51 slides from Erdene Resource Development's conference presentation, August 2011
Slide 1: Key factors for a project in Mongolia
Erdene Resource Development Corp. ENERGY METALS INDUSTRIAL MINERALS Key factors for a project in Mongolia | Peter Akerley, CEO, ERDENE RESOURCE DEVELOPMENT
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS = <=); Ec Certain information regarding Erdene ("the Company”) contained herein may constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projectio
Slide 3: Presentation Outline
PRESENTATION OUTLINE 2p) » Overview » Geology » Licensing process » Transportation - Infrastructure >» Manpower » Investment environment >» Summary
Slide 4: Over a Decade in Mongolia
Over a Decade in Mongolia
Slide 5: Erdene - Mongolia
ERDENE - MONGOLIA 21>) » Principals working in Mongolia since 1996 » Executive have >30 years of combined experience in Country » Erdene formed in 2002 to focus on Mongolia » Acquired Gallant Minerals (Zuun Mod) in 2005 » Partnered with Xstrata on coal in 2006 » Employ 14 full time and up to 100 sea
Slide 6: acest oN
acest oN Wargait 5 Gaat, Mogod Turnusise y. : \ Prtatedh BiispMioe sor enkher Gol “MAO NU GEGs I-A Deiuhous oil gat * Sorleeth . Bld Springs j Eiger a = = Rich Gobi ao -Shurtiin KAundii Zuun Mod 3 , geen Ulsan Del White Hills ag (Cac irs UlsnjOvoo) J tS Od ail Kiatsayeh ul < OTe South Gobi * fe Mand
Slide 7: Foreign Involvement 1990 to 2006
Foreign Involvement = SPlp) Mongolian Mining Industry 1990 to 2006 SS e 1994: First Foreign Investors in Mining » 1995-96: Magma (BHP) Discovers Oyu Tolgoi > 1996-98: 1° Exploration Wave and Mineral Law » 1999-01: Exploration Industry Near Dormant » 2001: Ivanhoe Deep Discovery Hole at Oyu Tolgoi >
Slide 8: Foreign Involvement 2006 to present
Foreign Involvement EW) Mongolian Mining Industry 2006 to present SS > 2000: & 2007-08: » 2008: > 2009: >» 2010: > 2011: Parliament Passes Windfall Tax (follows with Strategic Deposit Designation); Exploration Reduces Significantly — Many Exit Areva buys East Asia Uranium, and Kerry Holdings and MCS
Slide 9: Over a Decade in Mongolia: risks, rewards, challenges
Over a Decade in Mongolia: risks, rewards, challenges Political Geopolitical Language Experience-Workforce Community and Culture Bureaucracy World Class Deposits Hospitable people Exposure-Geology Nana vv ViV¥ VW YW YW Limited Exploration
Slide 10: Mongolia Major Metal Deposit Map
Mongolia Major Metal Deposit Map RUSSIA O Aseatin te \y @& Golden tills i Zaamar | LEGEND @ Gold + @ Copper/Moly @ Silver {@ Pb-Zn Fe-ore ®@ Coal Uranium 200 km
Slide 11: Carboniferous-Permian Arcs in Mongolia
Carboniferous-Permian Arcs in Mongolia North Selenga-Gobi-Khanga arc: South Selenga- Gobi-Khanga Arc Magmetic_arcs shp Carboniferous Permian [__] Mongolia_dd_031102.shp [Late pz akaiine intrusions shp Late pz calc-alkdine intrusions shp New Kazakh-Mongol Are Late pz volcanic arcs. shp Late pz accret
Slide 12: Mongolia Project Regional Targeting Major Structures
Acer toe Tat gia 5 soomdsllIlisi Mongolia Project Regional Targeting Major Structures 1:10,000,000 F x a“
Slide 13: Regional Targeting: Top Quartile Arcs
J SGK Arc: Post-collisional Selenge Complex (Triassic-Jurassic) SGK Arc: Post-collisional Ereendavaa Complex (Triassic-Jurassic) BS) vv vv¥Vetvy VV VV VV VY Regional Targeting Top Quartile Arcs
Slide 14: Coal Deposits and Rail Developments
Coal Deposits and Rail Developments Irkutsk Chita eo . Sharyn Gol . ULAANBAAT: / Tugalgatal Khushuut MONGOLIA Teaicarnt BW croregara J Tugrug® Gaishar - / > ESG, Bichigt . — Huren Gol 3) Zeegt . Shivee @ . / < niin Govi % Tevshiin Govl °Qyo9 Shinejinst ae Tavan Tolgol (Zamin Uud Sumber Little TT - L
Slide 15: Erdene Coal Overview
Erdene Coal Overview Extent of Exploration mo NGO VA Meanit « Jargalants oe R Mian wings A” c E ae Existing Railway Proposed Railway ir pe . raid 500 call Jiayuguan _—_—_—_—— . Khoot & . Ay Ulaanbaata Q : A “.Galshar Drill Tested © 2006 @ 2007 @ 2008 Due -Diligence Ad 2006 Ay 2007 A 2008 Field Visit
