NI 43-101 Technical Report Highlights (
- Base Case after-tax Net Present Value of
US$170 million (NPV5%) and 35.3% Internal Rate of Return (IRR), increasing toUS$196 million and 38.95% IRR, respectively, at current gold price ofUS$1,900 /oz - Life of Mine Earnings Before Interest, Taxes and Depreciation of
US$451 million , increasing toUS$495 million at aUS$1,900 /oz gold price - Total recovered gold of 476,000 ounces, a 25% increase compared to the 2020 Feasibility Study from an average gold recovery rate of 93%
- All-in sustaining cost (“AISC”) of
US$869 per ounce and upfront capital costs ofUS$88 million , plus a 12% contingency, and$2 million of pre-production costs - Measured and Indicated Resources of 674,700 ounces gold at an average grade of 2.6 g/t gold, and 319,000 ounces silver at an average grade of 1.38 g/t silver
- Proven and Probable Reserves of 513,700 ounces gold at an average grade 4.0 g/t gold, and 220,500 ounces silver at an average grade of 1.7 g/t silver
- Average annual gold production of 86,900 ounces during years 2 through 5 – Life of Mine annual average production of 74,200 ounces gold
- Eight-year project, comprising one-year pre-production, six and three quarter-year operating life and one-year mine closure period
- Adjacent high-grade resources and recent discoveries provide high probability growth options
- Significant benefits to
Mongolia , including Life of Mine royalties and taxes ofUS$143 million and approximately 500 new jobs inBayankhongor Province - Equity capital for the
Bayan Khundii Gold Project to be provided byMongolian Mining Corporation (“MMC”) under the terms of the previously announcedStrategic Alliance
Quotes from the Company:
“The Bayan Khundii Gold Project will be one of the highest grade open-pit gold mines in the world, and Mongolia’s largest primary gold producer, when it comes on stream in 2025. This updated Feasibility Study confirms the Project’s strong economics, supported by a 25% increase in recovered gold due to the incorporation of additional resources from Bayan Khundii and the Dark Horse Mane deposit,” said
“Bayan Khundii is the first development in what we expect to be a large-scale mining complex in
“With MMC’s investment under the
NI 43-101 Technical Report Overview
The Technical Report incorporates an updated reserve estimate for the BK Gold Deposit as well as the maiden mineral reserve estimate from the very high-grade Dark Horse Mane Gold Deposit. The FS includes 3.8 million mineable tonnes from the Bayan Khundii resource at an average diluted head grade of 3.8 g/t gold and 1.8 g/t silver, and 0.2 million mineable tonnes from the Dark Horse resource at an average diluted head grade of 7.0 g/t gold, all of which are Proven and Probable Reserves.
The Technical Report envisions a high-grade, open-pit mine, beginning at surface in the southern portion of the BK Gold Deposit (Striker and Gold Hill), and expanding northward into adjacent zones at Midfield and Midfield NE. Dark Horse open pit will commence in Year 3 and will be processed concurrently with BK Gold Deposit ore. The development incorporates conventional crushing and grinding, leach and a Carbon in Pulp (“CIP”) plant with processing capacity of 1,935 tonnes per day.
The base case assumes a gold price of
Table 1. Bayan Khundii Gold Project Key Metrics
BK FS | ||
Gold Price | US$/oz | 1,800 |
Production Profile | ||
Average Head | g/t gold | 4.0 |
Project Life2 | years | 8 |
Operating Life | years | 6.75 |
Target Plant Feed Rate Per Day3 | tpd | 1,935 |
Average Annual Saleable Gold | oz | 74,200 |
Peak Annual Saleable Gold | oz | 88,100 |
Average Gold Recovery Rate Over Life of Mine | % | 93% |
Strip Ratio | t:t | 10.9 |
Operating Costs | ||
Life of Mine (“LOM”) Average Cash Cost4 | US$/oz | 851 |
LOM Cash Cost plus Sustaining Cost (AISC)4 | US$/oz | 869 |
Pre-Tax Net Present Value | ||
5% discount rate | US$M | 245 |
7.5% discount rate | US$M | 207 |
10% discount rate | US$M | 175 |
Pre-Tax Internal Rate of Return | % | 44% |
After-Tax Net Present Value | ||
5% discount rate | US$M | 170 |
7.5% discount rate | US$M | 141 |
10% discount rate | US$M | 117 |
After-Tax Internal Rate of Return | % | 35% |
Payback Period (After tax) | years | 2.4 |
Capital Requirements | ||
Pre-production Capital Cost, including contingency | US$M | 100 |
Life of mine (“LOM”) Remaining Capital Cost | US$M | 9 |
Notes:
- Average diluted head grade of mineralized rock fed to process plant.
