Erdene Announces Year-End Results and Provides Bayan Khundii Project Update
TSX: ERD | MSE: ERDN
www.erdene.com 1 [email protected]
ERDENE ANNOUNCES YEAR-END RESULTS AND
PROVIDES BAYAN KHUNDII PROJECT UPDATE
Press Release
Halifax, Nova Scotia
2024.04.02
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, 2023, and to provide an update on progress at its Bayan Khundii Gold
Project (“BK” or “Project”). This release should be read in conjunction with the Company’s
2023 Financial Statements and MD&A, available on the Company’s website and SEDAR+.
Peter Akerley, Erdene’s President and CEO stated, “The past year was a transformative
period for Erdene with the striking of our Strategic Alliance with Mongolian Mining
Corporation (“MMC”), Mongolia’s leading publicly traded mining company , the
commencement of construction at the Bayan Khundii gold project and continued
exploration success across the Khundii Minerals District.”
He continued, “The Bayan Khundii gold mine is one of the highest grade, open pit gold
mines under development globally and will be Mongolia’s largest primary gold producer
when it reaches full production. With early works complete, project finance secured, long-
lead orders now arriving to site and the 2024 construction season underway, we are on
track to produce first gold at Bayan Khundii in Q2 2025.”
Mr. Akerley concluded, “Exploration during the 2023 field season further expanded
mineralization in our Khundii Minerals District, located in an under-explored, world-class
gold and copper belt. We have established a pipeline of high-quality projects, including
high-grade gold satellite deposits to Bayan Khundii, the large Altan Nar gold-polymetallic
deposit and the vast Zuun Mod molybdenum-copper porphyry resource. We plan to work
with our strategic partner MMC to build upon our exploration success to unlock new
opportunities for the Mongolian mining sector, increase the industry’s contribution to the
national economy and create long-term value for Erdene shareholders.”
2023 Highlights and Significant Subsequent Events:
TSX: ERD | MSE: ERDN
www.erdene.com 2 [email protected]
Image: Bayan Khundii Gold Project Construction Site
Bayan Khundii Gold Project
• Announced formal construction decision for Bayan Khundii on January 15, 2024
- Awarded the Project’s Engineering, Procurement and Construction (“EPC”)
services contract to MCS Property LLC (“MCSP”), a leading Mongolian
construction firm and affiliate of MMC
- Entered a power purchase agreement (“PPA”) with MCS International LLC
(“MCSI”), a long-standing energy services and power generation company and
affiliate of MMC
- Construction ramp-up starting in February 2024 with substantial completion
scheduled for end of 2024 – commissioning scheduled for Q1 2025 and first gold
planned in Q2 2025
• Completed early works, site establishment and major procurement for the Bayan
Khundii Gold Mine
- Early works and site establishment, including installation of temporary facilities and
process plant civils and footings complete – represents ~12% of total project
construction
- Approximately 330 employees and contractors on site during peak – no lost time
incidents
- Long lead and critical equipment orders on track with first deliveries received in
late Q4 2023
• Delivered Bayan Khundii NI 43-101 Feasibility Study Update (US$1,800/oz gold price,
unless noted)
TSX: ERD | MSE: ERDN
www.erdene.com 3 [email protected]
- Base Case after-tax NPV5% of US$170 million and Internal Rate of Return (“IRR”)
of 35% increasing to US$223 million and 42%, respectively, at gold price of
US$2,000/oz
- Life of Mine Earnings Before Interest, Taxes and Depreciation of US$451 million,
increasing to US$540 million at a US$2,000/oz gold price
- Total recovered gold of 476,000 ounces, a 25% increase compared to the 2020
FS with an average gold recovery rate of 93%
- All-in sustaining cost (“AISC”) of US$869 per ounce and upfront capital costs of
US$88 million, plus a 12% contingency, and pre-production costs of US$2 million
- Measured and Indicated Resources of 674,700 ounces gold at an average grade
of 2.6 g/t gold, and 319,000 ounces silver at an average grade of 1.38 g/t silver
- Proven and Probable Reserves of 513,700 ounces gold at an average grade 4.0
g/t gold, and 220,500 ounces silver at an average grade of 1.7 g/t silver
- Average annual gold production of 86,900 ounces during years 2 through 5 – Life
