Erdene Announces Positive Pre-Feasibility Study Results FOR the Bayan Khundii GOLD Project
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ERDENE ANNOUNCES POSITIVE PRE-FEASIBILITY STUDY
RESULTS FOR THE BAYAN KHUNDII GOLD PROJECT
Press Release
Halifax, Nova Scotia
2019.10.21
Erdene Resource Development Corp. (TSX:ERD; MSE:ERDN) ("Erdene" or the "Company") is pleased to announce the
results of an independent Technical Report for the 100%-owned, high-grade, open -pit, Khundii Gold Project in
southwest Mongolia, including a Pre-Feasibility Study (“PFS”) for its Bayan Khundii Gold Deposit (“Bayan Khundii” or
“BK”) and an updated Preliminary Economic Assessment (“PEA”) for its Altan Nar Deposit (“Altan Nar” or “AN”),
located 16 km from Bayan Khundii . The Technical Report also includes an updated mineral resource as well as a
statement of mineral reserves for Bayan Khundii. The Technical Report was prepared in accordance with National
Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43 -101”) by Tetra Tech Inc. (“Tetra Tech”). The
Technical Report, pursuant to NI 43-101 guidelines, will be filed on SEDAR within 45 days.
NI 43-101 Technical Report Highlights (US$1,300/oz Gold Price)
• Post-tax Net Present Value of US$97 million (NPV5%) and a 42% Internal Rate of Return (IRR), for the BK PFS
• Post-tax NPV5% and IRR of US$24 million and 92%, respectively, for the updated AN PEA, reflecting the second
phase of the development, and utilizing the BK infrastructure
• BK PFS Life of Mine Earnings Before Interest, Taxes and Depreciation of US$211 million
• BK Measured and Indicated Resources of 520,700 ounces gold at an average grade of 3.16 g/t gold, a 20%
increase from the September 2018 resource estimate
• BK Proven and Probable Reserves of 422,000 ounces gold at an average grade of 3.7 g/t gold
• Life of mine head grade of 3.73 g/t gold for the BK PFS and 3.46 g/t gold for the updated AN PEA
• Project life of 11 years, comprising one year pre-production period, six-year operating life for BK, three-year
operating life for AN, and one year mine closure
• Average annual gold production of 61,000 ounces in the BK PFS and 45,300 ounces of gold and 205,000
ounces of silver for the updated AN PEA
• All-in sustaining cost (“AISC”) of US$746/ounce of gold recovered for the BK PFS and for the updated AN
PEA, US$931/ounce of gold equivalent (“AuEq”; see definition in note 4, Table 1)
• BK PFS Initial Capital US$40 million and US$2 million incremental capital for AN PEA
• Payback period of less than 2 years for BK PFS
• Significant benefits to Mongolia, including Life of Mine royalties and taxes of US$82 million and
approximately 300 new jobs in Bayankhongor Province
Quotes from the Company:
“With exceptionally high gold grades, a growing resource and low capital and operating costs, the Khundii Gold
Project will generate significant returns for all stakeholders,” said Peter Akerley, Erdene’s President and CEO. “Bayan
Khundii PFS results provide a compelling base development case, and the updated Altan Nar PEA demonstrates the
significant upside in our Khundii Gold District.”
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“Our recently announced financing, led by the European Bank for Reconstruction and Development (“EBRD”), will
fund the Feasibility Study, engin eering and permitting work required to reach a development decision in 2020,”
stated Mr. Akerley. “EBRD’s investment was due in part to our approach to sustainable development. Through taxes
and local economic participation, the benefits of the Project will be shared by the Mongolian government, residents
of Bayankhongor Province, and shareholders, many of whom hold shares listed on the Mongolian Stock Exchange.”
“Erdene is targeting first gold production in 2021 , as the first step in our journey to become a major regional gold
producer,” continued Mr. Akerley . “The Khundii Gold District remains largely unexplored and we see the potential
for significant growth through continued exploration and acquisition.”
