Erdene Provides Second Quarter Project Review and Financial Results
Erdene Provides Second Quarter Project Review and Financial Results
Halifax, Nova Scotia – August 14, 2018 - Erdene Resource Development Corp. (TSX:ERD)
("Erdene" or "Company"), is pleased to provide an update on second quarter corporate and
project activities, along with an outlook for the second half of 2018 . This release should be read
in conjunction with the Company’s Q2-2018 Financial Statements and MD&A on the Company’s
website or on SEDAR.
“Our Company has had an active and successful second quarter where we reported some of the
highest grade drill results to date from our flagship gold p roject Bayan Khundii, annou nced an
updated resource estimate at our neighboring Altan Nar project that nearly doub led the total
ounces, became the first foreign -listed company to cross -list its shares on the Mongolian Stock
Exchange, and closed two oversubscribed financings,” said Peter Akerley, Erdene’s President and
CEO. “Taken together, the solid progress this quarter ha s increased the fundamental value of the
Company, and set the stage for further value e nhancement in the months ahead. Looking forward,
we anticipate announcing the maiden Bayan Khundii resource estimate in Q3, which will
compliment the updated Q2-2018 Altan Nar resource estimate, both of which will form the basis
of a P reliminary Economic Assessment , expected to be announced in Q4. Both of these projects
are high-grade, near-surface open pitable resources, located within an exceptional gold and copper
terrane that remains under-explored and that continues to be a core focus of the exploration team
actively exploring for the new deposits adjacent to a growing mining region.”
Project, Corporate and Financial Update
Bayan Khundii Gold Project – 100% Erdene
The Company completed a 4,584 metre drill program at Bayan Khundii in Q2 -2018
bringing total drilling to 42,656 metres since the project was discovered in Q2-2015.
In Q2-2018 multiple intersections returned very high gold grades, including:
18 metres of 21.6 g/t gold, including 2 metres of 169 g/t gold (BKD-238);
37 metres of 4.4 g/t gold, including 2 metres of 50.5 g/t gold (BKD-241);
10 metres of 16.9 g/t gold, including 2 metres of 17.5 g/t gold and 2 metres of 56.8
g/t gold (BKD-242);
12 metres of 11 g/t gold, including 3 metres of 35.6 g/t gold (BKD-245); and
81 metres of 2.6 g/t gold, including 17 metres of 9.2 g/t gold (BKD-254).
Significantly, the testing of a potential feeder zone in the Midfield Zone at the intersection
of a deep-seated northwest-trending fault and the interpreted relay ramp structure, returned
7 metres of 34.4 g/t gold (BKD-244) from the widest zone of gold -bearing quartz-adularia
veins intersected to date at Bayan Khundii.
All Bayan Khundii drill results were delivered to RPMGlobal in late July who have
commenced work on the maiden Bayan Khundii mineral re source estimate, anticipated to
be announced in Q3.
This maiden resource estimate will accompany the Company’s updated resource estimat e
for Altan Nar (16 kilometres northwest of Bayan Khundii) announced in Q2 -2018 (see
below for further detail).
Following the announcement of a consolidated resource estimate for Bayan Khundii and
Altan Nar, the Company will advance both projects to the preliminary economic
assessment stage, with results of that study expected in Q4-2018.
Altan Nar Gold-Polymetallic Project – 100% Erdene (16 kilometres north of Bayan Khundii)
In Q2 -2018, the Company announced an updated resource estimate for Altan Nar with
significant increases over the maiden resource estimate announced in March 2015.
The Indicated gold equivalent (“AuEq”) resource increased by 208% and the Inferred
AuEq resource increased by 172%, compared to the March 2015 resource estimate.
The Indicated Resource of 452,900 ounces (“oz”) AuEq averaged 2.8 g/t AuEq and the
Inferred Resource of 277,100 oz AuEq averaged 2.5 g/t AuEq, within a total resource of
5.0 million tonnes (“Mt”) Indicated and 3.4 Mt Inferred.
Approximately 90% of the Mineral Resource is within 150 metres of surface with all zones
open along strike and at depth.
Multiple undrilled and scout-drilled prospects along the 5.6 kilometre Altan Nar trend have
the potential for hosting additional gold-polymetallic resources.
Regional District Exploration
The Company has completed significant exploration within the 11.4 kilome tre long Bayan
Khundii license.
Subsequent to the end of Q2 -2018 the Company has completed reconnaissance drilling on
multiple targets in the Bayan Khundii licen se area with additional drilling planned in
Q3/Q4-2018.
