Erdene Resource Development Corporation

Erdene Resource Development Corporation

May 19, 2009 09:19 ET

Erdene Reports 2009 First Quarter Financial Results and Provides Project Updates

HALIFAX, NOVA SCOTIA--(Marketwire - May 19, 2009) - Erdene Resource Development Corp. ("Erdene") (TSX:ERD), today provided an update on its principal projects in conjunction with the release of its 2009 first quarter financial results.

2009 First Quarter Highlights

- Completed the Beta Minerals Reverse Takeover transaction, giving Erdene a controlling interest in Beta Minerals (now Advanced Primary Minerals Corp. (TSX VENTURE:APD))

- Continued Exploration and Development Phase implementation plans for the Donkin coal project

- Began work on the new Zuun Mod molybdenum project resource estimate that incorporates data from drilling completed in 2008

- Working capital of $18.8 million as at March 31, 2009, including Erdene's controlled subsidiary Advanced Primary Minerals Corp.

"During the first quarter we continued to make progress on our Exploration and Development phase implementation plans for the Donkin coal project and the completion of an updated resource estimate at the Zuun Mod molybdenum project," said Peter Akerley, President and CEO. "We are also pleased to see our kaolin division operate as a new public company with established production, which we expect will ultimately reward our shareholders."

Project Summaries and Updates

Donkin Coal Project

The Donkin coal project is located on the Donkin peninsula in Cape Breton Island, Nova Scotia, Canada. The project is a joint venture between Xstrata Coal Donkin (75%) and Erdene (25%) managed by Xstrata Coal Donkin Management Limited.

Current plans are to complete a feasibility study in conjunction with sales agreements for an interim Exploration and Development Phase program utilizing a continuous miner, which would see up to 350,000 tonnes of coal produced from the Harbour Seam, which contains the largest volume and highest quality resource within a total 227Mt (Indicated) resource of high volatile A bituminous coal. It is anticipated the initial phase would require a capital investment of approximately $65M of which Erdene is responsible for 25%, less $10M which will be funded by Xstrata under the terms of the joint venture agreement between the parties.

During the latter part of 2008 and the first quarter of 2009, work continued on the Exploration and Development Phase implementation with requests for pricing issued for the long lead-time items and major contracts associated with the project. The final feasibility of the Exploration and Development Phase will be released following conclusion of sales agreements. The project currently employs 10 full time or part time site personnel.

The final stage of the feasibility study for the Exploration and Development Phase involves the negotiations for domestic and international sales contracts. With respect to domestic sales, discussions revolve around coal quality details and acceptable volumes to be able to meet government regulated emissions standards for 2010 since the coal produced during the Exploration and Development Phase will be unwashed. The supply of an unwashed product is an interim step during the evaluation phase with the long term goal being longwall production of a higher quality washed product. The Exploration and Development Phase is a critical part of the overall project approval process. It will provide additional, essential information on geology, geotechnical data, coal quality and mineability aspects of the Donkin coal deposit. Once the feasibility study and sales agreements are finalized, it will be presented to the Donkin Coal Management Committee and then to the respective boards of the joint venture partners for approval.

Zuun Mod Molybdenum Project

Located within 200 kilometres of China's border in Mongolia's Bayankhongor Province, the Zuun Mod project measures 12 kilometres in circumference and hosts broad zones of molybdenum/copper mineralization. The project is wholly owned by Erdene.

During the first quarter of 2009, Minarco-MineConsult began work on a new Zuun Mod molybdenum/copper project resource estimate incorporating the drilling completed in 2008. Several of these holes, located in the central part of the deposit, returned intersections of up to 400 metres in width averaging 0.06% molybdenum with multiple higher grade zones, including one 70-metre intersection averaging 0.11% molybdenum in the northeastern portion of the deposit. These data add to an initial resource estimate, reported in May 2008, which totalled 110 million tonnes averaging 0.061% molybdenum in the Measured and Indicated category. Additional drilling will eventually be required to better define the higher grade zones and have them reflected in the overall resource. The current focus is on completing the resource estimate, evaluating a revised mine plan and preliminary economics and applying for a mining license.

In regards to the mining license application, the Zuun Mod exploration license is due to expire in May 2010 and work has been proceeding to complete the requirements for an application for a mining license. Under the Minerals Law of Mongolia, a mining license has an initial term of 30 years, renewable twice for 20 years each. Field work commenced in October 2008 by Ecotrade XXK, a Mongolian company, to collect data for an Environmental and Social Economic baseline study required as part of the application for a mining license. A final report for submission to the Ministry of Environment and Tourism was received in early May 2009. In addition, a contract was signed with AMC XXK to carry out a 1:2000 topographic survey, a hydro geological study of the Zuun Mod site and a geological report and resource estimate for submission to the Mongolian Mineral Resource Council as a prerequisite for granting of a mining license. The topographic survey and hydro geology study including the completion of a 25-cemtimetre diameter drill hole for pump tests and water sampling were completed in January 2009. Work on the AMC geological report and resource estimate began in the first quarter of 2009 and is expected to be completed by the end of July 2009.

Advanced Primary Minerals Corp.

