VANCOUVER(BullionStreet): Denying media reports, Canada's Entree Gold Inc said the Oyu Tolgoi LLC-Entree Gold joint venture mining licences have not been cancelled.
The company said it received official notification from the Mineral Resources Authority of Mongolia (MRAM) informing them that the joint venture mining licenses MV-15225A and MV-15226A have not been revoked.
But the company has been notified that Order No. 167, issued by the Ministry of Mineral Resources and Energy on July 10, 2009, has been cancelled.
This Order concerned the registration of reserves related to the joint venture deposits, which is one step in the process to convert an exploration licence into a mining licence. Order No. 167 was not concerned with the issuing of the mining licences.
Entree Gold understands that the joint venture mining licenses MV-15225A and MV-15226A have been put under suspension for a temporary period. This suspension means that Entree is not allowed to sell or transfer the licences for the time being.
The company said that it followed all Mongolian laws and regulations in conjunction with the issuance of the joint venture mining licenses.
These licences were issued to Entree as a condition precedent to the Investment Agreement between Entree's joint venture partner Oyu Tolgoi LLC, Rio Tinto International Holdings Limited (Turquoise Hill Resources) and the Government of Mongolia in October 2009.
Under the joint venture, Entree retains a 20 percent interest in the production from the mining licences, while Oyu Tolgoi LLC has the remaining 80 percent interest. Oyu Tolgoi LLC is currently developing the world class Oyu Tolgoi mining complex in southern Mongolia.
Entree said that it will work with Oyu Tolgoi LLC, which, as manager of the Oyu Tolgoi mining complex, is responsible for maintaining the licences in good order, to resolve the issue.
Rio Tinto and Turquoise Hill Resources are major shareholders of Entree Gold, holding approximately 12.9 percent and 10.7 percent of issued and outstanding shares, respectively. Rio Tinto, through its majority ownership of Turquoise Hill Resources, beneficially owns 23.6 percent of Entree's issued and outstanding shares.
The Ministry of Mining said yesterday in a statement on its website that in 2009 Entree Gold upgraded its exploration permits to mining licenses.
The award of a mining license can only be granted by the Mineral Resources Authority, not the ministry, and is therefore invalid, according to the statement.
The recent reports on the matter linked the issue to the ongoing dispute between the Mongolian government and Rio Tinto, which controls the giant Oyu Tolgoi copper and gold project in Mongolia's south.
In early February, the government raised several issues relating to the project, including cost overruns, lack of Mongolian shareholder involvement in decision making, and lack of transparency and timely reporting. For the above reasons, the government has refused to approve the 7 billion
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