Resource World Magazine

A P R I L / M A Y 2 0 1 6 www.resourceworld.com 39 erdene resource expanding Mongolian gold deposits by Laura Barker erdene Resource Development Corp. [ERD-TSX], a Canadian- based resource exploration company, has focused on exploring in Mongolia since 2002. And with its 2015, high-grade gold dis- covery at Bayan Khundii, and development of its 2011 discovered Altan Nar gold project (both 100%-owned), President and CEO, Peter Akerley thinks, "We have arrived at what we went there for almost fifteen years ago." Akerley explains, "Mongolia had one of the most prospective mineral belts globally, the Tian Shan Belt, running through the southern part of the country, but it was virtually unexplored. The (60 million oz) Oyu Tolgio discovery in the 1990s and early 2000s became the anchor for companies recognizing just how big depos- its could be in this belt." The goal: "We have remained focused on what Mongolia offers that is unique in the world – near surface, high-grade deposits." The Bayan Khundii discovery, on the edge of the Gobi des- ert, was discovered through a regional reconnaissance program within the southwestern Tian Shan Belt and returned grades of over 4,380 g/t gold from surface samples. An initial drill program in Q4 2015 identified 10 parallel, near surface (within 50 m), high- grade target zones in a 500 by 300-metre area. The Striker Zone, one of the more prominent zones, returned grades of up to 187 g/t gold over 1 metre, 20 g/t gold over 3 metres and 10 g/t gold over 15 metres. The geology at Bayan Khundii features pervasive silica and sericite alteration associated with low-grade gold that envelops high-grade veins and breccia systems. The area is an erosional 'window' that pokes up through younger volcanics. Based on regional geophysics and prospecting, it continues along trend and appears to resurface. The Altan Nar gold project, located 20 km north of Bayan Khundii, is an intermediate sulphidation epithermal deposit covering a 5.6 km by 1.5 km area. It has near-surface, bulk ton- nage, open pit potential, with the possibility for expansion to the north and at depth. NI-43-101 resources have been developed for the Union North and Discovery Zone targets, two of 18 target zones. In those zones, 250,000 oz gold are indicated and inferred (combined) with grades between 1.5 to 1.7 g/t gold equivalent (includes lead, zinc, silver) within 250 metres of surface. According to Akerley, "We see a million-ounce plus target at Altan Nar. The difference between the two deposits is metallurgy and grade; Bayen Khundi exhibits exceptionally high grade and easy metallurgy. Metallurgical results for Bayan Khundi are at 99% recovery using gravity and leach for high-grade and 92% recovery for grades as low as 0.7 g/t gold on average. There is the potential to go in with a high-grade gravity operation at Bayan Khundi, and morph into a back-end leaching operation where you can combine resources from both projects using a heap or vat-leach operation." (The Altan Nar ore responded well to direct leaching with recoveries of 88% gold using cyanidation.) Although the long-term goal may be to fund a large scale mining operation, the strategy to get there isn't fixed. Akerley explains, in this economy, "It's a balance; if we can find a route to start-up that ultimately funds exploration and reduces dilu- tion, we would take that route. We will examine whether or not it makes sense to develop a smaller (20-30,000 oz/year) start-up operation that is low cost and high grade, while continuing to build our resource base." Although the deposits are remote and on the edge of the Gobi desert, infrastructure in the area is moderately favorable and includes power to the state grid, rail access to China, and suffi- cient water for mine operations. In addition, Mongolia has had some mining-friendly legisla- tive changes over the last two years, including a reduction in the gold royalty rate and a new Foreign Investment Law. According to Akerley, "Mining is helping [Mongolia] move out of poverty and the government recognizes that." In return, Erdene has been committed to giving back to Mongolian communities through provision of scholarships for locals to attend university in the capital, Ulaanbaatar, equipment to schools and hospitals, and sup- porting a local farming NGO. Looking forward, the first step for Erdene will be to establish the size of the Bayen Khundi system with drilling starting in April 2016. The secondary focus will be to retain mining license(s) at one or both projects. In addition, through their alliance with Teck Resources (13% ERD owner), Erdene will continue to conduct regional base/ precious metals exploration in Mongolia's Tian Shan Belt. n A geologist examines gold mineralization at the Bayan Khundii Project in Mongolia. Photo courtesy Erdene Resource Development Corp. MININg

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