Erdene Resource Development Corp T.ERD

Donkin Mine Week-End Article

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From the Cape Breton Post Sat May 9 2009

Demand for coal could bring       Donkin mine to life

The potential for a viable coal mine in Donkin is inching closer to reality. Tunnels - drilled at a cost of $100 million more than 20 years ago- were allowed to flood after the price of coal slumped and the estimated 300 million tonnes of coal was never extracted.

In recent years, though, a demand for coal has returned and led to a 2004 call for tenders by the provincial government to develop the mine.

Global mining giant Xstrata emerged from the bidding process and together with Erdene Gold, which holds a 25 per cent stake in the project, continues to investigate the mine's potential.

Today, exploratory work continues at the Donkin mine to determine if the project can meet demands for coal around the world and become a major employer locally.

Xstrata Coal project manager Val Istomin estimates 250 to 270 direct jobs will be created and maintained for 30 years if the longwall mine can be developed and operated as an economically viable underground mine.

There are also indirect jobs.

"For every full time employee employed at Donkin four other community folk will gain income:' Istomin said, "so even for this relatively small exploration phase there are significant flow-on benefits:'

Although some have questioned if the mine will ever open, Istomin said Xstratas goal is to begin production in 2010.

"However, one outstanding issue that must be finalized before Xstrata will approve the commencement of mining is to sign a coal off-take agreement with potential local and overseas customers. We are currently in discussions with a number of potential customers including (Nova Scotia Power):'

The project must also meet regulatory, statutory and commercial approvals and tenders for all the necessary work and machinery and equipment would also have to be selected before underground exploration.

On the surface this means constructing new access road, coal crushing and truck loading facilities, office buildings and installing infrastructure such as electricity, water and compressed air.

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Underground, the two existing mine entry tunnels would have to be fixed, new mine fans must be installed and a fourkilometre underground conveyor belt system with associated piping and cables must be built.
"The detailed exploration phase entails using a continuous miner system to drive three underground roadways into the Donkin exploration licence area until sufficient technical
information is gained:'
He said the `missing' required detailed technical information includes geology, geotechnical, hydrology, underground gas regime, coal seam mineabilty and coal quality and marketability. Preparatory work also involves the purchase of all machines and equipment and the selection and employment of about 50 people.
"This exploration phase is results-driven, not time-driven but is estimated that it could take about two years to gain sufficient knowledge to make a decision:'