On February 27, 2009, Erdene and Beta Minerals Inc. ("Beta") announced the closing of the transaction outlined in an Amended and Restated Letter Agreement dated January 23, 2009 (the "Agreement"), among the Company, Beta and Deepstep Kaolin Company LLC ("Deepstep"). Pursuant to the Agreement, the Company and Deepstep exchanged all of the outstanding common shares of Erdene Materials Corporation ("EMC") for common shares of Beta, giving the Company a controlling interest in Beta (the "Transaction"). Following the closing, Beta changed its name to Advanced Primary Minerals Corporation ("APM") and on March 6, 2009 began trading on the TSX Venture exchange under the ticker symbol APD. The Transaction constituted an arms length "Reverse Takeover" under the applicable policies of the TSX Venture Exchange.

APM's goal is to become North America's leading specialized primary kaolin producer. To this end, a new state-of-the-art processing facility has been constructed in Dearing, Georgia and the first shipment of product from the new plant took place on May 11, 2009. The new Dearing plant is ideally located along the Augusta Highway, adjacent to rail with existing access to all required utilities. Extensive product development and testing has been carried out over the past five years and APM has advanced commercial trials underway to complement production commitments already in place.

APM is targeting value added products that benefit from the unique attributes of the Company's high quality primary kaolin resource under a two phase development program. Target markets under the phase one program, currently underway, are focused primarily on primary kaolin products for the North American ceramics and whitewares industries as well as conducting toll processing of a non-kaolin product for a third party under a contract that guarantees minimum monthly production volumes. The toll processing circuit within the Dearing plant is scheduled to commence June 1, 2009.

During the phase one program, a phase two feasibility program will be completed along with further product development and trials for an expanded product line targeting the paint, coatings and catalysts industries as well as other specialty industrial applications. Product trials have shown that APM's primary kaolin products meet or exceed the quality of comparable foreign imports. Proximity to the U.S. domestic market and elimination of foreign exchange risk add a strong competitive advantage.

Granite Hill

The Company's Granite Hill project is a former producing granite aggregate quarry in central Georgia. The Company owns the 342-acre property, through a wholly owned subsidiary, which holds in excess of a 120-million ton resource and is situated on an existing rail line. Ready Mix USA ("RMU") holds, through a lease with the Company, an exclusive right to mine, process, and sell aggregate from the Granite Hill property and is responsible for all associated capital and operating costs. The Company has a carried, percent-of-sales royalty interest in the sale of all aggregate from the property.

RMU's quarry development plan provides for an estimated start-up production rate of one million tons of granite aggregate per year, with a design capacity of up to 2.5 million tons. Based on current production projections, the Granite Hill quarry will have an estimated lifespan in excess of 30 years. RMU has designed a quarry mining plan, processing plant and facilities, and produced an environmental impact plan. RMU has also acquired additional land adjacent to the Granite Hill property to secure rail access to the site. During the quarter a new county access road was approved allowing for direct access for development of the site from existing roads while the initial development area is being prepared for clearing. The construction phase is expected to be completed nine to twelve months after a production decision by RMU. RMU is responsible for fully funding the development and operating program.

Production from the Granite Hill project will target markets in the southeastern U.S. where urban sprawl, depleted resources and the shutdown of mining in Florida's Lake Belt aggregate district have combined to create a pending shortage of crushed stone. At the same time the U.S. government stimulus package is expected to initiate over $90 billion in infrastructure spending over the next 12 to 18 months expected to spark demand for aggregate material. The Lake Belt district is in northwestern Miami-Dade County and on average produces approximately 45M tons of limestone or about half the state of Florida's annual production. There is currently no mining taking place in this area as a U.S. District Judge has stayed (pulled) all mining permits over concerns regarding impact on the Everglades' watershed and the environment.

2009 First Quarter Financial Results Summary

Erdene's 2009 first quarter financial statements and Management's Discussion and Analysis were filed with regulatory authorities on May 15, 2009 and are available on the Company's website at and on SEDAR at These statements are provided on a consolidated basis incorporating that of its controlled subsidiary, Advanced Primary Minerals Corp.

For the three months ended March 31, 2009, exploration and operating expenses amounted to $437,595 compared to $664,395 in the first quarter 2008. Including capitalized costs, exploration expenses were $840,435, net write-offs, for the first quarter of 2009 and $2,206,519 for the first quarter of 2008 respectively.

Erdene's first quarter expenditures were primarily directed toward the continued advancement of the Company's primary projects, namely the Donkin coal project and Zuun Mod molybdenum project as well as approximately $564,000 in purchases of plant and equipment for a new processing plant being constructed by Erdene's controlled subsidiary APM.

Administrative expenses totalled $459,395 for the first quarter of 2009, compared to $969,099 in first quarter 2008 (including $464,475 in stock based compensation).

The Company recorded income of $681,223, or $0.01 per share, in the first quarter of 2009 compared with a loss of $1,553,612, or $0.02 per share, in the first quarter of 2008. Erdene recognized an $879,869 dilution gain on the disposition of an interest in its subsidiary Erdene Materials Corporation. At March 31, 2009, Erdene had approximately $17,689,316 million of cash and cash equivalents on hand, including cash acquired on closing of the Beta Transaction, compared with $16,195,175 million at December 31, 2008.

About Erdene

Erdene Resource Development Corp. is a diversified resource company with multiple projects at various stages of development from exploration to production, all focused on high-growth commodities. Erdene has a current working capital position of approximately $17.8 million, including that of its controlled subsidiary APM, with 89,230,877 common shares issued and outstanding and a fully diluted position of 97,825,852 common shares.

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 Resource Development Corp.
    Peter C. Akerley
    President and CEO
    Erdene Resource Development Corp.
    Ken W. MacDonald
    Vice President Business Strategy and CFO