EDITOR: | February 15th, 2013

Entree Gold Secures US$55 Million Financing Package From Sandstorm Gold

| February 15, 2013 | No Comments
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February 15, 2013 (Source: Marketwire) Vancouver, BC — Entrée Gold Inc. (TSX:ETG)(NYSE MKT:EGI)(FRANKFURT:EKA) announces that it has entered into a comprehensive financing package with Sandstorm Gold Ltd. (TSX:SSL)(NYSE MKT:SAND) (“Sandstorm”) for immediate gross proceeds of approximately US$55 million.

The financing package consists of three key components:

  • Equity participation and funding agreement (“Funding Agreement”) that provides for a US$40 million upfront deposit and ongoing payments from Sandstorm. In return, Entrée will use future payments that it receives from its mineral property interests to purchase and deliver metal credits, in amounts that are primarily indexed to Entrée’s share of gold and silver by-products and, to a lesser extent, copper production from the Company’s joint venture property in Mongolia
  • CAD$10 million private placement under which Entrée will issue 17,857,142 shares to Sandstorm at a price of CAD$0.56 per share
  • US$5 million payment for a 0.4% net smelter return (“NSR”) royalty on the Ann Mason and Blue Hill deposits in Nevada.

Transaction Highlights

  • Multi-faceted financing package from a sophisticated investor with long term vision
  • Endorsement of Entrée’s assets
  • Total transaction consideration, indexed to a small portion of Entrée’s assets, unlocks significant value from the Company’s projects

Financing package structured to:

  • Limit shareholder dilution
  • Maintain almost full exposure to the dominant copper component of Entrée’s assets
  • Retain substantial majority of proceeds from future precious metal production
  • Retain corporate flexibility needed to maximize shareholder value

Provides sufficient funding to allow for the timely advancement of key assets and ongoing activities:

  • Sustain Mongolian joint venture and operations
  • Advance and enhance the Ann Mason Project, including Ann Mason and Blue Hill deposits

Robust treasury permits Entrée to carefully consider further strategic partnerships and other transactions that would best enhance shareholder value.

Greg Crowe, President and CEO, noted, “This financing package lays a solid foundation upon which Entrée can further advance its core properties. The nature of this transaction minimizes shareholder dilution while allowing the Company to monetize a portion of its assets. The upfront cash consideration from the funding and royalty agreements totaling US$45 million, in exchange for a relatively small portion of our future cash flows, provides an independent third party valuation of our current deposits. Entrée is now in a strong financial position from which it can meet its ongoing commitments in Mongolia and continue to advance the Ann Mason Project in Nevada.

We welcome Sandstorm as an investor through this production based financing and as a shareholder through the equity private placement. In light of the difficult capital markets environment, a financing package such as this is an effective solution to providing operating capital sufficient for the next two to three years.”


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