Erdene secures Mongolia gold license, stock advances

Drilling operations at Erdene’s Bayan Khundii gold project in southwest Mongolia. Source: Erdene Resource Development Corp.

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Erdene Resource Development Corp. [ERD-TSX; ERDI-MSE] shares rallied Tuesday August 6 after the company said it received a mining license for its Bayan-Khundii gold project in Mongolia.

The license was issued by the Mineral Resource and Petroleum Authority of Mongolia.

“Receipt of the Bayan Khundi Mining License is a major milestone in the development of the high-grade, open pit Khundii Gold Project,” said Erdene President and CEO Peter Akerley. “Securing this license provides us long-term tenure over the Bayan Khundi resource that will form the cornerstone of the project,” he said.

Akerley went on to say that with the mining license in hand, the company is focused on completing a NI 43-101-compliant pre-feasibility study, Mongolian feasibility study, environmental and social impact assessment and Mongolian Detailed Environmental Impact Assessment for the Khundii Gold Project in 2019.

Erdene shares advanced on the news, rising 6.67% or $0.015 to 24 cents. The shares are currently trading in a 52-week range of 16 cents and 44 cents.

Erdene holds a 100%-interest in the Bayan Khundii mining license, which covers 2,309 hectares and includes the Bayan Khundii and Altan Nar deposits which are located 16 km apart. Back in September 2018, the junior tabled a maiden resource estimate for the Bayan Khundii deposit. It also announced a significant increase in the mineral resource for the Altan Nar deposit.

“These deposits are shallow and high-grade, outcropping and located within the newly discovered Khundii Gold District,” the company said in a September 2018 news release.

In that news release, the company said Khundii contains a resource of 751,000 ounces gold at an average grade of 2.3 g/t gold in the measured and indicated category, plus 291,000 ounces of gold, averaging 1.8 g/t gold in the inferred category.

Including precious and base metals, the Khundii Project contains 886,000 ounces of gold equivalent at an average grade of 2.7 g/t gold equivalent in the measured and indicated category, and 382,000 ounces of gold equivalent, averaging 2.3 g/t gold equivalent in the inferred category.

In a June 2018 press release, the company said Altan Nar is estimated to contain a resource of 5.0 million tonnes at 2.8 g/t gold equivalent (2.0 g/t gold, 14.8 g/t silver, and 1.2% combined lead and zinc) for 452,900 gold equivalent ounces in the indicated category, and 3.4 million tonnes at 2.5 g/t gold equivalent (1.7 g/t gold, 7.9 g/t silver, and 1.4% combined lead and zinc) or 277,100 gold equivalent ounces in the inferred category.

“We are rapidly advancing towards initial production of 50,000 ounces per year, while continuing to expand resources through exploration and acquisition within the Khundii Gold District,” Akerley said.

Erdene said the mining license covers 2,309 hectares, including the Bayan Khundii Resource was well as the Altan Arrow, Khundii North and Khundii West targets. The license is valid for 30 years and can be extended to 70 years.

Based on the potential for additional discovery and expansion on the current license areas, the planned development is considered a foundation for growth,” he said.

A preliminary economic assessment announced in February 2019 envisions a high-grade open pit mine, producing 51,200 ounces per year at an average grade of 3.42 g/t gold over eight years. It said mining will begin at the Bayan Khundii Striker Zone, expanding to adjacent zones within Bayan Khundii, prior to incorporating resources from the neighbouring Altan Nar deposit in later years.

The development incorporates a conventional gravity separation circuit, and a carbon-in-pulp plant with processing capacity of 1,800 tonnes per day.


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