Erdene Gold Inc.
TSX : ERD

Erdene Gold Inc.

January 10, 2007 09:00 ET

Erdene Gold Inc.: Additional Applications for Erdene's High Brightness Sparta Primary Kaolin to be Evaluated by Huber

HALIFAX, NOVA SCOTIA--(CCNMatthews - Jan. 10, 2007) - Erdene Gold Inc. (TSX:ERD) today announced it's wholly owned subsidiary, Sparta Kaolin Corporation ("Sparta"), has amended its lease agreement with J.M. Huber Corporation ("Huber") to allow Huber greater production and marketing opportunity for Sparta's Georgia, USA, primary kaolin. Since January 2005, Huber has been using primary kaolin crude purchased from Sparta to produce HuberPrime® kaolin clay, a product application in lightweight coated ("LWC") papers. An umbrella lease agreement between Sparta and Huber grants Huber exclusive mining rights to mine prepaid crude from specific areas of certain owned and leased Sparta properties. The lease agreement was recently amended to lift a prior restriction on Huber that limited its application to products for the paper industry. As of January 7, 2007, Huber may mine its purchased crude to develop, produce and sell products into any paper or non-paper market. All other terms and conditions of the umbrella lease agreement between the parties will remain the same.

"This is an important step in recognizing the true market potential of Sparta's primary clay," said Ken MacDonald, Erdene Vice President North America. "Primary kaolin has unique attributes that impart positive performance characteristics on the finished product. It is encouraging that Huber wants to evaluate the potential of other applications for these unique crudes"

"Huber's Engineered Materials Division looks forward to evaluating primary kaolin for other applications consistent with our company's focus of engineering specialty solutions to meet customer needs," said Gerry Collins, VP Huber Kaolin Business Unit.

Through aggressive exploration and acquisition in the late 1990s, Sparta controls the vast majority of high brightness primary kaolin clays in Georgia. Sparta has incurred approximately US$10 million in expenditures on exploration and evaluation of its primary kaolin properties. Sparta's calculation of its reserve holdings were audited by an independent consultant. The audit reviewed more than 4,100 Sparta drill holes totaling 56,000 metres and Sparta's Georgia reserve calculation of 27.4 million tons.

Under the terms of the Huber and Sparta umbrella lease agreement, Huber prepaid for a specific quantity of primary kaolin crude that can be used to support HuberPrime® production or other non-paper applications. The two parties continue to negotiate as to the balance of Sparta's kaolin resource.

Sparta conducts standardized crude testing for Huber at Sparta's full service Industrial Mineral Laboratory facility in Eatonton, Georgia. Additional crude testing activity at the Sparta laboratory is expected to support a Huber evaluation of primary crude for other applications.

HuberPrime® is an engineered coating clay product with a platy shape that imparts superior coverage, excellent gloss, optics and printability to coated paper. For more information about HuberPrime, see Huber's website at www.hubermaterials.com. HuberPrime is a registered trademark of J.M. Huber Corporation for kaolin clay and is used herein with Huber's permission.

About Erdene Gold Inc.

Erdene is a diversified mineral company with exploration properties focused on high-growth commodities and near-production assets. The company has a strong portfolio of exploration properties in Mongolia focused on base metals (copper and molybdenum), precious metals (gold and palladium) and energy (uranium and coal). Erdene has strategic alliances with Xstrata Coal Canada Limited and International Uranium Corporation to develop its coal and uranium properties in Mongolia. In addition, Erdene has near-term cash flow opportunities in its recently acquired North American assets, which includes its 25% interest in the Donkin Coal Alliance in Nova Scotia, Canada and agreements with J.M. Huber Corporation and Rinker Materials as operators and developers in the southeast U.S. for its kaolin clay and aggregate projects respectively. Erdene has a cash position as of December 31, 2006 of approximately $7.6 million with 53,051,127 common shares issued and outstanding and a fully diluted share position of 62,775,852. For more information, see www.erdene.com.

About Huber Engineered Materials

Huber Engineered Materials develops engineered specialty ingredients that enhance the performance, appeal and processing of a broad range of products used in industrial, paper and consumer-based applications. Its Controlled Function TechnologySM product modification has resulted in advancing the art in specialty silica and silicates, alumina trihydrate, magnesium hydroxide, kaolin clay, barium sulfate and calcium carbonate. Headquartered in Atlanta, Huber Engineered Materials has offices in 15 countries. For more information, see www.hubermaterials.com

About J.M. Huber Corporation

J.M. Huber Corporation, headquartered in Edison, NJ, is a diversified, multinational supplier of engineered materials, natural resources and technology-based services to customers spanning many industries from paper and energy to plastics and construction. With announced sales exceeding $2 billion, J.M. Huber Corporation is one of the largest family-owned companies in the United States. The company offers total solutions in inorganic chemistry, 3-D seismic exploration, engineered wood composites and other specialties. For more information, see www.huber.com.

Forward-Looking Statements

Certain information regarding Erdene contained herein may constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Although Erdene believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Erdene cautions that actual performance will be affected by a number of factors, most of which are beyond its control, and that future events and results may vary substantially from what Erdene currently foresees. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration results, continued availability of capital and financing and general economic, market or business conditions. The forward-looking statements are expressly qualified in their entirety by this cautionary statement. The information contained herein is stated as of the current date and subject to change after that date.

Contact Information

  • Erdene Gold Inc.
    Peter C. Akerley
    President and CEO
    902-423-6419
    or
    Erdene Gold Inc.
    Ken W. MacDonald
    Vice President North America and CFO
    902-423-6419
    info@erdene.com
    www.erdene.com