www.foxbusiness.com reports that,
HALIFAX, NOVA SCOTIA, Aug 18, 2008 (MARKET WIRE via COMTEX) —-Erdene Resource Development Corp. (“Erdene”) (TSX: ERD), a diversified resource company with assets in Canada, the U.S. and Mongolia, today provided an update on the Company’s principal projects and plans for 2008 in conjunction with the release of its second quarter financial results.
– Donkin Coal Project: Phase I underground program complete; feasibility of Continuous Miner underground exploration and development phase underway
– Zuun Mod Molybdenum-Rhenium Project: Initial resource includes 311M lbs in Measured and Indicated and 58M lbs of Inferred at grades averaging greater than 0.05% Mo; scoping study and drilling underway
– New Industrial Mineral Spin-out: Plans were announced to complete a reverse take-over of Beta Minerals by transferring all kaolin assets from Erdene Materials Corp.
– Xstrata Coal Alliance Mongolia: Drilling programs to begin in third quarter of 2008 for multiple coal projects in Mongolia fully funded by Xstrata
– Financing: Completed $18.6 million private placement
– Financial Position: Cash and cash equivalents as of June 30, 2008 were $22,837,343
“We are very pleased with the results to date and outlook of our two advanced stage projects, Donkin and Zuun Mod both from a market fundamental and feasibility standpoint,” said Peter Akerley, President and CEO. “We view the third and fourth quarters of 2008 as a very exciting time for the growth of our Company as we will see major milestone points for both projects, a decision on initial underground development at Donkin and pre-feasibility for Zuun Mod. As we advance these projects we will continue to move forward with other projects in our pipeline aligned with our commodity and regional focus.”
Donkin Coal Project
The Donkin Coal Project, located in eastern Canada, is a joint venture project between Erdene and Xstrata Coal Canada (“Xstrata”) who own 25% and 75% of the Donkin Coal Alliance (“DCA”), respectively. The DCA is evaluating the development of the Donkin coal resource, specifically the Harbour seam which contains an indicated resource of 101 million tonnes and an inferred resource of 115 million tonnes classified as high volatile-A bituminous, high-sulphur, medium-ash coal. The Donkin coal resource block was accessed by the DCA in late 2007 following the dewatering and refurbishment of twin 3.5 kilometre long tunnels. An underground drilling program was successfully completed during the second quarter of 2008 with coal cores and roof and floor information secured for evaluation and testing. A positive preliminary assessment of the resource was completed in November, 2007.
During the second quarter of 2008, the DCA announced that it had committed to funding a feasibility study of an Evaluation and Development Program (the “Program”) at the Donkin project. The Program is an interim step in establishing a large scale underground longwall mining operation. The DCA confirmed that the results of recently completed further studies met expectations that the proposed Donkin project could generate economic returns consistent with those identified in the project’s preliminary assessment report of November 2007. The feasibility study regarding the Program is expected to be complete by the end of 2008. The Program will focus on gaining greater certainty of the geological, geotechnical and mining conditions of the proposed operation. Furthermore, coal extracted from the site during the Program will be marketed domestically and internationally in order to establish a customer base for future levels of forecast production. It is anticipated that during the estimated 18 month duration of the Program the DCA will be able to decide on the progression of the project into a feasibility study of the proposed large scale underground longwall mining operation, thereby maintaining a production decision timeline consistent with the preliminary assessment report.
Zuun Mod Molybdenum-Rhenium Project
During the second quarter of 2008, Erdene established the Zuun Mod Molybdenum Project as one of the largest and most advanced pre-development molybdenum projects in the north Asia region, by receiving its first National Instrument 43-101 (NI 43-101) compliant resource for the project. The Zuun Mod project is wholly owned and located in Mongolia within 200 kilometres of China’s border. The initial resource estimate (using a 0.04% cut-off) includes 237 million tonnes (272Mlbs) in the Measured and Indicated category at an average grade of 0.052% Mo and an additional 50Mt (51Mlbs) averaging 0.047% is included in the Inferred category. The mineral resource starts within 18 metres of surface and the mineralization remains open at depth.
With the resource complete, Minarco-MineConsult implemented the Preliminary Assessment Study (“PAS”). This work is being completed at a level where many aspects of the study are near pre-feasibility confidence which will provide for a fairly rapid transition into the more advanced pre-feasibility study. Many elements of the PAS are complete including metallurgical studies which confirmed that Zuun Mod compares favorably with other similar molybdenum deposits under development globally. Currently, the PAS work is targeting further definition of the higher grade zones in the Racetrack deposits and considering various development scenarios prior to developing the mine plan. These higher grade zones are the subject of current drilling. At a 0.04% Mo cut-off grade the resource includes 237Mt (272M lbs Mo) in Measured and Indicated and (50Mt) 51M lbs of Inferred resource.
Plans for New Industrial Mineral Spin-out Announced
Aligned with its plans to focus on its core commodity opportunities, the company announced plans to spin-out its premium kaolin clay assets held within its Erdene Materials subsidiary. Subsequent to quarter-end, Erdene entered into a binding letter agreement with Beta Minerals Inc. (“Beta”) and Deepstep Kaolin Company LLC (“Deepstep”) whereby Erdene will exchange all of its outstanding common shares of its wholly owned US subsidiary, Erdene Materials Corporation (“EMC”), for common shares of Beta, giving Erdene a controlling interest in Beta. Due to an aggressive exploration and acquisition program by EMC in the late 1990s, Beta will control a large, high brightness primary clay resource of “premium” quality with an in-ground resource of 21.9 million tons. The projects are located in central Georgia which is the largest producing kaolin clay region globally. In addition to the kaolin resource, the clay assets will include ongoing commercial production on a pre-paid royalty basis by Kamin LLC (formerly J. M. Huber Corporation), a minerals laboratory and pilot plant originally developed by RTZ’s industrial mineral division, a joint venture with Deepstep to develop and manufacture specialty kaolin products largely in the ceramics business, large surface land ownership of approximately 1,500 acres, and an experienced operations and management team.