NI 43-101 Technical Report Overview
The Technical Report is comprised of a PFS for Bayan Khundii and an updated PEA for Altan Nar. The Technical Report
incorporates an updated resource estimate for Bayan Khundii and the resource estimate, completed in May 2018,
for Altan Nar, located 16 kilometres northwest of Bayan Khundii (see news release dated May 10, 20 18). The P FS
includes 3.5 million mineable tonnes from the Bayan Khundii resource at an average head grade of 3.73 g/t gold, all
of which are Proven and Probable Reserves. The Altan Nar PEA contributes 1.8 million mineable tonnes at an average
head grade of 3.46 g/t gold and 17 g/t silver, of which 66% are Indicated Resources.
The Technical Report envisions a high-grade, open-pit mine, beginning at surface at Bayan Khundii, and expanding
northward into adjacent zones within the Bayan Khundii deposit. The development incorporates conventional
crushing and grinding separation and a carbon in pulp plant with processing capacity of 1,800 tonnes per day. Altan
Nar resources will be mined by open-pit mining following the completion of mining at Bayan Khundii, in years 8 to
10 of the Khundii Gold Project mine life.
Financial modelling for the Altan Nar PEA has been completed as a marginal analysis, assuming the use of processing
infrastructure at Bayan Khundii. Standalone financial modelling of Altan Nar resources has not been undertaken.
The base case assumes a gold price of US$1,300/oz and US$17.50 for silver . All references to dollars within this
release are US Dollars (US$), unless stated otherwise. The Technical Report, pursuant to NI 43-101 guidelines for the
Bayan Khundii PFS and the updated Altan Nar PEA will be filed on SEDAR within 45 days . Key metrics from the
Technical Report are presented in Table 1 below.
Table 1. Khundii Gold Project Key Metrics
BK PFS AN PEA
Gold Price US$/oz 1,300 1,300
Production Profile
Average Head Grade Over Life of Mine1 g/t gold 3.73 3.46
Project Life2 years 7 4
Operating Life years 6 3
Target Production Rate Per Day3 tpd 1,800 1,800
Average Annual Saleable Gold4 oz 61,000 48,000
Peak Annual Saleable Gold4 oz 75,000 53,200
Average Gold Recovery Rate Over Life of Mine % 91% 67%
Strip Ratio t:t 10.2 7.6
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Operating Costs BK PFS AN PEA
Life of Mine (“LOM”) Average Cash Cost5 US$/oz 741 929
LOM Cash Cost plus Sustaining Cost (AISC)5 US$/oz 746 931
Pre-Tax Net Present Value
5% discount rate US$M 124 31
7.5% discount rate US$M 107 24
10% discount rate US$M 92 19
After-Tax Net Present Value
5% discount rate US$M 97 24
7.5% discount rate US$M 83 19
10% discount rate US$M 71 15
Pre-Tax Internal Rate of Return % 48% 110%
After-Tax Internal Rate of Return % 42% 92%
Payback Period (After tax) years 1.8 1.1
Capital Requirements
Pre-production Capital Cost, including contingency US$M 39.9 2.2
Life of mine (“LOM”) Remaining Capital Cost US$M 2.5 nil
Notes:
1. Average diluted head grade of mineralized rock fed to process plant.
2. Project life comprising one year pre-production period, approximately nine years operating life and one year mine closure.
3. Assumes process plant operates for 8,000 hours per annum to achieve the target production rate of 600 ktpa.
4. Reported numbers for saleable gold for Bayan Khundii and gold equivalent (“AuEq”) for Altan Nar . For the purpose of the PEA, gold
equivalent (AqEq) is based on saleable gold and silver only, at metal values of US$1,300 for gold and US$17.50 for silver. No value is
assigned to lead and zinc as it is not recoverable in the current processing design.
5. Operating costs reported in terms of saleable gold ounces for Bayan Khundii and AuEq ounces for Altan Nar; cost includes Royalty and
Charges at US$77/oz.
The Altan Nar PEA is by nature, a preliminary economic study, based in part on Inferred Resources. Inferred
Resources are considered too speculative geologic ally to have the economic considerations applied to them that
would enable them to be categorized as mineral reserves which is required for a prefeasibility or feasibility study.
Mineral resources that are not mineral reserves do not have demonstrated econ omic viability and there is no
certainty that the PEA will be realized.
Technical Report Sensitivities
The following table s shows changes in the after -tax NPV and IRR over a range of gold prices and discount rates,
demonstrating the impact of higher gold prices and the Project’s resiliency to lower prices.
