Mongolia Project Overview

Entrée Gold Inc.’s 179,590 ha Shivee Tolgoi Property in southern Mongolia comprises three contiguous mineral exploration licences (“MEL”s) that wholly encompass the Oyu Tolgoi Property (100% Ivanhoe Mines Ltd.)  The eastern portion of the Shivee Tolgoi MEL and the entirety of the Javkhlant MEL are subject to an Earn-in and Equity Participation Agreement with Ivanhoe and are currently undergoing exploration by Ivanhoe (“Shivee Tolgoi Earn-In Property”).  Their work has led to the discovery of an extension of the Hugo North Deposit onto the Shivee Tolgoi MEL (Hugo North Extension Deposit), and the Heruga Deposit on the Javhlant MEL.  The remainder of the Shivee Tolgoi MEL and the entire Togoot MEL, collectively known as the Western Licences (“Western MELs”), are being explored by Entrée. 

Entrée retains 100% of the mineral rights on the Western MEL’s subject to a right of first refusal by Ivanhoe.  The Entrée MELs are current until March and April, 2009, and annual exploration licence fees have been paid to maintain the Entrée MELs in good standing until that date.  Entrée has been granted a final extension of term for the MELs, to March and April, 2010.  Before completion of this final term, the MELs must be converted to mining licences or they expire.

Entree’s Manlai property is located approximately 125 kilometres to the north of Lookout Hill and adjoins the east end of Ivanhoe Mines’ Kharmagtai porphyry copper-gold project.  At the Manlai Project in 2007, 1,960 metres of diamond drilling was completed in two holes on the East Target area.  This target was centred on coincident magnetometer and induced polarization anomalies, and anomalous copper and molybdenum in soil geochemistry, with surface exposure of stockwork quartz veining containing chalcopyrite and bornite over an area of 500 x 150 metres. .Limited work on the Manlai project is planned for 2008.  The Company has chosen to extend the licence to 2010.

SHIVEE TOLGOI EARN-IN PROPERTY

The Earn-In Agreement (the Agreement) between Entrée and Ivanhoe came into effect on November 17, 2004.  As part of the Agreement, Ivanhoe, who is the project operator, is entitled to earn up to an 80% interest in minerals below 560 m below surface and a 70% interest in minerals above that elevation.  In order for Ivanhoe to earn its full interest in the property, Ivanhoe must expend $35 million in exploration and development over an eight year period, which commenced in November 2004.  The Agreement contains staged exploration expenditure commitments for different earn-in interest phases; Ivanhoe obtained a 60% interest in the Earn-in Property in early 2008 after expenditures in excess of US$27.5 million. 

Systematic geophysical surveys and drill testing (over 100,000 m to date) by Ivanhoe since late 2004 has defined three zones of porphyry copper-gold±molybdenum mineralization: Hugo North Extension, Ulaan Khud, and Heruga. Hugo North Extension and Heruga contain significant NI 43-101 compliant resources which are reported in more detail below.

The Hugo North Extension Deposit within the Shivee Tolgoi MEL contains copper–gold porphyry-style mineralization associated with quartz monzodiorite intrusions, concealed beneath a deformed sequence of Upper Devonian and Lower Carboniferous sedimentary and volcanic rocks.  The deposit is highly elongate to the north–northeast.  It is the continuation northwards of the Hugo North Deposit on the Ivanhoe wholly-owned adjacent Oyu Tolgoi Property.  Within the Lookout Hill Project the top of the mineralization occurs between 900 m and 1,200 m below surface. 

The Heruga Deposit within the Javhlant Earn-in Property contains copper–gold-molybdenum porphyry-style mineralization hosted in Devonian basalts and quartz monzodiorite intrusions, concealed beneath a deformed sequence of Upper Devonian and Lower Carboniferous sedimentary and volcanic rocks.  The deposit is cut by several major brittle fault systems, partitioning the deposit into discrete structural blocks. Internally, these blocks appear relatively undeformed, and consist of southeast-dipping volcanic and volcaniclastic sequences.  The stratiform rocks are intruded by quartz monzodiorite stocks and dykes that are probably broadly contemporaneous with mineralization.  The deposit is shallowest at the south end (approximately 500 m below surface) and plunges gently to the north.

The alteration at Heruga is typical of porphyry style deposits, with notably stronger potassic alteration at deeper levels.  Locally intense quartz-sericite alteration with disseminated and vein pyrite is characteristic of mineralized quartz monzodiorite.  Molybdenite mineralization seems to spatially correlate with stronger quartz-sericite alteration.

Copper sulphides occur at Heruga in both disseminations and veins/fractures.  Mineralized veins have a much lower density at Heruga than in the more northerly Southern Oyu and Hugo Dummett deposits.

In October 2006, Ivanhoe MInes announced that a body of low-grade shallow copper and gold mineralization (“Ulaan Khud” or “Airport North”) was intersected approximately 7 km north of the Hugo North Extension.  The area between Ulaan Khud and the Hugo North Extension has received only limited drill testing and remains a viable exploration target; however, mineralization too deep to explore cost-effectively from surface.

Western Mineral Exploration Licenses

The Western MELs are underlain by Devonian and Carboniferous volcanic, volcaniclastic and sedimentary rocks, which in turn are overlain by a very minor amount of Permian (?) sedimentary rocks and Cretaceous sedimentary rocks.  The Devonian sequence is intruded by weakly cupriferous diorite dykes of probable Devonian age; both Devonian and Carboniferous rocks are intruded by a number of granitoid plutons and related felsic dykes of Carboniferous age.  On the western portion of the Shivee Tolgoi MEL, the Devonian sequence defines a corridor between two granitoid plutons, and has similarities with the stratigraphic succession to the east at Oyu Tolgoi.  To date, the stratigraphy underlying the Togoot MEL appears to be mainly of Carboniferous age, although a small portion of Upper Devonian or Lower Carboniferous volcanics may be present along the southern margin of the MEL.