The Agreement will enable EMC to expand on the current commercial product line used by the paper industry and to develop new product lines for the primary kaolin resource, initially in the ceramics sector. EMC has also been conducting testing of the resource for use in the catalytic converter sector and is evaluating its use in the cement industry. The initial focus will be the production and sale of kaolin products to the ceramic industry and toll processing of specialized industrial mineral products. EMC and Deepstep have been working with manufacturers over the past 24 months testing various EMC primary clay sources in different ceramic and glazing clay applications and are about to begin commercial production.
Aggregate (Crushed Stone)
The Granite Hill project is in the final stage of issuance of Federal, State and local operating permits to enable development as a granite quarry, primarily to serve the southeastern US markets by rail. Based on current production projections, the Granite Hill quarry would have a lifespan of at least 20 years. Ready Mix USA, LLC (“RMU”) which has assumed Rinker’s position as lessee is required under the lease with the corporation to pay an industry competitive royalty on the sale of all aggregate. 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. Mine permitting work is ongoing and has entered the final Federal and State approval stages with no impediments to approval anticipated. Receipt by RMU of all required operating permits is expected in 2008. The construction phase is expected to be completed nine to twelve months following a production decision by RMU. RMU is responsible for fully funding the development and operating program.
In addition to the Granite Hills project the company is actively pursuing additional opportunities in Georgia, South Carolina, Florida and Eastern Canada. Massive population growth in the U.S. over the next 50 years, concentrated in southern coastal regions will create an extremely tight supply-demand balance, which due to declining resources and urban sprawl is forcing the supply to be secured from operations at progressively greater distances, making quarries much further inland and offshore localities increasingly more attractive. Aggregates are the highest value, non-fuel mineral commodity consumed in the U.S. valued at over $22.4 billion. Florida alone consumes approx. 150M tones of aggregate annually where the access to domestic sources is declining rapidly leaving consumers to look to northern states or offshore supply. Erdene is positioning itself to benefit from this demand in both regions.
The company has appointed Mr. Geoff Harris as an advisor to the company to assist in the evaluation and development of its aggregate projects in Canada and the U.S. Mr. Harris was formerly President, “Mid America Division” Martin Marietta Materials and prior to that Division President “Mid West Division” for “Rinker Materials” where he was responsible for 43 aggregate plants. Coal and Mineral Projects in Mongolia
Erdene is currently undertaking a coal evaluation program in Mongolia, fully funded by Xstrata Coal targeting numerous metallurgical and high quality thermal coal deposits throughout Mongolia. In the second quarter of 2008, Erdene continued with a property evaluation and acquisition program designed to identify and secure access to additional exploration licenses in Mongolia with the potential to host large tonnage thermal and metallurgical coal resources. The alliance has acquired two new licenses through tender and map staking and has multiple applications in place. Plans include exploration and drill testing on four projects in the third quarter. The company also has plans for two limited drill programs during the 3rd and 4th quarter on its copper-molybdenum porphyry projects in northern Mongolia, Erdenet and Bayan Kharat.
During the second quarter of 2008, Erdene completed a private placement for aggregate gross proceeds of $18.6 million. The net proceeds of the private placement will be used for the company’s ongoing mineral exploration and development activities and for general corporate purposes.
Second Quarter Financial Results
Erdene’s second quarter financial statements and management’s discussion and analysis were filed on August 14, 2008 with the appropriate regulatory authorities and are available on the company’s website at www.erdene.com or on SEDAR at www.sedar.com.
The following are some of the financial highlights for the second quarter 2008:
– Erdene had cash and cash equivalents of $22.8 million, compared to $11.4 million
at December 31, 2007 (including flow through funds) – Exploration and operating expenses during the quarter-end were $0.3
million compared to $2.0 million for the same period in 2007; in addition: – Expenditures associated with Zuun Mod were capitalized
and totaled: $641,321 for the second quarter and $1,027,901 for the six months ended June 30, 2008. – Expenditures associated
with Donkin were capitalized and totaled:$2,006,644 for the second quarter and $3,156,644 for the six months ended June 30,
2008. – Costs for coal exploration in Mongolia totaled $184,847 and were to be recovered from Xstrata – Additional costs were
incurred by U.S. Ready Mix and KaMin in the development of the companies aggregate and kaolin resources – The loss for the
three months ended June 30, 2008 was $0.7 million or $0.01 per share compared with a loss of $3.0 million or $0.05 per share
during the same period in 2007.
About Erdene Resource Development Corp.
Erdene (formerly Erdene Gold Inc.) is a diversified resource development company with multiple projects at various stages of development from exploration to production all focused on high-growth commodities. Erdene has a current cash position of approximately $21.7 million with 89,230,877 common shares issued and outstanding and a fully diluted share position of 98,733,352 common shares.
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.
Contacts: Erdene Resource Development
Corp. Peter C. Akerley President and CEO Erdene Resource Development Corp. Ken W. MacDonald Vice-President North America and
CFO 902-423-6419 email@example.com www.erdene.com