There has always been controversies in Mongolia regarding the licenses held by Entrée Gold Inc. surrounding Oyu Tolgoi mining area. Mongolian government is not satisfied with the contractual agreements between Entrée Gold Inc., and Turquoise Hill Resources Inc. (formerly Ivanhoe Mines Inc.) assigned to Oyu Tolgoi LLC (formerly Ivanhoe Mines Mongolia Inc LLC). The current agreement gives 34% to the government out of 70-80% interest owned by Oyu Tolgoi LLC on Entrée’s licenses.
The Earn-in Agreement that can be found in Canadian Securities Administrators run website www.sedar.com states the terms of profit sharing arrangements. The agreement was made back in 2004 and with amendment in 2005. Also, the contractual obligation was assigned to Oyu Tolgoi LLC in 2005.
It turned out that the exploration licenses 3150X and 3148X held by Entrée Gold were converted into mining licenses in accordance with Oyu Tolgoi Investment Agreement by the ministerial order in 2009 violating the Minerals Law. The licenses conversion should have been converted by Mineral Resources Authority instead. Therefore, the order was annulled, further actions to be taken by Mineral Resources Authority.
In fact, the conversion of these licenses from exploration to mining licenses was one of the conditions precedent of the Oyu Tolgoi Investment Agreement to be effective.
It shows the dispute between Government of Mongolia and the Oyu Tolgoi investors is getting more intense.