Canada-based Erdene Resource Development has started the full construction at the Bayan Khundii gold project located in southwestern Mongolia.
Besides, the company has closed the investment by Mongolian Mining as part of the strategic alliance agreement to develop the Khundii Minerals District.
The agreement issued by the parties in January 2023 was closed by issuing shares in Erdene Resource’s Mongolian subsidiary Erdene Mongol to Mongolian Mining that represents a 50% stake.
Under the agreement, Mongolian Mining invested $40m million in Erdene Mongol that holds the Khundii and Altan Nar mining licenses and the Ulaan exploration license.
Construction at the Bayan Khundii gold project is expected to be over by the year end with technical and state commissioning planned for Q1 2025.
The open-pit project is on track to commission operations and achieve its first gold in Q2 2025.
Erdene Resource has awarded the contracts for early works and the project’s engineering, procurement, and construction (EPC) services to Mongolian engineering and construction firm MCS Property.
Erdene Resource president and CEO Peter Akerley said: “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 is one of the highest grade, open pit gold mines under development globally and will be Mongolia’s largest gold primary producer when it reaches full production.”
In August 2023, Erdene Resource estimated a total life of mine capital expenditures (capex) of $109m for the Bayan Khundii gold project, based on the findings of an updated independent feasibility study (FS).
The updated FS also projected a post-tax net present value (NPV) of $170m for the project at a gold price of $1,800 per ounce.
Besides, the post-tax internal rate of return is 35.3% for the Mongolian open pit gold project with an after-tax payback period of 2.4 years.
