Erdene raising $6 million for Mongolia gold exploration
Erdene Resource Development Corp. [ERD-TSX, ERCF-OTC] said it has arranged a $6 million private placement with proceeds earmarked for its Bayan-Khundii gold deposit in Mongolia.
The company said the non-brokered private placement will consist of up to 22.2 million units priced at 27 cents per unit. Each unit will consist of one common share and one half of one common share purchase warrant. The warrants are exercisable into one common share within two years of closing at a price of 40 cents. The financing is expected to close o n December 23, 2022.
News of the financing was released after the close of trading on December 14, 2022, when Erdene shares closed at 28.5 cents. The shares are currently trading in a 52-week range of 49.5 cents and 25 cents.
The Bayan Khundii mining license covers 2,309 hectares and includes the Bayan Khundii and Altan Nar deposits which are located 16 kilometres apart. Together these deposits comprise the Khundii Gold Project. The license also covers the highly prospective Altan Arrow, Dark Horse (Khar Mori) and Khundi North prospects.
An independent feasibility study for the Bayan Khundii Gold project envisions a high-grade open pit mine, producing 63,500 ounces per year at an average grade of 3.71 g/t gold, including 77,000 ounces in year two, using a carbon in pulp processing plant. Significant benefits to Mongolia, include life-of-mine royalties and taxes of US$103 million and approximately 400 jobs.
The eight-year project consists of one year of pre-production, a six-year operating life and one-year mine closure.
The Bayan Khundii gold deposit as of June, 2021 stood at 585,000 ounces of 2.19 g/t gold in the measured and indicated category and 36,000 ounces of inferred resources at 2.18 g/t gold. Within the measured and indicated resource is a proven and probable open pit reserve of 409,000 ounces at 3.7 g/t.
Erdene holds a 100% interest in the Ulaan license. The northern portion is situated along the western boundary of the Khundii license, while the southern area is approximately 350 metres west of the Bayan Khundi gold deposit, separated by the Khuren Tsav license held by the Mongolian government-owned gold company Erdenes Alt LLC.
Based on Erdene’s drilling near the western Khundii license boundary, satellite imagery, geophysical analysis and surface alteration, the hydrothermal system that hosts the Bayan Khundii gold deposit is expected to extend west, southwest of the Bayan Khundii deposit across the Khuren Tsav license and along the southern boundary of the Ulaan license.
Drilling results along the western boundary of the Khundii license intersected thick sequences of gold mineralization, locally beginning at surface, with the highest grades at 100 to 160 metres depth.