Entrée Resources Ltd.

What they do

Entree Resources is a mineral exploration company engaged in the exploration and development of gold and silver properties. Its primary focus is on the Entree/Oyu Tolgoi joint venture property in Mongolia, which is adjacent to the Oyu Tolgoi copper-gold mine. The company has not reported any production revenue; it is a development-stage entity.

Revenue drivers

• Exploration properties — No production revenue; the company's value is derived from its mineral exploration and development assets, primarily the Entree/Oyu Tolgoi joint venture.

Recent performance

The company reported net losses of $-11.4M in 2013, $-8.7M in 2014, $-7.8M in 2015, $-4.7M in 2016, and $-3.2M in 2017. Diluted EPS were consistently negative, ranging from $-0.12 in 2012 to $-0.03 in 2016. Operating cash flow was negative in most years, with $-12.6M in 2014, $-9.8M in 2015, $-10.2M in 2016, and $-3.0M in 2017, though it was $28.0M in 2013. As of September 30, 2018, the company had total assets of $7.5M, total liabilities of $32.3M, and a shareholder deficit of $-24.8M, with cash and equivalents of $6.0M.

Strategy

Management's stated direction includes advancing its mineral properties, particularly the Entree/Oyu Tolgoi joint venture. The company has focused on exploration and development activities, aiming to establish mineral resources and potentially move toward production. The strategy also involves managing its capital structure and liquidity, given its negative equity position.

Risks

• Development-stage risk — The company has no production revenue and depends on successful exploration and development of its properties to generate future cash flows.
• Negative equity and liquidity risk — With a shareholder deficit of $-24.8M and only $6.0M in cash, the company may face challenges funding ongoing operations and meeting liabilities.
• Geographic concentration risk — Primary assets are in Mongolia, exposing the company to political, regulatory, and economic risks in that jurisdiction.
• Commodity price risk — The viability of its gold and silver projects is sensitive to fluctuations in commodity prices, which could affect project economics and financing.

Outlook

Management expects continued exploration and development work on its properties, with a focus on advancing the Entree/Oyu Tolgoi joint venture. The company may need to secure additional financing to support its activities. Forward-looking statements indicate plans to develop the mineral resources further, but the timing and success of these efforts are uncertain.