Erdene Gold Inc.

Erdene Gold Inc.

March 26, 2007 07:45 ET

Erdene Announces Bought Deal $10 million Private Placement with National Bank Financial and Wellington West

Definition Drilling Program to be Implemented on Zuun Mod Molybdenum Project

HALIFAX, NOVA SCOTIA--(CCNMatthews - March 26, 2007) -


Erdene Gold Inc. (TSX:ERD) is pleased to announce that it has entered into an agreement ("Agreement") with National Bank Financial ("NBF") in which NBF has agreed to act as lead underwriter on behalf of a syndicate of underwriters which includes Wellington West Capital Markets Inc. ("Underwriters"), pursuant to which the Underwriters have agreed to purchase, on a bought deal basis subject to certain conditions, 10,000,000 common shares of Erdene at a price of $1.00 per share resulting in gross proceeds to Erdene of $10,000,000 ("Offering").

The net proceeds of the Offering will be used to advance Erdene's Zuun Mod molybdenum project and for general exploration and corporate purposes.

The Agreement and the Offering are subject to receipt of all necessary approvals, including regulatory and stock exchange approvals. The closing is expected to occur on or about April 12, 2007 ("Closing").

Erdene has agreed to pay the Underwriters a commission equal to 6% of the aggregate gross proceeds and to issue 600,000 brokers warrants ("Brokers Warrants"), representing 6% of the number of shares issued under the Offering. One Brokers Warrant will entitle the holder to acquire one share for $1.00 at any time until the date that is 12 months from Closing.

All of the securities issued in connection with the Offering will be subject to a four month hold period from the date of issue.

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 (coal and uranium). Erdene has strategic alliances with Xstrata Coal to develop its coal properties in Mongolia. Xstrata Coal is Erdene's largest shareholder with a 6% ownership of the company's common shares and has representation on its board of directors. In addition, Erdene has near-term cash flow opportunities in its North American assets, which includes its 25% interest in the Donkin Coal Alliance in Nova Scotia with Xstrata Coal Donkin Limited and agreements with J.M. Huber Corporation and Rinker Materials Corporation as operators and developers in the southeast U.S. for its kaolin clay and aggregate projects respectively. Erdene has a cash position as of March 1st, 2007 of approximately $6.7 million with 53,951,127 common shares issued and outstanding and a fully diluted share position of 62,870,852.

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