Q4 2025 HIGHLIGHTS State Interest in Area of Licences
During the third quarter 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"). Company representatives attended a December 8, 2025, public hearing in Ulaanbaatar to answer questions related to the Shivee Tolgoi and Javkhlant mining licences (the "Licences") on behalf of the Company.
Following the public hearing, on December 26, 2025, the Parliament of Mongolia approved Resolution No. 120 directing the Government of Mongolia to implement certain measures with regard to the exploitation of the Oyu Tolgoi Strategic Deposit, to provide quarterly progress reports to the Economic Standing Committee of Parliament, and to present the results during the Autumn Session of Parliament in 2026. See "Outlook and Strategy" below.
The Company received official notice on September 18, 2025 of the formation of a renewed working group (the "Government Working Group") led by the Minister of Industry and Mineral Resources. The Government Working Group was established to negotiate the State's interest in the area of the Licences. On October 17, 2025, the Company responded to a request from the Minister of Industry and Mineral Resources to advise the Government Working Group of the composition of the Company's negotiating team. A preliminary meeting between Company representatives and the Government Working Group was held in Ulaanbaatar on December 10, 2025, and the Company expects further discussions to commence shortly.
Entrée/Oyu Tolgoi JV Property Update
During the second half of 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 the Company's joint venture partner Oyu Tolgoi LLC ("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 December 31, 2025, ~4,688 metres of drilling on the Shivee Tolgoi mining licence in 22 underground holes had been completed, with one of the underground holes still in progress. In addition, ~5,250.4 metres of drilling in 6 surface holes had been completed, with one of the surface holes still in progress. 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 fourth quarter 2025.
Oyu Tolgoi Underground Mine 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 as amended on February 3, 2025 (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 January 21, 2026, Rio Tinto announced the Oyu Tolgoi Lift 1 underground mine ramp-up remains on track to reach an average of around 500 thousand tonnes of copper per year from 2028 to 2036. Oyu Tolgoi is set to become the world's fourth largest copper mine by 2030. Refer to Rio Tinto's press release dated January 21, 2026, titled "Rio Tinto releases fourth quarter 2025 production results" available on its website at www.riotinto.com for further details. Also see Rio Tinto plc's Form 20-F for the financial year ended December 31, 2025 ("Form 20-F") available on Edgar at https://www.sec.gov/search-filings.
Underground Lift 1 Panel 0 production level development completed during the fourth quarter 2025. Following completion of the concentrator conversion and Primary Crusher #2 in the third quarter, efforts focused on closeout and demobilisation activities, which are progressing as planned.
The fourth quarter 2025 was another record quarter for copper production following the successful planned concentrator shutdown in September. Higher production was driven by the continued underground ramp-up, higher head grades, and recovery rates. Underground material movement supported by the now fully operational conveyor to surface achieved record daily throughput of 52ktpd and averaged 42ktpd in December.
Rio Tinto disclosed in its Form 20-F that at the end of 2025, a total of 126 draw bells had been fired in Lift 1 Panel 0 on the Oyu Tolgoi mining licence and 6 draw bells had been fired in Lift 1 Panel 2 North on the Oyu Tolgoi mining licence.
Rio Tinto noted engagement continues with the Government of Mongolia including for the transfer of the Licences from Entrée LLC to OTLLC. Rio Tinto maintains flexibility and options in the mine plan, including bringing Lift 1 Panel 1 or Lift 1 Panel 2 South into production first, depending on the timing of the transfer.
Corporate
For the 2025 fiscal year, the Company's operating loss was $4.2 million compared to $4.8 million 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 2025 fiscal year, the operating cash outflow before changes in non-cash working capital items was $2.6 million compared to $3.3 million in 2024.
As at December 31, 2025, the cash balance was $4.3 million and the working capital balance was $4.2 million.
On October 20, 2025, Colorado-based Royal Gold, Inc. (NASDAQ:RGLD) announced the closing of its previously announced acquisitions of Sandstorm Gold Ltd. and Horizon Copper Corp. through its wholly owned subsidiary International Royalty Corporation.
On December 31, 2025, Dr. Michael Price retired from the Board of Directors after more than 7 years of service. Mr. Chris Adams was appointed as an independent director effective January 1, 2026, to fill the vacancy created by Dr. Price's retirement.
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 the implementation of the Award. 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 enable Lift 1 Panel 1 lateral development work on the Shivee Tolgoi mining licence area to proceed.
In February 2025, OTLLC and Entrée LLC duly executed and lodged License Transfer Agreements (the "License Transfer Agreements") and supporting documentation with the Mongolian tax authority ("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 the Mineral Resources and Petroleum Authority of Mongolia ("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 ...