Slide 16: Erdene's 2009-10 Coal Activity
ERDENE’S 2009-10 COAL ACTIVITY E25 avan Tolgoi Tender Olon & Sant ABulag | W Bid Preparatior Cm data collection & oy Ovoot Tolgoi pyar a > \s 8 e e T Ss 00,800 f sleet € y ey = z. 0 ob gy : 7E eee Progra Ceke ——— Due-D Existing Railway ex Proposed Railway CiH INA Baotou Bg ‘lo 250 500 pl Jiayuguan a
Slide 17: Tavan Tolgoi
Tavan Tolgoi Erdene data collection and digitization 1053 105.4 105.5 105.6 1057 2 N S275 11953 is W tt9se UKHAA HUDAG COALFIELD. onTOL ESI Con Sia vow eu 11982 , 1 BY) y a = Ly a | EASTERN COALFIELD ¢\ i = |; = = | we oe AQ | v ge! A a .— - BIN © Nu LEGEND & i (C] Erdenes mongolia CO Energy Resourc
Slide 18: Mining - Infrastructure - Transportation
Mining - Infrastructure- = Transportation SSE7
Slide 19: Mongolia - Coal Production (top 10)
Mongolia - Coal Production (top 10) RX) 140.0 Metallurgical 120.0 7) m= = =6Thermal 2 100.0 s ~~ Domestic Consumption c 80.0 2 —— Export =
Slide 20: Coal Deposits and Rail Developments
Coal Deposits and Rail Developments E2D) Irkutsk N RUSSIA . KZT . ® - on Aduun es Chutuun ' cua ® Ler bs e~ MONGOLIA mk ’ oe : — . ; aT el P o : @ Bichigt y ® Ukhaa Khudag ANS \ ~~ Mas a >> tamin Uud Har nN = SE a Ovoot Toigo be ttle TT = = Ceke LEGEND 7 i @ Active Coal Producer ~Join 4 @ Potential
Slide 21: New Roads - South Gobi Region
New Roads | South Gobi Region EXD) PROPOSED PAVED ROADS oo Minerals & Public Transportation (435km) \ eon Ukhes Khudag (MMC) - Gashuun Sukhait (~300km). In use ao OT - Gashuun Sukhait (105 km). Completed: 03-12 \ eo Ovvot (SGER) - Coke (45km). Comploted: 04-12 \ PROPOSED RAILWAY TT-Sasnshand-Chodbai
Slide 22: Understanding the licensing process for mining and exploration projects
Understanding the licensing process _ for mining and exploration projects =~
Slide 23: Mining Law - Issues
Mining Law - Issues => 8 GY) » Exploration license term (9 years): » OT from discovery to IA - 14 years » Extended rights of local administrative bodies » Province imposing rules arbitrarily » Exploration license granting > First come first serve and tender y Partial government ownership if deposit
Slide 24: Presidential Ban on the Processing of Exploration and Mining Licences
Presidential Ban on the Processing —.~ =x ip of Exploration and Mining Licences SS ( » In 2010 the President suspended the issuance and processing of both mining and exploration licences; » Extends to new or disputed licences » Converting from an Exploration licence to a mining licence permitted » A
Slide 25: The 2009 Law on the Prohibition of Minerals Exploration in Water Basins and Forested Areas
The 2009 Law on the Prohibition of IP Minerals Exploration in Water Basins and Forested Areas >» Objective to limit environmental damage caused primarily by placer gold mining » Revokes or modifies licences located no less than 200 metres from a water or forest resource » Requires government to comp
Slide 26: New Tender Process
New Tender Process GW » Previously first come first serve » New procedure for designating property as eligible for Tender; » Land explored by state funds (Mineral Corridors) » Forfeited exploration rights » Tender only to firms technically qualified to conduct minerals work » Technical merit of prop
Slide 27: Mining Law - Mining License
Mining Law - Mining License E2D » Requires resource registration following detailed review of mineral council » Period of validity of mining license shall be 70 years; y 30+ 20+ 20 » Pre-mine development operation option for 3 years under agreement with government and registration of resource and fe
Slide 28: Strategic Deposits
Strategic Deposits E2D » GOM can designate deposits of strategic importance and determine the government share if: » Production revenue +5% of the GDP » Type of deposit (coal, copper, uranium) » For strategic deposits the GOM can acquire 50% if the deposit was found by State funds and 34% if found u
Slide 29: Taxes Applicable to Mining
