Erdene Resource Development Corp (TSX:ERD, OTC:ERDCF) has secured significant financing from Mongolian Mining Corporation (MMC) for the development of the Bayan Khundii Gold Project
The company announced the successful execution of debt finance agreements totaling up to US$80 million with MMC.
The financing is earmarked for the development of the high-grade, open-pit Bayan Khundii Gold Project in southwestern Mongolia.
The funding, structured as a shareholder loan, will primarily finance the construction of the Bayan Khundii gold mine and processing complex, with an initial tranche of US$50 million. Additional tranches, up to a total of US$80 million, may be drawn subject to MMC’s discretion.
This financing follows MMC's earlier investment of US$40 million for a 50% equity interest in EM, forming part of the Strategic Alliance Agreement. In total, MMC is poised to inject up to US$120 million into Bayan Khundii.
MMC is Mongolia’s leading publicly traded mining company.
“With first gold scheduled in 2025, Bayan Khundii will be one of the highest grade, open pit gold mines globally and Mongolia’s largest primary gold producer when it reaches full production,” Peter Akerley, CEO of Erdene said in a statement.
“The strengthening of our relationship with MMC through this financing supports our goal of creating a major new mining district in southwestern Mongolia. With MMC’s experience in large scale mining, expertise in construction, power supply, transportation and logistics, and national and international relationships, the Bayan Khundii gold project will form a strong foundation for future growth in the Khundii Minerals District.”
Key terms of the financing include a maturity period of five years from the first draw, accruing interest at a rate of 13.8%, and paid quarterly. Erdene has the option to capitalize the first four interest payments.
The loan will be secured by a 50% guarantee by Erdene and its interests in the Bayan Khundii Project, including its shares of EM and NSR interest, as well as preferential rights over related mining licenses.
Bayan Khundii is scheduled to commence production in 2025.