Erdene Gold Inc.
TSX : ERD

Erdene Gold Inc.

December 14, 2007 12:49 ET

Erdene Announces Closing of Financing Donkin Coal Project Drilling Program Initiated

HALIFAX, NOVA SCOTIA--(Marketwire - Dec. 14, 2007) - Erdene Gold Inc. (TSX:ERD) ("Erdene" or "Company") today announced the final closing of its flow-through share financing. An aggregate of 3,326,500 flow-through common shares were issued in two tranches at $1.40 per share for aggregate proceeds of $4,657,100. The offering was increased from the $4.2 million previously announced in order to satisfy investor demand. The flow-through shares are subject to a hold period of four months and one day from the date they were issued.

The proceeds of the financing will be used for exploration and evaluation of the Donkin Coal Resource Block located in Cape Breton, Nova Scotia. These funds will satisfy Erdene's current requirement to fund its portion of the prefeasibility and feasibility studies underway which will be followed by a development decision by the Donkin Coal Alliance. Erdene has a 25% joint venture interest in the Donkin Coal Alliance with Xstrata Coal Canada Limited holding 75%. The Donkin project is being managed by Xstrata Coal Donkin Management Limited, a related party to Xstrata Coal Canada Limited.

Drilling from the coal face commenced on December 13, 2007 and will provide information regarding the gas desorption rates that ultimately will determine the most appropriate method for gas drainage and related production rates. This work will directly determine the ramp up time required before longwall coal is first produced. A bulk sample collected from the Harbour seam in November 2007 is currently being analysed to provide direction as to the best mining horizon and coal treatment to meet market requirements.

The company recently received a positive Preliminary Assessment (see release November 26, 2007) for the Donkin Coal Project completed by Norwest Corporation. The Donkin Resource Block includes the targeted Harbour Seam that has a current resource of 101 million indicated tonnes and 115 million inferred tonnes of thermal and metallurgical coal and is considered the last remaining undeveloped block of high quality coal offshore Cape Breton. The resource is classified as high volatile A bituminous, high sulphur, medium ash coal. The property currently has two slopes (tunnels) that provide access to the Harbour Seam, which is suited to development using the high productivity longwall mining method.

Company Overview

Erdene is a diversified mineral exploration and development company with projects focused on high-growth commodities and near-production assets. In addition to the Donkin coal project, the Company is advancing metals projects in Mongolia led by the Zuun Mod molybdenum project, coal projects in Mongolia fully funded by Xstrata and a number of industrial minerals projects in North America. A key focus of the industrial minerals division is on aggregate projects that are located to provide strategic market advantage to the growth areas of the eastern seaboard of the U.S. Developments at the Zuun Mod molybdenum project, located near the Chinese border in southwestern Mongolia, include the completion of 63 holes totalling greater than 20 kilometres of core drilling during 2007. A 43-101 independent resource is expected to be completed prior to the end of the 1st quarter 2008. Following the issuance of the shares in connection with the flow-through offering, Erdene has current cash and equivalent position of approximately $11.7 million with 69,200,939 common shares issued and outstanding and a fully diluted share position of 78,807,352.

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.

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