Taxes Applicable to Mining ERD > Corporate Tax >» Maximum 25% >» Royalty » 2.5% Coal; 5% for others plus graduated royalty » VAT » 10% (exception for highly processed mining products) >» Import/Customs Tax » Loss Carry Forward y 8 years (pre OT 2 years)
Slide 30: Parliament Amended Mineral Royalty Rates - late 2010
Parliament Amended Mineral =r Royalty Rates - late 2010 » Sliding scale over base royalty rate of 5% for metals and 2.5% for coal » Depends on: » World market price of the commodity » Amount of processing-value added completed in Mongolia
Slide 31: Investment Agreement
Investment Agreement E2D » The original intent of investment agreement was to provide tax benefits/incentives » An investment agreement can be concluded for an investment of more than $50M USD if made within the first 5 years of production; » $50- $100 million USD 10 years » $100 - $300 million USD
Slide 32: Mongolia Land Status
Mongolia Land Status
Slide 33: State Protected Area
State Protected Area pow iveeaie | ONGOLKA Oftes: 28 STATI iPRO TCT ate +.9,966,000 AIREA ‘ © C0 & 120 kh (= J
Slide 34: Provincial Special Needs
Provincial Special Needs “ecousiee a. ay, \ Gd BRENE EOC LES Bt i a TCOOF Cor: (1 AS2OOs
Slide 35: Mining and Exploration Licenses
Mining and Exploration Licenses
Slide 36: Tender Area
Tender Area
Slide 37: Mineral Potential Area
Mineral Potential Area Some tesa | SONGOILTA
Slide 38: Land Status
Land Status SES DAC DEVELOPS opts: 1 troraso
Slide 39: South Mongolia Land Status Update
South Mongolia Land Status Update <p Tenements Potentially Going to Tender
Slide 40: Mongolian Land Status
Mongolian Land Status G2Up) Tender 21% Application __— 2% Mining license 0.2% +Mineral Concentration 19.6%
Slide 41: Manpower Challenges and Solutions
Manpower Challenges and Solutions
Slide 42: Manpower
Manpower GW) » Unskilled labour sufficiently available » Mongolian labour pool » Temporary foreign workforce in construction phase > Skilled Labour » Educated >» Young » Adaptable » Shortages in advanced degrees/training » Vocational and professional >» Lack of facilities >» Solutions » In-country t
Slide 43: Manpower - Oyu Tolgoi
Manpower - Oyu Tolgoi E23 » >6000 workers employed by OT LLC » Agreement promises that at least 90 % of the project's employees will be Mongolian citizens. » Within 5 years, at least 50 % of engineers will be Mongolian citizens, increasing to at least 70 % within 10 years. » Acomprehensive, 5 year O
Slide 44: Investment environment: Regulation, sources of liquidity and investment risk
Investment environment: Regulation, GPP) sources of liquidity and investment risk Swe >» Oyu Tolgoi advancing, abolishment of windfall tax and successful Mongolian IPOs and price performance has created favourable investment climate » Although Oyu Tolgoi is the most prominent there are at multiple m
Slide 45: Health, Safety, Environment and the Community
Health, Safety, Environment and —_ the Community GY)
Slide 46: Shinejinst Community Development
Shinejinst Community Development Gzip
Slide 47: Summary
Summary EPID)
Slide 48: Summary
Summary » Geology-Exploration » World Class Metal and Coal Deposits » Limited Exploration >» Excellent Exposure » Licensing process >» Worked relatively well for most for 14 years >» Requires Clarification on tender process and water and forestry act » Transportation - Infrastructure >» Road network
Slide 49: Mongolia Mining Export Revenues
Mongolia Mining Export Revenues Growth - Top Ten Developments $9,000,000,000 $8,000,000,000 $7,000,000,000 $6,000,000,000 $5,000,000,000 $4,000,000,000 $3,000,000,000 $2,000,000,000 $1,000,000,000 $0 2010 2011 2012 2013 2014 2015 » Centerra Gold = Placer Gold & Other = Oyu Tolgoi Gold Oyu Tolgoi Cop
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Slide 51: Erdene Resource Development Corp
Erdene Resource Development Corp Corporate Office 99 Wyse Road, Suite 1480 Dartmouth, Nova Scotia Canada B3A4S5 Tel 902-423-6419 Fax 902-423-6432 NA Toll Free 800-261-1422 Email info@erdene.com www.erdene.com