Slide 1: Corporate Presentation Aug 2011
Corporate Presentation Aug 2011
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: Market Facts (Aug 12th, 2011)
Market Facts (Aug 12th, 2011) Capital Structure Share Performance Trading Info TSX: ERD 4.0 $2.0 3.5 $1.8 Shares Outstanding 90.3 M $1.6 Volume (millions) 3.0 $1.4 Shares Fully Diluted 93.0 M Price (CAD) 2.5 $1.2 Working Capital CDN ~$4.9 M (1) 2.0 $1.0 $0.8 52 Week High/Low CDN $0.26 / $1.84 1.5 $0
Slide 4: Management and Directors
Management and Directors Management Directors Peter C. Akerley, President, CEO & Director William B. Burton Seven years with Rio Tinto and over 20 years of exploration Over 30 years of experience in mining industry operating and mining experience in 7 different countries, discovering resource compan
Slide 5: Investment Highlights
INVESTMENT HIGHLIGHTS DONKIN PROJECT (25% ERD / 75% Xstrata) Prefeasibility completed on 2.75 Mtpy coking coal project Strategically located near a deep water port in eastern Canada Among the lowest transport and operating costs in the industry ZUUN MOD MOLYBDENUM-COPPER PROJECT One of the l
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Slide 7: Coking Coal Market
Coking Coal Market The world remains in the early stages of a long period of major coal demand growth, with so-called onetime events in the industry that constrain supply now occurring each quarter China led demand for steel has prompted a sixfold price increase in coking coal over the last decade t
Slide 8: Donkin Coal Project
DONKIN COAL PROJECT 25% Erdene / 75% Xstrata Coal (Manager) Located on Deep Tidewater Significant Infrastructure in Place Exclusive Port Access Large Resource – Long Mine Life High Quality Coal (Coking and Thermal) Low Operating & Transportation Cost Experienced Workforce 8
Slide 9: Ideally Located on Deep Tidewater
Ideally Located on Deep Tidewater Cape Breton, Nova Scotia No. 26 Colliery 9
Slide 10: Large Resource – Long Life
Large Resource – Long Life 20 year initial mine life based on saleable reserves only 48 Mt saleable reserves Indicated Probable Mineable Probable Saleable Inferred Seam Resource Resource Reserve Reserve (Mt) (Mt) (Mt) (Mt) Project economics are Lloyd Cove 53 n/a n/a 82 based on probable Hub 73 28 23
Slide 11: High Quality Coal
High Quality Coal Typical Product Specifications Quality Parameter Washed Coal Wash Plant Yield Avg. 81% Total Moisture (%) 8 Ash (% ad) 4 Volatile Matter (% ad) 39 Total Sulphur (% ad) 3.0 1 CV (BTU/lb gar) 13,250 CSN 8.5 Fluidity (mddm) 10,000 – 25,000 1. Based on the higher results collected to d
Slide 12: Strategically Located
Strategically Located Distance to Port Operating & Transport Cost USA Russia Average Global Cash Cost South Africa Comparison (FOB US$/t) Australia Major Exporting Countries Colombia Indonesia 12
Slide 13: Development Timeline
Development Timeline 2011 2012/13 2014+ Pre-feasibility Complete Full Production; report delivered Feasibility and 2.75 to 4 Mtpy EA filed Permitting Fully permitted for Continuous Miner initial 620 Ktpy ROM ROM Sales production Project Capital Expenditure (75% Xstrata, 25% Erdene) First $40 million
Slide 14: Pre-Feasibility Study Completed
Pre-Feasibility Study Completed June 2011 Production rate of 2.75 Mt of saleable coal Production rate of 2.75 Financial Parameters (C$) Mtpy of saleable coal FOB Cash Cost / Tonne $51.8 (avg. over LOM) 75% coking, 25% thermal Capital Expenditure $497 M Peak Funding $331 M Potential to grow Initial P
Slide 15: Mongolia Assets
SE MONGOLIA ASSETS
Slide 16: Mongolian Exploration Summary
Mongolian Exploration Summary Significant holdings near a massive global consumer New Cu-Au Zuun Mod Mo-Cu Xstrata discoveries in Deposit JV 2011 Khuvyn Khar Nomin Coal Located on One of the exploration New high Copper-gold the Chinese- largest Mo- grade discovery on partnership Mongolia C
Slide 17: Mongolia Coal Xstrata Alliance
MONGOLIA COAL XSTRATA ALLIANCE PRIORITY TARGETS: High Quality Thermal & Coking (open pit, <5:1, 200 Mt+, >5800 kcal/kg GAR) XSTRATA TERMS: • Option to earn up to 75% of any coal opportunity in Mongolia • Must fund all work through to completion of feasibility study WORK PROGRAM: • Xstrata has invest
