Erdene Resource Development Q1 2026 Earnings Call Transcript

Quartr
Provided by Quartr
May 7, 2026

Key Takeaways

  • Positive Sentiment: First production achieved: Bayan Khundii delivered first gold in September 2025 and in Q4 produced 7,434 oz (sold at an average of CAD 4,187) generating ~CAD 31M of revenue, with plant recoveries consistently >96% and throughput reaching nameplate by year-end.
  • Negative Sentiment: Ramp-up grade and dilution issues: Q4 feed averaged ~2 g/t versus reserve grade of ~3.8 g/t due to elevated dilution, blast fragmentation (≈15% oversized stockpiled ore) and transition from bulk to selective mining, requiring ongoing grade control, blasting and crushing improvements.
  • Neutral Sentiment: Production and cost targets: Feasibility supports ~80,000 oz/year at top-quartile all-in sustaining costs; 2023 AISC of US$869 adjusted for inflation/royalties implies roughly CAD/US$~1,250 by simple math, but management says two commercial quarters are needed to confirm actual AISC.
  • Positive Sentiment: District growth potential: Multiple high-grade exploration results (Dark Horse reserve 48,000 oz @ 7 g/t, Striker West, Altan Nar) plus oxide zones that may support heap-leach processing offer clear pathways to expand resources, extend mine life and add near-mine production (Dark Horse development targeted late 2027).
  • Positive Sentiment: Strong corporate liquidity for exploration: Erdene reports Erdene Mongol cash of US$13M, Erdene corporate had CAD 5M at year-end and now holds CAD 30M following a February 2026 private placement, with management saying no further JV capital injections are expected and no near-term equity raise planned.
AI Generated. May Contain Errors.
Earnings Conference Call
Erdene Resource Development Q1 2026
00:00 / 00:00

There are 6 speakers on the call.

Speaker 3

Welcome to the Erdene Resource Development fourth quarter and full year financial and operating results for 2025 conference call and webcast. As a reminder, all participants on the telephone are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then zero. Participants on the webcast may type their questions in the chat feature of the webcast. Now, let me hand the call over to John Dunchik. Please go ahead.

Speaker 1

Thank you, operator. Hello, everyone. Thank you for joining our call today. Some housekeeping items to note. The accompanying presentation for today's call is available for download from the company's website at erdene.com. Yesterday's press release, the financial statements, and the MD&A are all posted on Erdene's website and SEDAR+. It is also important to note that this conference call contains forward-looking information that is based on the company's current expectations, estimates, and beliefs, and may also use terms that are non-IFRS performance measures. Please review Erdene's Q4 2025 disclosure materials and the company's most recent annual information form for the risks associated with this forward-looking information and the use of non-IFRS performance measures. Please note that all dollar amounts mentioned on today's call are in Canadian dollars unless otherwise noted. Today's speakers from Erdene are Peter Akerley, President and CEO, and Robert Jenkins, Chief Financial Officer.

Speaker 1

I'd now like to turn the call over to Peter. Please go ahead, Peter.

Speaker 4

Thanks, John. Hello, everyone, and thanks for joining us today. Starting on slide 4, the Bayan Khundii Gold Mine is an emerging high-grade, low-cost gold producer in Mongolia, with first gold delivered in September of 2025. The mine is owned 50% by Erdene and 50% by Mongolian Mining Corporation through the joint venture Erdene Mongol LLC. Our company also holds a 5% net smelter royalty on all minerals produced by the joint venture after the first 400,000 ounces of gold production, which is expected to be achieved in the first 5 years. Once at full production, based on the feasibility, the mine is forecast to produce approximately 80,000 ounces of gold annually, with 93% recoveries from high-grade ore.

