THE TIMELINE FOR DEVELOPING THE ENTRÉE SITE REMAINS UNCLEAR

The Mongolian Mining Journal - 2026 April Edition

By A. Khaliun

The Oyu Tolgoi Investment Agreement was approved on October 6, 2009. It covers five licensed areas that make up the Oyu Tolgoi mineral deposit group. However, the mining licenses for the Javkhlant and Shivee Tolgoi areas are held by Entrée LLC, a company with Canadian investment.

In geological terms, the mineral resources within these two licensed areas form a single, continuous body of rock with the Oyu Tolgoi license area - an uninterrupted copper and gold deposit. As a result, both companies have long recognized that it is not practical to divide the deposit based on license ownership into separate Oyu Tolgoi and Entrée portions, or to mine the areas independently.

Around 32% of the ore reserves in the deposit group are located within Entrée's licensed areas. The total ore reserves in this area are estimated at approximately 2 billion tonnes.

More specifically, these include 10.3 million tonnes of copper (24%), 759 tonnes of gold (41% of total gold reserves), and 3,300 tonnes of silver (28%), according to a presentation by G.Namchinsuren, Director of the Mining Policy Department at the Ministry of Industry and Mineral Resources, during a session of a parliamentary ad hoc committee established by Mongolia's Parliament in September 2025.

The Oyu Tolgoi mine carries out its operations by dividing its licensed area into four zones, or panels, for extraction. Since the underground mine entered into operation, mining activities in recent years have been conducted in Panel 1.

Within Panel 1, one side of the licensed area belongs to Oyu Tolgoi, while the other is under Entrée's control. Oyu Tolgoi has completed extraction in its own portion of this section and has now reached the boundary of Entrée's licensed area. As a result, the company has been forced to temporarily suspend operations in this part of the mine.

To proceed into areas owned by another party, the stakeholders must engage in negotiations. However, this is not an issue that can be resolved solely through discussions between Oyu Tolgoi and Entrée.

To uphold the principle enshrined in the Constitution of Mongolia that "natural resources are under the people's ownership and under the protection of the State," the Government will act as the principal participant in negotiations between the stakeholders.

In accordance with both the Constitution and the Minerals Law, the State's share in the above-mentioned areas held under Entrée's licenses must be determined.

Although Parliament has not yet issued a formal decision on the matter, some Members of Parliament have expressed the view that a new Investment Agreement with Entrée LLC should be concluded, under which the majority of benefits would accrue to the Government of Mongolia.

Entrée has stated that it is prepared to provide 34% of the economic benefits from its licensed area to the Government of Mongolia. The company first communicated this position during a meeting with government representatives in 2023 and reaffirmed that it maintains the same stance at a public hearing held on December 8, 2025, as stated by Entrée CEO Stephen Scott.

The open hearing of the Parliamentary Oversight Committee, tasked with reviewing documents and conducting inspections to ensure Mongolia's national interests and increase the benefits derived from the development of the Oyu Tolgoi deposit group, was held on December 8, 10, and 12, 2025.

Entrée's management has acknowledged that mining the Javkhlant and Shivee Tolgoi licensed areas separately from the Oyu Tolgoi deposit would not be economically viable.

To fully utilize the resources of the deposit group and increase returns for shareholders, mining the ore in the Javkhlant and Shivee Tolgoi licensed areas is considered important. Accordingly, Oyu Tolgoi has not remained passive in recent years. It has held negotiations with Entrée and, after revising the terms of the agreement, submitted them to its Board of Directors in March 2023; however, the matter has yet to be resolved.

Due to delays in transferring the mining licenses for these two areas, which are critical to the stable operation of the underground mine, Oyu Tolgoi was forced to revise its mine planning in June 2025.

The Oyu Tolgoi Investment Agreement covers the five licensed areas that make up the deposit group. This indicates that the Shivee Tolgoi and Javkhlant mining license areas fall within the scope of the agreement. However, this appears to conflict with the Minerals Law, which stipulates that "only the license holder may conduct extraction activities."

Resolving the inconsistency between the law and the Investment Agreement, and ensuring compliance with the constitutional principle of distributing the benefits of natural resources to every citizen, is essential for bringing these resources into commercial production and breaking the current deadlock. The key question remains: when will the Government of Mongolia, Entrée, and Oyu Tolgoi sit down at the negotiating table?

When asked about the economic implications of stopping operations in Panel 1 upon reaching Entrée's licensed area and shifting to Panel 2, Oyu Tolgoi LLC CEO S.Munkhsukh said:

"This can be described as a lost opportunity. Having already made the main investment in Panel 1, we are now forced to leave this high-grade, higher cash-flow area unfinished due to unresolved licensing issues. Instead, we have to shift investment to the lower-grade Panel 2. This means we will lose the revenue we could have generated in the short term. Ideally, it would have been more beneficial to continue mining in the already invested, high-grade area and use the resulting income to repay debt, which would have been more advantageous for us."

Due to the ongoing uncertainty, no work is planned in Entrée's area in 2026. There is a general plan to return to the unfinished Panel 1 in 2028, should the licensing issue be resolved. If the area can be developed, its utilization would be an economically beneficial solution that aligns with the interests of all parties involved.

As the CEO's explanation indicates, delays in resolving the transfer of mining licenses have made it necessary for Oyu Tolgoi to revise the sequencing of its underground mine development.

After operations in Panel 1 were halted, the company carried out the first ore crusher blast in Panel 2 in August 2025, opening access to a new ore zone. This contributed to Oyu Tolgoi exceeding its production targets for the first quarter of 2026.

In the first quarter of this year, Oyu Tolgoi's underground mine set a record in copper and gold production, with copper content in the produced concentrate reaching 101.6 thousand tonnes, compared with a planned 91.7 thousand tonnes.

Gold contained in the produced concentrate also reached 123.1 thousand ounces (equivalent to 3.8 tonnes), compared with a planned 113.1 thousand ounces. In the first quarter, revenue was projected at $1.3 billion but reached $2.055 billion, while free cash flow exceeded $596 million.

This achievement was mainly driven by the fact that, in the first quarter of 2026, development work in Panel 2 - including undercut blasting, construction of ore passes, and drawpoints - was completed ahead of schedule, contributing significantly to increased mining output, according to Oyu Tolgoi's operational report for the first quarter of 2026.