Erdene Announces Q1 2021 Financial Results and Provides Khundii GOLD Project Update
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www.erdene.com [email protected]
ERDENE ANNOUNCES Q1 2021 FINANCIAL RESULTS AND
PROVIDES KHUNDII GOLD PROJECT UPDATE
Press Release
Halifax, Nova Scotia
2021.05.17
Erdene Resource Development Corp. (TSX:ERD; MSE:ERDN) (" Erdene" or the
"Company") is pleased to announce operating and financial results for the three months
ended March 31, 2021 and to provide an update on its Bayan Khundii Gold Project
(“Bayan Khundii” or “BK”). This release should be read in conjunction with the Company’s
Q1-2021 Financial Statements and MD&A, available on the Company’s website or
SEDAR.
Highlights:
• Advancing Bayan Khundii Gold Project towards construction
• Completed detailed design and engineering
• Received regulatory approval for major non-process facilities
• Executed contract for comminution circuit
• Developed project and operations documentation and organizational structure
• Progressed EDC Project Finance due diligence with consultant site visits completed
• Discovered high-grade gold, near-surface, at the new Dark Horse gold prospect
• Gold mineralization traced over 1.4 kilometre strike
• High-grade gold zone discovered within 10 metres of surface
• Two holes spaced at 100 metres returned 45 metres of 5.97 g/t gold
(AAD-58) and 35 metres of 2.67 g/t gold (AAD-81)
• Scheduled major drill program to commence in late Q2, targeting Dark Horse, the
southeast corner of the Ulaan license and Altan Nar
Quotes from the Company:
“During the first quarter we made significant progress on our two core objectives of
advancing Bayan Khundii towards development and expanding high -grade gold
resources in the Khundii Gold District,” said Peter Akerley, Erdene’s President and CEO.
“We progressed construction readiness and permitting work for our Bayan Khundii Gold
Project and conducted an employment orientation program in Bayankhongor Province,
our host community,” continued Mr. Akerley. “Due diligence by Export Development
Canada for the Project Finance debt is well underway.”
“Concurrently, drilling and exploration work during the quarter confirmed the Dark Horse
prospect as the most significant zone of gold mineralization in our Khundii Gold District
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since our discovery of the Bayan Khundii gold deposit,” said Mr. Akerley. “We have traced
mineralization over a 1.4 kilometre trend that remains open along strike and at depth. We
are finalizing plans for further drilling at Dark Horse, alongside maiden drilling of Ulaan
targets and expansion of the 2020 high-grade Gap Zone at Altan Nar beginning in late
Q2.”
“Although fieldwork has continued with minimal disruption, Mongolia has seen increasing
spread of COVID-19, including cases in our host province of Bayankhongor,” concluded
Mr. Akerley. “We are taking all precautions to maintain a safe work environment, and are
closely monitoring the COVID situation in the country and its potential impact on the
construction schedule for our Bayan Khundii Gold Project.”
Q1 2021 Highlights and Subsequent Events:
Bayan Khundii Gold Project – 100% Erdene
• Progressed construction readiness activities for the Bayan Khundii Gold Project
• Detailed design and engineering for the Carbon-in-Pulp (“CIP”) processing plant
was completed in Q1 2021 – regulatory review will commence in Q2 2021
• Contract for SAG and Ball mills awarded to CITIC in March 2021
• Detailed drawings for major non-process facilities received regulatory approval,
pending issuance of final documentation
• Balance of facilities is expected to be ready for regulatory submission by Q3 2021
• Construction, procurement, health and safety manuals, and job descriptions for
key roles drafted in advance of the launch of construction
• Launched an Employment Orientation program at the Bayan Khundii Project camp for
local residents
• Two cohorts of 36 received training from Erdene’s HSEC team, with a further 140
residents registered for upcoming sessions
• Topics included Project development plans, environmental management, and
opportunities for local participation in the Project
• Future programs planned to support local residents to attain the skills to earn
employment with the Project, including internship and trades certification
programs
• Obtained key permits and advanced regulatory approvals for mine development
• Received key regulatory approvals for five key non-process facilities
• Granted an extension for the Detailed Environmental Impact Assessment until
September 30, 2021 due to COVID-19 restrictions preventing travel and public
gatherings
Exploration
• Discovered high-grade gold, near surface, at the new Dark Horse gold prospect
• Gold mineralization traced over 1.4 kilometre strike length
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• Near surface, intensely oxidized, high-grade gold zone discovered beginning
within 10 metres of surface, defined by two holes spaced at 100 metres
o AAD-58 – 45 metres of 5.97 g/t gold, beginning 10 metres downhole,
including 1 metre of 82.5 g/t gold within 8 metres of 27.1 g/t gold
o AAD-81 – 35 metres of 2.65 g/t gold, beginning 4 metres from surface,
including 12 metres of 5.1 g/t gold with separate one-metre intervals of 14
g/t and 19 g/t gold
• Wide zones of gold mineralization beginning near surface
o AAD-61 – 130 metres of 0.53 g/t gold, beginning 10 metres downhole,
located 670 metres north of AAD-58
o AAD-66 – 14 metres of 1.31 g/t gold, beginning 53 metres downhole, as
well as 20 metres of 1.74 g/t gold, beginning 112 metres downhole, located
150 metres northeast of AAD-61
• Open at depths of up to 220 metres
o AAD-57 – 30 metres of 1.7 g/t gold, from 192 metres downhole
• Engaged technical experts to assist in the interpretation of the Khundii-Ulaan geologic
model and prospective mineralizing systems of the Khundii Gold District which includes
Erdene’s 100% owned Altan Nar project
• Results from geologic, structural, and geophysical modelling, spectral alteration,
