Erdene Resources Systematic Exploration in Mongolia Leads to Major Gold Discovery and Near-Term Production Potential

• Erdene Resource Development (ERD) is a company focused on gold exploration and development in southwestern Mongolia, particularly the Hyundai Minerals District.
• The company's objective is to establish a multi-million ounce gold resource and bring it into production to provide returns for investors.
• ERD's history goes back to the late 1990s, and it has systematically explored the region to discover multiple deposits and prospects.
• The main focus has been on the Hyundai Gold-Copper District, which includes the Bayan Hyundai and Ulan systems, characterized by low sulfidation epithermal mineralization.
• The recent Dark Horse discovery adds to ERD's potential, featuring bonanza-grade supergene oxide caps and the potential for more significant discoveries, contributing to the overall excitement about the district's prospects.

About Erdene Resources

Erdene Resources is a Canadian exploration and development company focused on discovering major gold deposits in southwest Mongolia. With over 20 years of experience in the region, Erdene has systematically explored a 400km belt, leading to the discovery of the Khundii Gold District which contains multiple high-grade gold and gold-copper prospects. Erdene is positioned to become a significant gold producer in Mongolia.

Interview with President & CEO Peter Akerley

Khundii Gold District Shows World-Class Potential

In an investor presentation, Erdene Resources CEO Peter Akerley outlined the enormous potential of the company’s Khundii Gold District. This district contains the Bayan Khundii and Altan Nar gold deposits and multiple early-stage prospects like Dark Horse. Bayan Khundii has an established resource of over half a million ounces grading over 3 g/t gold. Altan Nar has an additional indicated resource of about 300,000 ounces grading over 2 g/t. With continued exploration, Erdene sees multi-million ounce potential in this prolific district.

Akerley explained that the Khundii District hosts a very large, long-lived intrusive and hydrothermal system. The company has discovered low-sulfidation epithermal gold systems overprinting early porphyry-style intrusions. This combination provides both high-grade bonanza gold zones and potential bulk tonnage mineralization. Erdene has only tested a fraction of the broader district, with most exploration focused around known deposits. 80% of the land package remains untested, providing excellent discovery potential under shallow cover.

Priority is Developing Bayan Khundii Towards Production

While the exploration upside is huge, Erdene’s priority is advancing the Bayan Khundii deposit into production. The high-grade nature of Bayan Khundii means it can be developed rapidly at low capital cost. The initial phase aims to produce 50,000 oz/year, doubling to 100,000 oz/year as satellite deposits like Dark Horse are incorporated. Erdene is targeting first gold production in 2024 to start generating cash flow.

Akerley emphasized the exceptionally high grades at Bayan Khundii, with an average head grade over 3 g/t gold. This high grade results in low operating costs and allows low-cost open pit mining. The deposit starts right at surface, with grades improving at depth. Metallurgical testing has shown over 90% recoveries via simple gravity and leach processing. Erdene plans to have a very compact operation to minimize initial capex and ensure rapid payback.

Dark Horse Adds Significant High-Grade Upside

While Bayan Khundii is the initial development focus, Erdene has made an exciting new discovery at the Dark Horse prospect just 2.5km north. Dark Horse hosts an exceptionally high-grade oxide gold zone starting right at surface. Recent drilling has intersected grades up to 400 g/t gold over 1 meter within broader intervals grading up to 5 g/t gold.

The Dark Horse oxide zone could provide early supplementary feed to fast track Bayan Khundii's expansion. It adds significant production and cash flow upside with very minimal additional capex required. Dark Horse also has potential for deeper high-grade sulfide mineralization, with grades improving at depth. This suggests the potential for a much larger deposit underlying the spectacular bonanza oxide grades.

Major Discoveries Require Time and Patience

Erdene provides a great case study in the patience and persistence required for major mineral discoveries. The company has systematically explored Mongolia over a 20 year period, learning the regional geology and honing in on the most prospective trends. This methodical approach has led to the discovery of a world-class gold district. However, it has required over $40 million in exploration spending and nearly two decades of work.

For investors, Erdene provides a rare opportunity to invest in a junior exploration company that has successfully transitioned to developer status. The exploration upside remains strong, but Bayan Khundii de-risks the story with a clear path to gold production starting in 2024. Erdene offers investors the best of both worlds - cash flowing gold production combined with blue sky exploration potential. With additional discoveries like Dark Horse, Erdene aims to establish Khundii as a multi-million ounce gold district.

5 Key Takeaways for Investors

1. Systematic 20-year exploration program in Mongolia resulted in major discovery of the high-grade Khundii Gold District.
2. Priority is fast-tracking the 3 g/t Bayan Khundii deposit into production with initial phase targeting 50k oz/year.
3. Recent bonanza grade discoveries like Dark Horse provide significant production and cash flow upside.
4. Massive exploration potential remains, with 80% of the district untested and potential for 5+ million ounce resource.
5. Offers investors near-term cash flow combined with world-class exploration upside for leveraged gold exposure.

Conclusion

In summary, Erdene Resources provides a unique investment opportunity in the gold sector. The company's systematic 20-year exploration program in Mongolia has resulted in a major gold discovery just as the project pipeline globally is looking bare. Khundii has scale potential to host over 5 million ounces, but initial capex is minimized by focusing first on the ultra high-grade Bayan Khundii deposit. Near-term cash flow will fund aggressive exploration of the broader district where most targets remain untested. Erdene offers investors world-class discovery potential alongside low-risk gold production growth. For investors seeking leveraged gold exposure, Erdene represents compelling value.