Erdene Reports 2009 Second Quarter
Financial Results and Provides Project Updates
Halifax, Nova Scotia -
August 17, 2009 - Erdene Resource Development Corp. ("Erdene")
(TSX:ERD), today provided an update on its
principal projects in conjunction with the release of its 2009 second quarter
financial results.
2009 Second Quarter Highlights
- Donkin coal project work progressed with planning for the
Exploration and Development Phase implementation and some tenders being
provisionally awarded. Coal sales discussions are continuing.
- Finalizing Zuun Mod mineral resource estimate expected to be
released in the third quarter of 2009
- Final stages of installation of process equipment in new kaolin
processing facility in Dearing, Georgia with commercial production to
begin in the third quarter of 2009.
- $17,012,520 of cash and cash equivalents as at June 30, 2009
"Erdene is
committed to generating shareholder value through its concentration on coal,
molybdenum and copper, and industrial minerals focused on two regions:
China-Mongolia and the eastern seaboard of North America," said Peter
Akerley, President and CEO. "While focusing on strategically located
projects and commodities that have strong, long-term market fundamentals, we
will be advancing our projects using a measured and disciplined approach,
effectively managing risk."
Project Summaries and
Updates
Donkin Coal
Project
Erdene has a 25% joint venture partnership in the Donkin Coal Alliance
("DCA") with Xstrata Coal Donkin Limited. The DCA was formed
to secure the rights to the Donkin coal project and to explore, assess, study
and if feasible, develop the high-grade Donkin coal resource. The
Donkin coal project is located in Cape Breton, Nova Scotia, proximal to deep
water ideal for seaborne shipping into the major markets on North America's
east coast and Europe. The Donkin coal project is being evaluated as a 4
million tonne per annum underground longwall operation with both domestic and
export markets. The project is within 35 kilometers of a coal-fired
electrical generating plant and a deep-water coal loading facility.
In May, 2008 the DCA
announced a commitment to fund a feasibility study of an Evaluation and
Development Program ("Program") for the Donkin coal project. The
Program, utilizing a continuous miner, is an interim step in the development
path leading towards establishing a large scale underground longwall mining
operation.
The project partners endorsed this interim step in the project
to obtain further information deemed critical to the assessment of the
feasibility of the large scale underground mining options under
consideration.
During the latter part of 2008 and first half of 2009 work
progressed on the feasibility study for the Program with some tenders being
provisionally awarded and requests for pricing issued for the long lead time
items and major contracts associated with the project. The feasibility study
for the Program will be finalized upon conclusion of sales agreements.
Zuun Mod Molybdenum Project
The Zuun Mod project is a porphyry molybdenum ("Mo")
(with copper and rhenium) deposit and consists of a single license totaling
49,538 hectares. It is located in Bayankhongor Province approximately 950
kilometres southwest of Ulaanbaatar and 215 kilometres from railhead on the
Mongolia-China border at Ceke. The railhead is located 20 kilometres south of
the Nariin Sukhait and Oyuut Tolgoi coal mines.
The Zuun Mod project has been under exploration and evaluation
since 2002. Subsequent to signing an agreement with Gallant Minerals Limited
in March 2005 to acquire the license, the Company carried out extensive exploration
that has resulted in establishing Zuun Mod as one of the largest and most
advanced pre-development molybdenum projects in the North Asia Region.
In May 2008 the Company received a NI 43-101 compliant resource
report for the project from Minarco. The Zuun Mod resource includes 110Mt in
the measured and indicated resource categories with an average grade of 0.06%
Mo. This equates to 148 million pounds of contained Mo metal.
Following the release of the resource estimate, additional
drilling was carried out in 2008 to test for high-grade mineralization at
depth, to explore areas peripheral to the deposit and to better define
localized zones of higher grade mineralization, particularly those nearer
surface. A total of 32 new holes were completed and eight holes were
deepened, totaling 10,785 metres.
The 2008 program was successful in defining localized higher
grade zones and enlarging the overall deposit, both vertically and laterally.
The deposit was confirmed to extend to depths exceeding 500 metres over a
minimum strike length of 1.7 kilometres while locally coming to within 22
metres of surface. Drilling confirmed several continuous intersections exceeding
350 metres of 0.06% Mo and multiple high grade zones exceeding 50 metres of
0.10% Mo.
In the second quarter, 2009, Minarco carried out work to
incorporate the 2008 drilling results into the May 2008 resource estimate
with a focus on higher-grade zones. The updated Minarco mineral resource
estimate is expected to be released in August 2009.
Erdene also initiated a license-wide exploration program in 2009
consisting of stream sediment and rock chip geochemical surveys along with
geological and alteration mapping. Much of the field work was completed by
the end of June. Preliminary results include a newly identified molybdenum in
rock geochemical anomaly 4 kilometres northeast of the main deposit area. The
geochemical results for this area are of the same magnitude as those
overlying the main deposit area. Anomalous gold values (up to 1.3 g/t) were
also identified to the southwest of the main deposit, approximately 2.5
kilometres from a previously identified gold in soil geochemical anomaly.
In addition to Zuun Mod the company is carrying out evaluations
of multiple metal and coal projects throughout southern Mongolia.
Advanced Primary Minerals Corp.
As a result of an aggressive exploration and acquisition program
in the late 1990s, the Company acquired a large high brightness primary
kaolin (clay) resource through its U.S. subsidiary, Erdene Materials
Corporation ("EMC"). EMC's in-ground, "premium" quality,
primary kaolin resource in Georgia has a total NI 43-101 compliant resource of
25.5 million tons (Measured and Indicated).