and clay mineralogy analysis, petrographic analysis will be incorporated into drill
targeting as part of the 2021 exploration program
Corporate
• Progressed due diligence for the Bayan Khundii Project Finance with EDC
• Site visits completed in Q1 and draft diligence reports received
• EDC mandate letter contemplates a senior secured debt facility of up to US$55
million, subject to the satisfactory completion of due diligence and documentation
• Recorded a net loss of $617,084 for the three months ended March 31, 2021,
compared to a net loss of $1,041,990 for the three months ended March 31, 2020
• Exploration and evaluation expenditures, including capital ized expenditures,
totaled $2,523,968 for the three months ended March 31, 2021, compared to
$1,511,929 for the three months ended March 31, 2020, primarily due to
increased exploration as Erdene drilled 3,100 metres in the current period, while
no drilling was undertaken in the comparative prior year quarter. Additionally,
expenditures on construction readiness activities in the current quarter exceeded
costs associated with the Bayan Khundii Feasibility Study and Detailed
Engineering and Design in the prior year quarter.
• Corporate and administrative expenses totaled $394,604 for the three months
ended March 31, 2021, compared to $374,074 for the three months ended March
31, 2020, due to higher professional fees, regulatory costs, and share-based
compensation costs, partially offset by reduced directors’ fees and investor
relations costs.
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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 have most governments globally during 2020. With the first
community transmission of COVID-19 in November 2020, the Government of Mongolia
has further restricted the movement of people and the delivery of goods and services.
While restrictions were eased in mid-Q1 2021, preventive measures were reintroduced in
early Q2 2021 following an increase in the number of reported case s. Additionally, in
March 2021, Bayankhongor Province, where Erdene’s Projects are located, reported its
first confirmed case of community transmission of COVID-19, imposing restrictions on the
movement of people within and to and from the province. In response, Erdene provided
emergency funding and supplied personal protective equipment to the Bayankhongor
Emergency Commission to support its efforts to contain the spread of COVID-19 within
the Company’s host province.
Although the impact of COVID-19 on the Company’s operations has been modest to date,
the pandemic continues to evolve. The Company is monitoring the situation and
assessing potential disruptions to the Bayan Khundii Gold Project construction schedule.
Concurrently, the Company continues construction readiness work, including detailed
engineering and design, procurement, negotiation of a local co-operation agreement with
Bayankhongor provincial government, and project finance due diligence with Export
Development Canada. Additionally, the Company’s Mongolian exploration team has
been able to continue field exploration without significant disruption, while adopting
enhanced health and safety protocols. Erdene’s Corporate and Administrative teams in
Canada and Mongolia have worked remotely throughout the pandemic with minimal
disruption.
It is expected that a relaxation of government restrictions and widespread vaccine
distribution will allow the Mongolian economy to gradually reopen beginning in late Q2
2021, allowing the Company’s Canadian staff and consultants to travel to Mongolia. With
re-opening, activity in our local communities can resume, including employee safety and,
job training and, consultative stakeholder meetings required as part of the Company’s
Detailed Environmental Impact Assessment (“DEIA”) submission. Approval of the DEIA
is a key milestone in the permitting process, is required to commence construction, and
is currently expected in Q3 2021.
Assuming approval of the DEIA in Q3 2021, the Company expects to commence early
works, including establishing a permanent camp, warehousing facility, bore -field and
basic road works as early as the second half of 2021. Given Mongolian winter conditions,
significant concrete and steel works are not expected until 2022, resulting in a first pour
of gold in H1 2023. During this period, exploration results from both the Dark Horse and
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Ulaan prospects will be evaluated to determine possible adjustments to the development
plans.
The Company will provide further details on the impact of COVID-19 on its operations
and the Bayan Khundii Gold Project schedule as they become available.
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. Erdene’s deposits are located in
southwestern Mongolia’s Edren Terrane, within the Central Asian Orogenic Belt, host to
some of the world’s largest gold and copper-gold deposits. The Company has been the
leader in exploration in the region over the past decade and is responsible for the
discovery of the Khundii Gold District with interests in three mining licenses and two
exploration licenses hosting multiple high-grade gold and gold/base metal prospects, two
of which are being considered for development: the 100%-owned Bayan Khundii and
Altan Nar gold deposits.
Erdene Resource Development Corp. is listed on the Toronto and the Mongolian stock
exchanges. Further information is available at www.erdene.com. Important information
may be disseminated exclusively via the website; investors should consult the site to
access this information.
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.
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
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financing and general economic, market or business co nditions. 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 Company does not assume the obl igation 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
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LinkedIn: https://www.linkedin.com/company/erdene-resource-development-corp-/
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