Erdene Resource Development Corp. has released the results of an independent Preliminary Economic Assessment (PEA) for its wholly-owned Zuun Mod Molybdenum-Copper Project located in southwest Mongolia. The PEA, prepared in accordance with National Instrument 43-101 standards, indicates a robust economic outlook for the project, with a base case after-tax Net Present Value (NPV) of US$745 million and an Internal Rate of Return (IRR) of 16.1%. These figures are based on long-term commodity price assumptions of US$25.00 per pound for molybdenum and US$5.00 per pound for copper. Notably, at current spot prices of US$33.00 per pound for molybdenum and US$6.50 per pound for copper, the after-tax NPV could soar to US$2.0 billion, with an IRR of 27.8%.
The project is expected to have a mine life of 34 years, producing approximately 672 million pounds (305,000 tonnes) of molybdenum and 947 million pounds (430,000 tonnes) of copper. Initial capital costs are estimated at US$687 million, with an all-in sustaining cost (AISC) of US$13.89 per pound of molybdenum. The PEA also highlights the project’s strategic location, situated about 280 kilometres from the Mongolia-China border, which is expected to facilitate significant interest in long-term offtake agreements from Asian customers.
Peter Akerley, President and CEO of Erdene, expressed confidence in the Zuun Mod project, stating that it is poised to become one of the world’s premier undeveloped molybdenum resources. He noted that the demand for molybdenum, which is crucial for high-strength steel used in various industries including energy, aerospace, and defence, continues to outpace supply. The PEA outlines a conventional open-pit mining operation with a processing capacity of 25 million tonnes per annum, and the company plans to begin drilling in late October to upgrade and expand the resource.
The PEA also emphasises the potential for resource expansion, as the Zuun Mod deposit remains open at depth and along strike. Erdene is set to commence drilling to convert inferred resources to measured and indicated categories, focusing on areas scheduled for mining in the first five years of the project. Additionally, the company is exploring opportunities for value engineering to optimize project costs and is in discussions with potential partners for development pathways.
With rapid infrastructure development in southwestern Mongolia, including new roads and power supply enhancements, the Zuun Mod project is well-positioned to leverage these advancements for its operational needs. As Erdene moves forward with its plans, stakeholders can expect further updates on the project’s progress and potential partnerships.
