Erdene Gold Inc.

Erdene Gold Inc.

January 09, 2006 11:24 ET

Erdene's Drilling Returns Highest Near-Surface Grades to Date and Extends Size of the Zuun Mod Molybdenum Target Near Chinese Border

156 Metres of 0.06% Molybdenum Including 20 Metres of 0.11% Starting at
72 Metres

HALIFAX, NOVA SCOTIA--(CCNMatthews - Jan. 9, 2006) - Erdene Gold Inc. (TSX:ERD)
today announced results of the recent diamond drilling program at its Zuun Mod
porphyry molybdenum project in southern Mongolia. The project is in the South Gobi,
approximately 150 kilometres north of the Chinese border.

"The three-kilometre long Southeast Molybdenum Zone continues to provide
strong results, increasing our confidence in the potential for defining a very
large molybdenum resource. We are very excited with confirmation of higher
grades in the upper-levels of the mineralized system as it is important to the
potential economic viability of the project," said Erdene President and CEO,
Peter Akerley. "We believe that the demand for molybdenum will continue to
increase over the long term driven by steel manufacturing in China, making the
location of Zuun Mod very strategic."

A six-hole, 1,793-metre drill program was completed in mid-December at
Zuun Mod. Five vertical holes were drilled in the Southeast Molybdenum Zone,
and all intersected significant molybdenum mineralization. Three were
delineation holes (two in the Racetrack Zone and one in the Stockwork Zone)
and two were reconnaissance holes. There was one additional reconnaissance
hole drilled to the northwest of the Southeast Molybdenum Zone. A total of 15
vertical holes have tested the Southeast Molybdenum Zone, and 12 of the holes
have intersected significant mineralization. To view a plan map for Zuun Mod
please visit the company web site:

Highlights include:

- Racetrack Zone returns best results to date, including high near-
surface grades: 20 metres of 0.11% Mo beginning at 72 metres.
Additional high-grade zones (30 metres and 16 metres of 0.10% Mo) were
intersected at approximately 200 metres in both new Racetrack Zone

- Continuity of the mineralized zones between holes is indicated within
the Racetrack Zone, which remains open to the south-southwest.

- Strong indications of associated copper mineralization in the
Racetrack Zone: 10 metres of 0.24% copper (high 0.58% over 2 metres)
and 0.15% molybdenum (high 0.24% over 2 metres).

Delineation Drilling

In conjunction with recommendations from an independent consultant,
Erdene initiated close-spaced drilling on the Racetrack and Stockwork Zones to
define the molybdenum mineralization in these areas. Two holes tested
continuity and extension of the Racetrack Zone, located in the central portion
of the Southeast Molybdenum Zone. Thick zones of molybdenum mineralization
have now been intersected in four holes over a 400-metre strike length. The
four holes have mineralized zones with average molybdenum values equal to or
greater than 0.05% over an average thickness of 235 metres. Each of these
holes terminated within the mineralized zone. Hole ZMD-12 was drilled between
two previous holes (KKMD-08 and ZMD-11), and provides higher confidence in
zone continuity. Hole ZMD-13 (a 100 metre step-out from ZMD-11) effectively
extends the Racetrack mineralization to the southwest and intersected high-
grade mineralization closer to surface (72 metres) than previously identified.
The upper 10 metres of the zone also contains high copper values, 10 metres of
0.24% Cu from 72 metres to 82 metres. The full extent of this zone is yet to
be determined as it remains open to the southwest.

Hole ZMD-14, collared approximately 1.5 kilometres southwest of ZMD-13,
tested the Stockwork Zone between two previously drilled holes (KKMD-03 and
KKMD-09). Hole ZMD-14 intersected significant molybdenum mineralization and
provides added confidence in zone continuity over a 500-metre strike length.
The Stockwork Zone remains open to the south and southwest.

Table 1 - 2005 November-December Delineation Drilling Results
Zone Drill Hole From To Metres Mo % MoS2 %(*)
Racetrack ZMD-12 84 300 eoh 216 0.05 0.08
Including 180 264 84 0.07 0.12
Including 186 216 30 0.10 0.17
ZMD-13 72 349 eoh 277 0.05 0.08
Including 72 228 156 0.06 0.10
Including 72 92 20 0.11 0.18
Including 72 82 10 0.15 0.25
Including 204 220 16 0.10 0.17
Stockwork ZMD-14 128 190 62 0.05 0.08
Including 134 160 26 0.07 0.12
eoh equals end of hole
(*) Molybdenum analysis is reported either as Molybdenum (Mo) or
Molybdenite (MoS2). A conversion factor of 1.66 was used to calculate
the MoS2 values from the analytical results reported as Mo.

