10.14.2010, presentation, erdene resource development, peter c.akerleya
TRANSCRIPT
PETER AKERLEY, President & CEOPETER AKERLEY, President & CEO
MONGOLIA INVESTMENT SUMMITHONG KONG 2010
MONGOLIA INVESTMENT SUMMITHONG KONG 2010
FORWARD-LOOKING STATEMENTSFORWARD-LOOKING STATEMENTS
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Certain information regarding Erdene ("the Company") contained herein may constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not
statements of fact. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance thatsuch expectations will prove to have been correct. The Company cautions that actual performance will be affected by a number of factors, many of which are beyond the Company's control, and that future events and results may vary
substantially from what the Company currently foresees. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration results, continued availability of capital
and financing and general economic, market or business conditions. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement. The information contained herein is stated as of the
current date and subject to change after that date.
PRESENTATION OUTLINEPRESENTATION OUTLINE
Company Overview
Coal Program – Xstrata
Copper-Gold Exploration
Zuun Mod Molybdenum-
Copper Project
Company Overview
Coal Program – Xstrata
Copper-Gold Exploration
Zuun Mod Molybdenum-
Copper Project
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CanadaCanadaMongoliaMongolia
DIVERSE MID-TIER RESOURCE EXPLORATION& DEVELOPMENT COMPANY
DIVERSE MID-TIER RESOURCE EXPLORATION& DEVELOPMENT COMPANY
U.S.U.S.
MolybdenumMolybdenumCoalCoalCoalCoalAggregateAggregate
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ERDENE PROJECT LOCATIONSERDENE PROJECT LOCATIONS
ERDENE’S MONGOLIA JOURNEYERDENE’S MONGOLIA JOURNEY
Executive have combined experience in Mongolia
~30 years
ERD Initial Public Offerring 2004
Acquired Muhammed Al Fayad’s Gallant Minerals in 2005
Partnered with Xstrata on coal in 2006
Employ 14 full time and up to 100 seasonal personnel in Mongolia
>$20M CAD invested
Executive have combined experience in Mongolia
~30 years
ERD Initial Public Offerring 2004
Acquired Muhammed Al Fayad’s Gallant Minerals in 2005
Partnered with Xstrata on coal in 2006
Employ 14 full time and up to 100 seasonal personnel in Mongolia
>$20M CAD invested
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ERDENE MARKET FACTS(as of October 12th, 2010)ERDENE MARKET FACTS(as of October 12th, 2010)
Trading Info: Shares Outstanding: Working Capital: Market Cap:
Cdn ~$10 MCdn ~$10 M89.23 M89.23 MTSX:ERDTSX:ERD Cdn ~$44 MCdn ~$44 M
1 year history compared to TSX/S&P Global Mining Index
2010 Program: $1.6M field program to explore newly acquired 400,000 ha Zarman basin; drilling underway; acquisition due diligence continues
High Quality Thermal & Coking(open pit, <5:1, 200Mt+, >5800 kcal/kg GAR)
XSTRATA TERMS:
•Option to earn up to 75% of any coal opportunity in Mongolia
•Must fund all work through to completion of feasibility study
PRIORITY TARGETS:
MONGOLIA COAL - XSTRATA ALLIANCEMONGOLIA COAL - XSTRATA ALLIANCE
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ERDENE’S 2009-10 COAL ACTIVITY
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Existing Railway
Proposed RailwayJiayuguan
Baotou
Irkutsk
Tianjin
Extent of ERD’09 Regional Mapping
Program
Zarman Basin400,800 hectare Applications (6) & Geophysics Program
Tavan Tolgoi Tender Bid Preparation(data collection &
digitization)
Ceke
South Gobi Energy Resources
Due-Diligence Program
Chita
South Gobi Coal Basin Tenement & Tender Evaluation /
Budget
Ovoot
OlonBulag
Uneet
Project due-
diligence
TavanTolgoi
Ovoot Tolgoi
Target:
World Class Copper-Gold-Molybdenum Porphyry Deposits
Exploration Programs:
Multi-million program in South Gobi exploring for porphyry copper, gold, moly systems over 5 years
Exploration underway on new copper-gold discoveries at Nomin and Altan-Arrow; additional acquisitions planned
2010 Program:
MONGOLIA METALS – 100% ERDMONGOLIA METALS – 100% ERD
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2009-10 Porphyry Exploration Program
New Kazakh Mongol Arc
2009-10 Porphyry Exploration Program
New Kazakh Mongol Arc
METALS EXPLORATION MONGOLIAActive 2009-10 Cu-Au-Mo ProgramMETALS EXPLORATION MONGOLIAActive 2009-10 Cu-Au-Mo Program
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79 billion lbs of copper and 45 million ounces of gold
