Erdene Launches Construction of Bayan Khundii Gold Project in Mongolia with Strategic MMC Alliance
Erdene Resource Development has officially commenced full-scale construction of the Bayan Khundii Gold Project, set to become one of the highest-grade, open-pit gold mines in Mongolia. This significant development in southwestern Mongolia follows a strategic alliance agreement with Mongolian Mining Corporation (MMC), signed on 10 January 2023.
The alliance was formalized later in January, granting MMC a 50% equity stake in Erdene's subsidiary, Erdene Mongol (EM), which holds the mining licenses for the Bayan Khundii, Altan Nar, and Ulaan sites. MMC's investment of $40 million into EM reflects the project's considerable potential and strategic importance.
Erdene retains a 50% equity interest in EM and will also benefit from a 5% net smelter return royalty on production from these licenses after the first 400,000 ounces of gold are recovered. Notably, Erdene's interests in the Zuun Mod Molybdenum-Copper deposit and Khuvyn Khar Copper project remain wholly owned by the company and are not part of the strategic alliance with MMC.
The construction of the Bayan Khundii project, agreed upon on 15 January 2024, follows the completion of early works in the latter half of 2023. The mine boasts 513,000 ounces of gold reserves with an impressive average grade of 4.0 grams per tonne. At its peak, the project is expected to produce an annual output of 87,000 ounces of gold.
MCS Property, affiliated with MMC, has been contracted for the engineering, procurement, and construction services of the project, valued at $54 million. The construction of the process plant is a pivotal part of this project, with major components already on-site and expected completion by the end of the year.
Further enhancing the project's sustainability, EM has secured a power purchase agreement with MCS International for a hybrid power station. This station will include diesel generators, a solar farm, battery storage, and necessary infrastructure, signifying a commitment to environmentally conscious mining practices.
To date, the Bayan Khundii Gold Project has attracted approximately $80 million in investments, including Erdene’s prior expenditures and MMC's $40 million funding. Additional funding details for completing the construction are anticipated to be announced in the first quarter of 2024.
Erdene’s president and CEO, Peter Akerley, expressed his enthusiasm for the project, stating, “We are extremely pleased to announce the formal commencement of construction at the Bayan Khundii gold project and the close of our strategic alliance with MMC, Mongolia’s leading publicly traded mining company. The Bayan Khundii gold mine will be Mongolia’s largest gold primary producer when it reaches full production.”
This ambitious project marks a significant milestone in Mongolia's mining sector, emphasizing the nation's growing role in the global gold mining industry. With its strategic partnership and innovative approach, the Bayan Khundii Gold Project is poised to set new standards in sustainable, high-grade gold mining.
