Erdene has identified three strategic projects to advance toward development. Each project hosts a specific commodity with strong, long-term market fundamentals:
Erdene holds a 25% interest in the Donkin Coal Alliance (“DCA”) with partner Xstrata Coal Canada, which holds a 75% interest. The DCA is continuing to work towards 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 also has excellent coking coal properties including low phosphorous, high CSN (crucible swell number) and fluidity. In February 2010, Xstrata Coal Canada announced their intension to move forward with the development of the Donkin Coal Project based on sales into the coking coal market. Under the revised development plan, the Donkin Coal Project is projected to produce approximately 2.75 million tonnes per annum of washed export grade coking coal at full production, pending the receipt of all approvals. A pre-feasibility study for the revised Donkin coking coal project is currently underway and expected to be finalized by mid-2010.
The Zuun Mod molybdenum property is located in southwestern Mongolia, 200km from railhead at Ceke on the Chinese border. An independent resource estimate has determined that the Zuun Mod deposit has a Measured and Indicated Resource of 237Mt 98Mt at an average grade of 0.0562% molybdenum (0.054% Mo cut off). This equates to 134272 million pounds of contained Mo metal. With the completion of the Zuun Mod resource estimate, the Company’s independent technical consultants, Minarco-MineConsult of Australia, are now conducting pit optimization and scheduling studies. Following completion of this work, it is anticipated that the information will be used to create a financial model on which to base decisions regarding the advancement of the project to the pre-feasibility stage.
Granite Hill is Erdene’s construction aggregate (crushed stone) property, located in Georgia, U.S. The Granite Hill project is being developed as a construction aggregate quarry primarily to serve the growing Florida and costal South Carolina and Georgia markets. Granite Hill is adjacent to rail and mine permitting is complete. Aggregates USA Sparta LLC (“AUSA”) Ready Mix USA, LLC has been granted an exclusive right to mine, process, and sell aggregate from the Granite Hill property subject to a royalty payable to Erdene. In February 2010, AUSA advised Erdene that it is planning to make the Granite Hill Aggregate Project one of its top priority new developments. AUSA is designing a quarry and processing plant with an initial design capacity of 3M tpa and projected production capacity in the first full year of operation of 1M tpa for the Granite Hill quarry.
