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Erdene Resource Development Corp (2)
Symbol ERD
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Erdene's Bayan met results show gold is free milling

2017-09-14 09:55 ET - News Release

Mr. Peter Akerley reports

ERDENE RECEIVES POSITIVE METALLURGICAL RESULTS FOR ITS BAYAN KHUNDII GOLD PROJECT

Erdene Resource Development Corp. has received positive results from phase I 2017 metallurgical testing conducted by Blue Coast Research Ltd. (BCR) on its 100-per-cent-owned Bayan Khundii gold project in southwest Mongolia.

Highlights

  • Metallurgical results from two master composites indicate the gold from Bayan Khundii is free milling and amenable to conventional processing techniques.
  • Results for two master composite samples included:
    • BK-16-03 (4.3 grams per tonne gold): Gold recovery after 48 hours was 96 per cent whereas the 96-hour gold recovery was 97 per cent with a grind size of 80 per cent passing 60 microns, 40 per cent solids and 1.0 gram per litre sodium cyanide (NaCN).
    • BK-16-04 (4.47 g/t gold): Received full optimization testwork, including variation on grind size, residence time and sodium cyanide dosage (consumption) as well as assessing the impact on overall recoveries when initial gravity recovery was applied. Gold recoveries, using a target grind size of 80 per cent passing 60 microns, ranged from 91 per cent to 93.4 per cent after 48 hours with overall gold recovery of 95 per cent after 96 hours.
  • Grindability studies reported a Bond Rod Mill Work Index of 17.8 kilowatt-hours/tonne and a Bond Ball Mill Work Index of 16.1 kilowatt-hours/tonne.
  • Phase II testing, focused on material in the 1.5 g/t to three g/t gold range, will continue through Q1 2018.

Phase I 2017 metallurgical testwork summary

The phase I 2017 metallurgical testing program for Bayan Khundii is the second metallurgical testing program completed to date. The initial metallurgical testwork in 2016 tested two representative, master composite samples from Erdene's initial 2015 drill program at Bayan Khundii. This 2016 testwork included 15 widely spaced drill holes in the Gold Hill and Striker zones, testing the top 50 metres of the target areas. The results were very encouraging with 99-per-cent recovery on the high-grade sample (25.9 g/t gold) and 92 per cent on the low-grade sample (0.7 g/t gold) using a combination of gravity and leach.

The 2017 metallurgical program has been separated into two phases (I and II) to allow for the completion of the 2017 drill program and the production of composites and master composites that are representative of, and best reflect the anticipated average grades of, the gold mineralized system. The objective of phase I was to provide recovery data on moderately high-grade master composites, assess the recovery variability of the low-grade material to assist in determining optimal cut-off grades, provide grindability data and to complete an initial assessment on the amenability of the low-grade material to heap leach processes. The phase II program is designed to test variability and ultimately recovery of a collection of composites followed by master composites. Phase II sampling and testing are expected to be initiated in Q4 2017 and continue through Q1 2018.

Master composite testing

Two master composite samples were collected from throughout the Striker zone down to a vertical depth of 100 metres. Individual samples were collected from split drill core from more than 20 different drill holes in each sample with a total combined sample weight of 41 kilograms per composite. The head grades of the two composite samples were 4.30 g/t gold (sample BK-16-03) and 4.47 g/t gold (sample BK-16-04). As the company advances Bayan Khundii and gains a better understanding of potential mineralized domains it will complete further testwork on lower-grade material (1.5 to three g/t gold).

Master composite sample BK-16-03 received only leach testing, whereas master composite sample BK-16-04 received full optimization testwork, including variation on grind size, residence time and sodium cyanide dosage (consumption) as well as assessment of the impact on overall recoveries when initial gravity recovery was applied.

    OVERALL CIRCUIT RECOVERIES FOR THE TWO MASTER COMPOSITES, 48-HOUR LEACH

Master composite           Head grade     Gravity      48 hr leach     Combined

BK-16-03                         4.30           -               96           96
BK-16-04                         4.47          41               88*          92

* Percentage of the gold remaining in the gravity tails.

Sample BK-16-03

Leach testwork

A single test was completed on sample BK-16-03, as a single 96-hour leach test with a grind size of 80 per cent passing 60 microns, 40 per cent solids and 1.0 gram per litre NaCN. Gold recovery after 48 hours was 96 per cent whereas the 96-hour gold recovery was 97 per cent, indicating a 48-hour period will recover most of the available gold.

