Erdene updates estimate for moly project in Mongolia

A new resource estimate for Erdene Resource Development‘s (ERD-T) Zuun Mod molybdenum project in southwestern Mongolia, about 180 km from the border with China, indicates that the deposit is one of the biggest and most advanced pre-development molybdenum projects in North Asia, the company’s management says. It also enjoys an enviable strategic location in the region as it is just 215 km from a railhead that transports coal from Mongolia into China.

“Our goal for Zuun Mod was to expand on resources in the range of 0.06% molybdenum and to better define higher grade domains within the deposit for the initial mining phases,” Peter Akerley, Erdene’s president and chief executive, said in a statement. “We have achieved this with a significant increase in total resource for that grade range and also defining a higher grade domain within the South and North Racetrack deposits.”

Zuun Mod is a porphyry complex 12 km in circumference and contains broad zones of molybdenum mineralization. In a three-km long portion of the system, referred to as the South Corridor, Erdene has identified three mineralized zones known as the Racetrack North, the Racetrack South, and the Stockwork zones. Initial drilling of these zones intersected thick intervals of significant mineralization close to surface and open at depth.

Erdene’s 100%-owned deposit has a measured and indicated resource of 98 million tonnes at an average grade of 0.062% molybdenum and at a cut-off grade of 0.05% molybdenum for 133.8 million pounds of contained molybdenum. In the inferred category Zuun Mod has 73 million tonnes at an average grade of 0.060% molybdenum equating to 97.1 million pounds of contained molybdenum.

Compared with the initial resource estimate published in May 2008, the new figures show an 11% decrease in measured and indicated resources at a 0.05% molybdenum cut-off grade from 110 million tonnes to 98 million tonnes, but a 460% increase in inferred resources from 13 million tonnes to 73 million tonnes.

Both resource categories have seen a slight increase in grade to an average of 0.062% molybdenum overall, which met Erdene’s drilling program objectives.

The new resource also identified two higher grade zones within the South and North Racetrack deposits, which contain 95% of the measured and indicated resource at the higher 0.06% molybdenum cut-off, which totals 44 million tonnes and averages 0.071% molybdenum.

So far the company has identified significant molybdenum, copper and rhenium mineralization but its work has been largely centered around the South Corridor, a northeast-southwest trending structurally controlled zone about 3.6 km long by 800 metres wide.

Erdene, which has working capital of about $16.3 million, is completing field reconnaissance programs near the Zuun Mod deposit to determine the prospectivity of other targets in the area. This information will be useful in planning drilling as well as providing definition of a mining licence property boundaries.

The company is now starting a pit optimization and scheduling study to combine with the previously completed work under the preliminary assessment study initiated in 2008. This is expected to be completed in the third quarter and will help Erdene determine fleet operating hours and numbers to create a financial model that can be used to advance the project to the prefeasibility level.

There hasn’t been much exploration on the remainder of the porphyry complex with the exception of a surface survey and widely spaced drill holes. Even so the company has found significant anomalous mineralization and the entire property is viewed as being prospective for the discovery of potentially economic copper and molybdenum mineralization.

At press-time Erdene was trading at 21¢ per share and has a 52-week trading range of 12-95¢ per share. The company has 89.2 million shares outstanding.