Erdene Gold Inc.

Erdene Gold Inc.

November 14, 2007 10:17 ET

Erdene Provides Update on 2007 Projects, Releases Third Quarter Financial Statements

HALIFAX, NOVA SCOTIA--(Marketwire - Nov. 14, 2007) - Erdene Gold Inc. (TSX:ERD) ("Erdene" or "Company") today provided an update of the Company's exploration activities and a summary of the Company's third quarter financial results. Significant progress has been achieved on Erdene's two main projects, as well as a number of early stage exploration projects. At the Donkin Coal Project in Cape Breton, Nova Scotia, the dewatering of the two access tunnels has been completed allowing direct access to the targeted Harbour seam. This will enable bulk sample analysis and in-seam drilling. Resource expansion and delineation drilling continues at the Zuun Mod molybdenum project in southwestern Mongolia and an independent resource study is underway by Minarco MineConsult ("Minarco").

Third Quarter Financial Results

Erdene's quarterly financial statements have been filed with the appropriate regulatory authorities and are available on the Company's website at or on SEDAR at The following are some of the financial highlights for the third quarter 2007.

- Erdene had cash and cash equivalents of $8.33 million at September 30, 2007 compared to $3.05 million at December 31, 2006. In addition, the Company had cash restricted for Canadian Exploration Expenditures ("CEE") of $498,523 at September 30, 2007 compared to $4.60 million at December 31, 2006.

- Exploration and operating expenses during the three months ended September 30, 2007 were $1.3 million compared with $931,841 for the same period in 2006.

- The loss for the three months ended September 30, 2007 was $986,456, or $0.02 per share, compared to $1,503,853, or $0.04 per share, for the same period in 2006.

- Beginning July 1, 2007 Erdene's Zuun Mod molybdenum project met the Company's criteria to begin capitalizing exploration and development costs associated with the project. During the quarter ended September 30, 2007, the Company incurred $1,581,523 in exploration and support costs directly related to the Zuun Mod project which were capitalized.

- Subsequent to the end of the quarter, Erdene announced that Xstrata Coal had subscribed for one million common shares of the Company with closing to occur on the day which is 16 full trading days following the release of information from the Norwest report, which is a preliminary assessment of the Donkin Coal Project being prepared by Norwest Corporation, an independent engineering firm.

Mongolian Projects Update

In addition to the ongoing resource delineation drilling program at the Zuun Mod molybdenum project, first stage resource delineation drilling has been completed on the Galshar coal project. Drilling has also been carried out on four of Erdene's copper (with gold, molybdenum and/or platinum) projects; Mogoit, Tsagaan Ovoo, Erdenet and Biger.

Zuun Mod Molybdenum Project

Additional step-out holes continue to be drilled at 100 and 200 metre-centers within the South Corridor zone that lies within the southeastern portion of the Zuun Mod Porphyry complex. As announced recently, results from the Zuun Mod resource delineation drilling program continue to expand the area of known mineralization. The newly identified zone, north of the Racetrack zone, includes holes ZMD-29 with 80 metres of 0.073% molybdenum beginning at 46 metres and ZMD-39 with 0.173% molybdenum over 20 metres beginning at 92 metres. Both of these holes have returned wide intervals (198 and 258 metres) of 0.05% molybdenum or greater. The South Corridor also hosts the previously identified Stockwork, Intersection and Racetrack zones. The most advanced is the Racetrack zone which is being defined over a 1.4 kilometre strike length. Results to date indicate a central mineralized zone characterized by greater than 0.06% molybdenum over thicknesses ranging from 58 to 194 metres with many holes open at depth. Molybdenum mineralization has been defined over thicknesses of up to 380 metres, is open at depth and locally comes within 18 metres of surface.

To November 1, 2007, a total of 52 phase I and II drill holes have been completed for approximately 15,000 metres. It is anticipated that an additional 10 to 15 drill holes will be completed at Zuun Mod by early December. The objective of the 2007 drill program is to identify a National Instrument 43-101 compliant molybdenum resource for the Zuun Mod project. Erdene has retained the services of Minarco-MineConsult, a member of the Runge Group of Sydney Australia, to carry out an independent resource estimate for the Zuun Mod molybdenum project. The report will include geological modeling, geostatistical analysis, grade modeling and a mineral resource estimate for the Zuun Mod molybdenum deposit. The final report is expected in first quarter 2008 and will include the results from the current resource delineation drilling program.

