> Altan Nar

Commodity: GOLD-SILVER (AND LEAD-ZINC)

Location: SOUTHWESTERN MONGOLIA

Target: EPITHERMAL DEPOSIT

Ownership: 100%


PROJECT SYNOPSIS

Erdene geologists discovered Altan Nar (Golden Sun) in mid 2011 as part of a systematic, large-scale regional exploration program over southwest Mongolia’s Tian Shan Copper-Gold Belt, host to some of the world’s largest gold deposits, including Rio Tinto’s 60 million ounce Oyu Tolgoi copper-gold project. Since discovering this high-grade epithermal gold-polymetallic system and drilling the first hole in October 2011 (38m of 2.1 g/t gold equivalent), Altan Nar has progressed rapidly and has emerged as one of the most significant greenfield gold discoveries in Central Asia.

LOCATION

The project is located within the Tian Shan Copper-Gold Belt in southwest Mongolia approximately 250 km from the Chinese border city of Ceke, the main rail crossing between Mongolia and China in the region.

GEOLOGY

The geology at Altan Nar is dominated by a series of andesite volcanic flows with several stages of late granitoid dykes (generally less than 30 m wide) and andesite dykes (generally less than 10m wide), some of which intersect mineralized zones. Mineralized zones are often associated with zones of phyllic alteration (i.e. quartz-sericite/muscovite-pyrite), up to 100m wide. Drilling to date has identified several high-grade zones within broad zones of mineralization, including a 5m wide, near-surface intersection, that returned 17.7 g/t gold, 69 g/t silver, and 4.6% combined lead and zinc. Gold and silver mineralization is mostly present in quartz breccia zones with multiple stages of brecciation, silicification and quartz veins. Quartz veins typically have comb, colloform and crustiform textures, although some late-stage veins have chalcedonic quartz. Ore minerals include gold, silver, galena and sphalerite. Gangue minerals include quartz, mica, calcite, and several manganese-bearing carbonate, oxide and silicate phases.

Altan Nar is interpreted as a carbonate-base metal (CBM) gold deposit, a sub-set of epithermal deposits. CBM gold deposits are the major gold producers in the southwest Pacific Rim region and include the very large Porgera deposit (24 million ounces gold) of Papua New Guinea. Early work on the formation of the deposit suggests there have been multiple episodes of fluids and brecciation with early, low-sulfidation mineralization being repeatedly re-brecciated at increasingly higher temperatures with the main mineralizing event being the carbonate base metal gold mineralization with indications in some of the deeper drilling of intense potassic alteration, temperatures reaching porphyry level and significant increase in copper that is typically very low in the top 200m.

DEPOSITS

To date, Erdene has identified a total of eighteen near-surface, gold-silver-lead-zinc zones, ranging from hundreds of metres in length to over a kilometre, across a 5.6 x 1.6 km mineralized corridor that remains open at depth and along strike. Two of the early discoveries, the Discovery Zone (“DZ”) and Union North (“UN”), have been the subject of recent detailed work and were the focus of the Company’s Q4 2014 resource delineation drilling program and Q1-2015 Mineral Resource Estimate.

The areas tested by drilling represent a small portion of the total target areas as defined by mapping, geochemical and geophysical surveys. Geochemical surveys over the 5.6 km long mineralized corridor have identified multiple gold and associated metal anomalies (rock chip samples commonly returned assays of 1 g/t to 27 g/t gold). In addition, a strong correlation between the geochemical results and geophysical data, including gradient array chargeability highs and magnetic lows, has been used to identify numerous drill targets within the mineralized trend. Many of these are yet to be drill tested.

RECENT DRILLING

The 2014 and Q1 2015 exploration program at Altan Nar provided the widest and highest grade zone of mineralization to date from the Discovery Zone, with 30m of 5.1 g/t gold equivalent (AuEq) including 8m of 13.6 g/t AuEq. The program also returned broad zones of low-grade mineralization, including 96m of 1 g/t AuEq that remains open along strike and at depth (>150m).

The exploration program also resulted in the establishment of an initial resource (“Mineral Resource”) for the two most advanced prospects, Discovery Zone and Union North, and established sixteen additional mineralized target areas within the overall 5.6 km long mineralized trend.

