Sponsored Q&A: Erdene shifts from gold mine build to district-scale exploration

Erdene Resource Development has moved into commercial production at its Bayan Khundii gold mine in Mongolia and is turning its attention back to exploration across the wider Khundii Minerals District.

The Northern Miner Groups’s Devan Murugan spoke with Erdene President and CEO Peter Akerley about the company’s exploration strategy, its upcoming GeoSymposium and the potential for new gold and copper discoveries across the district.

Devan Murugan: For viewers who may not know Erdene very well, what makes the Khundii Minerals District different from the thousands of other exploration stories investors hear every year?

Peter Akerley: It’s a tremendously exciting area we’re in and a tremendously exciting story that I look forward to sharing.

But to set the stage geologically, we are in the Central Asian Orogenic Belt, one of the most prolific gold and copper belts on the planet. It hosts giants. Muruntau, the biggest gold deposit on the planet, and Oyu Tolgoi, soon to be the fourth-largest copper producer, kind of bookend this district that is thousands of kilometres long. It hosts a number of other giants within that trend.

We happened to be in the right place at the right time. We went out into southwestern Mongolia 20 years ago and began to focus on a sub-belt of the Central Asian Orogenic Belt called the Trans-Altai Terrane. We recognized it had the fertility and all the ingredients that you want when you’re searching for giants, which is why we went to Mongolia. We felt there was this untouched opportunity.

There were deep-seated structures, great fertility and evidence that other deposits of size were present along that trend. We’ve focused on the Trans-Altai for the last 20 years.

Today, we have brought home a new minerals district. We call it the Khundii Minerals District, or Khundii Metallogenic Terrane. It hosts three significant deposits, which we can talk a little more about, but it’s just a tremendous opportunity.

Watch a video here.

Patience

DM: You’ve gone from grassroots exploration to commercial gold production. Looking back over that journey, what were the key decisions that got the company to this point?

PA: The short answer to that question is patience.

We went out there and had a scientific, long-term, methodical regional exploration plan that we stuck with. We learned as we went and, in many instances, applied different science to make each discovery.

To give you a bit of a window into that, it was satellite imagery interpretation and ASTER imagery that took us to clay anomalies and got us into the neighbourhood.

It was geophysics that led us to the discovery of Ulaan, one of the sub-deposits, using what we knew about magnetite destruction in the other deposits. We used indicator mineral elements for Dark Horse, where we had seen that fingerprint at Bayan Khundii and applied it to another target.

So, we learned as we went. But it was patience — just good, methodical exploration over a long period of time.

We’ve seen a number of companies come and go in Mongolia. Most of the world’s giants have been there and touched some of the rocks, but in most cases they haven’t had the consistency that we’ve had, and that has led to this success.

Next steps

DM: Now that Bayan Khundii is producing, where does the next stage of value creation come from? Is it extending the existing mine, discovering more gold nearby, or is the bigger opportunity actually copper?

PA: We have three very large hydrothermal systems within a neighbourhood of about 40 km in radius.

We have Bayan Khundii, which is a more traditional low-sulphidation deposit with plenty of room for extension. We have 12 km of interconnected structure that we know has the fingerprints of the Bayan Khundii deposit and needs to be explored.

That epithermal system is overprinted on a high-temperature, likely porphyry-type event as well. So we’ve got a number of areas there to search for extensions, but also that bigger prize of porphyry copper at depth.

You move north to Altan Nar, and sometimes this is a forgotten deposit within the mix. We discovered this first, but it’s sitting there with half a million ounces of gold at surface, and we’ve only explored a small portion of the five-kilometre trend.

Next year, we’ll really start to ramp up our exploration at Altan Nar and do one of two things. Either bring that into the back end of the Bayan Khundii mine development and bring that ore into the CIP plant, or perhaps build a standalone flotation concentrate operation.

That deposit has tremendous room for growth — half a million ounces today in probably 10% of the exploration area.

Finally, the other big system we have is Zuun Mod, which sits 35 km to the east. We’ll deliver a preliminary economic assessment on that project this year, which will start to send it towards the development queue.

