In January 2023, Erdene entered a Strategic Alliance with Mongolian Mining Corporation (“MMC”) to develop the Bayan Khundii Gold Project. Under the terms of the Strategic Alliance, MMC invested US$40 million for a 50% interest in Erdene’s Mongolian subsidiary, Erdene Mongol LLC (“EM”).
The Strategic Alliance and Investment Agreement became effective on 25 January 2024.
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Summary:
The Project is located within the southeast part of the Trans Altai Terrane (“TAT”). The Trans Altai is an island arc terrane within the Central Asian Orogenic Belt (“CAOB”), which extends more than 3,000 km from the Urals to the Pacific. The CAOB is host to numerous porphyry copper and epithermal Au deposits of largely Devonian to Permian age. The closest known deposits of this type in Mongolia are those of the Oyu Tolgoi cluster, located ~700 km ESE of Bayan Khundii.
The southeast portion of the TAT is referred to by Erdene as the Khundii Minerals District (“KMD”) and host to a number of porphyry and epithermal deposits and occurrences, including the BK gold deposit, the Dark Horse gold deposit, the Altan Nar gold-polymetallic deposit, the Zuun Mod Mo-Cu deposit and the Ulaan SE gold mineralization.
The bedrock geology of the Khundii license area is dominated by a sequence of the Carboniferous Ulziithar Formation, comprised of tuffaceous units, volcanoclastic sedimentary sequences, basalt and andesite flows and volcanic breccia and is approximately 2,000 m thick. Rocks of the Ulziitkhar Formation were intruded by multiple plutons and stocks of the early Carboniferous Bayan Airag intrusive complex, and together these rocks were unconformably overlain by Permian and Jurassic volcanic and sedimentary units. All rocks in the region are overlain by unconsolidated sediments of Quaternary or Recent age.
Three sets of structures were distinguished in the KMD by their orientation and length, relationship to granitoid intrusions, and their cross-cutting relationships. The largest and oldest set comprises firstorder ENE-trending lithospheric scale lineaments, interpreted as deep-seated, inherited basement structures. A second set comprises structures that trend NE in en echelon fault segments that collectively define the ENE lithospheric trend. This set of NE-trending faults, including those at the Bayan Khundii deposit, are interpreted as a series of normal faults with dip-slip displacement. These extensional faults are interpreted to have formed the controlling structures at Bayan Khundii. Model integration of structural data from the BK gold deposit in three dimensions indicates a set of tilted extensional fault blocks in which gold was deposited in a fractured relay ramp structure between the fault tips of two soft-linked normal faults. A third set of smaller, N-S trending lineaments are noted. One of these N-S structures hosts the Dark Horse Mane gold deposit and can be traced for 3.5 km to the south where it connects to the extensional faults of the Bayan Khundii deposit.
Mineralization at the BK gold deposit consists of gold ±silver in massive-saccharoidal, laminar and comb-textured quartz ±hematite veins, multi-stage quartz-adularia-chalcedony ±hematite veins, quartz-hematite breccias, along late fractures (±hematite/specularite), and as disseminations within intensely illite-quartz altered pyroclastic rocks, where it is commonly associated with hematite that partially or completely replaced pyrite grains. Gold mineralization is mostly hosted in parallel NW-SE trending, moderately-dipping (approximately 45°) zones that range in width from 4 to 149 m.
Gold mineralization at the Dark Horse Mane deposit is hosted within strongly altered tuffaceous and volcanoclastic rocks, crosscut by quartz and quartz-hematite veins and stockwork zones. Several vein types are present, including comb-textured quartz-adularia veins, sugary crustiform-textured quartz veins, and multi-stage quartz-chalcedony veins. Mineralization is associated with a shallow (<60 m depth) oxide zone with high-grade Au mineralization at Dark Horse including well-developed structurally controlled supergene oxide zones which lies above a locally deeper sulphide-rich zone.
The BK and DH Mane gold deposits and the Ulaan Southeast gold occurrence, although identified as separate mineralization, as they were discovered at different times, all three may be part of a single epithermal system based on their proximity, inclusion within a contiguous white mica alteration zone, and generally similar mineralization features; they are also related to the same structural trends.
The BK gold deposit is interpreted as a low-sulphidation epithermal deposit hosted within a corridor of en-echelon extensional faults. Dark Horse Mane shares many features with the BK gold deposit, including field and petrographic evidence for an early high-temperature event of K-feldspar-biotitequartz alteration, and chalcopyrite encapsulated in quartz, as well as patches of lithocap-style alteration. This early porphyry-like assemblage was overprinted by quartz-illite alteration associated with epithermal Au mineralization.
The higher As and Sb contents in the Dark Horse project area suggest that it may represent a shallower erosion level than at Bayan Khundii. Recent drilling intersected a shallow (<60 m depth) oxide zone with high-grade Au mineralization at Dark Horse (including a 5 m interval averaging 123.5 g/t Au), which lies above a deeper sulfide-rich zone (of pyrite, arsenopyrite and arsenian pyrite), hosted by silicified and illite-altered lapilli andesite tuffs and volcanoclastic units. The presence of oxidation zone in Dark Horse is evidence to the near surface mineralization environment where leached sulphide minerals from surface were oxidized in the supergene process.