NI 43-101 Technical Report Highlights (US$1,400/oz Gold Price)
HALIFAX, Nova Scotia, July 20, 2020 (GLOBE NEWSWIRE) -- Erdene Resource Development Corp. (TSX:ERD; MSE:ERDN) ("Erdene" or the "Company") is pleased to announce the results of an independent Bankable Feasibility Study (“BFS”) for the 100%-owned, high-grade, open-pit Bayan Khundii Gold Project (“BK” or "Project”) in southwest Mongolia. The independent BFS was prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and has incorporated detailed mine design and scheduling, front-end engineering design for the processing plant and site infrastructure, a hydrogeological assessment, mineral waste facility design, comprehensive capital and operating cost estimation, and an updated economic model. These studies have been completed by a consortium of International and Mongolian firms with significant experience operating in Mongolia and internationally. The Technical Report, prepared by the Roma Group Ltd, pursuant to NI 43-101 guidelines, will be filed on SEDAR within 45 days.
The Company will host a conference call to review the Bankable Feasibility Study results at 10:00 am EST on Tuesday, July 21, 2020. The dial-in numbers for the conference call are as follows:
|North America (toll free):||1-877-703-1560|
|Overseas or local (Toronto):||1-647-689-5569|
Participants may also join the conference call via webcast at the following link: https://onlinexperiences.com/Launch/QReg/ShowUUID=67C7A554-57DF-4DCC-978D-4C232A233C68
Quotes from the Company:
“The Bayan Khundii BFS results confirm the high-return nature of this project in its base case, with significant potential upside due to ongoing district-wide exploration and exposure to rising gold prices. The shallow, high grade, open-pit Bayan Khundii deposit lends itself to conventional mining and processing techniques, reducing the execution risk in bringing the project into production in an accelerated timeframe,” said Peter Akerley, President and CEO. “As a low-capex, low-opex project with a less than two-year payback and significant growth potential, Bayan Khundii offers investors and stakeholders exposure and leverage to gold as we move towards first production in early 2022.”
“Recent exploration results, including intersections of high-grade gold in the Midfield SE and Striker SW zones of the Bayan Khundii deposit, currently classified as sub-grade material, are expected to add to the Project’s robust economics,” continued Mr. Akerley. “The Bayan Khundii development is the foundation for growth in our underexplored Khundii Gold District and we see significant potential to expand resources, extending the mine life and creating value for all stakeholders. We will follow up on recent exploration success with additional drilling in Q3 2020.”
“We have recently engaged HCF International Advisers Limited ("HCF") to secure debt financing for the project,” concluded Mr. Akerley. “Their expertise, combined with the support of the European Bank for Reconstruction and Development (“EBRD”) position us well to secure the funding to commence construction later this year.”
NI 43-101 Technical Report Overview
The Technical Report incorporates an updated reserve estimate for Bayan Khundii. The BFS includes 3.4 million mineable tonnes from the Bayan Khundii resource at an average diluted head grade of 3.7 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 Bayan Khundii deposit (Striker and Gold Hill), and expanding northward into adjacent zones at Midfield and Midfield NE. The development incorporates conventional crushing and grinding, leach and a Carbon in Pulp (“CIP”) plant with processing capacity of 1,800 tonnes per day.
The base case assumes a gold price of US$1,400/oz. All references to dollars within this release are US Dollars (US$), unless stated otherwise. The Technical Report, pursuant to NI 43-101 guidelines for the Bayan Khundii BFS will be filed on SEDAR within 45 days. Key metrics from the Technical Report are presented in Table 1 below.
Table 1. Khundii Gold Project Key Metrics
|? BK BFS|
|Average Head Grade Over Life of Mine1||g/t gold||3.7|
|Target Plant Feed Rate Per Day3||tpd||1,800|
|Average Annual Saleable Gold||oz||63,500|
|Peak Annual Saleable Gold||oz||79,100|
|Average Gold Recovery Rate Over Life of Mine||%||93%|
|Operating Costs||?BK BFS|
|Life of Mine (“LOM”) Average Cash Cost4||US$/oz||731|
|LOM Cash Cost plus Sustaining Cost (AISC)4||US$/oz||733|
|Pre-Tax Net Present Value|
|5% discount rate||US$M||145|
|7.5% discount rate||US$M||126|
|10% discount rate||US$M||109|
|Pre-Tax Internal Rate of Return||%||55%|
|After-Tax Net Present Value|
|5% discount rate||US$M||100|
|7.5% discount rate||US$M||86|
|10% discount rate||US$M||73|
|After-Tax Internal Rate of Return||%||42%|
|Payback Period (After tax)||years||1.9|
|Pre-production Capital Cost, including contingency||US$M||59|
|Life of mine (“LOM”) Remaining Capital Cost||US$M||5|
Technical Report Sensitivities
The following tables 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||US$1,200||US$1,400||US$1,600||US$1,800||US$2,000|
|NPV (5% discount rate)||US$M||43||100||158||216||274|
|NPV (7.5% discount rate)||US$M||33||86||138||190||242|
|NPV (10% discount rate)||US$M||25||73||120||168||215|
Bayan Khundii Mineral Resource and Reserve Estimate
The Bayan Khundii Mineral Resource Estimate (“Mineral Resource”) was prepared in accordance with NI 43-101 and CIM standards by Tetra Tech with an effective date of October 1, 2019. The details of the Mineral Resource are included in the “Khundii Gold Project NI 43-101 Technical Report” dated December 4, 2019 and authored by M. Phifer, C. Norton, Clark, A. Kelly, H. Ghaffari, M. Horan and M Fawcett (“KGP 2019 Technical Report”). The report is available on Edene’s SEDAR page (link here) and incorporated herein by reference.