Speaker 4

Bayan Khundii is expected to sit firmly in the top quartile globally of all-in sustaining costs, generating significant cash flow in today's strong gold price environment. Turning now to slide 5 and the operating performance in the fourth quarter of 2025, our first quarter of operations. The Erdene Mongol mining team delivered 365,000 tons of ore to the run-of-mine pad at an average estimated grade of 2.4 grams per ton. This was about 55% higher tonnage than projected in our feasibility study, largely due to a lower cut-off grade of 0.45 versus 0.67, and driven by higher gold prices. During this initial ramp-up phase, which included overburden stripping and establishing consistent working levels and while our mining workforce transitions from bulk mining experience to selective mining in a high-grade open pit environment, dilution was elevated.

Speaker 4

As seen on slide 6, in Q4, we fed 145,000 tons into the plant at a measured feed grade of 2 grams per ton. This produced 7,434 ounces of gold, sold at an average price of CAD 4,187. This generated $31 million in revenues. We also produced a silver byproduct of 2,634 ounces. On the processing side, our target is 1,950 tons per day, equating to 650,000 tons annually. At reserve grade, this supports approximately 80,000 ounces per year of production. In 2025, throughput averaged 77% of target but reached nameplate by year-end, and that performance has continued into Q1. Gold recovery has exceeded expectations consistently above 96%.

Speaker 4

Looking at mining operations, the left image on slide 7 shows the surface areas mined during startup. While the middle highlights new high-grade zones opened up in late Q1 and where mining will continue in Q2. As shown, mining is scheduled to move into denser high-grade zones, providing greater optionality. As we continue with our ramp-up phase, we're conducting ongoing training supported by experts in open pit mining. Grade control and improved mining processes are our focus as we move through Q2. One challenge to date has been blast fragmentation, which left approximately 15% of ore stockpiled, as is oversized for the crusher. Because the hardest ore hosts the highest grades, fully crushed material is expected to yield better results. Our mobile crushing unit was introduced in late Q1 and is allowing the plant to operate more efficiently.

Speaker 4

In addition, consultants have recently been on-site advising on blasting improvements, which are being observed in the mine. Through January and February, we blended lower grade stockpile material, but as we added the ability to feed whole ore and continually improved our mining and blasting processes, as well as adjustments to ROM pad blending, grades began trending upwards. Our objective is to deliver feed at the reserve grade of Bayan Khundii, approximately 3.8 grams per ton, as established in our feasibility study. We will provide a Q1 production update for the Bayan Khundii mine in late April. Achieving this feed grade target requires managing dilution through strong grade control modeling, precise dig lines, well-defined blasting, and efficient blending. With 85% of the Bayan Khundii deposit contained in just 25% of the ore, selective mining discipline is critical.

Speaker 4

Slide 8 provides a recap of the production projections from the 2023 feasibility study. We targeted 67,000 ounces in the first year of production, reaching greater than 80,000 ounces a year thereafter. As we complete our ramp up in Q2, we will have our improved understanding of production for the remainder of 2026. At full production and accounting for inflation and higher royalties at current gold prices, we continue to target all-in sustaining costs in the lowest quartile globally. Overall, we are very pleased with progress to date and confident in Bayan Khundii's potential to become one of the highest grade open pit gold mines globally. Our highest priority remains reaching and consistently producing gold at the rates we've discussed. Looking ahead, slide 9 displays the wide range of growth opportunities offered by the Khundii District.

Speaker 4

These include Dark Horse expansions west of the Bayan Khundii pit, Ulaan, Altan Nar, and broader exploration across our licenses and potential acquisitions in the area. Moving on to slide 10. The Bayan Khundii epithermal system is a 10-kilometer series of gold mineralized structures that host the main Bayan Khundii deposit, as well as the Dark Horse Satellite Deposit north of Bayan Khundii, slated to begin production in late 2027. Our immediate exploration focuses on the Dark Horse area and west of the mine at Khundii West. As shown on slide 11, Dark Horse is located just 2.5 kilometers north of the Bayan Khundii deposit on the same mining license. This area hosts a satellite pit with an established reserve of 48,000 ounces grading 7 grams per tonne, with additional low-grade oxide resources.