Sample BK-16-04

Primary grind size

As expected, the highest recovery is associated with the finest grind. An additional 4 per cent in recovery is gained from decreasing the particle size from 160 microns to 60 microns. Gold recovery with a primary grind size of 80 per cent passing 161 microns was 87 per cent. A primary grind of 80 per cent passing 60 microns resulted in an average gold recovery of 91 per cent. Further evaluation of the primary grind size should be conducted on a lower-grade composite.

Extended cyanidation residence time

A single test was conducted for a total leach time of 96 hours. The material was ground to 80 per cent passing 60 microns prior to the bottle roll. The standard cyanidation conditions used 40 per cent solids, 1.0 gram per litre NaCN. Gold recovery after 48 hours was 93.4 per cent, with overall gold recovery of 95 per cent after 96 hours, indicating a 48-hour period will recover most of the available gold, as was noted for sample BK-16-03.

Gravity and cyanidation test

A combined gravity and cyanidation test was conducted to determine if the addition of gravity ahead of cyanidation would yield any additional recovery. For this work a 10-kilogram test charge was ground in a laboratory rod mill to 80 per cent passing 60 microns. The ground charge was processed through a laboratory-scale Knelson centrifugal concentrator (MD-3). Forty-one per cent of the gold reported to the gravity concentrate at a grade of 205 g/t. A subsample of the gravity tails was then leached in a standard bottle roll for 48 hours (40 per cent solids; 1.0 gram per litre NaCN). Gold recovery through cyanidation was 88 per cent. Combining the results of both tests resulted in an overall gold recovery of 92 per cent. This is in line with the baseline cyanidation results and suggests that initial gravity separation will not increase the overall gold recovery, but could be incorporated into the Bayan Khundii flowsheet to ensure the coarsest gold is removed early in the process and minimize the amount of gold that could be caught in gold traps throughout the plant.

Variability testing of low-grade material

The phase I 2017 metallurgical program included a study assessing the potential impact on gold recoveries with increasing depth and variation in character of the low-grade mineralized material. The work included 16 primarily low-grade composite samples that ranged in head grade from 0.37 g/t gold to 2.29 g/t gold, with an average grade of 0.75 g/t gold. Applying standard leach parameters, gold recovery of these low-grade samples averaged 85 per cent after 48-hour leach. Two samples of Striker zone mineralization, without any vertical constraint and with head grades of 2.30 g/t Au and 1.18 g/t gold, returned recoveries of 93 per cent and 91 per cent respectively. These tests targeted primary grind sizes of 80 per cent passing 60 microns. Very low-grade material from eight composite samples with an average head grade of 0.55 g/t gold returned a recovery of 84 per cent after 48-hour bottle roll tests at a particle size of 58.4 microns. There was some indication that the areas under younger, postmineralization cover to the north of the Striker zone may be slightly harder than the Striker zone area (as evidenced by coarser grind sizes), however recoveries remained consistent supporting additional study on optimizing the primary grind size. Results from the master composite samples, and from lower grade Striker zone material unconstrained vertically, indicate that good recoveries can be gained from sample material collected from throughout the vertical sequence, however in the very low-grade material there does appear to be a decrease at greater vertical depth which will need further study once expected head grades are established.

Heap leach amenability testing

A series of coarse bottle roll tests was conducted on a composite of Striker zone material to evaluate if the material would be amenable to heap leaching. These tests were not designed to predict ultimate heap leach recovery. They were designed as screening tests whereby similar recoveries across all particle sizes would suggest the material may be amenable to heap leaching techniques, while poor recovery in the coarser tests would suggest that conventional tank leaching would be preferred.

These tests were conducted as 72-hour bottle rolls with sodium cyanide addition of 2.0 grams per litre. The material for the three tests was prepared as 100 per cent passing six mesh (3.35 millimetres), 100 per cent passing 10 mesh (1.7 mm) and 80 per cent passing 69 microns. Gold recoveries were 57 per cent on the 3.35 mm material, 63 per cent on the 1.7 mm material and 83 per cent on the 69-micron grind size. The higher recovery associated with the finer grind size suggests that conventional tank leaching would likely yield higher overall recoveries.

Grindability testing

Standard grindability tests were used to evaluate the energy requirement to grind material from a predefined feed size to a final product size. The Bond Rod Mill Work Index was recorded at 17.8 kilowatt-hours/tonne and the Bond Ball Mill Work Index at 16.1 kilowatt-hours/tonne. The grindability tests indicate that Bayan Khundii is moderately hard to hard.