Galshar Coal Project

Erdene has completed a first stage resource delineation drilling program for the Galshar coal project. Six diamond and 15 poly-crystaline diamond (PCD) holes, totalling 2,287 metres were completed over the Galshar deposit area with a drill spacing of 500 metres to 1 kilometre. The diamond holes were cored and samples selected for analysis. A total of 256 samples were collected. Twenty one drill holes were tested with down-hole geophysics to assist in coal seam identification and quality. A total of 2,074 metres of down-hole geophysics was completed.

The 2007 drill program was successful in expanding the coal resource to the west and defining the deposit structure and continuity to the east, north and northeast of the 2005 drill hole CDD-01, which reported 21.8 metres of greater than 10,000 BTU/lb coal, low ash (6%) and low sulfur (0.4%). Eight of the 2007 program drill holes intersected a 12.8 to 15.3 metre thick, homogenous coal seam at an average depth of 90 metres and within an area extending over 1.8 square kilometres. Final coal quality results are pending.

Mogoit and Tsagaan Ovoo Copper-Gold Projects

During the quarter, a drill program was completed at Tsagaan Ovoo which included six holes totaling 836 metres and at Mogoit where three holes totaled 685 metres. The holes were designed to test zones of copper and gold mineralization exposed in trenches, and at Tsagaan Ovoo beneath several large, partially buried hydrothermal breccia boulders that returned values up to 18.5g/t gold. The most significant drill results were from Tsagaan Ovoo where results indicate the sub-surface continuance of the surface copper and gold mineralization along northwest trending structures. A mineralized zone beneath Trench 4 reported 10 metres averaging 0.552% copper and 0.017g/t gold (including a 2 metre interval with 1.78% copper and 0.013g/t gold). A reconnaissance geological mapping and stream sedimentary survey was carried out over the entire licence area which identified a number of significant gold anomalies including a broad gold anomaly 9 kilometers west of the Tsagaan Ovoo prospect, an area previously unexplored. These anomalies require follow-up field evaluation.

Erdenet Ikh-Tal Porphyry Copper Project

Drilling has been completed 4 kilometres southeast of the Erdenet Mining Corp's ("EMC") open pit copper-molybdenum mining operation. Hole ITDD-13, with a total depth of 244 metres, was drilled to test a broad chargeability anomaly that extends east of hole ITDD-8 to the eastern side of the Company's license boundary. Hole ITDD-8 intersected highly anomalous oxide and sulfide copper zones. The new hole intersected disseminated sulfide mineralization in potassic altered granodiorite and has been sampled and sent for assay. At the Tsagaan Chuluut prospect, located 4 kilometres northwest of EMC's open pit copper-molybdenum mine, a dipole-dipole survey was completed over a broad magnetic low on the western side of the prospect. Results indicate a 1.6 kilometre long chargeability anomaly adjacent to the Company's western license boundary extending 1,000 metres to the east. The first 450-metre deep drill hole is now underway at Tsagaan Chuluut to test the coincident magnetic low, chargeability anomalies and extensive surface alteration. The Tsagaan Chuluut prospect occurs along a major northwest-trending structure that hosts the EMC deposit.

Biger Copper-Gold-PGE Project

In July 2007, a seven-hole drill program totaling 1,737 metres, was completed on the Biger property located in southwestern Mongolia. The property represents an alkalic porphyry system with potential to host significant copper-gold-platinum mineralization. The 2007 drill program was designed to test a number of geochemical and geophysical targets, and to follow up on drill results from Erdene's previous exploration program. A total of 753 samples were selected and sent to SGS for multi-element analysis. Hole BGD-05 intersected copper values up to 0.16% over 2 metres. Although the 2007 drilling results were not successful in identifying significant mineralization, Biger contains a vast pediment that contains several large untested sub-circular magnetic and coincident IP gradient and dipole-dipole anomalies. These anomalies are permissive of, and remain prospective for, Cu-Au-PGE (copper-gold-platinum group elements) enriched alkaline porphyry style mineralization.

North American Projects Update

In North America, work continues to advance the Donkin Coal Project towards feasibility, Erdene Materials has entered into a new partnership to further develop markets for the Company's kaolin resources in Georgia and work on the Granite Hill aggregate project continues in anticipation of receipt of the final mining permits.