ZUUN MOD MO DEPOSIT
>400M lbs of Mo and Cu
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Ancient mining pit workingsHosted within Paleozoicfelsic volcanics and granodioriteAverage Grades:Au 1.7 g/t, Cu 2.2%
Secondary ancient mining pitAverage Grades:Au 1.15g/t, Cu1.6%
Nomin CopperNomin Copper--Gold Project Gold Project
ZUUN MOD MO-CU PROJECT Metals: Molybdenum & CopperZUUN MOD MO-CU PROJECT Metals: Molybdenum & Copper
RESOURCE:
>180,000 tonnes (>400Mlbs) of contained moly at >0.05%, with similar copper content
MARKET:
Asia-Pacific region ~35% of Mo world consumption and fastest growing
• Wholly owned • ~ 200km from China border, • Advanced stage,• Open pit mineable target
PROJECT: Zuun Mod
Zuun Mod Mo-Cu Project LocationZuun Mod Mo-Cu Project LocationRegional Molybdenum Consumption & Steel Production Mining and Processing Sites Regional Molybdenum Consumption & Steel Production Mining and Processing Sites
World’s Largest Steel Producing Region World’s Largest Steel Producing Region
China’s Largest Molybdenum Producing Regions China’s Largest Molybdenum Producing Regions
Gas Pipeline22 Mlbs Mo
Zuun Mod Porphyry ComplexZuun Mod Porphyry Complex
Limit of Alteration and Mineralization
4.5 kilometres
Molybdenum in Rock
South Corridor Deposits
Drill IntersectionsDrill Intersections
373m of 0.063% MoIncl 94m of 0.084% Mo
410m of 0.057% MoIncl 96m of 0.095% Mo
428m of 0.060% MoIncl 172m of
0.091% Mo
399m of 0.055% MoIncl 36m of
0.088% Mo
Mineralization in holes
highlighted begins 22m to
150m from surface
ZUUN MOD MO-CU PROJECT ZUUN MOD MO-CU PROJECT
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0.06% Mo
0.08% Mo
South Racetrack Looking West –
Molybdenum Grade Contour
0.04% Mo
June 2009 NI 43-101 Resource EstimateJune 2009 NI 43-101 Resource Estimate
Mo%Resources
MtResource CategoryCut-off Grade Mo%
Contained Mo Metal Mlbs
Total Measured & IndicatedTotal Measured & Indicated0.04%0.04%
Cu%
180180 0.0640.064 0.0540.054 215 215
Total InferredTotal Inferred0.04%0.04% 185185 0.0660.066 0.0510.051 208 208
ZUUN MOD Mo-Cu PROJECT ZUUN MOD Mo-Cu PROJECT
High Grade ZonesHigh Grade ZonesZUUN MOD Mo-Cu PROJECT ZUUN MOD Mo-Cu PROJECT
Cut-off Grade Mo%
Resource Resources
Mo%
Contained
Cu%
Contained Cu Metal
Mlbs Re ppm
Contained
Category Mt Mo Metal Re Metal
Mlbs lbs (000's)0.06% Measured 11 0.068 17 0.067 17 0.26 6
Indicated 33 0.072 52 0.07 51 0.34 25
M&I 44 0.071 69 0.069 68 0.32 31
Inferred 29 0.069 44 0.067 43 0.36 23
Major Molybdenum Deposits Mo Content and TonnesMajor Molybdenum Deposits Mo Content and Tonnes
Zuun Mod
(Erdene)
Molybdenum grade of Zuun Mod compares favourably with major deposits
ZUUN MOD Mo-Cu PROJECT ZUUN MOD Mo-Cu PROJECT Minarco Preliminary Assessment - ProjectMinarco Preliminary Assessment - Project
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ZUUN MODZUUN MODTimelineTimeline
201120112010 2010 20122012 201420142013 2013 20152015
Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Q1 Q1 Q2Q2 Q3 Q3 Q4 Q4 Q1 Q1 Q2 Q2 Q3 Q3 Q4Q4 Q1 Q1 Q2 Q2 Q3 Q3 Q4Q4 Q1 Q1 Q2 Q2
DevelopmentDevelopment
Strategic Partner EvaluationStrategic Partner Evaluation
FeasibilityFeasibility
PrefeasibilityPrefeasibility
Mining License Application
Mining License Application
Start-up - ProductionStart-up - Production
Preliminary Assessment StudyPreliminary Assessment Study
Resource DefinitionResource Definition
Global Molybdenum and Stainless Steel Production Global Molybdenum and Stainless Steel Production
60
110
160
210
260
310
360
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
Year
Tho
usan
d M
etri
c T
ons
Mol
ybde
num
0
10
20
30
40
50
60
Thousand Metric Tons Molybdenum Million Metric Tons Stainless
60
110
160
210
260
310
360
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
Year
Tho
usan
d M
etri
c T
ons
Mol
ybde
num
0
10
20
30
40
50
60
Thousand Metric Tons Molybdenum Million Metric Tons Stainless
Source USGS 2007 - 1257 using 20 yr historic growth rate
>300M lbs (~140,000 tonnes) of additional molybdenum supply required annually by 2020 the equivalent of 12 of the largest primary Mo mines
China’s Domestic Molybdenum Consumption to 2020China’s Domestic Molybdenum Consumption to 2020
0
20000
40000
60000
80000
100000
120000
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
Year
t es
t M
o co
nte
nt
0
20000
40000
60000
80000
100000
120000
