It is anticipated work at Altan Nar will commence in the second quarter leading to additional drilling in 2013.
Khuvyn Khar - Zuun Mod Copper & Molybdenum Project
In 2012, work was completed on a pit optimization study that included high level production scheduling, a review of operating and capital costs, and economic modeling. The study will be used to determine the parameters of additional pre-feasibility level studies expected to be carried out as the project advances. Although depressed molybdenum prices have resulted in a cautious approach to advancing the project, the location relative to China, large resource size, unexplored areas, a significant copper component in other areas of the porphyry complex, and positive longer term outlook for molybdenum demand and pricing, are all positive factors in evaluating the future potential of the project.
The Zuun Mod property covers a large porphyry system with multiple exploration targets. One such target is the Khuvyn Khar copper prospect located 2.2 kilometres northwest of the Zuun Mod molybdenum-copper deposit. In 2011, drilling at Khuvyn Khar intersected 34 metres of 1.3% copper and 9.24 g/t silver from 308 to 342 metres depth. The 2012 exploration program at Khuvyn Khar included a review of technical data, an expanded mobile metal ion ("MMI") geochemical survey, reprocessing of geophysical data, as well as a review of surface and drill hole geological data. This work has identified areas and criteria for a follow-up exploration program to be carried out in 2013 designed to test the mineral potential of the Khuvyn Khar prospect.
Altan Arrow Gold Project
Early stage surface exploration on a new prospect (Altan Arrow), located 15 kilometres south-southeast of the Company's Altan Nar gold discovery, has returned significant gold and silver mineralization associated with epithermal quartz veins over a one-square-kilometre area. Results include an average grade from rock chip samples over a 1 kilometre strike length of 3.5 g/t Au and 60 g/t Ag, including samples with up to 57 g/t Au and 416 g/t Ag.
Galshar Coal Project Royalty
The Company retains a royalty interest in the Galshar thermal coal project in Mongolia. The project is operated by Xanadu Coal Mongolia LLC ("Xanadu"), a 100% owned subsidiary of ASX listed Xanadu Mines Ltd. Xanadu has delineated a JORC compliant thermal coal resource of 70 million tonnes ("Mt") Indicated and 100 Mt Inferred. At Galshar, the basal seam, which contains a resource of 48 Mt Indicated and 53 Mt Inferred, is classified as medium to low ash, high moisture sub-bituminous coal suitable for power generation or Coal to Liquids (CTL) technologies. Xanadu has commenced the permit process to obtain a mining license at Galshar. The project is subject to a royalty payable to Erdene, its successors and assigns, of US$1.50 for each tonne of the first 5 Mt of coal mined from the property and a royalty of US$0.75 per tonne for any additional tonnes of coal mined.
During 2012, Erdene successfully completed a major restructuring of the Company, with the objective of maximizing shareholder value, minimizing dilution of its core assets, and to focus the resulting Companies' resources on specific projects. The key element of the restructuring was the separation of the core projects into two public companies.
Morien Resources Corp. ("Morien") now holds all of Erdene's former North American property interests, consisting primarily of a 25% interest in the Donkin Coal Project in Eastern Canada. Morien trades on the TSX-V under the symbol "MOX".
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