The Mineral Resource has been constrained to a conceptual pit shell and is reported at a cut-off grade of 0.55 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. Tetra Tech recommends reporting the Bayan Khundii Mineral Resource at a 0.55 g/t gold cut-off, however a sensitivity analysis of the grade and tonnage relationships at different cut-off grades is shown for reference in Table 3.
Table 3. Bayan Khundii Gold Deposit – Mineral Resource Estimate Summary, October 1, 2019
|Cut-off Grade(1)||Resource Classification||Quantity (Mt)||Grade (Au g/t)||Gold (Koz)|
|Measured & Indicated||6.4||2.64||540|
|Measured & Indicated||5.1||3.16||521|
|Measured & Indicated||2.3||6.05||457|
|Measured & Indicated||1.9||7.10||441|
BK Reserve Estimate
The Bayan Khundii, BFS Mineral Reserve has been estimated by Qualified Person, Mr. Anthony Keers, Director, Auralia Mining Consulting, using the 2014 CIM Definition Standards for Mineral Resources and Mineral Reserves to conform to the Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects. The total Mineral Reserve for the Bayan Khundii deposit is shown in Table 4. The Mineral Reserve is based on the October 1, 2019, Mineral Resource, reported herein. The Mineral Reserve includes both Proven and Probable Mineral Reserves that were converted from Measured and Indicated Mineral Resources. Tonnes and grades were calculated for the mining blocks, and allowances for dilution and mining recovery were applied to the estimate for the Mineral Reserve Statement. The effective date of the Mineral Reserve statement is July 1, 2020.
Table 4. Bayan Khundii Gold Deposit – Mineral Reserve Statement, July 1, 2020
|Tonnage (Mt)||Grade (g/t Au)||Contained Au (Koz)|
|Proven Mineral Reserves||1.2||4.2||166|
|Probable Mineral Reserves||2.2||3.5||244|
The BK BFS is based on an open-pit mining operation targeting 600,000 tonnes per year of feed material for the processing plant. The total mineable mineralized plant feed is 3.4 million tonnes at an average diluted head grade of 3.7 g/t gold and average strip ratio of 9.1:1 (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 BFS has assumed contract mining based on methodology and costing contained in proposals received from contractors with suitable experience in Mongolia in similar open-pit mining environments. In this scenario the contractor provides the full fleet and personnel to operate the project on a schedule of rates (US$/tonne material moved) basis. The contractor is proposing a total of 4 x excavators (2 x ore, 2 x waste), 10 x 55t payload trucks, 3 x blasthole drills and a fleet of ancillary and support equipment to deliver the required material movement. The contractor’s workforce peaks at approximately 190 personnel to deliver the required schedule of production.
The BFS 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 Blue Coast Research which has established optimal processing parameters, including; grind size of 80% passing 60 microns; design inputs for comminution circuit, low cyanide concentration in leach circuit (0.5 g/litre sodium cyanide); 36 hour retention time; carbon adsorption parameters and detoxification reagent dosages. The process circuit has been designed to maximize water recovery with the most efficient dewatering process (ceramic disc filters) to achieve targeted 15% moisture in tailings, minimize chemical and reagent usage and minimize environmental impact.
The ore-processing plant will be located adjacent to the Bayan Khundii open pit and throughput will target 600,000 ore-tonnes per year, nominally 1,800 tonnes per day. Total mineralized material from BK, processed in the plant over the course of the mine life, is 3.4 million tonnes at an average diluted head grade of 3.7 g/t gold. Using an estimated mill recovery of 93.1%, total recovered gold over the life of the Bayan Khundii deposit is 381,700 ounces.
Operating costs are based on the mining and processing scenarios outlined above and assumes contract mining. Power for operations will be generated through a 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 $733/oz.
Table 5. Operating Costs
|LOM ($ millions)||US$/oz||US$/tonne|
|Mine Operating Cost||133||350||39|
|Total Site Operating Costs||242||635||71|
|Royalty and Charges||32||86||10|
|Sustaining Capital & Closure Costs||5||12||1|
|All-In Sustaining Cost||279||733||82|
Construction costs (Year 0), primarily comprising the process plant and supporting infrastructure, accommodation village, and associated engineering and indirect costs is estimated at US$46 million. Pre-production costs, including construction readiness, mobile site equipment and pre-strip total $8M. The capital cost estimate includes a 10% contingency. Sustaining capital of US$4 million has been included in the mine plan and net mine closure costs are estimated at US$1 million, including salvage values. Total life of mine capital expenditures for the Bayan Khundii Gold Project are estimated at US$64 million.
Table 6. Capital Costs
|Engineering & Support||4|
|Subtotal Plant and Infrastructure||59|
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