Erdene Resource Development Corporation press release
Erdene Outlines Multiple Drill Targets Adjacent to Major Copper Mine in Mongolia
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Kaoclay Shareholder Meeting Set for May 25th
HALIFAX, May 2 /CNW/ - Erdene Gold Inc. (TSX: ERD) is pleased to provide an update on recent exploration on its property surrounding the Erdenet Copper Mine and its proposed acquisition of Kaoclay Resources Inc. "To have identified targets of this magnitude in one of the most important copper districts in the China region is very exciting," said Peter Akerley, CEO. "With the added advantages of adjacent infrastructure and a cooperative relationship with Erdenet Mining Company, we view the Erdenet project as a core strategic asset and look forward to the upcoming drilling campaign." The Erdenet Mining Company (EMC) is a Mongolian/Russian government joint stock company that operates a world class copper/molybdenum open pit mine at Erdenet, which has annual production of approximately 27.6 million tonnes of ore producing approximately 280 million pounds of copper and 2.62 million pounds of molybdenum in concentrate. In the late 1970s copper head grades were 0.87% to 0.96%, while today they are between 0.59% and 0.61% as a result of the upper oxide portion being depleted. The declining head grades at depth have created an opportunity to identify higher grade, near-surface feed for the Erdenet mill complex. The mine is located on rail with connections to China and Russia.
Copper Exploration - Erdenet Mine Area
Erdene's exploration team recently completed a geophysical and surface mapping program east and northwest of the Erdenet Mine site in northern Mongolia. This has resulted in the identification of two large, very intense geophysical anomalies east of the mine site with coincident surface alteration and favourable geology. Drilling plans are now being prepared with start-up anticipated within 30-60 days. The April 2006 program was a continuation of the 2005 exploration program which identified a high intensity induced polarization (IP) geophysical anomaly at Baglai (North Baglai), beginning 200 metres east of the mine property. As a result of the expanded geophysical and mapping program a number of additional targets have been identified. The highest priority targets are described below.
1. South Baglai: The April 2006 induced polarization survey has revealed a large, strong (10 to 28 mv/V) chargeability anomaly (1000 by 800 metres) and coincident resistivity anomaly approximately 2.5 kilometres east of the Erdenet open pit mine. This anomaly extends from 50 metres to 350 metres and is open at depth.
2. North Baglai: Strong silicified and sericitized granites, syenites and porphyry, with finely disseminated sulfides (pyrite-chalcopyrite- limonite-magnetite), are exposed at surface in the North Baglai area, approximately 200 metres east of EMC's property boundary. The geophysical chargeability anomaly in the vicinity of this exposure is 15-19mv/V increasing to 40-50mv/V 400 metres east, between 200-metre and 400-metre depths. The anomaly extends 1200 metres east of the Erdenet boundary and is 800 metres wide.
3. Interjacent (Central): A satellite zone of mineralization from the Erdenet open pit straddles the Erdenet-Erdene boundary southeast of the main pit. Favourable alteration, mineralization and geology have been identified in this area. A broad, moderately high chargeability (~10mv/V) is coincident with this target.
4. NW Extension: The operating open pit is within 200 metres of the Erdene property boundary in this area. Mapping and sampling have indicated favourable alteration and mineralization adjacent to the boundary.
The Erdenet open pit mine is located within a large, 20-25 kilometre diameter district which includes a number of intrusive centres, typically ranging from 2 to 2.5 kilometres in diameter and represented by dykes and stocks of altered granitic rocks. Previous exploration by EMC has identified five copper/molybdenum deposits to date. The main deposit is concentrated within a subvertical, pipe-like intrusive body of Late Triassic granodiorite porphyry ranging from 1.3 to 2.4 kilometres in diameter which continues at least 1000 metres vertically and has been mined commercially by EMC since 1978. Erdene has a 100% interest, (subject to a 1.5% royalty interest to Gallant Minerals Ltd.) in its licences surrounding the Erdenet Mine. Erdene's licences are immediately adjacent to the Erdenet open pit mine and extend 3 to 4 kilometres away from the mine site in each direction except to the south where a 200-metre wide area is controlled by Erdene. To view the property map outlining the Company's licence area please visit www.erdene.com.
2006 Exploration Program
The Company has been conducting its exploration activities on its Erdenet licences in cooperation with EMC. Drilling will immediately follow a review of the new exploration data and consultations with EMC representatives.
Proposed Kaoclay Resources Inc. ("KRI") Acquisition
The Supreme Court of Nova Scotia has fixed May 25, 2006 as the date for the Special Meeting of the KRI Shareholders to vote upon the proposed Plan of Arrangement whereby Erdene will acquire all of the outstanding shares of KRI in exchange for shares and warrants of Erdene. The Notice of Meeting and Management Information Circular was mailed to all registered KRI Shareholders on May 1, 2006. If the Plan of Arrangement is approved by a majority of 66 2/3% of the KRI shareholders voting in person or by proxy as well as the necessary court approval, it will be effective in early June. KRI is a Nova Scotia-based company with three advanced-stage energy and industrial mineral projects in North America, including a 20% interest in the Alliance formed to explore and, if warranted, develop the Donkin Coal Resource Block in Cape Breton, Nova Scotia, along with Xstrata Coal Canada Ltd., which has a 66% interest.
Qualified Person
This press release has been prepared under the supervision of J. Christopher Cowan, P.Eng., who serves as the qualified person under National Instrument 43-101. All samples are assayed at SGS Laboratory in Ulaanbaatar, Mongolia. In addition to SGS Laboratory internal checks, Erdene Gold incorporates a QA/QC sample protocol utilizing prepared standards, sample splits and duplicates.
About Erdene Gold Inc.
Erdene Gold Inc. is a diversified mineral exploration company focused on Mongolia with over 20 mineral exploration projects that include 68 licences and cover approximately 1.6 million hectares. Erdene's Mongolia projects are focused on high-growth commodities in base metals (molybdenum and copper), precious metals and energy (uranium and coal). The Company has strategic alliances with Xstrata Coal Canada Ltd. and International Uranium Corporation to develop its coal and uranium properties in Mongolia. Erdene has a current cash position of approximately $7 million with 31,688,210 common shares issued and outstanding (before the issuance to Kaoclay Shareholders) and a fully diluted share position of 35,868,210 common shares.
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