- Project life comprising one-year pre-production period, approximately six and three quarter-year operating life and one-year mine closure period.
- Assumes process plant operates for 8,000 hours per annum to achieve the target production rate of 650 ktpa.
- Operating costs reported in terms of saleable gold ounces for Bayan Khundii; costs include Royalty and Charges of
US$108 /oz.
Technical Report Sensitivities
The following table shows changes in the after-tax NPV and IRR over a range of gold prices and discount rates, demonstrating the impact of higher gold prices and the Project’s resiliency to lower prices.
Table 2. Technical Report Sensitivities – After-Tax Gold Price Sensitivity Analysis
Gold Price Sensitivity Analysis | Units | |||||
NPV (5% discount rate) | US$M | 65 | 118 | 170 | 223 | 275 |
NPV (7.5% discount rate) | US$M | 48 | 95 | 141 | 188 | 234 |
NPV (10% discount rate) | US$M | 34 | 76 | 117 | 158 | 200 |
IRR | % | 18% | 27% | 35% | 42% | 49% |
Bayan Khundii Mineral Resource and Reserve Estimate
BK Gold Deposit Mineral Resource Estimate
The BK Gold Deposit Mineral Resource Estimate (“BK Mineral Resource”) was prepared in accordance with NI 43-101 and CIM standards by
The Mineral Resource has been constrained to a conceptual pit shell and is reported at a cut-off grade of 0.40 g/t gold. The assumptions and parameters utilized to establish the cut-off grade and pit shell are reported below in notes to Table 3. AGP recommends reporting the Bayan Khundii Mineral Resource at a 0.40 g/t gold cut-off.
Table 3. BK Gold Deposit – Mineral Resource Estimate Summary,
Resource Classification | Quantity (Mt) | Gold Grade (Au g/t) | Ounces Gold (Koz) | (Ag g/t) | Ounces Silver (Koz) |
Measured | 4.0 | 3.03 | 394 | 1.44 | 187 |
Indicated | 3.3 | 2.04 | 219 | 1.22 | 131 |
M&I | 7.4 | 2.58 | 613 | 1.34 | 319 |
Inferred | 0.2 | 1.08 | 6 | 1.32 | 8 |
Notes:
- Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
- Summation errors may occur due to rounding.
- The effective date of the Mineral Resources is
April 20, 2023 . - Open pit mineral resources are reported within an optimized constraining shell.
- Open pit cut-off grade is 0.3 g/t Au based on the following parameters:
- Gold Price of
US$2,000 /oz Au - Gold recovery of 95%
- Mining Costs of
US$3.00 /t - Milling Costs and G&A of
$22.00 /t - Capping of gold grades was 200 g/t Au and 50 g/t Ag on 1m composite values.
- The density varies between 2.58 g/cm3 and 2.66 g/cm3 depending on lithology.
- Gold Price of
Dark Horse Mane Mineral Resource Estimate
The Company is pleased to provide a summary of the maiden mineral resource estimate for the Dark Horse Mane Gold Deposit (“Dark Horse Mineral Resource”) discovered in 2021 and located just two kilometres north of the BK Gold Deposit. The Dark Horse Mineral Resource was prepared in accordance with NI 43-101 and CIM standards by RPM Global (“RPM”) with an effective date of
The Dark Horse Mineral Resource is reported above a gold cut-off grade of 0.35 g/t gold for oxide and transition mineralization and 1.02 g/t gold for fresh mineralization. The Mineral Resource has been constrained to a conceptual pit shell. The assumptions and parameters utilized to establish the cut-off grade and pit shell are reported below in notes to Table 4.
