Erdene Resource Development Corp CEO Peter Akerley says the company’s independent preliminary economic assessment on the proposed US$687 million Zuun Mod molybdenum-copper project in southwest Mongolia underlines its potential as “one of the world’s premier undeveloped resources of molybdenum”.
Hong Kong-based O2 Mining’s PEA, including resource and processing input from SLR and Tetra Tech, respectively, pointed to a 16.1% after-tax internal rate of return for a 34-year, 25 million tonnes per annum operation producing an average 20 million pounds of molybdenum and 28Mlb copper per annum at an average all-in sustaining cost of US$13.89/lb molybdenum. The study used long-term US$25/lb molybdenum and $50/lb copper prices.
The project, about 280km from a Mongolia-China border railhead at Ceke, is said to be within 30km of a circa-300km “mine haul road” linking regional coal mines to the Shivee Khuren–Ceke border crossing. Power was supplied to the Khundii Minerals District via high-voltage transmission lines, the PEA said.
TSX-listed Erdene, which has a current market value around C$393 million, says management has visited several molybdenum roasters in Asia over the past year to inform its offtake strategy for Zuun Mod’s molybdenum and copper concentrates.
“The project is underpinned by a low-strip-ratio openpit, located 35km from our Bayan Khundii gold mine and approximately 200km from the border with China, the world’s largest consumer of molybdenum and copper,” Erdene CEO Peter Akerley said.
“The project demonstrates compelling economic potential under our base case scenario with significant upside at current metals prices. Rapid infrastructure development across southwestern Mongolia, including new roads and expanded power supply, further support the potential viability of the project.
“Molybdenum is essential to high-strength steel used in energy infrastructure, aerospace and defence. Demand continues to outpace supply, with little new primary production planned globally. “Building on this study, drilling will begin in late October focused on upgrading and expanding a resource that remains open and to test for copper mineralisation across the broader porphyry system. Engineering, environmental and hydrogeological programs will advance concurrently and we are in discussions with potential partners on pathways to take Zuun Mod into development.”
Erdene’s PEA talks about peak “mining employment” of about 530 people and $3.7 billion of corporate taxes and government royalties over the projected life-of-mine. A conceptual mining fleet peaking at 63 units – including 33 ultra-class haul trucks, three large face shovels, two rehandle loaders, eight drills and supporting equipment – would be operated by a mining contractor.
