Erdene has identified three strategic projects to advance toward development, and continues to explore early stage base and precious metal properties.
| Coking Coal | Moly | Construction Aggregate |
Erdene holds a 25% interest in the Donkin Coal Alliance (“DCA”) with joint-venture partner and project manager Xstrata Coal Canada. The underground resource includes 227 million metric tonnes ("Mt") of Indicated and 254 Mt of Inferred high volatile-A bituminous (12,000-14,000 Btu) coking coal with elevated sulphur. The processed Donkin coal has excellent coking coal properties including low ash, low phosphorous, high crucible swell number (“CSN”) and high fluidity. In February 2010, Xstrata Coal Canada announced their intention to move forward with the development of the Donkin Coal Project based on sales into the coking coal market. At full production, the Donkin Coal Project is projected to produce approximately 3.5 million tonnes per year (“Mtpa”) Run of Mine coal that would be subsequently washed to provide 2.75 Mtpa of product coal suitable for the international export coking and thermal coal markets and domestic thermal coal markets, pending the receipt of all approvals. A National Instrument 43-101 compliant Technical Report (“Report”) for the Donkin Coal Project was prepared by Marston & Marston, Inc, to present the results of an internal Pre-Feasibility Study and marketing report commissioned by Xstrata and Erdene in early 2010. The Report confirms the technical and economic viability of the Donkin Coal Project and supports advancing the project to the next phase. The Report concludes that Donkin has a US$1.06 billion Net Present Value ("NPV") at a 8% discount rate (equating to US$265 million for Erdene’s 25%) based on project development capital of approximately $500 million and demonstrates the potential for first quartile operating costs.
The Zuun Mod molybdenum property is located in southwestern Mongolia, 200km from railhead at Ceke on the Chinese border. In June 2011, Erdene released an updated National Instrument 43-101 compliant resource estimate for the Company’s Zuun Mod Molybdenum Project. The Zuun Mod deposit has a Measured and Indicated Resource of 218 Mt at an average grade of 0.057% molybdenum and 0.069% copper (0.04% Mo cut off grade). This equates to 273.5 million pounds of contained Mo metal and 330.7 million pounds of contained Cu metal. In addition, Zuun Mod has an Inferred Resource of 168 Mt averaging 0.052% molybdenum and 0.065% copper.
Erdene's Granite Hill Project (also known as the "Sparta Quarry") is a former producing granite aggregate quarry in central Georgia, USA. Erdene owns the 342-acre property, which holds in excess of a 120 million ton resource. The quarry is currently being developed by Aggregates USA (Sparta), LLC, ("AUSA"), a major construction materials producer. Under the mining lease, the corporation has granted an exclusive right to AUSA 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 Corporation. In early 2011, installation of plant equipment continued and construction started on the railway underpass on Highway 16 to link the property to the existing rail-line. Commercial production is forecast to commence in late 2011 at an estimated start-up production rate of one million tons of granite aggregate per year.
