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.
NO REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE CONTENT OF THIS
RELEASE.
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