Erdene Gold Inc.

Erdene Gold Inc.

December 14, 2006 07:00 ET

Erdene's Drill Program Confirms Copper Oxide and Sulfide Mineralization Extends onto its Property at Erdenet

New Northwest extension identified: Additional drilling planned for 2007

HALIFAX, NOVA SCOTIA--(CCNMatthews - Dec. 14, 2006) - Erdene Gold Inc. (TSX:ERD) today announced the final results of its 2006 drill program on the Erdenet property which surrounds Erdenet Mining Corporation's ("EMC") world-class copper/molybdenum mine located in north-central Mongolia. Drilling has returned multiple zones of significant copper mineralization from the South-Central Baglai area (to the southeast of the mine site) and from the Northwest Extension area (northwest of the mine). Follow-up drilling is planned for these two areas in 2007. In addition, a new large area of alteration with coincident geophysical anomalies, referred to as Tsagaan Chuluut, has been identified four kilometres northwest of the EMC open pit and will be drill tested in 2007.

"Erdene is very excited by the results of this round of drilling. Wide spaced drilling returning oxide zones grading up to 0.7% copper at shallow depths and new sulfide zones were intersected over three kilometres from the current open pit. We view the Erdenet property as having high potential for economic concentrations of near-surface copper oxide zones and deeper copper sulfide mineralization," said Peter Akerley, President and CEO. "With both copper oxide and sulfide production facilities operating at the mine site on relatively low-grade copper feed, we view these initial drill results from our Erdenet property as very encouraging."

The drill program at Erdenet consisted of nine wide-spaced diamond drill holes for a total of 1,773.8 metres. The drill program was designed to test a number of targets identified by geophysical surveys (IP and magnetics) in association with geological and alteration mapping on the Erdene property adjacent to the EMC open pit.

In the South-Central Baglai area, drill hole ITDD-04, located 200 metres to the east of the EMC property boundary, intersected a mineralized oxide zone starting at 36 metres that returned 0.20% copper over 32 metres. This includes a 10 metre section of 0.32% copper and up to 0.65% copper over two metres. Hole ITDD-08, collared 200 metres southeast of ITDD-04, intersected 35 metres of 0.27% copper. This includes 0.33% copper over 15 metres, starting at 31 metres from surface. In addition, sulfide zones were intersected deeper in the hole. These include 10 metres of 0.30% copper at 125 metres and 25 metres of 0.23% copper at 215 metres to the bottom of the hole which ended in mineralization. A broad high chargeability anomaly has been traced for 400 metres southeast of hole ITDD-08 along with surface porphyry style alteration indicating the potential for discovering porphyry copper mineralization in this area.

In the Northwest Extension area, hole ITDD-09, located 1200 metres northwest of EMC's open pit, returned a 35 metre interval with copper oxide mineralization that averaged 0.21% copper from 24 to 59 metres. This includes a five metre section of 0.71% copper at 54 metres. Hole ITDD-10, located 550 metres to the northeast of hole ITDD-09, intersected five metres of 0.25% copper at 40 metres from the surface.

These results now confirm the extension of both near surface oxide and deeper sulfide porphyry copper mineralization onto Erdene's adjoining property to the southeast as well as the northwest of EMC's mine. Further drilling is now being planned for 2007. Results are summarized in the following table.

Table 1 - Summary of significant copper intersections from drill core

Hole ID From To Interval % Cu
(metres) (metres) (metres)
ITDD-04 36 68 32 0.20
Including 56 66 10 0.32
Including 60 66 2 0.65

ITDD-08 31 66 35 0.27
Including 31 46 15 0.33
and 125 135 10 0.30
and 215 240 (BOH(i)) 25 0.23

ITDD-09 24 59 35 0.21
Including 54 59 5 0.71

ITDD-10 40 45 5 0.25
(i)BOH - Bottom of Hole

Tsagaan Chuluut Copper Target

Additional geological mapping and sampling in the Tsagaan Chuluut area, four kilometres northwest of EMC's open pit, has outlined an area of silicification and alunite alteration. This coincides with a large magnetic low, high chargeability and low resistivity. In addition, the Tsagaan Chuluut prospect occurs along a major regional structural feature that also transects the EMC deposit. It is anticipated that this new target area will be drill tested in 2007 along with follow-up of the positive results from the South Baglai and Northwest Extension areas.

Qualified Person

This press 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 samples are assayed at SGS Laboratory in Ulaanbaatar. In addition to internal checks by SGS Laboratory, the company incorporates a QA/QC sample protocol utilizing prepared standards, sample splits and duplicates.

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 (uranium and coal Erdene has strategic alliances with Xstrata Coal Canada Limited and International Uranium Corporation to develop its coal and uranium properties in Mongolia. In addition, Erdene has near-term cash flow opportunities in its recently acquired North American assets, which includes its 25% interest in the Donkin Coal Alliance in Nova Scotia, Canada and royalty agreements with JM Huber Corporation and Rinker Materials as operators and developers in the southeast U.S. for its kaolin clay and aggregate projects respectively. Erdene has a cash position as of November 30, 2006 of approximately $8.2 million with 53,041,127 common shares issued and outstanding and a fully diluted share position of 62,775,852.

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
    Erdene Gold Inc.
    Ken W. MacDonald
    Vice-President and CFO