Heruga (Cu-Au-Mo)

Project Summary

Heruga is a world class, copper-gold-molybdenum porphyry deposit located approximately 570 km south of the capital city of Ulaanbaatar and 80 km north of the border with China.  Heruga is the southern-most deposit of the Oyu Tolgoi trend which is currently being developed by Oyu Tolgoi LLC (“OTLLC”, a subsidiary of Turquoise Hill ResourcesNote: Effective August 2, 2012, Ivanhoe Mines changed the company's name to Turquoise Hill Resources. The company's new trading symbol, "TRQ", became effective at the opening of trading on the Toronto Stock Exchange, the New York Stock Exchange and the NASDAQ Stock Market on August 8, 2012. Please see August 2, 2012, news release for more details. and the Government of Mongolia) and its project manager Rio Tinto.  Entrée retains a 20% or 30% interest in the mineral resources of the Heruga deposit.

Access to the property from Ulaanbaatar is possible year-round by air to an airstrip serviced by daily flights from Ulaanbaatar.  Road and power line infrastructure to China is being constructed and a railway line is proposed.

OTTLC discovered Heruga in 2007 while drilling a deep IP chargeability anomaly in the course of earning its interest in the joint venture property. A joint venture between Entrée and OTLLC was formed in 2008 and covers an area of 39,807 hectares which also includes the Hugo North Extension deposit.

Underground mining of Heruga is reviewed in the ‘Life of Mine (Sensivity) Case’ presented in Entrée’s Technical Report 2012 on the Lookout Hill Property (“LHTR12”). The Life of Mine (Sensitivity) Case considers the potential economic viability of developing the Heruga deposit. At current resources, Heruga contains over 9 billion pounds of copper and over 14 million ounces of gold, attesting to its long-term importance to the mining complex.

Milestones

Links to Technical Reports

March 2013 Technical Report on the Lookout Hill Property
March 2012 Technical Report 2012 on the Lookout Hill Property, Omnogovi, Mongolia (LHTR12) 
June 2010 Lookout Hill Property (information on Hugo North Extension and Heruga development options)
March 2010 Lookout Hill Property (updated Inferred Mineral Resource estimate for Heruga)
March 2008 Lookout Hill Property (first Inferred Mineral Resource estimate for Heruga)

Joint Venture with OTLLC

Entrée's joint venture with OTLLC (a subsidiary of Turquoise Hill ResourcesNote: Effective August 2, 2012, Ivanhoe Mines changed the company's name to Turquoise Hill Resources. The company's new trading symbol, "TRQ", became effective at the opening of trading on the Toronto Stock Exchange, the New York Stock Exchange and the NASDAQ Stock Market on August 8, 2012. Please see August 2, 2012, news release for more details.  and the Government of Mongolia) provides that Entrée holds a 20% interest in any mineralization lying below a depth of 560 metres and a 30% interest in any mineralization occurring from surface to a depth of 560 metres on the joint venture property including the Heruga deposit. Entrée may choose to be carried through to production by way of debt financing from OTLLC with interest accruing at prime plus 2%.  This debt can be repaid in whole or in part from (and only from) 90% of monthly available cash flow arising from the sale of Entrée’s share of products. This arrangement ensures that Entrée cannot be diluted down from its 20% or 30% position.

Oyu Tolgoi Investment Agreement

In October 2009, Ivanhoe MinesNote: Effective August 2, 2012, Ivanhoe Mines changed the company's name to Turquoise Hill Resources. The company's new trading symbol, "TRQ", became effective at the opening of trading on the Toronto Stock Exchange, the New York Stock Exchange and the NASDAQ Stock Market on August 8, 2012. Please see August 2, 2012, news release for more details. , OTLLC and Rio Tinto International Holdings Ltd. signed the Investment Agreement with the Mongolian government.  The Investment Agreement regulates the relationship between these parties and stabilizes the long term tax, legal, fiscal, regulatory and operating environment to support the development of the Oyu Tolgoi mining complex.  The contract area defined in the Investment Agreement includes the Javhlant and Shivee Tolgoi mining licences, including Shivee West which is 100%-owned by Entrée and not currently subject to the Entrée-OTLLC Joint Venture.  In accordance with the Investment Agreement, the Government of Mongolia acquired a 34% interest in OTLLC including, by extension, OTLLC’s interest in the joint venture property.

Mine Development Plan

The Life of Mine (Sensitivity) Case and its possible implications for the joint venture are explained in the following news releases:

May 11, 2010  First Mineral Reserves for Hugo North Extension Included in Inititial Underground Mining
June 15, 2010 Entrée Files Technical Report on Hugo North Extension and Heruga Development Options

North-South Profile of Hugo Dummett, Southern Oyu and Heruga Deposits (Looking West)
(From: Technical Report 2012 on the Lookout Hill Property, with modifications by Entrée Gold Inc.)

Geology and Mineralization

The copper-gold-molybdenum mineralization at Heruga is primarily hosted in Devonian augite basalts and less commonly in Devonian quartz monzodiorite intrusions.  The deposit is cut by several north-northeast oriented near-vertical post-mineral normal faults, which include the West Bor Tolgoi and Bor Tolgoi.  Devonian volcaniclastic strata are structurally juxtaposed over the Heruga deposit along the Contact Fault, a major, southeast-dipping fault zone.  This fault ranges from a 30 metre wide cataclastic zone to a narrow mylonite and places several hundred metres of unmineralized Devonian stratigraphy over the deposit.

The Heruga deposit is zoned with a molybdenum-rich zone coming to within 500 m of surface at the south end and an increasing gold-rich zone at depth.  Both are overlapped by copper-rich mineralization at intermediate levels.  Overall, the vertical extent of mineralization is close to 800 m.  The West Bor Tolgoi and Bor Tolgoi faults have offset mineralization into two discrete structural blocks.  Mineralization remains open down dip to the east of the eastern block and at depth of the western block.  It is assumed that the western block terminates against a parallel NNE-trending fault.

There is a rough spatial correlation between metal and alteration zonation and the two may be genetically linked.  Generally speaking at deeper levels mineralization consists of chalcopyrite and pyrite in veins and disseminated within biotite-chlorite-albite-actinolite altered basalt or sericite-albite altered quartz monzodiorite. Selvages of salmon pink albite alteration occur with chalcopyrite associated with higher grade mineralization in both basalt and quartz monzodiorite. The higher levels of the orebody are overprinted by strong quartz-sericite-tourmaline-pyrite alteration where mineralization consists of disseminated and vein controlled pyrite, chalcopyrite and molybdenite.  Gold may correlate with strong biotite alteration at the deeper levels of the deposit.

Mineralized veins have a much lower density at Heruga than in the more northerly Southern Oyu and Hugo Dummett deposits.  High grade copper and gold intersections show a strong spatial association with contacts of the mineralized quartz monzodiorite porphyry intrusion in the southern part of the deposit, occurring both within the outer portion of the intrusion and in adjacent enclosing basaltic country rock.  There is no oxide zone at Heruga, nor is there any high-sulphidation style mineralization known to date.

Last Updated: April 2013