At the same time, within that same complex, we have a new copper discovery. So we kind of have an embarrassment of riches.

Part of the focus of this symposium is asking: where is that next significant material deposit that we could find in any one of those three areas? But also, how do we prioritize it and how do we apply new thinking?

We’re bringing in the expertise of some of the top experts in the world. We want to boil down what that priority is for each of these target areas.

Independent experts

DM: Why was it important to invite independent experts rather than simply continue with your own exploration program?

PA: Our plate is very full. We have a growing team of geologists who’ve been together for 20 years and we’ve obviously been very successful, but I think it’s always important to bring in new thinking.

Many of the people we’ve brought into this GeoSymposium have significant expertise. Doug Kirwin was one of the initial team members who discovered Oyu Tolgoi and is considered a porphyry expert globally. Dr. Jeffrey Hedenquist is probably the world’s foremost expert on epithermal deposits.

We have Dr. David Burrows, who also has a massive understanding of porphyry copper deposits, and Kelly Cluer, who has worked extensively with Kinross, Centerra and now consults with us.

Bringing those thinkers together into a group with our team can obviously open some new doors and new ideas. We’re really looking forward to that helping guide our exploration in this next phase.

And just to add to that, we were heads down building a gold mine — our entire team, geologists and engineers — for the last few years. We’ve now passed that commercial production phase. We’re in cash flow.

We can use that cash flow to really unlock the riches of this district, which was the strategy from the beginning. Let’s get away from constantly going back to the market to raise equity and dilute. Let’s get the cash flow, and we’ll use that to explore this tremendously exciting district.

GeoSymposium

DM: Just remind us, Peter, when is the GeoSymposium taking place?

PA: That’s happening Sept. 14-18, coinciding with Mining Week in Mongolia.

We’ll do a few days of field visits and reviews. Then we have a GeoSymposium where we’ll invite industry, academics and stakeholders in the mining industry to come and hear what we’ve found and benefit from the presence of these experts.

DM: Mongolia has enormous mineral potential, but many investors still think almost exclusively of Oyu Tolgoi. Do you think that’s beginning to change, and what role can companies like Erdene play in attracting more international attention to the country?

PA: We’ve seen that change start to manifest itself over the last couple of years, with more majors — both Asian-based companies and Western-based companies — coming in.

We saw the government in June announce a reopening of its licensing system, which was probably the largest impediment to new entrants who couldn’t get product — product being exploration licences.

So we’re seeing that change. The infrastructure change in southwestern Mongolia over the last 20 years has been immense.

Maybe just to spend a second on that: the reason we were unchallenged in exploration for 20 years was that people viewed it as remote and infrastructurally challenged. Today, you have that infrastructure coming to us, with us being first movers in this new district.

So, yes, I think that’s absolutely going to change. What we hope this GeoSymposium will do is raise the profile of Mongolia and of the Khundii Minerals District, and have the world recognize just what a tremendous opportunity for exploration exists in Mongolia, for the benefit of all stakeholders.

Exploration program

DM: The symposium is a big milestone. For the rest of the year, what are the big markers you want investors to know about when it comes to Erdene?

PA: As I said, we’re at a transition point for Erdene. We hit commercial production a few months ago. We’re in strong cash flow, we have a great financial position in the corporate entity, and now we can embark on a much broader exploration program.

We’ll be delivering the PEA for Zuun Mod in late September or early October and immediately start to move that into the next stage of definitive studies.

We have 12,000 metres of drilling going on to expand Bayan Khundii and Dark Horse. We’re starting to kick off work at Altan Nar. We also have some follow-up work on our project in the Oyu Tolgoi Belt called Khul Morit.

So it’s just a very active period as we move through the fourth quarter and into 2027, when we’ll pick things up at Altan Nar as well.

It’s an exciting time for us and our investors. We expect to deliver continued success at the Bayan Khundii gold mine while we advance a number of other very significant projects.

DM: Peter, thanks for your time.