Donkin Coal Project

During the third quarter, the dewatering phase of the project was completed to the end of the 3,500 metre long twin tunnels followed by the subsequent tunnel clearing and refurbishing program. This represents a major milestone in the project's development with access to the targeted Harbour seam complete. A large channel sample was recently taken from the exposed Harbour seam coal face and sent to Australia for testing and analysis. Extensive testing of the Harbour seam will now take place via a 10,000 metre in-seam drilling program.

In August 2007, the Donkin Coal Alliance ("DCA"), a joint venture between Xstrata Coal (75%) and Erdene (25%), announced that an internal evaluation for the Donkin Coal Project has been completed and the project is now advancing towards the feasibility stage. Norwest Corporation, an independent engineering firm based in Calgary Alberta, was retained to prepare Preliminary Assessment Study in light of the DCA's requirement that all publicly disclosed information be independently verified prior to release. The Norwest report is expected to be released in the fourth quarter.

Sparta Kaolin Project

On October 31, Erdene Materials Corporation (formerly Sparta Kaolin Corporation, a wholly owned subsidiary of Erdene) entered into an Option Agreement with Deepstep Kaolin Company LLC ("DKC"), of Georgia, USA. The purpose of the agreement is to jointly develop a new product line for the Company's primary kaolin resources. The ceramic clay market provides an emerging opportunity in North America as clays typically supplying this market from Europe are being depleted. DKC will now proceed with a trial production period during which Erdene will contribute the raw material and the product manufacturing facility and DKC will cover the necessary capital and operating costs. DKC will also provide the management and expertise required to manufacture the products and operate Erdene's facility in Eatonton, Georgia. Following the Phase I development program, estimated to take eight months, if DKC decides to take the project to production, Erdene will have the option of directly participating in the ownership of the production company. In addition, Erdene will be paid a royalty for any of its kaolin mined for the development of these products.

Granite Hill (Maddox) Project

The Granite Hill project, in which Erdene has a 7.5% of selling price royalty interest, is now being operated and fully funded by Cemex S.A.B. de C.V. ("Cemex") who recently purchased Rinker Materials. Cemex is a leading worldwide producer of cement, ready-mix concrete and aggregates. Granite Hill has an estimated start-up production of one million tonnes of granite aggregate per year with a design capacity of four million tonnes. Based on current production projections, the Granite Hill quarry would have a lifespan of at least 20 years. Cemex has designed a quarry mining plan, processing plant and facilities, and produced an environmental impact plan. Cemex has also acquired additional land adjacent to the Granite Hill property to secure rail access to the site. During the third quarter mine permitting work was ongoing and has entered the final Federal and State approval stages with no impediments to approval anticipated. Issuance of the surface mining permit is now expected in first quarter 2008. Following a development decision by Cemex, the construction phase is expected to be completed in nine to twelve months.

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). Erdene has strategic alliances with Xstrata Coal to develop its coal properties in Mongolia. In addition, Erdene has near-term cash flow opportunities in its North American assets, which includes its 25% interest in the Donkin Coal Project in Nova Scotia with Xstrata Coal Donkin Limited and agreements with J.M. Huber Corporation and Cemex as operators and developers in the southeast U.S. for its kaolin clay and aggregate projects, respectively. Erdene has a current cash and equivalent position of approximately $8.0 million with 65,809,439 common shares issued and outstanding and a fully diluted share position of 75,480,852.

Qualified Person

This news release has been prepared under the supervision of J. C. (Chris) Cowan, P.Eng., who serves as the qualified person under National Instrument 43-101. All Zuun Mod samples were prepared at the SGS Laboratory in Ulaanbaatar, Mongolia and then sent to the Chemex Laboratory in Vancouver, Canada in order to facilitate the analysis of rhenium. All Biger drill core samples were prepared at the SGS Laboratory in Ulaanbaatar and sent the SGS Laboratory in Tianjin, China to facilitate the analysis of platinum group elements. All other samples were prepaared and analyzed at the SGS Laboratory in Ulaanbaatar. In addition to internal checks by Chemex Laboratory and SGS Laboratory, the Company incorporates a QA/QC sample protocol utilizing prepared standards, sample splits and duplicates.

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.

No regulatory authority has approved or disapproved the content of this release.

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