Erdene Quarterly Update - Q2 2025

• Production Timeline: First gold pour scheduled for late Q3 2025 with commercial production expected by end of 2025 
• Construction Status: Substantially completed Bayan Khundii Gold Mine complex with all major permits received 
• Drilling Results: Ore-control drilling intersected 2,370 g/t gold over 1 metre, the highest-grade intersection to date 
• Resource Extension: 76% of drill holes intersected gold values exceeding 0.3 g/t up to 60 metres beyond previously modelled zones 
• Portfolio Addition: Acquired option for 80% interest in copper-gold prospect 10km from Oyu Tolgoi deposit

Erdene Resource Development Corp. (TSX:ERD; MSE:ERDN; OTCQB:ERFCF) is a Canada-based resource company developing precious and base metal projects in Mongolia. The company holds interests in three mining licences and two exploration licences in Mongolia, focused on the Khundii Gold District discovery.

The company's primary asset is the Bayan Khundii Gold Project, developed through a joint venture with Mongolian Mining Corporation. Erdene's operations concentrate on exploration and development activities across Mongolia's mineral terrain, with the Bayan Khundii project representing the company's first move into gold production.

Operational Status & Production Timeline

Construction at the Bayan Khundii Gold Mine reached substantial completion as of June 30, 2025. The project employed 454 contractors and staff at quarter end, maintaining a total recordable injury frequency rate of 0.2 per 200,000 person hours with zero reportable environmental incidents. Local hiring comprised approximately 35% of site personnel from Bayankhongor province.

The project received construction approvals for mining operations, processing plant and site infrastructure on June 12, 2025. The final chemical usage permit was obtained after quarter end, completing the regulatory requirements. All major permits are now in place for operations to commence.

Mining and processing commissioning began during the quarter. Pre-production mining started in May 2025, including topsoil stripping and run-of-mine pad establishment. The processing plant dry commissioning is underway, with ore mining commenced in lower grade areas designated for initial startup feed. The company maintains its target of first gold pour in late Q3 2025.

Drilling Programme Results & Resource Definition

The company completed a 201-hole ore-control drilling programme during the quarter, designed to test areas up to 60 metres beyond the previously defined ore zones. The programme utilised reverse circulation drilling on a 5-metre spaced grid, with holes averaging 12.2 metres depth. Multiple intersections exceeded 20 g/t gold, including 6 metres of 481.9 g/t gold (BKGC-1062) and 5 metres of 73.5 g/t gold (BKGC-1071).

The drilling returned gold values exceeding 0.3 g/t in 76% of holes tested. Approximately 30% of holes averaged more than 5 gram-metres, while 10% exceeded 20 gram-metres. The highest-grade intersection measured 2,370 g/t gold over 1 metre within the broader 6-metre intersection, representing the highest grade encountered to date in the Khundii Minerals District.

Results from these 201 holes are being combined with 918 previously completed ore-control drill holes to update the block model for mine planning. The data extends the known mineralisation beyond the original resource estimate boundaries. Ore mining has begun in defined lower grade areas selected for initial processing plant feed.

Financial Position & Community Programmes

Erdene incurred US$115 million in capital and operating expenditures through Q2 2025. The joint venture retains access to US$31 million in undrawn liquidity through Erdene Mongol for commissioning and ramp-up completion. The company recorded a net loss of $4.1 million for Q2 2025, compared to $1.9 million in the prior year period.

Community development programmes continued during the quarter, with support for local small and medium enterprises through agricultural product purchases and microfinance lending. The company provided technical assistance to regional businesses and maintained its local employment programme with 35% of site personnel drawn from the local province.

The company engaged RPMGlobal to prepare an updated mineral resource report for the Zuun Mod Molybdenum-Copper project, scheduled for Q3 2025 delivery. In July, Erdene executed an option agreement to acquire up to 80% interest in the Tereg Uul Copper-Gold prospect, located 10 kilometres from the Oyu Tolgoi deposit. The company also received shareholder approval for a 6:1 share consolidation expected to complete in Q3 2025.

Next Steps

Erdene's immediate priorities include completing processing plant commissioning and achieving first gold pour in late Q3 2025. The company targets commercial production by year-end 2025. The updated Zuun Mod resource estimate is scheduled for delivery in Q3 2025, while exploration activities will expand following initial gold production and cash flow generation from Bayan Khundii operations.

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