Table 2A. Technical Report Sensitivities – After-Tax Gold Price Sensitivity Analysis – BK PFS
Gold Price Sensitivity Analysis Units US$1,200 US$1,300 US$1,400 US$1,500
NPV (5% discount rate) US$M 73 97 121 144
NPV (7.5% discount rate) US$M 61 83 105 125
NPV (10% discount rate) US$M 50 70 91 109
IRR % 34% 42% 50% 58%
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Table 2B. Technical Report Sensitivities – After-Tax Gold Price Sensitivity Analysis – AN PEA
Gold Price Sensitivity Analysis Units US$1,200 US$1,300 US$1,400 US$1,500
NPV (5% discount rate) US$M 18 24 30 37
NPV (7.5% discount rate) US$M 14 19 24 29
NPV (10% discount rate) US$M 11 15 19 23
IRR % 71% 92% 113% 134%
Resource and Reserve Estimates
The following table provides the total resources for the Khundii Gold Project and was calculated by adding the
resource from both the Bayan Khundii and Altan Nar deposits and calculating the weighted average grades. Details
of the resource estimates for each of the deposits is provided below in Tables 4 and 5.
Table 3. Khundii Gold Project – Mineral Resource Estimate Summary
Cut-off Grade(1) Resource Classification Quantity (Mt) Grade (Au g/t) Gold (Koz)
0.4 Measured & Indicated 14.0 1.91 863
Inferred 4.8 1.91 295
Recommended(2) Measured & Indicated 10.1 2.59 839
Inferred 4.3 2.10 289
1.0 Measured & Indicated 6.5 3.65 762
Inferred 3.6 2.38 275
1.4 Measured & Indicated 5.2 4.33 727
Inferred 3.2 2.56 266
Notes:
1. Cut-off grades for Altan Nar are AuEq2 (as defined in Note 8; Table 6) and for Bayan Khundii are gold only.
2. Tetra Tech recommended cut -off grade for Bayan Khundii is 0. 55 g/t gold and RPM recommended cut -off grade for Altan Nar is 0.7 g/t
AuEq2 above a pit and 1.4 g/t AuEq2 below the same pit shell.
Updated Bayan Khundii Mineral Resource Estimate
The Bayan Khundii updated Mineral Resource Estimate (“Mineral Resource”) was prepared in accordance with NI 43-
101 by Tetra Tech and is dated effective October 1, 2019. The reported Mineral Resource (Table 4) is based on
information provided to Tetra Tech by Erdene and verified where possible by Tetra Tech. Data verification and
statistical analyses were carried out by Tetra Tech in suppor t of the Mineral Resource. A final National Instrument
43-101 (NI 43-101) Technical Report will be filed on SEDAR within 45 days. The Mineral Resource incorporates 26 6
diamond drill holes totaling 44,55 6 metres, completed between Q4 -2015 and Q2 -2019. The Mineral Resource is
contained within a near -surface, shallow-dipping and mineralized system (intercepts up to 2,200 g/t gold ) that
extends along strike over a distance of 1.2 kilometres (NE-SW) and is up to 400 metres wide (NW-SE).
The Mineral Resource estimate is based on the combination of geological modeling, geostatistics, and conventional
block modeling using the Ordinary Kriging method of grade interpolation in Datamine Studio RM™ software. The
Mineral Resources were estimated using a non-rotated block model with parent blocks of 5m x 5m x 5m, split 5 times
into sub-blocks. A composite size of 1 m was used in order to support the utilized block size. The QAQC sampling
protocols and corresponding sample preparation and shipment procedures have been reviewed by Tetra Tech.
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The Mineral Resource was estimated and classified in conformance with the CIM Definition Standards for Mineral
Resources and Mineral Reserves. The confidence of the resource is based on an understanding of geological controls
of the mineralization, the drill hole pierce point spacing in the resource area, the number of samples present, and
the number of holes contained within each search ellipse.
The Mineral Resource estimate has been constrained to a conceptual pit shell and is reported at a cut-off grade of
0.55 g/t gold. The assumptions and parameters utilized to establish the cut -off grade and pit shell are reported
below in notes to Table 4 and support reasonable prospects for eventual economic extraction.
Tetra Tech estimated the Bayan Khundii Mineral Resource at a number of gold cut -offs, however, Tetra Tech
recommends reporting the Bayan Khundii Mineral Resource at a 0. 55 g/t gold cut-off. A sensitivity analysis of the
grade and tonnage relationships at different cut-off grades is shown in Table 4.
