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Erdene shares run on Dark Horse discovery

Shares in Erdene Resource Development Corporation rose more than 8% on Wednesday after the company reported the second phase of drilling at the Dark Horse prospect in southwest Mongolia produced a shallow gold discovery near the flagship Bayan Khundii deposit.
Erdene shares run on Dark Horse discovery Erdene shares run on Dark Horse discovery Erdene shares run on Dark Horse discovery Erdene shares run on Dark Horse discovery Erdene shares run on Dark Horse discovery

Erdene Resource Development says it has made a high-grade gold discovery near its flagship Bayan Khundii project in Mongolia

Staff Reporter

The Canada-based explorer had already established Dark Horse as "the most significant zone of gold mineralisation" since its discovery of Bayan Khundii. It said the new high-grade discovery sat in a 4km-long mineralised structure in the western portion of the Dark Horse tenements.

Among the highlight intercepts from the 3,085m December drilling programme are 45m grading 5.95 grams per tonne gold starting from 10m downhole, including 1m at 82.5g/t within 8m grading 27.1g/t. Another hole returned 16m grading 0.6g/t from 52m depth, and 48m at 1.2g/t from 194m down which included 30m at 1.7g/t.

A step-out hole drilled 1km further north also intersected high-grade gold, including 3m at 5.6g/t from 138m downhole, while assays are pending for another 500m step-out hole to the north.

The company said results showed the potential for significant gold discoveries near Bayan Khundii.

The company initially traced the north-south trending mineralised structure by its magnetic signature, through local exposures of epithermal breccia and stockwork veining, and gold-in-soil anomalies. Notably, the discovery holes are at the intersection of the north-south structure, and the north-east trending Dark Horse structures with associated large magnetic low and high IP chargeability anomalies said to be similar to the Bayan Khundii setting.

"These intercepts are a discovery in their own right, however, they also substantially increase our understanding of the gold potential of the broader Khundii system, providing multiple targets with similar structural and alteration characteristics," said president and CEO Peter Akerley.

Bayan Khundii hosts 521,000oz at 3.16g/t in measured and indicated resource, and 103,000oz at 3.68g/t inferred.

Erdene said it was planning "a significant" exploration programme for later this quarter to follow up on the promising results.

Erdene released in July 2020 results of a feasibility study for the Bayan Khundii project, which at US$1,400/oz gold calculated an after-tax net present value (at 5% discount) of $100 million and an internal rate of return of 42%. The mining plan has an openpit producing an average of 63,500ozpa for seven years, with a conventional carbon-in-pulp plant receiving material averaging 3.71g/t.

More recently, Erdene consolidated more land next to Bayan Khundii by acquiring the Ulaan exploration licence through the purchase of 49% of Leader Exploration.

Shares in the company last traded at C46c, near the 12-month high of 71c, capitalising Erdene at $123 million (US$97 million).