Slide 18: Zuun Mod Mo-Cu Project
ZUUN MOD MO-CU PROJECT Molybdenum and Copper Highlights Located on the China border, next to the world’s largest base metals and steel producing markets Image/map... High grade Cu-Mo zone discovered in Sexy shot of ZM 2011 perhaps Access to lower capex plant and equipment Growing local infrastructur
Slide 19: Oyu Tolgoi Copper – Gold Complex
Oyu Tolgoi Copper – Gold Complex Significant Mongolian Development 19
Slide 20: Zuun Mod Mo-Cu Project: Infrastructure Building
ZUUN MOD MO-CU PROJECT Infrastructure Building 20
Slide 21: China's Role in the Moly Market
China’s Role in the Moly Market Ceased as major net importer of moly in 2008 Acted as swing supplier to work market in 2009 - 2010 2009 Hanlong formed, seeks overseas moly investments Greatest growth in moly usage came from China in 2010 Consumption was up from 119 M lbs in 2009 to 148 M lbs in 2010
Slide 22: Zuun Mod Mo-Cu Project: June 2011 Resource Estimate
ZUUN MOD MO-CU PROJECT June 2011 NI 43-101 Resource Estimate Resource Mo Grade Cu Grade Contained Mo Contained Cu Category Tonnage (Mt) (% Mo) (% Cu) (M lbs) (M lbs) M&I 218 0.057 0.069 273.5 330.7 Inferred 168 0.052 0.065 191.8 240.5 22
Slide 23: Section Through Deposit: 2011 Drill Results Highlights
Section Through Deposit 2011 Drill Results Highlights Legend Zone of higher grade copper (highlighted in red below) Hole Interval Mo Grade Cu Grade ZMD-51 ext 432 m 0.061% 0.072% including 118 m 0.106% 0.098% 2011 Drill Program ZMD-115 300 m 0.071% 0.110% Highlights including 66 m 0.108% 0.129% ZMD-
Slide 24: Project Timeline
Project Timeline 2011 2012 2013 2014 2015 2016 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Property Wide Exploration Economic Assessment Strategic Partner Evaluation Prefeasibility Feasibility Development Start‐up Production 24
Slide 25: Regional Target Areas
Regional Target Areas Limited Drilling of Large Zuun Mod Mineral Complex Copper in Soil Anomaly Large mineralized Khuvyn Khar annular feature- Copper 12km in Discovery circumference; ~80% of drilling in ZM deposits Cu in soil anomaly Zuun Mod Mo-Cu deposits 1 km 25
Slide 26: Regional Copper-Gold Opportunities
Regional Copper-Gold Opportunities 2011 Discoveries New copper discovery located over 2 km from existing Zuun Mod resource Khuvyn Khar Original discovery hole ZMD-121 returned 1.34% Cu and 9.24 g/t Ag over 34 m High Grade Cu Six drill holes over 1.2 km strike length completed with follow-up dr
Slide 27: Khuvyn Khar Copper Discovery
Khuvyn Khar Copper Discovery Cu in Soil Anomaly 118m @ 0.08% Cu ZMD-08 ZMD-121 373m @ 0.19% Cu KKMD-13 (34m @ 1.3% Cu) Drill Hole 152m @ 0.16% Cu (32m of 0.22% Cu) 27
Slide 28: Comparable Valuations: Coal
Comparable Valuations Coal Coal exploration & development companies are currently trading at 0.4x to 0.6x NAV Erdene’s 25% interest in Donkin represents an NPV (10%) of $207.5 million Based on a peer NAV comp, ERD’s 25% interest is valued at $104 million (US$ millions, unless otherwise noted) Market
Slide 29: Comparable Valuations: Base Metals
Comparable Valuations Base Metals Erdene’s Zuun Mod project is a significant molybdenum-copper deposit containing 3.1 billion lb Measured + Indicated copper equivalent resource Assuming a $0.02 Cu eq value, Zuun Mod would have a market value of roughly $60M (US$ millions, unless otherwise noted) Mar
Slide 30: Summary
Summary Developing a large export coking coal project with Xstrata Advancing a major Mo-Cu project on the China-Mongolia border Exploration drilling underway on Nomin copper-gold-silver discovery and Khuvyn Khar copper-silver discovery 30
Slide 31: Appendix
APPENDIX
Slide 32: Industrial Minerals
INDUSTRIAL MINERALS KAOLIN AGGREGATE INTERESTS • Majority ownership of TSX-V listed • Royalty arrangement with Advanced Primary Minerals Aggregates USA, spending $28M to – Current market cap of ~$5 million develop site – ERD controls 60% of common shares • East Coast and Caribbean Evaluations COMMOD