Table 4. Bayan Khundii Gold Deposit – Updated Mineral Resource Estimate Summary, October 1, 2019
Cut-off Grade(1) Resource Classification Quantity (Mt) Grade (Au g/t) Gold (Koz)
0.4 Measured 1.7 3.15 176
Indicated 4.6 2.45 364
Measured & Indicated 6.4 2.64 540
Inferred 1.1 3.10 106
0.55 Measured 1.4 3.77 171
Indicated 3.7 2.93 350
Measured & Indicated 5.1 3.16 521
Inferred 0.9 3.68 103
1.0 Measured 0.7 7.31 153
Indicated 1.7 5.56 304
Measured & Indicated 2.3 6.05 457
Inferred 0.4 6.83 93
1.4 Measured 0.5 9.09 148
Indicated 1.4 6.40 294
Measured & Indicated 1.9 7.10 441
Inferred 0.4 7.61 91
Notes:
1. The Statement of Estimates of Mineral Resources has been compiled under the supervision of Mr. Cameron Norton who is a full -time
employee of Tetra Tech and a P. Geo. Mr. Norton has sufficient experience that is relevant to the style of mineralization and type of deposit
under consideration and to the activity that he has undertaken to qualify as a Qualified Person as defined in the CIM Standards of Disclosure.
2. All Mineral Resource figures reported in the table above represent estimates based on drill ing completed up to April 22, 2019. Mineral
Resource estimates are not precise calculations, being dependent on the interpretation of limited information on the location , shape and
continuity of the occurrence and on the available sampling results. The tot als contained in the above table have been rounded to reflect
the relative uncertainty of the estimate. Rounding may cause some computational discrepancies.
3. Mineral Resources are reported on a dry in-situ basis.
4. The Mineral Resources is reported a t a 0. 55 g/t Au cut -off. Cut-off parameters were selected based on Tetra Tech’s internal cut -off
calculator, which indicated that a break-even cut-off grade of 0.55 g/t Au, assuming an open cut mining method, a gold price of USD $1,350
per ounce, an open mining cost of USD $2 per tonne, a processing cost of USD $16 per tonne milled, a G&A cost of $5 per tonne, and a gold
recovery of 0.95%.
5. The mineral resource estimate has been constrained to a preliminary optimized pit shell which assumed a gold price of USD $2,000 and
the economic potential tested using the above parameters.
6. The mineral resource estimate assumes an average density of 2.66 t/m3 for the mineralized domains.
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7. Mineral Resources referred to above, have not been subject to detailed economic analysis and therefore, have not been demonst rated
to have actual economic viability.
8. Measured and Indicated mineral resources d o not have demonstrated economic viability. Inferred mineral resources have a greater
amount of uncertainty as to their existence and potential economic and legal feasibility, do not have demonstrated economic viability, and
are exclusive of mineral reserves.
The updated Bayan Khundii resource estimate has resulted in a 20% increase in the grade and ounces of contained
gold for the combined Measured and Indicated resources. This increase is due to the results of 2019 infill drilling
that confirmed continuity of the high-grade mineralization and a reinterpretation of the geologic model by the Tetra
Tech resource modeler.
BK Reserve Estimate
The Bayan Khundii O ctober 15, 2019, PFS Mineral Reserve has been estimated by Qualified Person , Maurie Ph ifer,
P.Eng., Manager, Mining, Tetra Tec h, using the 2014 CIM Definition Standards for Mineral Resources and Mineral
Reserves to conform to the Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects. The
total Mineral Reserve for the Bayan Khundii deposit is shown in Table 5. The Mineral Reserve is based on the updated
October 1, 2019, Mineral Resource, reported herein. The Mineral Reserve includes both Proven and Probable Mineral
Reserves that were converted from Measured and Indicated Mineral Resources. Tonnes and grades were calculated
for the mining blocks, and allowances for dilution and mining recovery were applied to estimate the Mineral Reserve
Statement. The effective date of the Mineral Reserve statement is October 15, 2019.