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
Year
t es
t M
o co
nte
nt
Source IMOA, CMMR 2007
•110M lbs(50,000 tonnes) of new production annually by 2020 at 5 to 6% growth
•If China continues its current growth averaging 7.5% through 2020 an additional 140M lbs (64000 tonnes) of moly annually by 2020 or the equivalent of six world class mines
Need for New ProducersNeed for New Producers
400
575
750
2010 2011 2012 2013 2014 2015
Mlb Mo
2009
Need for new sourcesImproved recoveriesChina expansionsRecyclingExisting minesConsumption
2016 2017 2018
Consumption trend
New supply needed, >300Mlbs;Equivalent of 1-2 additional world class mines each year
Source: CRU Group
Molybdenum supply, by source
Molybdenum PriceMolybdenum Price
Despite significant exports by China the price of molybdenum has increased by 100% from its post crash lows and is holding stable in the $15 to $17 range
Under financing of new projects in 2009 and 2010 will have consequences on supply
JP Morgan analysts forecast the metal rising to around $21 per pound by the end of this year, and possibly rising as high as $24 per pound by the end of 2011.
Roskill, is projecting moly prices to rise above $20 per pound in 2011 on strong demand. The research group also says a supply deficit in the market by 2014 is possible and may drive prices as high as $40 per pound.
Despite significant exports by China the price of molybdenum has increased by 100% from its post crash lows and is holding stable in the $15 to $17 range
Under financing of new projects in 2009 and 2010 will have consequences on supply
JP Morgan analysts forecast the metal rising to around $21 per pound by the end of this year, and possibly rising as high as $24 per pound by the end of 2011.
Roskill, is projecting moly prices to rise above $20 per pound in 2011 on strong demand. The research group also says a supply deficit in the market by 2014 is possible and may drive prices as high as $40 per pound.
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Zuun Mod – Comparison to Hanlong Invested Moly Companies(As of July 21, 2010)
Zuun Mod – Comparison to Hanlong Invested Moly Companies(As of July 21, 2010)
ERD General Moly Moly Mines
PROJECT Zuun Mod Mt. Hope Spinifex Ridge
M+I RESOURCE134 Mlbs Mo @ 0.062%
1,531Mlbs Mo @ 0.07%
562 Mlbs Mo @ 0.060%
INF RESOURCE97 Mlbs Mo @ 0.060%
265.7 Mlbs Mo @ 0.06%
30 Mlbs Mo@ 0.054%
SYMBOL ERD:TSX GMO:TSX MOL:TSX
SHARES OUTSTANDING
89M 76M 364M
Share Price $0.50 $4.10 $0.73
MKT CAP (CDN$) $45M $299M $266M
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ZUUN MOD SUMMARYZUUN MOD SUMMARY
Strong steel demand expected to drive moly demand and price
One of the largest molybdenum deposits in Asia
On the doorstep of the world’s largest steel producing region
Established >400 Mlbs of molybdenum resource
Targeting 2014 Start-up
Strong steel demand expected to drive moly demand and price
One of the largest molybdenum deposits in Asia
On the doorstep of the world’s largest steel producing region
Established >400 Mlbs of molybdenum resource
Targeting 2014 Start-up
ERD SUMMARY-2010ERD SUMMARY-2010Mongolia
Advancing one of the largest molybdenum deposits in Asia located 200km from China, the leading steel producing country and the fastest growing molybdenum consumer
Major regional porphyry exploration program (Cu-Au-Mo)
Advancing coal opportunities in Mongolia with Xstrata
North AmericaGlobal export quality coking coal resource moving tow ards development in close proximity to deep ocean port in Atlantic Region
Interests in established development or producing proje cts in Eastern US; royalty based production projected for 20 10
MongoliaAdvancing one of the largest molybdenum deposits in Asia located 200km from China, the leading steel producing country and the fastest growing molybdenum consumer
Major regional porphyry exploration program (Cu-Au-Mo)
Advancing coal opportunities in Mongolia with Xstrata
North AmericaGlobal export quality coking coal resource moving tow ards development in close proximity to deep ocean port in Atlantic Region
Interests in established development or producing proje cts in Eastern US; royalty based production projected for 20 10
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V A L U E C R E A T I O NV A L U E C R E A T I O N
Sustaining GROWTHSustaining GROWTH
Maintaining STABILITY Maintaining STABILITY
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