Reconnaissance Drilling

Two reconnaissance drill holes, ZMD-15 and 16, were drilled 800 metres
apart in the Intersection Zone (northwest portion of the Southeast Molybdenum
Zone) where a previous hole had indicated potential for near-surface
mineralization. Hole ZMD-15 intersected 0.12% Mo over a 2-metre interval at 32
metres depth from surface and hole ZMD-16 intersected 32 metres of 0.07% Mo at
a depth of 156 metres. These results demonstrate the potential of the
northwest portion of the Southeast Molybdenum Zone to host significant
mineralization. A third reconnaissance hole, ZMD-17, that did not return
significantly anomalous values, was drilled to test a surface alteration
anomaly two kilometres northwest of the Racetrack Zone.

Table 2 - 2005 November-December Reconnaissance Drilling Results
Drill Hole From To Metres Mo % MoS2 %(*)
ZMD-15 32 34 2 0.12 0.20
And 284 328 34 0.05 0.08
ZMD-16 46 56 10 0.04 0.07
And 156 188 32 0.07 0.12
(*) Molybdenum analysis is reported either as Molybdenum (Mo) or
Molybdenite (MoS2). A conversion factor of 1.66 was used to calculate
the MoS2 values from the analytical results reported as Mo.


The recent drill results further strengthen management's view that Zuun
Mod hosts a potentially economic molybdenum resource. The increasing grades
near surface in the southern portion of the Racetrack zone, significant
thickness of mineralized zones and the large untested areas remaining, attest
to the potential of the Zuun Mod project. Because of these factors and the
project's close proximity to Chinese markets, processing capacity and
infrastructure, Erdene management is very positive about the potential of the
project. Scoping study components and drilling are expected to continue
throughout 2006.

About Zuun Mod & Molybdenum

Zuun Mod is located in the South Gobi region of Mongolia where major
copper, gold, coal and uranium projects are currently being developed. The
property is located less than 200 kilometres from rail and high voltage power
facilities that are being constructed to service the Jiaguan Iron and Steel
complex located in China's Gansu Province. The facilities are being built to
source raw materials from the Naraan Sukhait coal project in southern

Molybdenum is used in steel and cast iron products as well as
superalloys, electronics, catalysts, lubricants and pigments. Production of
certain stainless steel products, which can contain up to 6% molybdenum, is a
major growth area for the metal as are natural gas and oil pipelines which
utilize a significant amount of molybdenum. Strong demand in China, coupled
with limited supply, has resulted in significant price increases in
molybdenum. It is currently priced at US$24/lb.

Qualified Person

This press release has been prepared under the supervision of Michael
Corey, P.Geo., who serves as the qualified person under National Instrument
43-101. All samples are assayed at SGS Laboratory in Ulaanbaatar, Mongolia. In
addition to SGS Laboratory internal checks, Erdene Gold incorporates a QA/QC
sample protocol utilizing prepared standards, sample splits and duplicates.

About Erdene Gold Inc.

Erdene Gold Inc. is a diversified mineral exploration company focused on
Mongolia with over 20 mineral exploration projects that include 71 licenses
and cover approximately four million acres. Significant projects include the
Zuun Mod molybdenum project, the Central Basin Uranium Projects (International
Uranium Corporation Joint Venture), the Ikh Tal-Erdenet Mine copper
exploration program where high priority targets have been identified adjacent
to Mongolia's largest mining complex, the Tsenkher Gol Gold project targeting
a granite hosted disseminated gold target, the Galshar coal program, where
programs are underway to determine coal quality and thickness and the Temuujin
copper-gold porphyry project in the South Gobi Mineral Belt. Erdene is well
funded with a working capital position of approximately $4 million as of
December 31st, 2005. Erdene has 27,269,635 common shares issued and
outstanding and a fully diluted share position of 32,188,910 common shares.

Forward-Looking Statements

Certain information regarding the Company 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 the Company 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. The Company
cautions that actual performance will be affected by a number of factors, many
of which are beyond the Company's control, and that future events and results
may vary substantially from what the Company 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 Company's 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.

For additional information visit Erdene's website at or
contact the company via email at

The TSX has not reviewed and does not accept responsibility for the
adequacy or accuracy of this news release.

Contact Information

  • Erdene Gold Inc.
    Peter C. Akerley
    President and CEO
    (902) 423-6419


    Erdene Gold Inc.
    Ken W. MacDonald
    Vice-President and CFO
    (902) 423-6419