Table 4. Dark Horse Gold Deposit – Mineral Resource Estimate Summary,
Indicated Mineral Resource | Inferred Mineral Resource | |||||
Type | Tonnes | Gold Grade | Ounces Gold | Tonnes | Gold Grade | Ounces Gold |
(Kt) | g/t Au | (K oz) | (Kt) | g/t Au | (K oz) | |
Oxide | 578 | 3.0 | 56.2 | 75 | 1.1 | 2.7 |
Transitional | 99 | 1.5 | 4.8 | 109 | 1.2 | 4.1 |
Fresh | 5 | 4.9 | 0.7 | - | - | - |
Total | 682 | 2.8 | 61.7 | 184 | 1.2 | 6.8 |
Notes:
- The Statement of Estimates of Mineral Resources has been compiled under the supervision of Mr. Oyunbat Bat-Ochir who is a full-time employee of RPM and a Member of the
Australian Institute of Geoscientists . Mr. Bat-Ochir has sufficient experience that is relevant to the style of mineralization and type of deposit under consideration and to the activity that he has undertaken to qualify as a Qualified Person as defined in the CIM Standards of Disclosure. - All Mineral Resources figures reported in the table above represent estimates at
November 1, 2022 . Mineral Resource estimates are not precise calculations, being dependent on the interpretation of limited information on the location, shape and continuity of the occurrence and on the available sampling results. The totals contained in the above table have been rounded to reflect the relative uncertainty of the estimate. Rounding may cause some computational discrepancies. - Mineral Resources are reported on a dry in-situ basis.
- The Mineral Resource is reported using a 0.35 g/t Au cut-off grade in oxide and transition mineralisation and 1.02 g/t Au cut-off in fresh mineralisation and is constrained above conceptual optimised pit shell. Cut-off parameters were selected based on an RPM internal cut-off calculator, assuming an open cut mining method with 5% ore loss and 10% dilution, a gold price of
US$1,723 per ounce, a mining cost ofUS$3 per tonne and a processing cost ofUS$16 per tonne milled and processing recovery of 90% for oxide, 87% for transitional and 30% for fresh Au mineralisation. The conceptual optimised pit shell was constructed using a gold price ofUS$2,000 per ounce, which is 1.4 times the long-term consensus forecast price. - Mineral Resources referred to above, have not been subject to detailed economic analysis and therefore, have not been demonstrated to have actual economic viability.
BK and DH Reserve Estimate
The Bayan Khundii and Dark Horse FS Mineral Reserves have been estimated by QP, Mr.
The cut-off grade for mineral reserve calculations is 0.63 g/t gold for the BK Gold Deposit and 0.68 g/t gold for Dark Horse Gold Deposit, based on a gold price of
A summary of the Mineral Reserves estimated for the BK and Dark Horse deposit with an effective date of
Table 5. BK Gold Deposit – Mineral Reserve Estimate Summary,
Classification | Tonnage (Mt) | Grade (g/t Au) | Contained Gold (Koz) | Grade (g/t Ag) | Contained |
Proven | 2.7 | 4.1 | 360.2 | 1.7 | 159.4 |
Probable | 1.1 | 3.0 | 104.7 | 1.7 | 61.1 |
Total | 3.8 | 3.8 | 464.9 | 1.7 | 220.5 |
Table 6. Dark Horse Gold Deposit – Mineral Reserve Estimate Summary,
Classification | Tonnage (Mt) | Grade (g/t Au) | Contained Gold (Koz) |
Proven | - | - | - |
Probable | 0.2 | 7.0 | 48.8 |
Total | 0.2 | 7.0 | 48.8 |
Notes:
- The effective date of the Mineral Reserve estimate is
August 1, 2023 . The QP for the estimate is Mr.Julien Lawrence ofO2 Mining Limited ; - The Mineral Reserve estimates were prepared with reference to the 2014
Canadian Institute of Mining , Metallurgy and Petroleum (“CIM”) Definition Standards (2014 CIM Definition Standards) and the 2003 CIM Best Practice Guidelines; - Reserves estimated assuming open-pit mining method;
- Waste to ore cut-offs were determined using a NSR for each block in the model. NSR is calculated using prices and process recoveries for each metal accounting for all off-site losses, transportation, smelting and refining charges;
- Reserves are based on a gold price of
$1,816 /oz; and - Mineral Reserves were calculated from a diluted “mining” block model which included average dilution of 10% and losses of 2.5%.
Mining
The BK FS is based on an open-pit mining operation targeting 650,000 tonnes per year of feed material for the processing plant. The total mineable mineralized plant feed is 4.0 million tonnes at an average diluted head grade of 4.0 g/t gold and average strip ratio of 10.9:1 (waste tonne: plant feed tonne). Mineralization starts at surface, with the majority of the deposit contained within the top 100 metres. The deposit structure, grades and depth suggest selective open cut mining will be utilized. Mining will use hydraulic excavators in backhoe configuration. Drilled and blasted material will be loaded into haul trucks, with waste rock deposited in an engineered Integrated Waste Facility (“IWF”) adjacent to the pit, and ore hauled to a crusher or run-of-mine (“ROM”) pad adjacent to the processing plant.
