Cheap stock.....ERDErdene Gold Inc.: Donkin Coal Alliance Commits Funding to Advance Donkin Coal Project Toward Feasibility
5/16/2008 8:01:13 AM - Market Wire
HALIFAX, NOVA SCOTIA, May 16, 2008 (MARKET WIRE via COMTEX News Network) --
ErdeneGold Inc. (TSX: ERD) announced today on behalf of the Donkin CoalAlliance that, having completed an evaluation of further studies on theDonkin coal project, the Donkin Coal Alliance will commit to funding afeasibility study of an Evaluation and Development Program ("Program")at the Donkin project in Nova Scotia, Canada. The Donkin Coal Alliance("DCA") is a joint venture between Xstrata Coal Donkin Limited (asubsidiary of Xstrata plc) (75%) and Erdene Gold Inc. (25%). TheProgram, utilising a continuous miner, is an interim step in thedevelopment path leading towards establishing a large scale undergroundlongwall mining operation. The DCA has endorsed this interim step inthe project management process to obtain further information deemedcritical to the assessment of the feasibility of the large scaleunderground mining options under consideration. In addition, thein-seam drilling is now complete and information collected for gasdesorption rates and samples for coal quality evaluation are now beingprocessed.
The DCA confirmed that the results of recentlycompleted further studies met expectations that the proposed Donkinproject could generate economic returns consistent with thoseidentified in the project's preliminary assessment report of November2007. The feasibility study regarding the Program is expected to becomplete by the end of 2008. The Program will focus on gaining greatercertainty of the geological, geotechnical and mining conditions of theproposed operation. Furthermore, coal extracted from the site duringthe Program will be marketed domestically and internationally in orderto establish a customer base for future levels of forecast production.It is anticipated that during the estimated 18 month duration of theProgram the DCA will be able to decide on the progression of theproject into a feasibility study of the proposed large scaleunderground longwall mining operation, thereby maintaining a productiondecision timeline consistent with the preliminary assessment report.
"Weare very pleased with the latest development in the assessment processand view this initiative as an important step in advancing the Donkinproject toward feasibility," said Ken MacDonald, VP Business Strategyand CFO of Erdene. "The introduction of the new evaluation anddevelopment program will allow the DCA to gain greater confidence forthe decision to commit to the large scale longwall mining operation.More importantly, it provides the opportunity to generate earlier cashflow from the sale of coal produced during the Program."
Donkin Coal Project Background
Thetargeted Harbour seam, containing an indicated resource of 101 milliontonnes and an inferred resource of 115 million tonnes in the Donkincoal resource block was accessed in late 2007 following the dewateringand refurbishment of twin 3.5 kilometre long tunnels. The resource isclassified as high volatile-A bituminous, high-sulphur, medium-ashcoal. A positive preliminary assessment was completed in November,2007.
About Erdene Gold Inc.
Erdene is a diversifiedresource development company with exploration properties focused onhigh-growth commodities and near-production assets. The Company has astrong portfolio of properties in Mongolia focused on base and preciousmetals and energy (coal). Erdene has a strategic alliance with XstrataCoal to develop its coal properties in Mongolia. Erdene has near-termcash flow opportunities in its North American assets, which includesagreements with J.M. Huber Corporation (now KaMin LLC) and Ready MixUSA as operators and developers in the southeast U.S. for its kaolinclay and aggregate projects, respectively. Erdene has a cash positionof approximately $7.4 million with 70,644,877 common shares issued andoutstanding and a fully diluted share position of 80,447,352 commonshares.
Forward-Looking Statements
Certain informationregarding Erdene contained herein may constitute forward-lookingstatements within the meaning of applicable securities laws.Forward-looking statements may include estimates, plans, expectations,opinions, forecasts, projections, guidance or other statements that arenot statements of fact. Although Erdene believes that the expectationsreflected in such forward-looking statements are reasonable, it cangive no assurance that such expectations will prove to have beencorrect. Erdene cautions that actual performance will be affected by anumber of factors, most of which are beyond its control, and thatfuture events and results may vary substantially from what Erdenecurrently foresees. Factors that could cause actual results to differmaterially from those in forward-looking statements include marketprices, exploitation and exploration results, continued availability ofcapital and financing and general economic, market or businessconditions. The forward-looking statements are expressly qualified intheir entirety by this cautionary statement. The information containedherein is stated as of the current date and subject to change afterthat date.
Contacts: Erdene Gold Inc. Ken MacDonald VicePresident Business Strategy and CFO 902-423-6419 info@erdene.comwww.erdene.com
SOURCE: Erdene Gold Inc.
mailto:info@erdene.com https://www.erdene.com
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