Erdene Announces 2021 Results and Provides Khundii GOLD District Update
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ERDENE ANNOUNCES 2021 RESULTS AND
PROVIDES KHUNDII GOLD DISTRICT UPDATE
Press Release
Halifax, Nova Scotia
2022.03.10
Erdene Resource Development Corp. (TSX:ERD; MSE:ERDN) ("Erdene" or the
"Company") is pleased to announce operating and financial results for the year ended
December 31, 2021 and to provide an update on its Khundii Gold District, including its
Bayan Khundii Gold Project (“Bayan Khundii” or “BK ”). This release should be read in
conjunction with the Company’s 2021 Financial Statements and MD&A, available on the
Company’s website or SEDAR.
Quotes from the Company:
“During 2021, we executed upon our strategic objectives of expanding the Khundii Gold
District, while advancing the Bayan Khundii Gold Project towards development ,” said
Peter Akerley, Erdene’s President and CEO. “Our blind-top discovery at the Ulaan
Southeast gold prospect and the expansion of the 1.5 -kilometre Dark Horse Mane gold
mineralized trend demonstrate the scale potential of the Khundii-Ulaan system within the
Khundii Gold District . We are well on our way to confirming our two million ounce gold
equivalent resource target in 2022, and see the potential to add resources beyond this
target.”
“We also made solid progress advancing Bayan Khundii towards a construction decision,
despite the continued impact of COVID-19,” concluded Mr. Akerley. “Over the past twelve
months we completed 90% of the project’s design, secured several key permits, including
the Mongolian Detailed Environmental Impact Assessment, and advanced project finance
with Export Development Canada and other financiers. The Company plans to commence
preparatory site works in the coming months , with full construction ramping up in mid-
2022. However, the Company is monitoring the impact of COVID -19 on the availability
and costs of key inputs and will provide a more fulsome update on schedule and budget
in the coming months.”
2021 Highlights and Significant Subsequent Events:
Bayan Khundii Gold Project – 100% Erdene
• Progressed construction readiness activities for the Bayan Khundii Gold Project:
• Detailed design and engineering for process and non-process infrastructure 90%
complete
• Contracts awarded for SAG and Ball mills and Gold Room and Elution plant
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• Began recruitment of key personnel and developed project execution plans and
manuals in advance of a construction decision
• Issued requests for proposal for all major mechanical and construction work
packages
• Initiated confirmatory studies for mine water supply, with results expected in Q 2
2022
• Advanced local community programs:
• Executed a Cooperation Agreement with t he local government in Q3 2021,
supporting development measures in the local communities, including pandemic
response support
• Undertook employment orientation and readiness training with over 120 local
residents to prepare individuals for employment during construction and
operations
• Launched local vegetation program in January 2022
• Obtained key permits and advanced regulatory approvals required for mine
development:
• Project Detailed Environmental Impact Assessment (“DEIA”) approved by
Ministry of Environment and Tourism in November 2021
• Regulatory review of detailed drawings well advanced, with nine facilities fully
approved, including those planned during the site establishment and initial
construction – received construct ion permits for eight of these facilities in
February 2022
• Prepared updated Bayan Khundii Resource Estimate, incorporating 2020 drilling at
Striker West, Striker, Midfield and Midfield North, and reflecting current gold prices:
• 2021 BK Mineral Resource Estimate contains 61,700 more ounces gold (36%) in
the Measur ed category and 2,700 more ounces of gold (1%) in the Indicated
category
• Measured mineral resources within the minable pit, as defined by the 2020
Feasibility Study increased by 47,500 ounces (28%)
• Confirmed the high-grade nature of the BK deposit with an average grade of 6.59
g/t gold for combined Measured and Indicated Resources, at a cut -off grade of
1.0 g/t gold
• Additional near surface gold mineralization was identified at Midfield and at
Midfield North, results from 2020 drilling allowed for the localized extension of the
modeled mineralized domains
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Exploration
• Completed 2021 exploration program, drilling 19,706 metres over 154 holes at the new
Dark Horse Mane prospect and the Ulaan Southeast discovery, adjacent Bayan
Khundii:
• Provides further support to the Company’s thesis that the broader Khundii-Ulaan
hydrothermal alteration trend hosts a multi-million ounce gold deposit
• Targeting a total resource inventory of 2 million ounces gold equivalent by the
end of 2022
• Defined a 1.5-kilometre trend of alteration within the Dark Horse Mane characterized
by near-surface, high-grade gold mineralization, that remains open to the north, south
and at depth:
• Demonstrates potential for additional near-surface, high -grade oxide gold
mineralization across the Khundii Gold District
• Notable intersections from the 11,608 -metre, 126-hole, 2021 Dark Horse Mane
program include:
o AAD-126: 30 metres of 5.63 g/t gold, beginning 10 metres downhole,
including 24.12 g/t over six metres, starting 26 metres downhole
o AAD-137: 24.5 metres of 9.4 g/t gold beginning 1.5 metres downhole,
including 13.5 metres of 16.1 g/t gold