The BK FS has assumed owner mining based on methodology and costing prepared from first principles using vendor quotations for major cost elements and O2 Mining experience in
Processing
The FS assumes processing of ROM material via a conventional crush and grind circuit and a carbon in pulp plant. Plant design by 360-Global has been based on testing at
The ore-processing plant will be located adjacent to the Bayan Khundii open pit and throughput will target 650,000 ore-tonnes per year, nominally 1,935 tonnes per day. Total mineralized material from BK, processed in the plant over the course of the mine life, is 4.0 million tonnes at an average diluted head grade of 4.0 g/t gold. Using an estimated mill recovery of 92.6%, total recovered gold over the life of the
Operating Costs
Operating costs are based on the mining and processing scenarios outlined above and assume owner mining. Power for operations will be generated through an on-site hybrid diesel and solar generation solution, provided under a power purchase agreement for the duration of the Project. All other activities are assumed to be owner-operated. The AISC for Bayan Khundii is estimated at
Table 7. Operating Costs
LOM ($ millions) | US$/oz | US$/tonne | |
Mine Operating Cost | 165 | 347 | 41 |
Processing Cost | 166 | 349 | 41 |
G&A | 20 | 43 | 5 |
Total Site Operating Costs | 352 | 739 | 88 |
Royalty and Charges | 51 | 108 | 13 |
Sustaining Capital & Closure Costs | 10 | 22 | 3 |
All-In Sustaining Cost | 414 | 869 | 103 |
Note: Rounding may cause computational discrepancies
Capital Costs
Construction costs, primarily comprising the process plant and supporting infrastructure, accommodation village, and associated engineering and indirect costs are estimated at
Table 8. Capital Costs
Item | $ millions |
Process Plant | 47 |
Non-Process Infrastructure | 14 |
Construction Indirects | 27 |
Construction Costs | 88 |
Pre-Production Costs | 2 |
Contingency | 10 |
Subtotal Plant and Infrastructure | 100 |
Sustaining Capital | 4 |
Reclamation and Mine Closure | 7 |
Salvage | (2) |
Total | 109 |
Note: Rounding may cause computational discrepancies
Environmental and Permitting
Erdene completed an independent Environmental and Social Impact Assessment (“ESIA”) for the Project in accordance with the Performance Requirements of the
Erdene has obtained approvals for the 12 project facilities that the company will own and operate. Construction permits have been issued for nine of these facilities, including the CIP Process Plant, and earthworks for several facilities is currently underway.
Project Finance and Next Steps
The Company engaged HCF to act as Project Finance advisor, with primary responsibility for securing debt in 2020. HCF is a leading independent corporate finance advisory boutique based in
Two international financial institutions have conducted due diligence on BK and are expected to provide debt financing for the project. These institutions are active in
The equity capital for the project has been secured from the
- MMC is Mongolia’s largest internationally traded mining company, listed on the main board of the
Hong Kong Stock Exchange (HKEx: 975). - MMC to invest
US$40 million for a 50% equity interest in Erdene’s Mongolian subsidiary,Erdene Mongol LLC (“EM”), holding the Khundii andAltan Nar mining licenses and the Ulaan exploration license through a three-stage transaction, based on achievement of milestones. - Erdene retains a 50% equity interest in EM and a 5.0% Net Smelter Return (“NSR”) royalty on all production from the Khundii,
Altan Nar and Ulaan licenses, as well as any properties acquired within 5 kilometres of these licenses, beyond the first 400,000 ounces gold recovered. - The first two stages of the transaction were completed in
January 2023 andMay 2023 , with MMC investingUS$10 million to finance technical studies, including this FS, early construction works and exploration for theBayan Khundii Gold Project . - The third stage of the transaction, expected to close in late Q3 2023, will see MMC invest a further
US$30 million once EM has reached a construction decision, providing equity capital for the Bayan Khundii Gold Project. - Erdene will appoint EM’s Chief Executive and Chief Technical Officers, and MMC will appoint EM’s Chief Operating and Chief Financial Officers.
- Erdene maintains a 100% interest in its large Zuun Mod Molybdenum-Copper deposit and Khuvyn Khar Copper project, located approximately 30 kilometres east of Bayan Khundii, and adjacent to a planned railway development.
In addition to project financing, over the coming months, development work will be focused on:
- Continuing with construction early works;
- Executing the Engineering, Procurement and Construction contract for the Project;
- Concluding the Project’s Power Purchase Agreement;
- Optimizing the project execution schedule and completing value engineering;
- Securing approval of Erdene and MMC’s Boards of Directors to begin construction; and
- Exploring in the
Khundii Minerals District to expand mineralization and convert resources to reserves.
