Erdene Commences Construction at the High-Grade Bayan Khundii Gold Project and Finalizes Strategic Alliance With Mongolian Mining Corporation - Seite 2

On January 15, 2024, Erdene and MMC reached a formal decision to commence construction at Bayan Khundii. With Proven and Probable reserves of 513,000 ounces of gold at an average head grade of 4.0 g/t gold, Bayan Khundii is scheduled to produce an average of 87,000 ounces of gold during years two through five of the seven year mine life. Furthermore, known resources in the District are expected to provide further reserves to significantly extend mine life.

The construction decision follows the successful completion of the Project’s early works program during the second half of 2023. Representing approximately 12% of the total construction effort, EM built temporary construction facilities, including aggregate crushing and concrete batch plants, fuel depot and construction camp, construction roads, and completed site leveling, detailed excavation, and all major reinforced concrete footings and columns installation for the Project’s process plant. Construction site photos are included below.

Process Plant Foundations and Temporary Facilities – October 2023

Process Plant Foundations and Temporary Facilities – January 2024

The contracts for early works and the Project’s Engineering, Procurement and Construction (“EPC”) services have been awarded to MCS Property LLC (“MCSP”), a leading Mongolian engineering and construction firm, and an affiliate of MMC. With a 25-year history operating in Mongolia, MCSP is a major contractor to the country’s mining industry, successfully delivering critical infrastructure for Rio Tinto’s Oyu Tolgoi underground operations and non-process infrastructure for MMC’s Ukhaa Khudag metallurgical coal mining operations. The fixed price EPC contract is valued at US$54 million, representing 60% of the Project’s capital costs. EM previously contracted with CITIC Heavy Industries for the Project’s Ball and SAG mills, COMO Engineers for the elution circuit and gold room and Hot Chengdu for the Project’s filtration equipment. In total, the Company has secured contracts for $74 million of the Project’s $90 million capital budget (excluding contingency).

The Project’s critical path construction activity is the completion of the process plant. With all major footings and columns in place and the first process mechanical equipment now on site, construction is expected to be substantially complete by year end with technical and state commissioning planned for Q1 2025. The Project is on schedule and budget to achieve operations commissioning and first gold in Q2 2025.