Erdene Resources, a mining company based in Halifax, Nova Scotia, has announced that it has received $30 million in funding for its Bayan Khundii gold project in Mongolia. The funding comes from MMC, a Mongolian mining company, and is part of a modified agreement between the two companies.
Under the agreement, MMC initially invested $15 million as a convertible note to support the early works of the project. In October, MMC advanced the remaining $15 million of the third-stage payment to progress Bayan Khundii and secure necessary approvals.
The funding from MMC is a crucial milestone for Erdene Resources as it allows the company to continue the development of the gold project. Meanwhile, international financial institutions are currently conducting due diligence on the project’s updated feasibility study and are expected to provide debt financing.
Bayan Khundii Project Overview
The Bayan Khundii gold project is an open-pit mine located in southwestern Mongolia. According to the project’s latest feasibility study, production is set to begin in late 2025. Over its 6.5-year mine life, the project is expected to produce an average of 74,200 ounces of gold per year, with an all-in sustaining cost of $869 per ounce.
Mongolia is known for its coal mining exports, but the country is actively expanding its resource base and investing in sustainable development. This includes projects like Bayan Khundii, as well as green agriculture and renewable energy initiatives. Additionally, Mongolia is home to Rio Tinto’s Oyu Tolgoi mine, which is set to become one of the world’s leading sources of copper by 2030.
Future Prospects and Closing Timeline
Erdene Resources anticipates that senior debt financing will make up a significant portion of the total financing package for the Bayan Khundii project, potentially up to 65%. The company expects the closing of the financing to take place in late 2023.
Securing the $30 million funding from MMC is a significant step forward for Erdene Resources, demonstrating the confidence and support for the development of the Bayan Khundii gold project. With the ongoing due diligence by international financial institutions and the expected debt financing, the future looks promising for Erdene Resources and its shareholders.