o AAD-138: 25 metres of 6.1 g/t gold beginning 18 metres downhole,
including 8 metres of 17.1 g/t gold
o AAD-177: 23 metres of 11.4 g/t gold beginning 1 metre downhole, including
4 metres of 59.8 g/t gold within 8 metres of 32.2 g/t gold
o AAD-178: 15 metres of 42.8 g/t gold beginning 11 metres downhole,
including 3 metres of 160.4 g/t gold within 5 metres of 123.5 g/t gold
o 106 of 126 holes in 2021 program intersected anomalous gold
mineralization (≥0.1 g/t gold) with the remaining 20 holes returning
anomalous indicator elements, including antimony, molybdenum and
arsenic
• Intersected some of the thickest intervals of gold in the Khundii Gold District at the
Ulaan Southeast discovery, 300 metres west of the Bayan Khundii deposit:
• Gold mineralization has been traced over a 200 x 250 metre area, to a maximum
depth of 460 metres, that remains open at depth and to the north and west
• Multiple holes returned wide zones (30 to 75 metres) averaging over 3 g/t gold
• Highlights from 8,098 metre, 28 hole 2021 Ulaan program include:
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o UDH-10: 258 metres of 0.98 g/t gold beginning at 92 metres downhole,
including 3.77 g/t gold over 40 metres, starting at 99 metres downhole
o UDH-14: 217 metres of 1.07 g/t gold beginning 188 metres downhole,
including 3.55 g/t gold over 53 metres
o UDH-15: 364 metres of 0.79 g/t gold beginning 97 metres downhole,
including 1.98 g/t gold over 91 metres
o UDH-21: 77 metres of 3.19 g/t gold beginning 115 metres downhole,
including 8.74 g/t gold over 27 metres
o UDH-22: 152 metres of 1.71 g/t gold beginning 85 metres downhole,
including 3.11 g/t gold over 65 metres
Corporate
• Progressed due diligence for the Bayan Khu ndii Project Finance with EDC and
Mongolian financiers
• EDC mandate letter contemplates a senior secured debt facility of up to US$55
million
• EDC technical diligence report received in January 2022 and environmental and
social diligence report finalized in August 2021
• Loan term negotiation and drafting underway in advance of anticipated mid-2022
financial close
• Due diligence is proceeding in parallel with Mongolian financial institutions on
subordinated debt
• Received Mongolian Tax Stabilization Certificate for Bayan Khundii in December 2021
• Guarantees the taxes applicable to the Bayan Khundii Gold Project are the more
favourable of those currently in effect and prevailing future tax rates
• Closed Mongolian Stock Exchange offering in October 2021 for gross proc eeds of
approximately US$5 million
• Received subscriptions from 1,867 institutional and retail Mongolian investors
• Offering was 46% over-subscribed and filled pro-rata to orders as is required by
Mongolian regulations
• Company remains the only firm cross-listed on the Mongolian and Toronto Stock
Exchanges
• Further C$2.3 million raised in 2021 through the exercise of 7,544,750 warrants
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• Advanced technical and strategic review of the Zuun Mod/Khuvyn Khar molybdenum-
copper project
• RPMGlobal delivered updated technical and economic analysis in December
• Strategic discussions ongoing to optimize the Project’s value, through options
including sale, joint venture partnership, or spinout
• Recorded a net loss of $5,570,523 for the year ended December 31, 2021, compared
to a net loss of $13,116,358 for the year ended December 31, 2020:
• Exploration and evaluation expenditures, inclu ding capitalized expenditures,
totaled $12,391,867 for the year ended December 31, 2021, compared to
$9,276,028 for the prior year, due to increased exploration work as the Company
drilled nearly 20,000 metres in the current year, compared to approximately
15,000 metres in the prior year, as well as incremental expenditures on the Bayan
Khundii Gold Project Detailed Engineering & Design work and Construction
Readiness activities (including deposits on long -lead time items), that exceeded
costs associated wi th the Feasibility Study and Detailed Engineering & Design
work in the prior year. Additionally, Stakeholder relations costs were greater in
the current year following the execution of a Local Co -operation Agreement
(“LCA”) for the Bayan Khundii Gold Project
• Corporate and administrative expenses totaled $1,973,800 for the year ended
December 31, 2021, compared to $1,868,905 for the year ended December 31,
2020, with the year on year variance largely due to higher administrative salaries
and professional fees in support of pre -development and financing work for the
Bayan Khundii Gold Project
• Non-cash, change in fair value expenses of $8,412,081 and interest expenses of
$1,661,960 in the prior year were attributable to a convertible loan held by the
European B ank for Reconstruction and Development (“EBRD”), which was
converted in October 2020, resulting in EBRD becoming one of Erdene’s largest
shareholders
COVID-19 Update
In late January 2020, the Government of Mongolia instituted limitations on public
gatherings, suspended in -person classroom learning, and implemented international
border controls in response to COVID -19. The Canadian Government adopted similar
measures in March 2020, as did most governments globally during 2020. With the first
confirmed cases of community transmission of COVID -19 in November 2020, the
Government of Mongolia further restricted the movement of people and the delivery of
goods and services. While restrictions were eased in early 2021, precautionary measures
were subsequently reintroduced in late Q1 2021 following an increase in the number of
reported cases in Mongolia.
