Mongolian Resource Play

[Tackler]

ETG Entree finds 3.06% Cu over 193.1 metres at Copper Flats

2005-08-04 10:35 ET - News Release

Ms. Mona Forster reports

ENTREE GOLD INC.: HOLE EGD016C ASSAYS CONFIRM CONTINUITY OF HIGH GRADE COPPER MINERALIZATION AT COPPER FLATS

Entree Gold Inc. has released assay results for hole EDG016C, which was reported in Stockwatch on June 28, 2005, to have intersected strong copper mineralization. A 193.1-metre downhole interval, between depths of 1,324 metres and 1,517.1 metres, has now returned average grades of 3.06 per cent copper and 1.08 grams per tonne gold or a copper equivalent grade of 3.75 per cent copper. The hole ended in high-grade mineralization at 1,517.1 metres due to drilling difficulties.

Greg Crowe, Entree's president and chief executive officer, commented: "The assays in hole EGD016C confirm the continuity of high-grade mineralization from the Entree-Ivanhoe boundary northward to hole EGD008, a strike distance of approximately 450 metres. The system remains open to the north and to depth. Ivanhoe Mines Ltd. continues to aggressively evaluate the potential along-strike continuation of the Hugo North copper-gold porphyry system."

Separately, the company reports that hole EGD020, which was collared an additional 450 metres north of EGD008, was lost due to drilling difficulties, before it could test the targeted depth of the potential mineralized system. Ivanhoe has now initiated a new hole (EGD053), located 150 metres north of EGD008 and 300 metres south of hole EGD020, to more conservatively test the continuation of the system and to attempt to avoid drill difficulties due to faulting.

The Ivanhoe earn-in

Under an earn-in agreement announced in Stockwatch in October, 2004, Ivanhoe has the right to earn an interest in approximately 22 per cent (40,000 hectares) of Entree's Lookout Hill property, Mongolia. By the terms of the agreement, Ivanhoe must spend a minimum of $20-million (U.S.) in order to earn any interest in the mineral rights to the project property and may acquire up to a 70-per-cent interest in mineralization above a depth of 560 metres and an 80-per-cent interest in mineralization below a depth of 560 metres by spending $35-million (U.S.). Thereafter, Entree has the right to require Ivanhoe to finance its share of subsequent joint venture costs through to production, to be recovered from production cash flow.

Recent fundraising

In October, 2004, Entree received $4.6-million from Ivanhoe in the private placement to Ivanhoe of 4.6 million units (each comprising a share and a warrant). The warrants were exercisable to purchase an additional 4.6 million Entree shares, at a price of $1.10 each, for two years.

In July, 2005, Entree received $13,875,226 from Rio Tinto PLC (NYSE: RTP)(LSE: RIO.L) in the placement to a subsidiary of Rio Tinto of 6,306,921 units (each comprising a share and two warrants) at a price of $2.20 each. The warrants are exercisable for two years to purchase an additional 6,306,920 shares, half at $2.75 each, and half at $3.00 each.

With the Rio Tinto placement, Entree received an additional $7,778,075 from Ivanhoe when Ivanhoe exercised its 4.6 million warrants at $1.10 and its pre-emptive right to participate in any private placement, by purchasing 1,235,489 units of the $2.20 unit placement.

Entree now has a treasury cash balance of approximately $26-million with which to accelerate the independent exploration of the its large Lookout Hill land position, surrounding Turquoise Hill and the Hugo North extension, and its Ulziit Uul copper gold porphyry target, located 120 kilometres north of Lookout Hill. Entree also continues to evaluate possible acquisitions.

Quality assurance and control

Robert Cann, PGeo, Entree's exploration manager and a qualified person as defined by National Instrument 43-101, is responsible for the preparation of technical information in the company's news. SGS Mongolia LLC prepares the split core at the project site and assays all samples at its facility in Ulan Batar, Mongolia. Ivanhoe's QA/QC program is monitored by independent consultant Dr. Barry Smee, PGeo, and managed on site by Dale Sketchley, MSc, PGeo. Prepared standards and blanks are inserted at the sample preparation lab on the project site to monitor the quality control of the assay data.