INITIAL MINERAL RESOURCE ESTIMATE

An independent National Instrument 43-101 technical report outlining the resource estimate at Altan Nar (“Resource Report”) was completed in February 2015 and is available on SEDAR. Table 1 below shows the Indicated and Inferred Mineral Resource estimate for the Discovery Zone and Union North prospects. The Mineral Resource was completed by RungePincockMinarco (“RPM”) in accordance with the recommended guidelines of the CIM Definition Standards references in NI 43-101. The Mineral Resources are provided at a number of AuEq cut-offs, however RPM suggests reporting the Mineral Resource at a 1.0 g/t AuEq cut-off. The 0.6 g/t AuEq and 1.4 g/t AuEq cut-off grade Mineral Resources are provided for illustrative purposes.

The potential for increasing the resource is considered by RPM to be good, with the Discovery Zone and Union North open along strike and at depth, and multiple priority targets throughout the remaining 16 prospects.


Table 1

Altan Nar Project – Mineral Resource Estimate Summary as at February 19, 2015

AuEq
Cut-Off
g/t
Resource
Classi-
fication
Tonnes
Mt
Grade Contained Metal
Au
g/t
Ag
g/t
Zn
%
Pb
%
AuEq
g/t
Au
kOz
Ag
kOz
Zn
Mlbs
Pb
Mlbs
AuEq
kOz
0.6 Indicated 3.4 1.0 9.4 0.57 0.47 1.7 112 1,014 42.4 34.8 186
0.6 Inferred 3.0 0.8 9.4 0.51 0.35 1.4 83 913 33.9 23.5 135
1.0 Indicated 1.8 1.7 11.1 0.61 0.54 2.5 102 657 24.7 22.1 147
1.0 Inferred 1.5 1.5 10.4 0.54 0.39 2.1 72 498 17.7 12.8 102
1.4 Indicated 1.3 2.3 12.1 0.61 0.58 3.1 92 486 16.8 15.9 130
1.4 Inferred 1.0 2.0 10.8 0.53 0.40 2.6 63 342 11.5 8.6 84


Notes
  1. The Mineral Resource Estimate Summary has been compiled under the supervision of Mr. Jeremy Clark who is a full-time employee of RPM and a Member of the Australian Institute of Geoscientists. Mr. Clark has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that he has undertaken to qualify as a Qualified Person as defined in the CIM Standards of Disclosure.
  2. All Mineral Resources figures reported in the table above represent estimates as at 19th February, 2015. Mineral Resource estimates are not precise calculations, being dependent on the interpretation of limited information on the location, shape and continuity of the occurrence and on the available sampling results. The totals contained in the above table have been rounded to reflect the relative uncertainty of the estimate. Rounding may cause some computational discrepancies.
  3. Mineral Resource grades are reported in accordance with the CIM Standards.
  4. Mineral Resources reported on a dry in-situ basis.
  5. Totals may differ due to rounding
  6. Gold Equivalent (“AuEq”) values were used in an effort to express the combined value of gold, silver, lead and zinc as a percentage of gold, and are provided for illustrative purposes only. No allowances have been made for recovery losses that may occur should mining eventually result. Calculations assume metal prices of US$1,200/oz gold, US$18/oz silver, and US$0.90/lb for lead and zinc.

For details on key parameters/assumptions considered in the Altan Nar Mineral Resource estimate, and for a map of the Mineral Resource area, the reader is directed to the Company’s March 31, 2015 press release announcing the resource estimate; click here for link to release.

REGIONAL SETTING

Various exploration and mining projects are underway in the general area and throughout the southern Mongolia region, including Rio Tinto’s Oyu Tolgoi gold-copper project, which is now ranked as the sixth largest gold resource globally with 2015 gold production projected to exceed 600,000 ounces (source: Turquoise Hill Resources Ltd. press release). In addition, elsewhere in Mongolia both Centerra Gold Inc. (TSX:CG) and Bayan Airag Exploration LLC (Kerry Holdings Ltd.) have made significant advancements during the past year in their respective gold projects, Gatsuurt and Golden Hills.

* See the Company's press release section and corporate presentation section for the latest updates on drilling and plans at Altan Nar.




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