Erdene Gold Inc.
TSX : ERD

Erdene Gold Inc.

February 14, 2006 08:16 ET

Xstrata Coal Acquires 9.8% Stake in Erdene

Conference Call at 9:30 am ET Today

HALIFAX, NOVA SCOTIA--(CCNMatthews - Feb. 14, 2006) - Erdene Gold Inc.
(TSX:ERD) today announced it has entered into an alliance agreement with
Xstrata Coal Canada Limited (Xstrata Coal), a subsidiary of Xstrata plc
(London Stock Exchange: XTA.L; Zurich Stock Exchange: XTA.S), pursuant to which
Xstrata Coal will subscribe for 3,000,000 common shares of Erdene at $1.00/share
resulting in Xstrata Coal owning a 9.8% equity interest in Erdene. The transaction
is expected to close February 16, 2006, subject receipt of all necessary regulatory
approvals.

"This agreement with Xstrata Coal marks a pivotal point in the growth of
Erdene and is great news for our shareholders," said Peter Akerley, Erdene
President and CEO. "It will allow us to more aggressively test advanced
projects and continue with the creation of new opportunities with an initial
focus on coal. This partnership combines Erdene's strong pipeline of
strategically located, early stage properties in Mongolia with Xstrata's
established relationships in Asia and ability to invest in and support world
class projects."

"With this investment in Erdene, Xstrata Coal gains exposure to a strong
inventory of projects and a senior management team with established local
knowledge of mineral resources in Mongolia. We look forward to working with
Erdene in helping advance their many exciting opportunities," said Xstrata
Coal Chief Executive, Peter Coates.

Highlights of the Alliance Agreement

Xstrata Coal will be granted a first option to enter into a joint venture
and earn a 75% interest in any coal opportunity in Mongolia identified by
Erdene by funding all work through completion of a feasibility study. Should
Erdene elect to develop or pursue third party participation in any non-coal
projects or properties in Mongolia or elsewhere, Xstrata Coal will have a
60-day right to review all supporting project information and, if it wishes to
participate in the project, to negotiate the terms of its participation before
Erdene may make the opportunity available to another party or develop the
property itself. Xstrata Coal will have the right to name a nominee to the
Board of Directors of Erdene. The rights granted to Xstrata Coal under the
Alliance Agreement expire if Xstrata does not maintain a 5% equity position in
Erdene although parties' rights and obligations for any established joint
venture survive.

Conference Call and Webcast

Management of Erdene will hold a conference call at 9:30 a.m. ET today to
discuss the agreement and answer questions. Participants can access the call
by dialing 1-800-814-4862 or 416-644-3414. The call will also be webcast live
at www.erdene.com.

A replay of the call will be available until midnight on March 1, 2006 by
dialing 1-877-289-8525 or 416-640-1917 and entering passcode 21177079
(followed by the number sign.)

About Erdene Gold Inc.

Erdene Gold Inc. is a diversified mineral exploration company focused on
Mongolia with over 20 mineral exploration projects that include 68 licenses
and cover approximately four million acres. Significant projects include the
Zuun Mod molybdenum-copper 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 $4.0 million
as of December 31, 2005. Erdene has 27,599,933 common shares issued and
outstanding (before the issuance to Xstrata Coal) and a fully diluted share
position of 32,188,910 common shares.

About Xstrata

Coal Xstrata Coal is a wholly owned subsidiary of Xstrata Coal Pty
Limited, one of the Xstrata plc group of companies. It is amongst the world's
largest producers of export thermal coal and a significant producer of coking
coal. Xstrata Coal has interests in a diverse portfolio of over 30 coal mines
located in Australia and South Africa with a project in Canada, and employs
around 10,000 people, including contractors. Xstrata plc is a major global
diversified mining group, listed on the London and Swiss stock exchanges and
is listed in the FTSE Top 50. The Group is headquartered in Zug, Switzerland
and has approximately 24,000 employees world-wide, including contractors.
Xstrata maintains a meaningful position in six major international commodity
markets: copper, coking coal, thermal coal, ferrochrome, vanadium and zinc,
with additional exposures to gold, lead and silver. The Group's operations and
projects span five continents and eight countries: Australia, Canada, South
Africa, Spain, Germany, Argentina, Peru and the UK.

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 www.erdene.com or
contact the company via email at info@erdene.com.

NO REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE CONTENT OF THIS RELEASE.

Contact Information

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

    or

    Erdene Gold Inc.
    Ken W. MacDonald
    Vice-President and CFO
    (902) 423-6419
    info@erdene.com
    www.erdene.com