Speaker 4

Development of the high-grade pit is scheduled to begin in Q4 2027, allowing for a 12-month period while the Bayan Khundii mine advances into deeper high-grade zones. Dark Horse also contains an extensive zone of near surface oxide mineralization along a 3-kilometer trend, with exploration extending into the Altan Nar area. This provides a tremendous opportunity to expand resources and extend mine life. Turning to slide 12. Our Q4 drill program at Dark Horse intersected impressive grades, 9 grams per tonne over 19 meters, 28 grams per tonne over 3 meters, adding to the existing high-grade reserve. Resource updates for Dark Horse are planned for Q2 2026, with further drilling to fully define reserves and complete grade control ahead of mine planning in 2027.

Speaker 4

At Dark Horse North, Q4 drilling intersected shallow oxidized zones of gold enrichment, expanded mineralization and increased grade with mineralized zones extended at depth, including 42 meters of 1.9 grams per tonne gold. The oxides are now being evaluated for heap leach processing, potentially complementing the Bayan Khundii carbon in pulp plant. At Altan Nar in the northeast portion of the greater Dark Horse area, the Q4 drill program returned multiple shallow intersections of gold-bearing oxidation zones, including 1 meter of 16 grams per tonne of gold within a broader zone of 16 meters at 1.4 grams per tonne, beginning just 8 meters from surface. Overall, some very exciting results that we plan to build upon in 2026.

Speaker 4

As you can see on slide 13, we have a substantial opportunity to expand production next to the current open pit in the Striker West and Ulaan areas. At Striker West, the most recent drilling intercepted thick high-grade zones, including 42 meters with 7 grams per tonne of gold. We'll look to incorporate Striker West into the mine plan as we move through 2026. Further west, the Ulaan prospect returned broad low-grade intervals, 330 meters over 1 gram per tonne beginning at 80 meters depth, as well as very high-grade intersections of 20-40 meters containing 8 grams per tonne. Overall, the vast epithermal system at Bayan Khundii is still in the early stages of exploration, and we are excited about the potential it offers.

Speaker 4

We've established a cornerstone reserve at Bayan Khundii and Dark Horse to support the initial mining period and the related infrastructure to support expansion in the region. The exploration opportunities on the Khundii and Ulaan licenses, the potential to upgrade production at our current carbon in pulp plant, and a possible heap leach opportunity provides us with a solid foundation for long-term growth. As you can see on slide 14, Erdene Mongol also holds the Altan Nar gold deposit located just 16 kilometers north of Bayan Khundii. The license hosts a 5.6-kilometer mineralized trend that is comparable in style of deposit to Fruta del Norte in Ecuador and Porgera in Papua New Guinea. Altan Nar has received limited exploration since our focus shifted to Bayan Khundii a decade ago, but is scheduled to see exploration later this year.

Speaker 4

This work will seek to upgrade our resources beyond the current shallow resource of approximately 500,000 ounces of gold. Metallurgical test work to date indicates that selective high-grade ore could be trucked to Bayan Khundii for processing or processed in a standalone flotation plant. In addition to the planned resource expansion, work in 2026 and 2027 will include metallurgical testing and technical studies aiming for a feasibility study being delivered by late 2027. Let me now turn to our wholly owned exploration and development projects. Starting on slide 15. Zuun Mod is one of the largest undeveloped molybdenum copper deposits in Asia. In October 2025, the company reported an updated independent mineral resource, significantly expanding on the previous estimate.

Speaker 4

Additionally, drilling in late 2025 outlined further molybdenum mineralization in the near surface that is expected to positively influence the preliminary economic assessment scheduled to be delivered in Q3 of this year. To slide 16. The drill program just mentioned also tested the Khuvyn Khar copper target, 3.5 km northwest of the Zuun Mod molybdenum-copper deposit, but in the same intrusive complex. Drilling returned a strongly mineralized copper zone with 65 m averaging over 0.6% copper, including 30 m of 1.2% copper. We're very excited about this discovery as it confirms a substantial copper component in the Khuvyn Khar porphyry system beyond the molybdenum-copper deposit defined at the nearby Zuun Mod deposit. Our plans for 2026 for Khuvyn Khar include a large-scale geophysical program to define targets throughout the complex for drill testing later in 2026.