As part of Erdene's business plan, Erdene created a dedicated
vehicle for its primary kaolin operations by initiating a reverse takeover of
Beta Minerals Inc. ("Beta"), a TSX Venture-listed company. Beta
changed its name to Advanced Primary Minerals Corporation ("APM")
and is listed on the TSX Venture Exchange (TSXV:APD) with Erdene as its
majority shareholder.
The goal of APM is to be North America's leading specialized
kaolin producer. Much of the premium kaolin clay deposits in Georgia and the
UK have been depleted over the past century. APM's primary kaolin products
meet or exceed the quality of comparable foreign imports and domestic
sources. APM looks to take advantage of that situation with its unique, high
quality primary clay deposits and modern processing facilities to focus on
small to moderate-volume opportunities and high-margin specialty products.
Proximity to domestic markets and elimination of foreign exchange risk add a
strong competitive advantage over comparable foreign imports. Kaolin is used
in the manufacture of value-added products within a number of industries
which include ceramics, paint and paper.
APM is currently producing kaolin products for its initial
customers in the ceramics industry as well as continuing trials with
potential customers. It is in the final stages of installing the process
equipment in its new state-of-the-art kaolin processing facility in Dearing,
Georgia that is scheduled to begin commercial production in the third quarter
of 2009.
Granite Hill
The Company's Granite Hill project is a former producing granite
aggregate quarry in central Georgia. The Company owns the 342-acre property,
which holds in excess of a 120 million-ton resource and is situated on an
existing rail line. Ready Mix USA ("RMU") holds, through a lease
with the Company, an exclusive right to mine, process, and sell aggregate
from the Granite Hill property. The sale of all aggregate from the property
is subject to an industry competitive royalty payable to the Company.
RMU's quarry development plan provides for an estimated start-up
production rate of one million tons of granite aggregate per year, with an
initial design capacity of up to 2.5 million tons. Based on current
production projections, the Granite Hill quarry will have an estimated
lifespan in excess of 30 years. RMU has designed a quarry mining plan,
processing plant and facilities, and produced an environmental impact plan.
RMU has also acquired additional land adjacent to the Granite Hill property
to secure rail access to the site. The construction phase is expected to be
completed nine to twelve months after a production decision by RMU. RMU is
responsible for fully funding the development and operating program.
Production from the Granite Hill project will target markets in
the southeastern U.S. where urban sprawl, depleted resources and the shutdown
of mining in Florida's Lake Belt aggregate district have combined to create a
pending shortage of crushed stone. At the same time the U.S. government stimulus
package is expected to initiate over $90 billion in infrastructure spending
over the next 12 to 18 months expected to spark demand for aggregate
material. The Lake Belt district is in northwestern Miami-Dade County and on
average produces approximately 45 million tons of limestone or about half the
state of Florida's annual production. There is currently no mining taking
place in this area as a U.S. District Judge has stayed all mining permits
over concerns regarding impact on the Everglades' watershed and the
environment.
In addition to the Granite Hill project, the company is
completing evaluations of aggregate opportunities in eastern Canada and the
Caribbean.
2009 Second Quarter Financial Results Summary
Erdene's 2009 second quarter financial statements and
Management's Discussion and Analysis were filed with regulatory authorities
on August 14, 2009 and are available on the Company's website at
www.erdene.com and on SEDAR at www.sedar.com. These statements are provided
on a consolidated basis incorporating that of its controlled subsidiary,
Advanced Primary Minerals Corp.
For the three months ended June 30, 2009, exploration and
operating expenses amounted to $681,862 compared to $222,477 in the second
quarter 2008. Including capitalized costs and excluding write-offs,
exploration expenses were $1,041,685 for the second quarter of 2009 and
$2,870,442 for the second quarter of 2008 respectively.
Erdene's second quarter expenditures were primarily directed
toward the continued advancement of the Company's primary projects, namely
the Donkin coal project and Zuun Mod molybdenum project as well as
approximately $422,168 in purchases of plant and equipment for a new
processing plant being constructed by Erdene's controlled subsidiary APM.
Administrative expenses totaled $551,654 (including $99,120 in
stock based compensation) for the second quarter of 2009, compared to
$498,141 in second quarter 2008.
The Company recorded a loss of $1,478,796, or $0.02 per share,
in the second quarter of 2009 compared with a loss of $724,571, or $0.01 per
share, in the second quarter of 2008. The loss in the second quarter of 2009
includes a write down of non performing assets of $960,986, compared to a
write down of $75,723 in the same quarter in 2008. At June 30, 2009, Erdene
had approximately $17,012,520 of cash and cash equivalents on hand, including
cash acquired on closing of the Beta Transaction, compared with $16,195,175
million at December 31, 2008.
About Erdene
Erdene Resource Development Corp. is a diversified resource company with
multiple projects at various stages of development from exploration to
production, all focused on high-growth commodities. Erdene has a current
working capital position of approximately $16.3 million, including that of
its controlled subsidiary APM, with 89,230,877 common shares issued and
outstanding and a fully diluted position of 94,208,377 common shares.
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 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 subject to change after that date.
Contact information
Peter C. Akerley, President and CEO
or
Ken W. MacDonald, Vice President Business Strategy and CFO
Phone: (902) 423-6419
e-mail: info@erdene.com
www.erdene.com