Bayan Khundii deposit is located in southwestern Mongolia, within the Khundii Gold District, approximately 16 kilometres south of the Altan Nar deposit. In August of 2019, Erdene secured a mining license for Bayan Khundii from the Mineral Resource and Petroleum Authority of Mongolia (“MRPAM”). The Bayan Khundii mining license covers 2,309 hectares and, in addition to the Bayan Khundii high-grade gold deposit, includes Erdene’s highly prospective Altan Arrow, Khundii North and Khar Mori targets. The mining license is valid for an initial term of 30 years with the ability to extend to 70 years.
In October of 2019, Erdene announced the results of a Pre-Feasibility Study (“PFS”) for Bayan Khundii Gold Project. The PFS included an updated Mineral Resource for Bayan Khundii as well as Mineral Reserves. Please refer to the Company’s October 21, 2019 news release and the NI 43-101 Technical Report for full details.
PFS highlights (assuming US $1,300/oz gold price):
- After-tax Net Present Value (NPV5%) of US$97 million and 42% Internal Rate of Return (IRR)
- Bayan Khundii Measured and Indicated Resources of 520,700 ounces gold at an average grade of 3.16 g/t gold represents a 20% increase from the September 2018 resource estimate
- Bayan Khundii’s Proven and Probable Reserves were estimated at 422,000 ounces gold at an average grade of 3.7 g/t gold
- Life of Mine head grade of 3.73 g/t gold
- Average annual gold production of 61,000 ounces per year
- All-in sustaining cost (“AISC”) of US$746/oz of gold recovered
- Bayan Khundii PFS initial Capital Expenditure is estimated at US$40 million
- Payback period of less than 2 years
In October of 2019, Erdene announced a US$5 million investment by the European Bank for Reconstruction and Development (“EBRD”), the proceeds of the funding is intended for the completion of the Bankable Feasibility Study of the Bayan Khundii Gold Project. See the October 15, 2019 news release for more details.
In January of 2020, Erdene announced that the Company has commenced the Bankable Feasibility Study (“BFS”) for the Bayan Khundii Gold Project. The results of the BFS is expected to be announced during mid-2020. See the January 13, 2020 news release for further information.
Erdene’s Q4-2019 exploration results revealed a newly discovered Khar Mori (“Dark Horse”) prospect, located 3.5 km northeast of the Bayan Khundii gold deposit and 1 km Southeast of the Altan Arrow prospect. The Khar Mori gold prospect was discovered in early Q4-2019 with the collection of a 32.9 g/t gold rock chip sample hosted by massive tourmaline cut by quartz stockwork veins.
The results of a follow-up Q4-2019 exploration program at Khar Mori included:
- Rock chip samples of 87.8 g/t gold, 18.2 g/t gold, 15.3 g/t gold and 12.1 g/t gold near the 32.9 g/t gold rock chip collected in early Q4-2019
- Geochemical sampling and mapping have expanded the prospect area to 1.5 km by 2.0 km area
For further details, please refer to the Company’s February 4, 2020 news release.
In addition to Khar Mori, there are several other prospects located on the Khundii Mining license with significant upside potential, including:
- South Bayan Khundii prospect located 350 m south-southwest of the Bayan Khundii gold deposit where drilling has intersected multiple 1m intervals of anomalous gold (>0.1 g/t) were intersected within the altered unit with up to 1 metre of 2.45 g/t gold. This discovery opens up a large area south of the deposit for additional exploration.
- Altan Arrow prospect located 4.0 km north of the Bayan Khundii gold deposit, along a gold bearing structure in the central portion of the Khundii mining license. Drilling to date has concentrated in an area along and south of the main structure, where several high-grade zones have been intersected, including 39 g/t gold over 1 metre and 24 g/t gold and 70 g/t gold over 2 metres. Overall, 77% of the 21 holes (2,605 metres) drilled at Altan Arrow have intersected anomalous gold.
- Khundii North target located 4 kilometres northeast of the Bayan Khundii gold deposit. The area was identified through surface exploration in late 2017, when sampling of quartz vein material returned high grade gold mineralization of up to 22 g/t gold from a structurally controlled quartz vein stockwork and breccia zone traced over a 1,500 metre strike length and drilling has intersected the zone up to 35-metre wide (AAD-29) and have associated anomalous gold, locally up to 2.1 g/t over one metre intervals (AAD-30) and locally anomalous copper (>500ppm).
The Bayan Khundii license has a 1.0% net smelter returns royalty (“NSR Royalty”) in favour of Sandstorm Gold Ltd.