In Q3-2017 the Company acquired a 51% interest, with the option to acquire up to 100%,
in the Ulaan license, located immediately west of its Bayan Khundii license. Ulaan has no
history of drilling and is host to very large, 3 -kilometre diameter, intense alteration zone
with characteristics thought to be related to a porphyry complex. The Company completed
a surface geophysical program in Q3-2018 and intends to initiate a maiden drill program at
Ulaan in late Q3.
Erdene continues to be active through its Alliance with Teck Resou rces Limited (“Teck”),
Canada’s largest diversified mining company, in assessing regional base and precious
metal opportunities in southwest Mongolia’s prolific Central Asian Orogenic Belt.
Between 2013 and 2017, Teck invested a total of $3 million through six separate private
placements in Erdene, fulfilling the initial terms of the Company’s original agreement with
Teck. Teck will continue t o have the right, through to Q1 -2020, to elect to enter into a
joint venture agreement on any designated properties within the Alliance’s Area of Interest
submitted by Erdene and approved by Teck for acquisition.
Mining Studies Group
In Q2-2018, the Company formed a Mining Studies Group responsible for all technical and
permitting-related studies pertaining to Bayan Khundii and Altan Nar. The team includes:
Cameron McRae (Chair of Technical Committee of the Board and Erdene Director);
Former President of Oyu Tolgoi LLC where he led the construction and start -up of
the US$6 billion Oyu Tolgoi copper-gold mine in southern Mongolia;
Julian Lawrence (Erdene Advisor); Mining Engineer and qualified Project Manager
with over 15 years’ experience in permitting and developing mining projects across
the Asia region, including Mongolia;
Paul Korpi (Erdene Ad visor); Metallurgical Engineer and Mining Consultant with
over 40 years’ experience in the mining sector, including 22 years with Newmont
Mining Corporation, and 4 years with Centerra Gold where he was part of the
development team and managed the first har d rock gold mine in Mongolia (Boroo
mine) producing 250,000+ ounces per year;
David Mosher (Erdene Director); Geologist and former President and CEO of High
River Gold Mines where he developed and managed gold mines in Burkina Faso and
Russia; and
Chris Cowan (Erdene Chairman); Mining executive/engineer with over 40 years’
experience in senior industry positions, including 28 years with Falconbridge Ltd.
Permitting, Water, Energy, and HSEC
Permitting:
Erdene has engaged several consulting firms in preparation of anticipated resource
estimates, preliminary economic studies, mining license application s, and geological
modeling and targeting for the Bayan Khundii and Altan Nar projects. Erdene also
continues to update the baseline survey s at Bayan Khundii and Altan Nar to fulfill
Mongolian regulatory requirements for registering mineral resources, including
conducting geotechnical work and mine hydrogeology studies.
Water:
A preliminary water resource was recently identified approximately 15 kilometres
from Altan Nar, which is believed to be sufficient to meet the processing needs of
both projects (Altan Nar and Bayan Khundii). Additional w ork will be required in
2019 prior to the completion of a feasibility study to better define the water resource.
Energy:
Through an initiative of the International Finance Corporation, the Company
participated in a co-financed study of renewable energy supply options at Bayan
Khundii and Altan Nar . T he study provided technical and f inancial analysis for
potential mine electricity demand scenarios that indicated an optimal pairing of
renewable power with rotating machines for lowest cost, most reliable energy supply.
Health, Safety, Environment & Community (HSEC):
No Lost Time Injuries reported to date in 2018.
Through a province-based, non-profit organization, the Company initiated cultivation
trials of endemic plant species in and around its project sites as part of its
commitment to stewardship of natural resources in Mongolia’s southwestern Gobi.
The Company entered into an annual Local Cooperation Agreement with the local
provincial and county governments, which outlines the responsibilities and
commitments of the Company and local governments in relation to regulating and
increasing public awareness of the minerals sector.
In 2018, Erdene approved voluntary contributions for over ten different initiatives at
the county and province levels focused on improving local livelihoods, basic
education, public health and natural resource management.
The Company recently appointed a dedicated Health and Safety Officer and site -
based Environmental Officer to assist with HSEC related efforts.
Financial and Corporate Update
As of August 14, 2018, the Company has a working capital position of approximately
$3.95 million. Current working capital is expected to fund the Company’s budgeted
expenditures to Q1-2019.
Erdene's Q2-2018 Financial Statements and Management Discussion & Analysis were
filed with r egulatory authorities on August 14, 2018 and are available on the Company's
website and on SEDAR.
