Khundii gold project, also known as Bayan Khundii, is an open-pit gold mine located in Bayankhongor Aimag, Mongolia. Erdene Resource Development is the owner and developer of the deposit, which comprises two deposits namely Bayan Khundii and Altan Nar.

Preliminary economic assessment (PEA) for the Khundii gold project was completed in February 2019. Erdene completed pre-feasibility study (PFS) and an updated PEA for Bayan Khundii and Altan Nar deposits in October 2019.

The project is being developed with an estimated investment of £34.4m ($44.6m) and is expected to have a mine life of approximately 11 years.

The Bayan Khundii project is expected to produce 61,000 ounces (Oz) of gold a year for six years. The Altan Nar deposit will produce 45,300oz of gold and 205,000oz of silver a year for three years.

Project Gallery

Development decision for the Khundii gold project is expected to be made in 2020, with first gold production expected to be commence in 2021. The project is estimated to create approximately 300 new jobs.

Khundii gold project location, geology, and mineralisation

The Khundii gold project is located 980km from Ulaanbaatar, the capital city of Mongolia, and 300km from Bayankhongor City. The Bayan Khundii deposit extends in 2,039ha, approximately 16km from the Altan Nar deposit.

The project lies within Trans Alrai Terrane, a part of the Central Asian Orogenic Belt. The deposit is dominated by the Devonian and Carboniferous volcanic and pyroclastic rocks and features unconsolidated sediments of Quaternary age too.

The mineralisation of the deposit is associated with comb textured quartz veins, multi-stage specularite veins and fractured filings. The numerous sub-parallel, NW-SE trending, SW-dipping zones traced up to 200m along the strike host the mineralisation.

Khundii gold project reserves

The proven and probable ore reserves at Bayan Khundii deposit are estimated at 3.5Mt graded at 3.7g/t of gold, containing 422,000oz of gold.

Mining and ore processing at Khundii gold project

Conventional open-pit mining method, involving drilling and blasting followed by loading and hauling, will be used at the Khundii gold project. The project is expected to recover 600,000 tonnes per year of feed material for the processing plant.

Hydraulic excavators in backhoe configuration will be used for the mining activity. The mined ore will be taken to a crusher or run-of-mine (ROM) pad located near the processing plant, while waste will be deposited in an engineered integrated waste facility near the pit.

The Bayan Khundii processing plant is expected to treat 1,800 tons per day and will be located near the open-pit. Ore from Altan Nar will also be processed at the Bayan Khundii processing plant.

The ROM material will pass through a conventional crush and grind circuit, cyanide leaching, and a carbon-in-pulp (CIP) plant as part of the processing.

The ore will undergo two-stage crushing and grinding followed by in-line reactor processing of gravity concentrate. The resultant product will undergo cyanide leaching, followed by CIP extraction of gold and silver. The loaded carbon will undergo acid washing and gold elution.

Gold and silver from the eluate will undergo electro-winning followed by smelting to produce dore bars.

Infrastructure

The project is accessible on sealed roads from Ulaanbaatar to Bayanhongor, followed by unsealed regional gravel roads from Bayankhongor to Shiinjinst before reaching the site.

Erdene proposes to secure power from Mongolian state grid’s 35kV line, connected to the local sub-province centre (Shinejinst). The Gobi region is also favourable for solar and wind generation. In addition, diesel generators will be installed to provide back-up power.

Water for Bayan Khundii is proposed to be collected from a water resource located 32km from the project. A reverse osmosis (RO) water treatment plant will be installed to provide potable water for the accommodation camps.

Financing

Erdene Resource secured financing package of C$8m (£4.8m) from a group of banks led by European Bank for Reconstruction and Development (EBRD) in October 2019. The package includes a $5m (£4m) convertible loan from EBRD.

Contractors involved

RPM Global Asia prepared the technical report for Altan Nar project. Erdene engaged Sardonyx Geotechnical Consulting Services to conduct geotechnical analysis on Bayan Khundii and the Discovery zone of Altan Nar.