Speaker 4

Moving on to slide 17. Also outside of the Alliance is the Tereg Uul copper-gold porphyry prospect, where we have an option to acquire an 80% interest. This property is located 10 km southwest in the long trend of Oyu Tolgoi, one of the largest copper-gold deposits in the world. In 2025, Erdene completed license-wide exploration programs resulting in the identification of several geophysical targets, but also a zone of anomalous gold mineralization over an area of approximately 2 km by 800 meters. A series of scope drill holes are planned in Q2 to test the extent and grade of the gold mineralization, as well as select geophysical targets. In summary, Bayan Khundii is our foundation, but the exploration pipeline is our future. By systematically de-risking these exploration targets, we're building a district with significant leverage to new discoveries, providing significant upside for our shareholders.

Speaker 4

I'd like to turn the call over to Bob for some of the financial highlights in the quarter.

Speaker 5

Thank you, Peter. Moving on to slide 18. Let me provide an overview of the financial highlights for the year ended December 31st, 2025. As a reminder to everyone on the call, Erdene's investment in Bayan Khundii is held through its joint venture interest in the Mongolian company, Erdene Mongol LLC. Therefore, our consolidated results, prepared in accordance with International Financial Reporting Standards, reflects only our investment in this company and our proportionate share of Erdene Mongol's operating results, as well as our corporate operations. For 2025, we recognized a loss from our investment in Erdene Mongol of CAD 1.3 million, reflecting our portion of the company's pre-operating costs for the first nine months of the year, partially offset by the net proceeds from gold sales following first pour in September 2025.

Speaker 5

At December 31, 2025, our investment in Erdene Mongol was valued at CAD 46.5 million on our balance sheet, representing 84% of the corporation's total assets as reported under IFRS. Corporately, we incurred approximately CAD 2.5 million of exploration and evaluation expenses on our wholly owned projects in 2025 compared to CAD 1.9 million in 2024, with the year-on-year increase primarily due to exploration expenses at the recently optioned Tereg Uul property. Corporate and administrative expenses in 2025 were nearly CAD 4 million, down from CAD 5 million in 2024, with the year-on-year reduction primarily due to one-time financing costs of CAD 1.5 million in 2024, partially offset by modest increases in administrative services, professional fees, and regulatory and compliance costs in the current year due to inflationary pressures.

Speaker 5

Erdene Mongol ended the year with $13 million US of cash on hand. No further capital injections are expected from Erdene to Erdene Mongol to fund operations at Bayan Khundii, as the mine is now generating positive cash flow from operations. Corporately, Erdene ended the year with CAD 5 million of cash. Has CAD 30 million in the treasury today following the proceeds from the bought deal private placement closed in February 2026. This liquidity will allow us to invest in the exploration and technical programs at Zuun Mod and Tereg Uul mentioned by Peter earlier on today's call. This concludes the review of our financial performance and position. I'll turn the call back to Peter.

Speaker 4

Thank you, Robert. On slide 19, I'd like to highlight our commitment to safety, environment, and communities. Our success depends on our people and ensuring their health and safety is our top priority. At the end of Q4 2025, Erdene Mongol had 476 staff and contractors on site, with approximately 40% of those local residents of Bayan Khundii. Since construction began, the Bayan Khundii project has logged 4.9 million person-hours, and by year-end, our total recordable injury frequency rate was 1.8 per million person-hours. On the environmental front, I'm proud to report zero reportable incidents in 2025. Our stewardship efforts remain focused on mitigating impacts and advancing protection initiatives such as endemic vegetation trials at the 2-hectare plantation at Bayan Khundii. In Q4, Erdene Mongol executed an updated local cooperation agreement with provincial and sub-provincial governments.