Table 5. Bayan Khundii Gold Deposit – Mineral Reserve Statement, October 15, 2019
Tonnage (Mt) Grade (g/t Au) Contained Au (Koz)
Proven Mineral Reserves 1.1 4.4 165
Probable Mineral Reserves 2.4 3.4 256
Total Mineral Reserve 3.5 3.7 422
Notes:
1. The effective date of the Mineral Reserve estimate is October 15th, 2019. The QP for the estimate is Ms. Maurie Phifer, P.Eng. of Tetra Tech
2. The Mineral Reserve estimates were prepared with reference to the 2014 Canadian Institute of Mining, Metallurgy and Petroleum (CIM)
Definition Standards (2014 CIM Definition Standards) and the 2003 CIM Best Practice Guidelines
3. Reserves estimated assuming open pit mining methods
4. Reserves are reported on a dry in-situ basis
5. Waste to ore cut-offs were determined using a Net Smelter Return (“NSR”) for each block in the model. NSR is calculated using prices and
process recoveries for each metal accounting for all off-site losses, transportation, smelting and refining charges. NSR cut-off was calculated
to be $22.93, and includes 5% royalty deduction
6. Reserves are based on a gold price of $1267/oz, mining cost of $2.5/tonne, milling costs of $16.46/tonne feed, G&A costs of $6.58/tonne
7. Mineral Reserves include dilution of 9% and losses of 5%.
Altan Nar Resource Estimate
RPMGlobal (“RPM”) calculated the Mineral Resource estimate for Altan Nar in May 2018 at a number of gold cut-offs,
however, RPM recommends reporting the Bayan Khundii Mineral Resource at cut-off of 0.7 g/t AuEq 2 (see note 8,
Table 6) above a pit and 1.4 g/t AuEq 2 below the same pit shell. . A sensitivity analysis of the grade and tonnage
relationships at different cut-off grades is shown in Table 6. For further details on the Mineral Resource estimate
please see the Company’s May 10, 2018 news release (click here).
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Table 6. Altan Nar Deposit – Mineral Resource Estimate Summary, May 7, 2018
Cut-
off
AuEq
g/t
Resource
Classi-
fication
Quantity
(Mt)
Grade Contained Metal
Au Ag Zn Pb AuEq2 Au Ag Zn Pb AuEq2
g/t g/t g/t g/t g/t Ko
z Koz Kt Kt Koz
0.4 Indicated 5.6 1.8 13.5 0.6 0.5 2.6 323 2,412 33.2 29.9 464
Inferred 3.7 1.6 7.5 0.7 0.6 2.3 189 901 24.5 22.8 283
0.7 Indicated 5.0 2.0 14.8 0.6 0.6 2.8 318 2,350 31.6 29.0 453
Inferred 3.4 1.7 7.9 0.7 0.7 2.5 186 866 23.7 22.3 277
1.0 Indicated 4.2 2.3 16.6 0.7 0.7 3.2 306 2,212 28.6 27.4 431
Inferred 3.2 1.8 8.2 0.7 0.7 2.7 182 837 22.8 21.5 270
1.4 Indicated 3.3 2.7 18.9 0.8 0.8 3.8 285 2,002 24.9 25.2 398
Inferred 2.9 1.9 8.6 0.8 0.7 2.8 176 795 21.5 20.4 259
Notes:
1. The Mineral Resources have been constrained by topography and a cut-off of 0.7 g/t AuEq2 above a pit and 1.4 g/t AuEq2 below the same
pit shell.
2. The Mineral Resource Estimate Summary was compiled under the supervision of Mr. Jeremy Clark who is a full-time employee of RPM and
a Member of the Australian Institute of Geoscientists. Mr. Clark has sufficient experience that is relevant to the style of mineralization and
type of deposit under consideration and t o the activity that he has undertaken to qualify as a Qualified Person as defined in the CIM
Standards of Disclosure.
3. All Mineral Resource figures reported in the table above represent estimates as at May 7, 2018. Mineral Resource estimates are not precise
calculations, being dependent on the interpretation of limited information on the location, shape and continuity of the occur rence and on
the available sampling results. The totals contained in the above table have been rounded to reflect the relative uncertainty of the estimate.
Rounding may cause some computational discrepancies.
