The Asia Miner

OCT-DEC 2017

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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28 | ASIA Miner | Volume 14 • Issue 4 | 2017 ERDENE Resource Development Corp has acquired a 51% interest in the Ulaan explo- ration licence, which is immediately west of its Bayan Khundii Gold Project. Erdene has an option to acquire up to 100% of the 178 hectare project. Ulaan hosts a very large, 3km diameter, intense alteration zone with characteristics thought to be related to a porphyry copper and epithermal gold system. Although the property has no history of drilling or trenching, rock chip and stream sediment geochemical sampling has iden- tified anomalous concentrations of gold, copper and molybdenum in the surround- ing area, and recently completed geophys- ical surveys have produced a number of follow-up targets. Erdene has acquired 51% of the out- standing shares of Leader Exploration LLC, a private Mongolian company that owns the property, from Erdenechuluun Z and Erdenekhuyag Z for US$750,000. Provided Erdene spends a minimum of US$600,000 on work over the next three years, it has the right to acquire the remain- ing 49% of Leader from Erdenechuluun Z. Erdene may extend the option beyond three years by annually spending a mini- mum of US$100,000 on work expenditure. SOUTHGOBI Resources has entered into a loan agreement and supplementary loan agreement with Beijing Jin Rui Tian Chen Asset Management Co Ltd to finance the purchase of mining equipment. The company says the equipment will increase production capacity at its Ovoot Tolgoi Coal Project. The principal of the combined equipment purchase loan is RMB 69 million with maturity 12 months from drawdown and the interest rate is 12% per annum. The company shall repay the principal and accrued interests at maturity date, and will provide a corporate guarantee to cover the principal and interest owed, and provide mining equipment with val- ue no less than RMB 69 million as security. As a result of improved market conditions and prices for coal in China, the company's operating results for the June quarter im- proved with an increase in the average selling price of coal as well as the volume of coal sales, as compared to the second quarter of 2016. SouthGobi sold 1.48 million tonnes of coal product during the second quarter of 2017 from Ovoot Tolgoi compared to 0.82 million tonnes for the second quarter of 2016. The average realised selling price increased from $13.65 per tonne for the second quarter of 2016 to $25.24 per tonne for the second quarter of 2017, which was mainly a result of improved market conditions as well as an improved product mix. The company recorded a gross profit of $7.3 million during the quarter compared to a gross loss of $12.7 million in the second quarter of 2016. It recorded a $900,000 profit from operations during the quarter compared to a $13.8 million loss from operations in the second quarter of 2016. Revenue was $34.7 million com- pared to $10.4 million in the corresponding 2016 period. SouthGobi has initiated a plan to change its product mix to higher value and higher margin outputs by washing certain grades of coal commencing in the second half of 2017 to produce more premium semi-soft coking coal. The plan will also initiate more processing of lower grades of coal to reduce the ash content and improve the selling price and margins on its thermal coal. Equipment to boost SouthGobi production Erdene's copper-gold prospects are in southwest Mongolia. Erdene secures adjacent property The Canada-based company expects ex- ploration of Ulaan to start before the end of the year while it continues drilling at its Bayan Khundii, Altan Nar and Altan Arrow projects. Erdene has recently received results from metallurgical testing conducted by Blue Coast Research (BCR) on Bayan project. Results from two master composites indi- cate the gold is free milling and amenable to conventional processing techniques. Tests of the first composite of 4.3 g/t gold showed recovery after 48 hours was 96% whereas the 96-hour gold recovery was 97% with a grind size of 80% passing 60 micron, 40% solids and 1.0 g/L NaCN. The second composite of 4.7 g/t received full optimisation test work, including varia- tion on grind size, residence time and so- dium cyanide dosage as well as assessing the impact on overall recoveries when initial gravity recovery was applied. Gold recover- ies, using a target grind size of 80% passing 60 micron, ranged from 91% to 93.4% after 48-hours with overall gold recovery of 95% after 96-hours. Based on this success, BCR has recom- mended additional tests to better study the metallurgical characteristics and further opti- mise recoveries. It expects these will begin this quarter.

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