of Mine annual average production of 74,200 ounces gold
- Adjacent high-grade resources and recent discoveries provide high probability
growth options
• Delivered on increased community and stakeholder commitments
- Conducted equipment operator training for 80 residents of Bayankhongor
province, the majority of who entered full-time operator employment at MMC to
gain further experience before deploying to Bayan Khundii for the start of
operations planned in 2025
- Completed community support projects, including the installation of a municipal
potable water treatment facility, public education sanitation facilities and herder
livelihoods support initiatives
- Remitted 2023 annual planned donations to local government development
programs, in accordance with the statutory Local Cooperation Agreement
Khundii Minerals District Exploration
• Conducted 2023 gold exploration program at the Greater Dark Horse prospect
- Drilled 1,040 metres intersecting anomalous gold and/or indicator elements in 16
of 18 holes
- Executed IP survey over 9 km2 area identifying several targets for follow-up
- Completed ~500 metre trenching program testing near surface supergene oxide
targets similar to those intersected at Dark Horse Mane, returning anomalous
mineralization in several areas
• Completed 4,100 metre drill program at Zuun Mod Moly-Copper deposit
- Expanded mineralization on periphery of current NI 43-101 mineral resource
- Intersected high-grade mineralization in a step-out hole, located 1.7km north of
the deposit, demonstrating the potential to expand resources
TSX: ERD | MSE: ERDN
www.erdene.com 4 [email protected]
Corporate
• Closed strategic alliance with MMC on January 23, 2024 to advance construction of
the BK Project
- MMC invested US$40 million for a 50% equity interest in EM, the company
holding the BK Project
- Erdene retains a 50% equity interest in EM as well as a 5% NSR royalty on
production from the Khundii District after the first 400,00 ounces of gold production
and a 100% interest in Zuun Mod
• Secured BK Finance from strategic partner MMC
- Up to US$80 million shareholder loan to EM
- Five-year bullet maturity, bearing interest at 13.8%, payable in arrears
• Recorded a net income of $522,043 for the year ended December 31, 2023, compared
to a net loss of $5,986,237 for the year ended December 31, 2022
- Exploration and evaluation expenses totaled $847,010 for the year ended
December 31, 2023, compared to $3,798,676, with the year -on-year change
primarily due to the reporting of EM’s activity as an Investment in Associate in the
current year due to the loss of the control of the subsidiary following the Strategic
Alliance with MMC, partially offset by regional exploration work incurred by Erdene
- Exploration and evaluation expenditures, including capitalized expenditures,
totaled $7,266,375 for the year ended December 31, 2023, compared to
$11,770,631 for the prior year primarily due lower drilling activity during the current
year as well as reduced spending on engineering and design work for the Bayan
Khundii Gold Project following the commencement of early construction works
- Corporate and administrative expenses totaled $3,137,736 for the year ended
December 31, 2023, compared to $2,218,984 for the year ended December 31,
2022, with the year-on-year change primarily due to an increase in the allocation
of management effort to corporate activities following the strategic alliance with
MMC, inflationary salary adjustments, and increased marketing, professional fees,
non-cash share-based compensation and travel costs
- Non-cash gain on loss of control of subsidiary of $6,544,863 and loss from
investment in associate of $2,278,370 due to the change in the basis of accounting
for Erdene’s investment in EM to equity accounting following the signing of the
Strategic Alliance and Investment Agreements with MMC in January 2023
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.
TSX: ERD | MSE: ERDN
www.erdene.com 5 [email protected]
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 an exploration license 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 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.
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 economic, 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 Company does not assume the o bligation 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-/