Speaker 4

Through this, we continue supporting local development programs focused on infrastructure, education, and health. We are deeply committed to the communities and proud of the progress achieved through these programs. Slide 20 summarizes our 2026 roadmap with a clear focus on transitioning Bayan Khundii into a steady state producer. This operational foundation allows us to capture maximum value from current gold prices while simultaneously executing a district scale exploration strategy to grow our mineral inventory. This two-pronged strategy, mine expansion and exploration, is in our view, the path to driving shareholder value. In closing, 2025 was a transitional year for Erdene. I want to congratulate our teams at Erdene and Erdene Mongol and thank our strategic partners, Mongolian Mining Corporation. Together, we safely built a gold mine in less than two years and joined the ranks of gold producers during a period of market strength.

Speaker 4

As we execute our growth plans, expanding Bayan Khundii and advancing adjacent opportunities, I believe we're very well positioned to deliver value for shareholders and stakeholders alike. With that, I'll hand it back to the operator to begin the Q&A. Thank you.

Speaker 3

Thank you, sir. As a reminder, to join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance, you may signal an operator by pressing star then 0. Participants on the webcast may type in their questions in the chat feature of the webcast. Thank you. For those on the phone, you may press star 1 now if you have questions. Your first question will be from John Ogden at Eastern Value Limited. Please go ahead, John.

Speaker 2

Thank you, Peter, for the call, and great to see the mine up and running. Excuse me. Just wanted to sort of go through the mathematics on the production, because I calculated 1.6 gram per ton that you're actually mining. You know, it's quite a way off. I mean, I was actually on the call with Mongolian Mining, and they are sort of seeing it gradually creeping up towards 3 grams in the next few months. Maybe you can give us a bit more, you know, understanding why it's taking so long to get to reserve grade.

Speaker 2

You know, not getting enough grade control drilling or bit of inexperience from the operators? That's one question. The other one is just, you know, you got CAD 30 million in bank, obviously a lot of drill targets and so on. Probably not gonna get money back from the JV yet. How are you gonna approach that? Are you expecting to do a capital raise later in the year? Thanks.

Speaker 4

Thanks, John. Yeah. When you look at the ramp up, we had always anticipated that we would be producing at a rate that was 50% of projected production as we move through, you know, what you would expect in terms of training up staff that are largely experienced in coal mining, so bulk mining, moving into selective mining. As I mentioned in the presentation, we've had a number of experts on site assisting with things like blasting and just improving on the dig lines. During the first few months, we mined an average of 2.4 and put 2 grams into the plant. You're probably looking at about a 20% dilution in that equation. As we moved into Q1 of this year, we did blend some of that large stockpile that we had into the plant.

Speaker 4

Grades would have been in that 1.5 to 2 gram range. As we've seen these improvements, including that of the crusher, we are seeing the grades start to move up towards that target number. I'm actually very pleased with the progress that we've seen to date. It's still a work in progress. I mean, those things I mentioned will still be worked upon, and it's not a switch we can flip on to go from 2 grams to 4 grams. It's sort of an incremental thing where you see these improvements along the way, but I'm very optimistic given what we're seeing in the last few weeks, that we're moving towards that point where we want to be. On the CAD 30 million, I'm not quite sure what you're referring to in terms of a raise later this year.

Speaker 4

The mine is cash flow positive. The CAD 30 million is certainly sufficient to fund the exploration we have planned at our 100% owned projects. It also gives us the ability to act on acquisitions should we decide to, but there's certainly no consideration at this point of any raises in the near future or any need for it in our current plans.

Speaker 2

Oh, thank you, Peter. No, the reason I said that is just that you have so many great targets to go for. I thought you were gonna have a very aggressive drill campaign. Of course, in Mongolia, the drilling is cheap, and it will be in elsewhere such as Canada. Yeah, fair point.

Speaker 4

Yeah, that's. I'll maybe just expand on that a little bit. Good point on the drilling. I think we're probably around CAD 110 a meter here. When we look at the projects that we are funding 100% of, we will do that first phase drilling at Tereg Uul, particularly testing that gold target, beginning at the end of April. That'll be a first phase. With success there, we would continue to ratchet that program up. Let's see what we get in the first go around. That will include testing that 2-kilometer gold target but also some geophysical targets. That's really just, let's see what happens with the first stage. The same can be said about Khuvyn Khar. You know, that could turn into a fairly expensive program.

