The company has established a series of drill targets in the southern portion of the Ulaan license
Erdene Adds Second Rig and Commences Drilling Ulaan Gold Target. (Credit: Darkmoon_Art from Pixabay.)
Erdene Resource Development Corporation (TSX: ERD | MSE: ERDN) (“Erdene” or the “Company”) is pleased to report the commencement of drilling on the Ulaan Gold Target, located 350 metres west of the Bayan Khundii Gold deposit.
“We are excited to test the potential of the southern portion of the Ulaan license area following the acquisition of 100% of the property in late 2020,” said Peter Akerley, Erdene’s President and CEO. “This license, adjacent our Bayan Khundii Project, is part of the broader Ulaan-Khundii alteration system. Based on the trend of mineralization from the Bayan Khundii gold deposit, supporting surface alteration and anomalous geochemical survey test results, we believe there is a high probability that the mineralization defined at Bayan Khundii continues onto the Ulaan License. We expect to report initial drill results from the Ulaan exploration drilling in mid Q3 2021.”
Following the discovery of the Company’s 100%-owned Bayan Khundii gold deposit in 2015, the Company initiated a land consolidation effort leading to the acquisition of a 51% interest in the adjacent Ulaan license in 2017. The remaining 49% interest in the Ulaan license was acquired in December 2020.
The northern portion of the 1,780 hectare Ulaan license is situated along the western boundary of Erdene’s Khundii license. The southern area of the Ulaan license is approximately 350 metres west of the Bayan Khundii gold deposit, separated by the Khuren Tsav license held by the Mongolian government-owned gold company, Erdenes Alt LLC (EA). (See appendices).
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 W-SW 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 Khundii license intersected thick sequences of gold mineralization, locally beginning at surface, with highest grades at 100 to 160 metres depth. Highlight intersections from drilling near the border include 7 metres of 18 g/t gold in BKD-220; 5 metres of 25 g/t gold in BKD-265; and 28 metres of 2.4 g/t gold in BKD-334, the latter of which is located to the north of and outside the reported resource at Bayan Khundii.
Further supporting this hypothesis, in 2020, prior to the issuance of the Khuren Tsav license to Erdenes Alt LLC, the Mongolian National Geological Survey conducted diamond drilling on the portion of license situated between Erdene’s Bayan Khundii and Ulaan licenses. Though details of this drilling have not been publicly announced, in early 2021 Erdenes Alt LLC announced plans to undertake further drilling and geologic work on the property. Erdene has been in discussions with Erdenes Alt LLC since the company was granted the license on opportunities to develop the property in the best interests of all stakeholders.
The Company has established a series of drill targets in the southern portion of the Ulaan license. Initial drilling will be wide spaced, testing targets over an approximately 2 kilometre strike length to a maximum depth of 350 meters. The target area (see maps below) is underlain by the same lithologic units associated with the Bayan Khundii gold deposit, namely, Carboniferous volcanic tuffs and intrusive rocks (syenites and monzonite). These units display similar alteration styles as at Bayan Khundi, silicification and clay (illite/sericite) alteration with gold bearing quartz veins (up to 13 g/t gold in grab samples) observed along the western extent of the area. Approximately 50% of the target area is covered by recent sediments or younger lithologies, however, there is strong gold in soil anomalism in the target area.
Erdene’s deposits are in the Edren Terrane, within the Central Asian Orogenic Belt, host to some of the world’s largest gold and copper-gold deposits. The Company has been the leader in exploration in southwest Mongolia over the past decade and is responsible for the discovery of the Khundii Gold District comprised of multiple high-grade gold and gold/base metal prospects, two of which are being considered for development: the 100%-owned Bayan Khundii and Altan Nar projects. Together, these deposits comprise the Khundii Gold Project.
The Bayan Khundii Gold Resource1 includes 521,000 ounces of 3.16 g/t gold Measured and Indicated (“M&I”)² and 103,000 ounces of Inferred resources at 3.68 g/t gold. Within the M&I resource, a proven and probable open-pit reserve totals 409,000 ounces at 3.7 g/t (see the full press release here), providing significant potential growth of reserves with the development of the remaining M&I and Inferred resources1.
In July 2020, Erdene announced the results of an independent Feasibility Study for the Bayan Khundii Gold Project (press release here). The Feasibility Study results include an after-tax Net Present Value at a 5% discount rate and a US$1,400/oz gold price of US$100 million and Internal Rate of Return (“IRR”) of 42%. The Feasibility Study envisions an open-pit mine at Bayan Khundii, producing an average of 63,500 oz gold per year, for seven years, at a head grade of 3.71 g/t gold, utilizing a conventional carbon in pulp processing plant. Production is expected to commence in early 2022 based on the current project schedule.
Source: Company Press Release