In March 2021, Bayankhongor Province, where Erdene’s projects are located, reported
its first confirmed case of community transmission of COVID-19, leading to the imposition
of restrictions on the movement of people within and to/from the province. Furthermore,
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in late June 2021, Bayankhongor province and the sub -province of Shi nejinst, the
communities in which Erdene operates, imposed states of emergency due to worsening
community spread of COVID -19 in the area. Although the Company temporarily halted
field work in late June in response, Company staff and contractors returned to site in early
August 2021 to commence follow -up exploration work, which has continued without
interruption due to COVID since this date. Additionally, Canadian and International staff
and consultants resumed travel to Mongolia in Q3 2021. On February 14, 2022, the
Government of Mongolia fully reopened its borders to vaccinated international travelers,
allowing the Company’s staff and key contractors to travel to the Country with minimal
disruption.
However, Mongolia continues to see disruptions at its land borders with China, given the
latter’s zero COVID policies. These disruptions have impacted the availability and prices
of industrial and consumer goods required for the construction of the Bayan Khundii Gold
Project. Although the impact of COVID-19 on the Company’s operations has been modest
to date, COVID-19 has the potential to further delay or increase the costs of the Bayan
Khundii Development. The Company is monitoring the situation and assessing the impact
on the Bayan Khundii Gold Project const ruction schedule and budget. Erdene does not
intend to ramp up to full construction until there is certainty that supplies can readily be
imported to Mongolia. The Company will provide further details on the impact of COVID-
19 on its operations and the Bayan Khundii Gold Project as they become available.
Erdene is working with Mongolian and Canadian authorities to implement and maintain
controls to protect the health and well-being of its workers as well as the communities in
which the Company operates.
Qualified Person
Peter Dalton, P.Geo. (Nova Scotia), Senior Geologist for Erdene, is the Qualified Person
as that term is defined in National Instrument 43-101 and has reviewed and approved the
technical information contained in this news release.
About Erdene
Erdene Resource Development Corp. is a Canada-based resource company focused on
the acquisition, exploration, and development of precious and base metals in
underexplored and highly prospective Mongolia. The Company has interests in three
mining licenses and two exploration licenses in Southwest Mongolia, where exploration
success has led to the discovery and definition of the Khundii Gold District. Erdene
Resource Development Corp. is listed on the Toronto and the Mongolian stock exchanges.
Further inf ormation is available at www.erdene.com. Important information may be
disseminated exclusively via the website; investors should consult the site to access this
information.
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Forward-Looking Statements
Certain information regarding Erdene contained herein may constitute forward -looking
statements within the meaning of applicable securities laws. Forward-looking statements
may include estimates, plans, expectations, opinions, forecasts, projections, guidance, or
other statements that are not statements of fact. Although Erdene believes that the
expectations reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to have been correct. Erdene cautions that
actual performance will be affected by a number of factors, most of which are beyond its
control, and that future events and results may vary substantially from what Erdene
currently foresees. Factors that could cause actual results to differ materially from those
in forward-looking statements include the ability to obtain required third party approvals,
market prices, exploitation, and exploration results, continued availability of capital and
financing and general e conomic, market or business conditions. The forward -looking
statements are expressly qualified in their entirety by this cautionary statement. The
information contained herein is stated as of the current date and is subject to change after
that date. The C ompany does not assume the obligation to revise or update these
forward-looking statements, except as may be required under applicable securities laws.
NO REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE
CONTENTS OF THIS RELEASE
Erdene Contact Information
Peter C. Akerley, President and CEO, or
Robert Jenkins, CFO
Phone: (902) 423-6419
Email: [email protected]
Twitter: https://twitter.com/ErdeneRes
Facebook: https://www.facebook.com/ErdeneResource
LinkedIn: https://www.linkedin.com/company/erdene-resource-development-corp-/