine and conflict in the Middle East, which could lead to falling commodity prices, trade actions (including increased tariffs, retaliations, and sanctions), and government efforts to exert more control over natural resources or to protect domestic economies by changing contractual, regulatory, or tax measures; the impacts of climate change and the transition to a low-carbon future; the nature of the ongoing relationship and interaction between OTLLC, Rio Tinto, EOT and the Government of Mongolia with respect to the continued operation and development of Oyu Tolgoi; the continuation of undercutting in accordance with the mine plans and designs in OTFS23; applicable taxes and royalty rates; the future ownership of the Shivee Tolgoi and Javkhlant mining licences; the amount of any future funding gap to complete the Oyu Tolgoi project and the availability and amount of potential sources of additional funding; the timing and cost of the construction and expansion of mining and processing facilities; inflationary pressures on prices for critical supplies for Oyu Tolgoi resulting in cost escalation; the ability of OTLLC or the Government of Mongolia to deliver a domestic power source for Oyu Tolgoi (or the availability of financing for OTLLC or the Government of Mongolia to construct such a source) within the required contractual timeframe; sources of interim power; OTLLC's ability to operate sustainably, its community relations, and its social license to operate in Mongolia; the impact of changes in, changes in interpretation to or changes in enforcement of, laws, regulations and government practises in Mongolia; delays, and the costs which would result from delays, in the development of the underground mine; the anticipated location of certain infrastructure and sequence of mining within and across panel boundaries; projected commodity prices and their market demand; and production estimates and the anticipated yearly production of copper, gold and silver at the Oyu Tolgoi underground mine.
The 2021 PEA is based on a conceptual mine plan that includes Inferred mineral resources. Numerous assumptions were made in the preparation of the 2021 PEA, including with respect to mineability, capital and operating costs, including inflationary pressures thereon resulting in cost escalation, production schedules, the timing of construction and expansion of mining and processing facilities, and recoveries, that may change materially once production commences at Hugo North Extension Lift 1 and additional development and capital decisions are required. Any changes to the assumptions underlying the 2021 PEA could cause actual results to be materially different from any future results, performance or achievements expressed or implied by forward-looking information relating to the 2021 PEA.
Other risks, uncertainties and factors which could cause actual results, performance or achievements of the Company to differ materially from future results, performance or achievements expressed or implied by forward-looking information include, amongst others, unanticipated costs, expenses or liabilities; discrepancies between actual and estimated production, mineral reserves and resources and metallurgical recoveries; the impacts of geopolitics on trade and investment; trade tensions between the world's major economies; development plans for processing resources; matters relating to proposed exploration or expansion; mining operational and development risks, including geotechnical risks and ground conditions; regulatory restrictions (including environmental regulatory restrictions and liability); risks related to international operations, including legal and political risk in Mongolia; risks related to the potential impact of global or national health concerns; risks associated with changes in the attitudes of governments to foreign investment; risks associated with the conduct of joint ventures, including the ability to access detailed technical, financial and operational information; risks related to the Company's significant shareholders, and whether they will exercise their rights or act in a manner that is consistent with the best interests of the Company and its other shareholders; inability to upgrade Inferred mineral resources to Indicated or Measured mineral resources; inability to convert mineral resources to mineral reserves; conclusions of economic evaluations; fluctuations in commodity prices and demand; changing foreign exchange rates; the speculative nature of mineral exploration; the global economic climate; dilution; share price volatility; activities, actions or assessments by Rio Tinto or OTLLC and by government stakeholders or authorities including EOT and the Government of Mongolia; the availability of funding on reasonable terms; the impact of changes in interpretation to or changes in enforcement of laws, regulations and government practices, including laws, regulations and government practices with respect to mining, foreign investment, strategic
Q3 2025 MD&A (table amounts expressed in thousands of US Dollars, except per share amounts and where otherwise noted)
deposits, royalties and taxation; the terms and timing of obtaining necessary environmental and other government approvals, consents and permits; the availability and cost of necessary items such as water, skilled labour, transportation and appropriate smelting and refining arrangements; unanticipated reclamation expenses; changes to assumptions as to the availability of electrical power, and the power rates used in operating cost estimates and financial analyses; changes to assumptions as to salvage values; ability to maintain the social license to operate; accidents, labour disputes and other risks of the mining industry; global climate change; global conflicts; natural disasters; the impacts of civil unrest; breaches of the Company's policies, standards and procedures, laws or regulations; increasing societal and investor expectations, in particular with regard to environmental, social and governance considerations; the impacts of technological advancements; title disputes; limitations on insurance coverage; competition; loss of key employees; cyber security incidents; misjudgements in the course of preparing forward-looking information; and those factors discussed in the section entitled "Critical Accounting Estimates, Risks and Uncertainties" in this MD&A and in the section entitled "Risk Factors" in the AIF. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Except as required under applicable securities legislation, the Company undertakes no obligation to publicly update or revise forward-looking information, whether as a result of new information, future events, or otherwise. Accordingly, readers should not place undue reliance on forward-looking information.
TECHNICAL INFORMATION
Robert Cinits, P.Geo., has approved the technical disclosure in this MD&A. Mr. Cinits is a Qualified Person ("QP") as defined by NI 43-101.
Cautionary Note to United States Investors - Canadian Disclosure Standards in Mineral Resources and Mineral Reserves
All mineral reserve and mineral resource estimates included in this MD&A have been prepared in accordance with NI 43-101, which incorporates by reference the definitions of the terms ascribed by the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") in the CIM Definition Standards for Mineral Resources and Mineral Reserves, adopted by the CIM Council on May 10, 2014, as may be amended from time to time by the CIM.
NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral properties. NI 43-101 differs from the disclosure requirements of the United States Securities and Exchange Commission generally applicable to U.S. companies.
Accordingly, descriptions of mineral deposits contained in this MD&A may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.
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