Speaker 4

What I'm focused on there is to get our deeper geophysics completed, and we are going to bring in an international group to complete that program, and that's a summer program, following which we will test some of those targets. Again, it's one of those things where, you know, I can't commit to a large-scale program until we get that first phase in, but excited about both of them, and let's see.

Speaker 2

Great. Thanks, Peter.

Speaker 4

Good.

Speaker 3

From Don MacLean at Paradigm Capital. Please go ahead, Don.

Operator

Hey, good morning, Peter. Congratulations to you and your team for a great year last year. We look forward to a good one this year, too, with the mine running away at full speed, hopefully by the midterm of the year. You touched on it, this new discovery at Zuun Mod. Just wondering, with the drill program that's planned, what is it you're looking for? We know that porphyries come in clusters. This one's different than Zuun Mod. Maybe you could just give us some of the insights that you and your team have into what's happening in that neighborhood and the potential.

Speaker 4

Yeah. You know, Khuvyn Khar has been a very interesting project for us for some time, and largely because of the large volume of copper mineralization that we had seen in some reconnaissance holes or regional holes in that area. It wasn't unusual for us to be seeing a couple hundred meters of 0.1 to 0.2 copper, but we hadn't entered into those high grades. This most recent drilling intersected 30 meters of over 1%, 60 meters of 0.6. The characteristics of that mineralized dome are what were most exciting. We're seeing textures that suggest we're at the top of a porphyry system. We're seeing UST textures. We're sort of seeing breach and seal as you'd expect to see as you're blowing the top off of one of these cupola features.

Speaker 4

These interstitial fractures are filled with chalcopyrite. We're pretty confident we're near the top of the system. Now the question is, you know, which way do we go to find the rest of that? You know, the geological side of this, the character of it is what's most exciting.

Operator

Terrific. Well, we wish you lots of luck.

Speaker 4

Thanks, Don.

Speaker 3

Thank you. At this time, there are no further questions from the telephone. I'll now pass the call over to John Vinh to ask management the questions that have come in from email and on the webcast. Please go ahead, John.

Speaker 1

Thank you, operator. The first question through the webcast is: Given all the opportunities across your portfolio of projects, how do you allocate capital?

Speaker 4

We have a lot of projects. As you know, if we focus on Erdene Mongol first off, the priority there is really to focus on those opportunities that can most readily add to our production. When we look at Dark Horse, we are scheduled to begin mining there late next year, and we hadn't completed much of the exploration along trend. There's a 3-kilometer trend of gold mineralized oxides along that strike, we wanna fully explore that so we can ensure that as we get up there to open up that 50,000 ounces of 7 grams, we can understand fully how big that pit may get. With the recent drilling that we've just included in our release today, the Dark Horse North area is starting to come together as a substantial ore body as well.

Speaker 4

That introduces this concept of potentially a heap leach. There's work to do there, but if you can imagine, we can take the high grade and put it into CIP and take a lot more low grade now that we have the higher gold price and put that onto a heap leach and be a great complement to one another. Excited about that opportunity, and I'd say that's the priority in the coming months. You know, immediately after that and really part of our near-term plan is to fully define that potential as we move west.

Speaker 4

As you would have seen in the image I shared in the presentation, substantial intersections across that area from, you know, the 40 meters of 7 grams that we intersected at Striker West over to Ulaan, where we're seeing similar intersections of up to 40 meters of 8. Terrifically high-grade zones that we want to start to incorporate into our plans moving forward. Those are the two highest priorities at Erdene Mongol. You know, I think when you come back to the 100% owned projects, we talked about Tereg Uul and Khuvyn Khar, you know, earlier stage but very exciting grassroots projects. One next to the 4th largest copper gold mine in the world and the other part of a very large porphyry copper system. Be very exciting to see those drills turning on both those targets this year.

