Slide 1: 1st Quarter 2009 Update
PETER AKERLEY President President & & CEO CEO 11stst Quarter Quarter 2009 2009 Update Update
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS 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, projections, guidan
Slide 3: Investment Highlights
INVESTMENT HIGHLIGHTS Strong Cash Position Projected to Fully Fund Projects through to 2011 Diversified Commodity Base, with Strong Long-term Market Fundamentals Significant Cash Flow Potential Strategically Located World Class Projects 3
Slide 4: Erdene Projects
Erdene — PROJ ECTS
Slide 5: Coal
COAL Target: >200M tonnes of high quality, thermal or metallurgical coal Market: U.S. Eastern Seaboard and China Projects: Donkin (75%-25%): Major East Coast North America Coal Development Xstrata Coal Alliance: Multiple projects under evaluation 5
Slide 6: World Coal Markets
WORLD COAL MARKETS Erdene’s Coal Project Locations 92Mt Xstrata/ERD Alliance Donkin Mongolia Nova Scotia 60Mt 129Mt 231Mt Consumption: US Consumption: US Consumption: China Consumption: China (Mt) (Mt) 4215 69Mt 1402 981 2457 Erdene Properties Top Consumers Top Exporters 2006 2030 2006 2030 Source:
Slide 7: Donkin Coal Project: Atlantic Seaborne Coal Transportation Costs
DONKIN COAL PROJECT Atlantic Seaborne Coal Transportation Costs 45 km from DONKIN $36/t Pit to Port /t 1/t $58 Appalachia $1 U.S.A. /t 300 km from 9 $5 $28 Pit to Port $88 /t /t Cerrejon Colombia 150 km from Pit to Port From Avg Transportation South Africa Costs 350 km from Rail - $0.08/ton-mile Pit
Slide 8: Donkin Coal Project: Local Infrastructure
DONKIN COAL PROJECT Local Infrastructure No. 26 Colliery 8
Slide 9: Donkin Coal Project: Resources
DONKIN COAL PROJECT Resources – Indicated & Inferred Harbour Seam High volatile-A bituminous (12,000 - 14,000 Btu), Seam Indicated Inferred high sulphur, medium ash coal (Millions of Metric Tonnes) Lloyd Cove 53 82 Hub 73 57 Harbour 101 115 TOTAL 227 254 9
Slide 10: Donkin Coal Project: Coal Quality vs Competition
DONKIN COAL PROJECT Coal Quality vs Competition Average Coal Quality – World Coal Resources 16,000 15,000 14,000 13,000 12,000 BTUs 11,000 10,000 9,000 8,000 7,000 Indonesia South Russia Venezuela Cerrejon, Powder Central North Donkin Africa Colombia River Appalachian Appalachian Basin 10
Slide 11: Donkin Stage Development Program: Continuous Miner
DONKIN COAL PROJECT 2 Stage Development Program: Continuous Miner Continuous Miner Conveyor Power Plant Truck 11
Slide 12: Donkin Stage Development Program: Longwall
DONKIN COAL PROJECT 2 Stage Development Program: Longwall Longwall Miner Conveyor Ship Train 12
Slide 13: Donkin Coal Project: Assumptions
DONKIN COAL PROJECT Assumptions 3.5 to 5 Mtpa high energy thermal coal for local & export markets Metallurgical spot market & wash plant remains option Initial capital $313M Projected cash costs – loaded on ocean-going vessel: Sydney international coal terminal - $23.12/tonne >30 years of high produ
Slide 14: Donkin Coal Project: Valuation
DONKIN COAL PROJECT Valuation Base Case Sensitivity Sensitivity Sensitivity Sensitivity $52/Mt Price Price Start-up Discount Discount Factor 2015 Start-up 10% Discount ($57/Mt) (2012) (8%) and Price NPV ERDENE (25%) (US$) $49M $68M $66M $78M $106M Erdene’s Average Net Cash Flow $CDN after Taxes and
Slide 15: Donkin Coal Project: Timeline
DONKIN COAL PROJECT Timeline 2008 2009 2010 2011 2012 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 DCA Approves CM Feasibility CM Longwall Decision Decision CM Longwall Construction Construction CM Longwall Production Production CM: Continuous Miner Evaluation & Development
Slide 16: Donkin Summary
DONKIN SUMMARY High quality coal resource Transportation advantage >$120M invested to date in mine development (DEVCO & XDCM) Low initial capital investment by ERD to bring to production ($10M credit) Initial continuous miner production decision in Q4 2008 ERD’s Interest in Full Longwall Production:
Slide 17: Metals: Molybdenum
METALS: MOLYBDENUM Target: >300Mlbs of molybdenum grading ~0.06% Mo, open pit mining Market: Asia-Pacific region ~35% of world consumption and fastest growing Project: Zuun Mod: Wholly owned; advanced stage; ~200km from China border and rail 17
Slide 18: Need for New Producers
NEED FOR NEW PRODUCERS Molybdenum Supply by Source Need for new sources Zuun Mod – Erdene Consumption Molybdenum Supply (Mlb Mo) Improved recoveries New supply needed 600 China expansions Recycling Existing mines Consumption trend 500 Zuun Mod - Erdene 400 2006 2007 2008 2009 2010 2011 2012 2013 201
Slide 19: Zuun Mod: Regional Molybdenum & Steel Production
ZUUN MOD Regional Molybdenum & Steel Production World’s Largest Steel Producing Region China’s Largest Molybdenum Producing Regions 19
Slide 20: Zuun Mod: Established Infrastructure
