Erdene Resource Development Corp. (TSX:ERD; MSE:ERDN) ("Erdene" or the "Company") is pleased to announce that it has closed its previously announced non-brokered private placement raising gross proceeds of $2,001,500 (the “Offering”). Erdene’s management, directors and employees subscribed for 8% of the Offering.
Image: A gold rock. Photo: courtesy of PHGCOM/Wikipedia.
Pursuant to the Offering, Erdene has sold 10,007,500 units of the Company (the “Units”) at a price of $0.20 per Unit. Each Unit consists of one common share and one-half (½) of one common share purchase warrant (the “Warrant”). Warrants are exercisable by the holder into one common share of the Company within two years of the closing date, at a price of $0.30 per share. Erdene paid finder’s fees in the aggregate of $35,760 and issued 108,800 finder’s warrants in connection with the Offering. The finder’s warrants are exercisable on the same terms as the unit Warrants.
Proceeds of the Offering will be used to fund completion of the independent Pre-Feasibility Study (“PFS”) of the Company’s Khundii Gold Project (the “Project”), mining license applications for the Project’s properties, acquisition and exploration, including step-out holes to test continuity of the Bayan Khundii extension identified in Q2-2019, and for general working capital purposes.
Erdene launched the PFS for the Khundii Gold Project in March 2019. Managed by Tetra-Tech, Inc., with support from Sustainability East Asia LLC for Environmental and Social Impact studies, and Blue Coast Laboratories, for Metallurgical analysis. Results of the PFS are scheduled to be announced in late Q3-2019.
Results from Erdene’s Q2-2019 drill program (see news release dated May 13, 2019), including the intersection of 112 metres grading 5.9 g/t gold, are amongst the strongest encountered at the Bayan Khundii project and are expected to contribute positively to the PFS. Erdene intends to use a portion of the proceeds of the Offering for step-out drilling including follow-up on a newly emerging zone of gold mineralization in southern Bayan Khundii, where Q2-2019 drilling intersected 51.9 g/t gold over one metre.
Securities issued under the Offering are subject to a four month hold period from the closing date of the Offering.
Background on the Khundii Gold Project Development
Erdene’s deposits are located 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 Company delivered the Project’s maiden mineral resource estimate in Q3 2018 with a combined Measured and Indicated resource of 751,000 ounces (“oz”) gold within 10.1 million tonnes (“Mt”) at an average grade of 2.3 g/t gold (Table 1). This was followed by a Preliminary Economic Assessment dated February 4, 2019 (“PEA”) which returned an after-tax Net Present Value of US$99 million, based on a 5% discount rate and a US$1,200/oz gold price, and an Internal Rate of Return of 56%. The initial development has a life of mine head grade of 3.42 g/t gold with an average annual gold production of 51,200 oz over an eight- year mine life. Based on the potential for additional discovery and expansion on the current license areas, the planned development is considered as a foundation for growth.
The PEA is by nature, a preliminary economic study, based in part on Inferred Resources. Inferred Resources are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves which is required for a prefeasibility or feasibility study. Mineral resources that are not mineral reserves do not have demonstrated economic viability and there is no certainty that the PEA will be realized. The PEA, entitled “NI 43-101 Technical Report for the Preliminary Economic Assessment of the Khundii Gold Project”, is available on SEDAR under Erdene’s profile.
Source: Company Press Release