In Q2-2018, Erdene became the first foreign -listed company to cross -list its shares on the
Mongolian Stock Excha nge and closed an oversubscribed Mongolian financing f or gross
proceeds of $1.36 million. Concurrent with the cross -listing, Erdene completed a private
placement with gross proceeds of $4.12 million.
For the six months ended June 30, 2018, the Company recognized a net loss of $2,141,134,
or $0.01 per share, compared to a loss of $2,664,797, or $0.02 per share for the same
period in 2017.
Exploration expenditures, including capitalized costs, totalled $ 3,180,081 for the first six
months of 2018 compared with $ 4,799,360 for the same period in 2017, a decrease of
34%. Together, the Bayan Khundii and Altan Nar projects represented $ 2,208,354 or 69%
of t he 2018 exploration expenditures compared with $3,753,946 or 78 % of the 2017
exploration expenditures for the same period in 2017.
Excluding non -cash share -based com pensation and depreciation, the cash corporate and
administrative expenses for the first six months of 2018 were $ 738,017 compared with
$904,207 for the same period in 2017, a decrease of $166,190 or 18%. Total corporate and
administrative expenses were $ 1,278,047 for the six months ended June 30, 2018
compared to $1,725,192 in 2017.
The corresponding cash exploration expenditures for the first six months of 2018 were
$2,825,044, compared with $4,209,544 for the same period in 2017 . The cash corporate
and administrative expenses represented 26% of cash exploration expenditures incurred the
first six months of 2018 compared with 21% for the same period in 2017.
Outlook
With the Q2 -2018 Bayan Khundii drill program complete, the Company has delivered all
Bayan Khundii dr ill results to RPMGlobal who have commenced work on a maiden
independent NI 43 -101 mineral resource estimate for Bayan Khundii to accompany the
Company’s updated mineral resource estimat e prepared by RPMGlobal for Altan Nar
announced in Q2-2018.
The Bayan Khundii resource estimate is expected to be announced in Q3-2018.
Following the definition of resources, the Company has com missioned RPMGlobal to
complete a preliminary economic assessment for Bayan Khundii and Altan Nar ,
anticipated to be announced in Q4-2018.
It is expected that the Company will progress through a series of increasingly more
detailed and rigorous assessment s through 2019. It is anticipated that these assessments
will lead to a feasibility decision that will potentially lead into mine and plant development
and construction and onto initial commercial production.
Regional exploration within the Tian Shan Belt will continue, however the Company’s
immediate focus will continue to be the advancement of Bayan Khundii and Altan Nar,
and evaluation and potentially acquisition of prospects in the surrounding Khundii District.
Qualified Person and Sample Protocol
Michael MacDonald, P.Geo. (Nova Scotia), Vice President Exploration 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 base and precious metals in underexplored and
highly prospective Mongolia. The Company has interests in four exploration licenses and a mining
license in southwest Mongolia, where exploration success has led to the discovery and definition
of several prospects and deposits including: Bayan Khundii – the Company’s flagship and newly
discovered (Q2-2015), high -grade, near -surface gold project; Altan Nar – an extensive, high -
grade, near-surface, gold-polymetallic project located 16 kilometres northwest of Bayan Khundii;
Altan Arrow – an early -stage, high -grade gold -silver project 3.5 kilometres north of Bayan
Khundii; Ulaan – a recently-acquired copper-gold porphyry prospect adjacent to Bayan Khundii;
Khuvyn Khar – an early-stage, copper-silver porphyry project; Nomin Tal – a narrow, high-grade
copper-gold discovery; and Zuun Mod – a large molybdenum -copper porphyry deposit. In
addition to the above projects, Erdene has an Alliance with Teck Resources Limited on regional
copper-gold exploration in the prospective Trans Altai region of southwest Mongolia. The Bayan
Khundii and Altan Nar licenses have a 2% net smelter returns royalty (“NSR Royalty”) in favour
of Sandstorm Gold Ltd. with a buy -back option to reduce the NSR Royalty to 1%. For further
information on the Company, please visit www.erdene.com. Erdene has 161,775,791 issued and
outstanding common shares and a fully diluted position of 185,951,320 common shares.
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 g ive 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 market prices, exploitation and
exploration results, continued availability of capital and financing and general ec onomic, 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 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
Ken W. MacDonald, Vice President and CFO
Phone: (902) 423-6419
E-mail: [email protected]
Website: www.erdene.com
Twitter: https://twitter.com/ErdeneRes