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2020-07-20

Erdene Announces Positive Bankable Feasibility Study Results for Bayan Khundii Gold Project

Study demonstrates high-grade, shallow open-pit mine with strong NPV, IRR and low initial capital investment

NI 43-101 Technical Report Highlights (US$1,400/oz Gold Price)

  • Base Case after-tax Net Present Value of US$100 million (NPV5%) and 42% Internal Rate of Return (IRR), increasing to US$216 million and 77% IRR, respectively, at current gold price of US$1,800/oz
  • Life of Mine Earnings Before Interest, Taxes and Depreciation of US$257 million, increasing to US$400M at a US$1,800/oz gold price
  • Total recovered gold over the initial phase of the Khundii Gold District development of 381,700 ounces
  • All-in sustaining cost (“AISC”) of US$733/ounce of gold recovered and upfront capital costs of US$59 million
  • BK Measured and Indicated Resources of 521,000 ounces gold at an average grade of 3.16 g/t gold
  • BK Proven and Probable Reserves of 409,000 ounces gold at an average grade of 3.71 g/t gold
  • Average annual gold production of 63,500 ounces, including 77,600 ounces in Year 2
  • Eight-year project, comprising one-year pre-production, six-year operating life and one-year mine closure
  • Payback period of less than 2 years
  • Adjacent high-grade resources and recent discoveries provide high probability growth options
  • Significant benefits to Mongolia, including Life of Mine royalties and taxes of US$103 million and approximately 400 new direct jobs in Bayankhongor Province

HALIFAX, Nova Scotia, July 20, 2020 (GLOBE NEWSWIRE) -- Erdene Resource Development Corp. (TSX:ERD; MSE:ERDN) ("Erdene" or the "Company") is pleased to announce the results of an independent Bankable Feasibility Study (“BFS”) for the 100%-owned, high-grade, open-pit Bayan Khundii Gold Project (“BK” or "Project”) in southwest Mongolia. The independent BFS was prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and has incorporated detailed mine design and scheduling, front-end engineering design for the processing plant and site infrastructure, a hydrogeological assessment, mineral waste facility design, comprehensive capital and operating cost estimation, and an updated economic model. These studies have been completed by a consortium of International and Mongolian firms with significant experience operating in Mongolia and internationally. The Technical Report, prepared by the Roma Group Ltd, pursuant to NI 43-101 guidelines, will be filed on SEDAR within 45 days.

The Company will host a conference call to review the Bankable Feasibility Study results at 10:00 am EST on Tuesday, July 21, 2020.  The dial-in numbers for the conference call are as follows:

North America (toll free):1-877-703-1560
Overseas or local (Toronto):1-647-689-5569

Participants may also join the conference call via webcast at the following link: https://onlinexperiences.com/Launch/QReg/ShowUUID=67C7A554-57DF-4DCC-978D-4C232A233C68

Quotes from the Company:

“The Bayan Khundii BFS results confirm the high-return nature of this project in its base case, with significant potential upside due to ongoing district-wide exploration and exposure to rising gold prices. The shallow, high grade, open-pit Bayan Khundii deposit lends itself to conventional mining and processing techniques, reducing the execution risk in bringing the project into production in an accelerated timeframe,” said Peter Akerley, President and CEO. “As a low-capex, low-opex project with a less than two-year payback and significant growth potential, Bayan Khundii offers investors and stakeholders exposure and leverage to gold as we move towards first production in early 2022.”

“Recent exploration results, including intersections of high-grade gold in the Midfield SE and Striker SW zones of the Bayan Khundii deposit, currently classified as sub-grade material, are expected to add to the Project’s robust economics,” continued Mr. Akerley. “The Bayan Khundii development is the foundation for growth in our underexplored Khundii Gold District and we see significant potential to expand resources, extending the mine life and creating value for all stakeholders.  We will follow up on recent exploration success with additional drilling in Q3 2020.”

“We have recently engaged HCF International Advisers Limited ("HCF") to secure debt financing for the project,” concluded Mr. Akerley. “Their expertise, combined with the support of the European Bank for Reconstruction and Development (“EBRD”) position us well to secure the funding to commence construction later this year.”

NI 43-101 Technical Report Overview

The Technical Report incorporates an updated reserve estimate for Bayan Khundii. The BFS includes 3.4 million mineable tonnes from the Bayan Khundii resource at an average diluted head grade of 3.7 g/t gold, all of which are Proven and Probable Reserves.

The Technical Report envisions a high-grade, open-pit mine, beginning at surface in the southern portion of the Bayan Khundii deposit (Striker and Gold Hill), and expanding northward into adjacent zones at Midfield and Midfield NE. The development incorporates conventional crushing and grinding, leach and a Carbon in Pulp (“CIP”) plant with processing capacity of 1,800 tonnes per day.

The base case assumes a gold price of US$1,400/oz. All references to dollars within this release are US Dollars (US$), unless stated otherwise. The Technical Report, pursuant to NI 43-101 guidelines for the Bayan Khundii BFS will be filed on SEDAR within 45 days. Key metrics from the Technical Report are presented in Table 1 below.

Table 1. Khundii Gold Project Key Metrics

   BK BFS
Gold PriceUS$/oz1,400
Production Profile   
Average Head Grade Over Life of Mine1g/t gold3.7
Project Life2 years8
Operating Lifeyears6
Target Plant Feed Rate Per Day3tpd1,800
Average Annual Saleable Goldoz63,500
Peak Annual Saleable Goldoz79,100
Average Gold Recovery Rate Over Life of Mine%93%

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