Interview with Peter Akerley, President and CEO, Erdene Resource Development

Our previous interview: https://www.cruxinvestor.com/posts/erdene-resource-development-tsxerd-mongolia-gold-producer-with-130m-annual-cash-flow-potential-6179

Recording date: 4th of March, 2025

Erdene Resource Development (TSX: ERD, MSE: ERDN) is in the final stages of bringing its high-grade Bayan Khundii gold project in southwestern Mongolia into production. Construction is expected to complete in April 2025, with commercial production anticipated by September-October 2025.

The open-pit Bayan Khundii project boasts an exceptional grade of 4 grams per ton gold, positioning it to produce approximately 85,000 ounces annually with a current reserve-based mine life of six years. At current gold prices, the operation is projected to generate after-tax cash flows exceeding $100 million per year, providing significant economic resilience even during the startup phase.

"The high-grade nature of this deposit - four grams per ton - sets ourselves far apart from most in the open pit world. It gives us a buffer on the economic side," notes Erdene's President and CEO Peter Akerley.

In 2023, Erdene entered a strategic alliance with Mongolia Minerals Corporation (MMC), formalized in January 2024 as a 50/50 joint venture. Importantly, Erdene retained a 5% net smelter return royalty that begins after production of 400,000 ounces, effectively giving the company a 60/40 economic split once this threshold is reached. The partnership provided $40 million in equity and an $80 million shareholder loan repayable over five years.

Recent drilling programs have shown promising results for potential grade improvements, with ongoing exploration work focused on extending the mine life. Erdene has identified opportunities to optimize the processing plant, potentially increasing production to 95,000-100,000 ounces annually with minimal capital investment.

Beyond Bayan Khundii, Erdene controls the Zuun Mod molybdenum-copper project, which has gained improved prospects due to enhanced infrastructure and strengthening molybdenum markets. The company plans to allocate over $10 million annually to exploration starting in 2026-2027, focusing on expanding resources around Bayan Khundii and advancing other deposits in their Khundii Minerals District.

Mongolia's strategic location adjacent to China provides advantages for resource development, allowing Erdene access to both Western capital markets and Asian consumer markets, particularly valuable in today's fragmenting global economy.

Learn more: https://www.cruxinvestor.com/companies/erdene-resource-development

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