The updated FS and associated Detailed Engineering and Design (“DED”) work has been completed by a consortium of International and Mongolian firms with significant experience:
O2 Mining Ltd. (“O2”) led the overall delivery of the FS update, completing the key works of mine design and planning (including closure), process design, cost estimation, and financial evaluation. O2 is aHong Kong -based engineering firm with principals who have over 15 years of Mongolian mining experience and a team with significant experience in mine development inAustralasia , including the design, construction, commissioning and operation of gold, coal, base metals and industrial mineral mines and processing facilities.- Roma Group Ltd. (“Roma”), a leading company in the region in engineering, business and asset valuations, corporate and M&A advisory services, will lead the development of the final NI 43-101 FS Technical Report. Roma is listed on the
Hong Kong Stock Exchange and has extensive experience working with major regional mining and financial firms leading technical studies and valuations for mining projects inAsia , includingMongolia . - Multiple Mongolian companies provided in-country services and support for the FS update. Erdene works closely with local specialists to apply international standards and ensure compliance with Mongolian regulations.
- 360-
Global Inc. (“360-Global”) carried out process plant design and engineering for the FS and DED work. 360-Global is a consulting firm based inthe Philippines , specialized in full cycle design services and experienced with gold processing infrastructure globally, including inMongolia ,China ,Canada ,Australia andAfrica . ATC Williams Pty Ltd , (“ATCW”) undertook mineral waste and tailings facility design and management planning, including for closure. ATCW isAustralia -based and has extensive experience in mineral waste and tailings transport, storage, closure and water management, including at the Oyu Tolgoi project inMongolia .Blue Coast Research Ltd (“BCR”) provided metallurgical testing and interpretation for theBayan Khundii Gold Project . BCR have extensive experience with gold deposits and have carried out all of the Bayan Khundii, Dark Horse, andAltan Nar metallurgical test work to date.- Ramboll Australia Pty performed technical review and assessment of the mine water supply and pit hydrology.
Ramboll is a global architecture, engineering, and consultancy company involved in buildings, transport, energy, environment & health, water, management consulting, architecture and landscape. Fugro Ltd. provided the geotechnical assessment of the Bayan Khundii and Dark Horse open pits. Fugro is a leading geo-data specialist.AGP Mining Consultants Inc. completed the mineral resource estimate for the Bayan Khundii Gold deposit. AGP is a full service, independent mine engineering company.RPM Global Inc. completed the mineral resource estimate for the Dark Horse Gold Deposit. RPM Global is an international provider of advisory and consulting, software, and training services focused on the mining industry.Sustainability East Asia LLC ,Ramboll , andEco Trade LLC delivered the Environmental and Social Impact Assessment for the Project, announced onJune 4, 2020 (see full press release here).
Qualified Person and Sample Protocol
The information in this press release that relates to the financial models for the Bayan Khundii Feasibility Study is based on information compiled and reviewed by
All samples have been assayed at
Erdene’s drill core sampling protocol consisted of collection of samples over 1 or 2 metre intervals (depending on the lithology and style of mineralization) over the entire length of the drill hole, excluding minor post-mineral lithologies and un-mineralized granitoids. Sample intervals were based on meterage, not geological controls, or mineralization. All drill core was cut in half with a diamond saw, with half of the core placed in sample bags and the remaining half securely retained in core boxes at Erdene’s Bayan Khundii exploration camp. All samples were organized into batches of 30 including a commercially prepared standard, blank and either a field duplicate, consisting of two quarter-core intervals, or a laboratory duplicate. Sample batches were periodically shipped directly to SGS in Ulaanbaatar via Erdene’s logistical contractor,
About Erdene
Forward-Looking Statements
Certain information regarding Erdene contained herein may constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Although Erdene believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Erdene cautions that actual performance will be affected by a number of factors, most of which are beyond its control, and that future events and results may vary substantially from what Erdene currently foresees. Factors that could cause actual results to differ materially from those in forward-looking statements include the ability to obtain required third party approvals, market prices, exploitation and exploration results, continued availability of capital and financing and general economic, market or business conditions. The forward-looking statements are expressly qualified in their entirety by this cautionary statement. The information contained herein is stated as of the current date and is subject to change after that date. The Company does not assume the obligation to revise or update these forward-looking statements, except as may be required under applicable securities laws.
NO REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE CONTENTS OF THIS RELEASE
Erdene Contact Information
Phone: | (902) 423-6419 |
Email: | info@erdene.com |
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Source:
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