Speaker 4

I'd say on the 100% owned projects, the real value driver there is Zuun Mod. You know, I think it's sometimes hidden in our portfolio that we're sitting on an 800 million pound molybdenum equivalent resource that's exposed at surface, great, low stripping ratio. If there was a knock against it in the past, it was that it was remote and infrastructurally challenged. Here we are in a region now that we just brought power in from the border 240 km away. There's coal mine haul roads now passing by this district. The infrastructure's come, and it's at a time when there's a molybdenum deficit in China. I'm very excited about Zuun Mod and looking forward to getting our PEA delivered later this year.

Speaker 4

We have a couple of people in Asia working with upstream moly producers to talk about potential relationships moving forward. That project, I think, will be a surprise for our shareholders as we move through the latter part of this year. Lots on our plate, but that's sort of the sequencing of both the EM and the Erdene projects.

Speaker 1

Peter, the next question is, a follow-on to something you alluded to in your answer, and the question is: What is the potential for heap leach? Is Mongolia's climate compatible, and do you have indications of potential recovery from the low-grade ore?

Speaker 4

You know, it's interesting when we first came into this district, which was quite some time ago now, but I wouldn't have imagined that we would have been talking today about thick zones of oxide. You know, at Dark Horse South, we're seeing that oxidation zone go down 80 to 100 meters. You know, deep 100-meter thick zones of oxide. We're not just seeing it at Dark Horse South. We discovered it later in the exploration life at Bayan Khundii, where we have Midfield Southeast, again, giving these supergene enriched zones of 100 gram plus intersections. We're now looking at Altan Nar again and, you know, a lot of our drilling was below sort of 50, 60 meters coming in at an angle.

Speaker 4

Now as we go back and look at the trench samples, we're seeing enrichment there as well. I think there's a very strong likelihood that we can come up with substantial oxide resources, certainly at Dark Horse, but likely in other areas and begin to develop our heap leach opportunity. We also have a significant volume of low grade at Bayan Khundii, which because of the higher gold price, our cutoff has dropped, as I mentioned at the outset. That potentially could be blended in as well. I wouldn't anticipate as higher recovery, but nonetheless an opportunity for us to gain value from that low-grade material. We've done the bottle roll testing on the Dark Horse material.

Speaker 4

It looks like good recoveries. That material has now been sent as a bulk sample off to a lab in Canada to do the column leach work, which will be delivered over the summer. A number of fronts advancing there. Yeah, very excited about that. There are a number of heap leach mines now operating in Mongolia. You know, I have to get questions about cold weather here. A very viable opportunity here in Mongolia. Yeah, excited about that.

Speaker 1

Peter, next question. You've said consistently that Bayan Khundii is a low cost mine. Can you give us an indication or range of what you think the all-in sustaining cost will be?

Speaker 4

Yeah, I think to be, you know, fair on that one, we need 2 commercial quarters to really be able to establish what that all-in sustaining cost will be. To set the stage for that, when we did our feasibility in 2023, the independents had assessed or determined that the all-in sustaining cost would be $869. Obviously, there's been inflation. Mongolian inflation runs at about 8% per annum. With the higher gold price, the royalties that we pay to the state increase proportionate to that. If you apply those 2 elements to the $869, we would be somewhere in that $1,250 range. That would be the math.

Speaker 4

Let's see, when we get a couple of quarters of commercial production under our belt, we'll have a better understanding of the all-in sustaining cost.

Speaker 1

Thank you, Peter. Operator, that concludes our calls, from the webcast and email. Pardon me, questions from the webcast and email.

Speaker 3

We will now turn the call back over to Peter.

Speaker 4

Well, thank you everyone. I'd just like to, yeah, thank you all for joining us today and look forward to our next update. We will be issuing Q1 production numbers as we move towards the end of April. Certainly welcome any questions you wanna send our way. Thanks again.

Speaker 3

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. At this time we do ask that you please disconnect your line.

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