Entrée Comments on Surprise Mongolian Government Tax Measure
May 15, 2006
Vancouver, B.C., May 15, 2006 - Entrée Gold Inc. (TSX:ETG; AMEX:EGI; Frankfurt:EKA – “Entrée” or the “Company”) reports that the National Parliament of Mongolia appears to have approved a new, excess-profits tax on minerals, in a surprise vote on the night of Friday, May 12. The measure was passed, without industry comment and little parliamentary debate, by a majority of members present (35 out of 45 parliamentarians). There are 76 elected members of Parliament, meaning that the legislation was approved by less than 50 per cent of the Parliament.
The legislation, reportedly, allows for the imposition of a new tax beginning at a rate of 68% when copper prices reach $2,600 a tonne ($1.18 per pound), and when gold reaches $500 an ounce. Although the details of the legislation, and its potential impact, remain unclear, Entrée’s management believes it could deal a serious blow to mining, mineral exploration, and investment in Mongolia.
Over the past several months, a number of meetings have been held between members of Parliament, representatives of mining and exploration companies, the World Bank, and various Mongolian administrative officials to discuss ways to reform and improve Mongolia’s mining and tax laws. The common goal was to strike a balance, so as to ensure the Mongolian people benefit from recent, higher, commodity prices, without discouraging global investment. The transparent process, which was thought to have been making progress, appears to have been superseded by the nature and inexplicable haste of Friday’s vote.
Entrée is advised that, at this point, the legislation will become law shortly unless the President of Mongolia exercises his constitutional authority to veto it. There is no assurance that he will do so, although such a veto would provide the time necessary to conclude the existing consultative process and develop tax and mineral law amendments that would truly advance the best interests of the Mongolian people.
Domestic and foreign mining companies active in Mongolia are coordinating opposition to the tax bill and will present the concerns of investors and industry to all levels of the Mongolian government. Entrée management will continue to monitor this situation and will endeavor to keep investors up-to-date in as timely a manner as possible.
Entrée Gold Inc. (http://www.entreegold.com/) is a Canadian mineral exploration company focused on gold and copper prospects. The Company is a large landholder in Mongolia’s south Gobi Desert, near the Chinese border, and has recently acquired additional copper assets in western Mongolia.
Entrée holds a 100% interest in mineral concessions comprising the 179,590 hectare Lookout Hill (Shivee Tolgoi) property which completely surrounds Ivanhoe’s 8,500 hectare, Turquoise Hill (Oyu Tolgoi) holdings.
Under an “Earn-In Agreement” announced in October 2004, Ivanhoe has the right to earn an interest in approximately 40,000 hectares of Entrée’s Lookout Hill property. Details of the Earn-In Agreement are available on Entrée’s website at www.entreegold.com and on Sedar at www.sedar.com. Drilling conducted by Ivanhoe as part of the Earn-In Agreement confirmed the extension of the Hugo North Deposit onto Lookout Hill. An initial inferred resource was estimated at 190,160,000 tonnes (calculated using a 0.6% copper equivalent cut-off), averaging 1.91% copper equivalent, containing over 6.5 billion pounds of copper and 3.2 million ounces of gold (see Entrée’s news release of February 1, 2006).
Significant investments by Rio Tinto plc and Ivanhoe contributed to Entrée’s treasury, which is now over CDN$23 million. Entrée plans to use these funds to explore its wholly-owned projects in Mongolia and to review and acquire new projects globally.
Entrée is listed for trading on the TSX under the symbol “ETG”, on the AMEX under the symbol “EGI” and on the Frankfurt Stock Exchange under the symbol “EKA”.
Email: [email protected]
Monica Hamm, Corporate Communications
Entrée Gold Inc.
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