ZUUN MOD Established Infrastructure 20
Slide 21: Zuun Mod: Project Status
ZUUN MOD Project Status September 2008 Drill Results 410m of 0.057% Mo (96m 0.095%) Revised resource estimate report 399m of 0.055% Mo in Q4 2008 Preliminary (36m 0.088%) assessment study 428m of 0.060% Mo Q1 2009 (172m 0.091%) Mining license 373m of application 2009 0.063% Mo (94m 0.084%) Mineraliz
Slide 22: Zuun Mod: Timeline
ZUUN MOD Timeline 2008 2009 2010 2011 2012 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Resource Definition Preliminary Assessment Study Mining License Application Prefeasibility Strategic Partner Evaluation Feasibility Development Start-up 22
Slide 23: Zuun Mod Summary
ZUUN MOD SUMMARY One of the largest molybdenum deposits in Asia On the doorstep of the world’s largest steel producing region Established >300 Mlbs of molybdenum resource Updated resource estimate Q4 2008 Preliminary assessment study Q1 2009 23
Slide 24: Industrial Minerals
INDUSTRIAL MINERALS Construction Aggregate • Kaolin
Slide 25: Kaolin
KAOLIN Target: Established Established resource resource of of 27 27 million million tons tons of of premium premium quality quality primary primary Kaolin Kaolin Market: United United States, States, Europe Europe and and Asia; Asia; Supplying Supplying primary primary clay clay to to JM JM Huber H
Slide 26: Advanced Primary Minerals (APM)
Advanced Primary Minerals (APM) Summary Creating new public vehicle (APM) to advance kaolin assets to production Facilitated through transfer of EMC kaolin assets Reverse Takeover of Beta Minerals Closing expected December 2008 72% controlled subsidiary of ERD post-closing and $2 million in cash
Slide 27: Construction Aggregate
CONSTRUCTION AGGREGATE Target: >100M tonnes of high quality construction aggregate Market: U.S. eastern seaboard; focused on the southeast Projects: Granite Granite Hill, Hill, Central Central Georgia Georgia Woodland, Woodland, West West Georgia Georgia Eastern Eastern Canada Canada Tidewater Tidew
Slide 28: Construction Aggregate: U.S. Population Increase through 2030
CONSTRUCTION AGGREGATE U.S. Population Increase through 2030 AGGREGATE CONSUMPTION AVERAGES 9 TONNES PER PERSON PER ANNUM Secondary Market Target Population Population VA. Growth Growth N.C. >10M S.C. 1M – 10M GA. 500K – 1M TX. 250K – 500K FLA. 100K – 250K Primary Market Target Source: U.S. Census B
Slide 29: Construction Aggregate: East Coast Target Markets
CONSTRUCTION AGGREGATE East Coast Target Markets Eastern Canada Projects 50% increase in aggregate imports to SE U.S. ports from 2002 to 2006 Canada provides ~42% of SE e L in U.S. international imports ll Source: USGS Fa Marine Transport Advantage Woodland, West Georgia Mode Cost/tonne/mile Granite
Slide 30: Construction Aggregate: Southeast US Projects
CONSTRUCTION AGGREGATE Southeast US projects Ready Mix USA Royalty Agreement Granite Hill Augusta Charleston Savannah Woodland Jacksonville Railroad (owner) CSTX FEC Tampa Clearwater NS CASH FLOW PENDING Miami PRODUCTION DECISION 2009 30
Slide 31: Construction Aggregate: Summary
CONSTRUCTION AGGREGATE Summary One royalty project entering development phase with potential for initial cash flow in 2009 ERD positioning itself to have strategic projects in both offshore and nearest rail regions by 2010 Positioning to permit properties by 2012 Increasing cost advantage associated
Slide 32: Project Overview: Timeline
PROJECT OVERVIEW Timeline 2008 2009 2010 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Continuous Continuous Miner Continuous Miner Production Donkin Miner Construction Longwall Feasibility Study Feasibility Updated Preliminary Strategic Mining License / Zuun Mod Resource Assessment Prefeasibility Study Partner Est
Slide 33: Erdene Market Facts
ERDENE MARKET FACTS Shares Trading Info: Working Capital: Website Outstanding: TSX:ERD 89.2 M Cdn ~$18.2 M www.erdene.com Market Market Capitalization Capitalization (CDN$) (CDN$) 120.00 100.00 80.00 CDN $ M 60.00 40.00 20.00 0.00 27-Feb 30-Jul 31-Dec 31-May 31-Oct 31-Mar 31-Aug 30-Jan 30-Jun 30-Nov
Slide 34: Investment Proposition
Investment Proposition Trading Near Cash Value Experienced Mining-Exploration Group Focused on: Projects that are unique in terms of quantity, quality and location Commodities where Long Term Fundamentals point to Supply Shortages Partnering with Industry Leaders Fully Funded through 2011 with partn
Slide 35: Investment Proposition
Investment Proposition Energy Donkin Coal Project ERD-Xstrata Alliance Mongolia Metals Zuun Mod Molybdenum-Copper Project Erdenet Copper-Molybdenum Project Regional Metal Exploration Mongolia Industrial Minerals Granite Hill Crushed Stone Project Eastern North America Crushed Stone Evaluation Projec
Slide 36: Thank You
Thank You 11stst Quarter Quarter 2009 2009 Update Update