4. Mineral Resource grades are reported in accordance with the CIM Standards.
5. Mineral Resources reported on a dry in-situ basis.
6. No dilution or ore loss factors have been applied to the reported Resource Estimate
7. No allowances have been made for recovery losses that may occur should mining eventually result.
8. For the AN resource estimate Gold Equivalent 2 (“AuEq2”) calculations assume metal prices of US $1,310 per ounce gold, US $18 per ounce
silver, and US $2,400 per tonne lead and US $3,100 per tonne zinc.
Mining
The BK PFS is based on an open -pit mining operation targeting 600,000 tonnes per year of feed material for the
processing plant. The total mineable mineralized plant feed is 3.5 million tonnes at an average diluted head grade
of 3.73 g/t gold and strip ratio of 10. 2:1 (waste tonne: plant feed tonne). Minerali zation starts at surface , with the
majority of the deposit contained within the top 100 metres . The deposit structure, grades and depth suggest
selective open cut mining will be utilized. Underground mining below the current open cut pit is not within the PFS
scope of work but will be examined in future studies. Mining will use hydraulic excavators in backhoe configuration.
Drilled and blasted material will be loaded into haul trucks, with waste rock deposited in an engineered integrated
waste facility adjacent to the pit, and ore hauled to a crusher or run-of-mine (“ROM”) pad adjacent to the processing
plant.
The updated Altan Nar PEA is based on the selective open-pit mining, also targeting 600,000 tonnes per year of mill
feed. The total mineable minerali zed plant feed is 1.8 million tonnes at an average diluted head grade of 3. 46 g/t
gold and 17 g/t silver , at a strip ratio of 7.6:1. Resources from Altan Nar, with a 2 0 kilometre road distance to the
processing plant means that ore hauled from the pit will need to be placed ne arby and transferred by articulated
trucks to Bayan Khundii.
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Processing
The PFS assumes processing of ROM material via a conventional crush and grind circuit and a carbon in pulp plant.
The ore-processing plant will be located adjacent to the Bayan Khundii open pit and throughput will target 600,000
ore-tonnes per year, nominally 1,800 tonnes per day. Total mineralized material from BK processed in the plant over
the course of the mine life is 3.5 million tonnes at an average diluted head grade of 3.73 g/t gold. Using an estimated
mill recovery of 91%, total recovered gold over the life of the Bayan Khundii deposit is 382,000 ounces.
For the updated PEA base case, ore from Altan Nar will be processed at the Bayan Khundii processing plant, utilizing
the same conventional crush and grind circuit and carbon in pulp plant. Total mineralized material from Altan Nar
processed in the Bayan Khundii plant over the course of the Altan Nar mine life is 1.8 million tonnes at an average
diluted head grade of 3. 46 g/t gold and 17 g/t silver. For the Altan Nar deposit, which includes arsenopyritic ore
locally, with associated low recoveries, ore mined will only include the free-milling portions of the resource with an
average recovery of 67% gold and 62% silver, resulting in a total recovered gold of 136,000 ounces and total recovered
silver of 616,000 ounces over the life of the Altan Nar mine, or 144,000 AuEq ounces.
Operating Costs
Operating costs are based on the mining and processing scenarios outlined above and assumes contract mining. All
other activities are assumed to be owner-operated. The AISC for Bayan Khundii is estimated at $746/oz and the AISC
for Altan Nar is $931/oz AuEq.
Table 7. Operating Costs
Bayan Khundii PFS Altan Nar PEA
Life of
Mine
($ millions)
US$/oz US$/tonne
Life of
Mine
($ millions)
US$/oz
AuEq US$/tonne
Mine Operating Cost 125 327 35 59 406 32
Processing Cost 113 295 32 56 388 31
G&A 15 40 5 8 60 5
Total Site Operating Costs 253 662 72 123 854 68
Royalty and Charges 30 77 8 11 77 6
Sustaining Capital & Closure Costs 2 7 1 - - -
All-In Sustaining Cost 285 746 81 134 931 74
Capital Costs
The initial capital cost (Year 0), primarily comprising construction of supporting infrastructure and the process plant,
is estimated at US$40 million. The estimates include a 15% contingency. The PFS contemplates the lease of fleet
equipment, which if purchased outri ght, would add $16 million to capital costs. All major facilities including the
process plant are proposed to be located at the Bayan Khundii site.
In Year 6 the supporting infrastructure for the Altan Nar site , primarily a haul road and updates to the processing
circuit, is constructed at an estimated cost of US$2.2 million, including a 20% contingency.