Recommendations for further work

Based on the success of this second metallurgical testing program, BCR has recommended additional tests to better study the metallurgical characteristics of Bayan Khundii and further optimize recoveries. It is anticipated that the following studies will be initiated in Q4 2017:

  • Additional cyanidation process development work on lower grade composites that reflect the average grade of the Bayan Khundii deposit;
  • Further variability testing incorporating composites that represent the full range of head grades and depths within Bayan Khundii;
  • An extended gravity recoverable gold (E-GRG) test on a sample representing the average grade of the deposit.

Quality assurance/quality control (QA/QC)

Results for the metallurgical test program were provided and approved by Andrew Kelly, PEng, of Blue Coast Research Ltd., a qualified person for the purpose of National Instrument 43-101. All other technical information in this news release has been reviewed and approved by Michael MacDonald, PGeo (Nova Scotia), vice-president of exploration for Erdene, a qualified person as that term is defined in National Instrument 43-101.

All drill result samples have been assayed at SGS Laboratory in Ulan Bator, Mongolia. In addition to internal checks by SGS Laboratory, the company incorporates a QA/QC sample protocol utilizing prepared standards and blanks. Erdene's sampling protocol for drill core consisted of collection of samples over one-metre or two-metre intervals (depending on the lithology and style of mineralization) over the entire length of the drill hole, excluding minor postmineral lithologies and unmineralized granitoids. Sample intervals were based on metreage, not geological controls or mineralization. All drill core was cut in half with a diamond saw, with half of the core placed in sample bags and the remaining half securely retained in core boxes at Erdene's Bayan Khundii exploration camp. All samples were organized into batches of 30 samples including a commercially prepared standard, blank, and either a field duplicate, consisting of two one-quarter-core intervals, or a laboratory duplicate. Sample batches were periodically shipped directly to SGS in Ulan Bator via Erdene's logistical contractor, Monrud Co. Ltd.

Background on Bayan Khundii gold project

In Q2 2015, Erdene conducted an initial exploration program on the southern portion of the company's 100-per-cent-owned Khundii exploration licence in southwest Mongolia where an early rock-chip sampling program revealed multiple very high-grade surface quartz veins that returned up to 4,380 g/t gold. Since that time, the company has completed a total of 30,728 metres in 198 diamond drill holes, revealing the presence of very high gold grades, with up to 306 g/t gold over one-metre intervals, within broad mineralized zones, with up to 131 metres of 3.9 g/t gold, including 80 metres of 6.0 g/t gold. High gold values are relatively common with nearly 20 per cent of the 198 holes drilled to date containing one or more one-metre samples exceeding 30 g/t gold. The Bayan Khundii gold mineralization is associated with quartz adularia veins and breccias, within veins and fractures and disseminated within the altered host rocks. Visible gold has been identified in several drill holes as irregular-shaped grains, however it is generally observed to be fine grained.

The company has completed a comprehensive exploration program at Bayan Khundii that has included: geological mapping; soil geochemical surveys; additional surface rock chip sampling; a ground magnetic survey; and gradient array and dipole-dipole induced polarization surveys.

In addition to the continuing Bayan Khundii drill program, the company will complete regional exploration and drilling between Bayan Khundii and its Altan Arrow gold-silver project, located 3.5 kilometres north of Bayan Khundii. The company also has recently completed a follow-up drill program at its neighbouring Altan Nar gold-polymetallic project, located 16 kilometres northwest of Bayan Khundii, where it tested newly defined geophysical targets and completed step-out drilling in areas adjacent to its previously reported NI 43-101 mineral resource estimate at Altan Nar. In conjunction with the above work, Erdene will complete an exploration program in 2017 at its newly optioned Ulaan property, immediately west of Bayan Khundii and Altan Arrow (see Aug. 22, 2017, news release).

The Bayan Khundii/Altan Arrow and Altan Nar projects have a 2-per-cent net smelter returns royalty (NSR royalty) in favour of Sandstorm Gold Ltd. with a buyback option to reduce the NSR royalty to 1 per cent.

About Erdene Resource Development Corp.

Erdene Resource Development is a Canada-based resource company focused on the acquisition, exploration and development of base and precious metals in underexplored and highly prospective Mongolia. The company has four exploration licences and a mining licence in southwest Mongolia. In addition to the Bayan Khundii and Altan Nar projects, other deposits and prospects within these licences include: Khuvyn Khar -- an early-stage, copper-silver porphyry project with multiple drill targets and significant copper intersections; Nomin Tal -- a narrow, high-grade copper-gold discovery; Zuun Mod -- a large molybdenum-copper porphyry deposit; and Altan Arrow -- an early-stage gold-silver project. On Aug. 30, 2017, the company announced it had acquired a 51-per-cent interest in the Ulaan licence, situated adjacent to its Khundii licence which hosts the Bayan Khundii and Altan Arrow projects.

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