Erdene Resource Development (TSX:ERD)- First Gold Flows as Multi-Mine District Strategy Unfolds

Erdine Resource Development Corporation: 2026 Strategy & Operational Update

Key Concepts:

• Bay Hyundai Gold Mine: Erdine’s flagship project, achieving first gold production in September 2025.
• Darkhorse Deposit: A high-grade gold deposit adjacent to Bay Hyundai, targeted for near-term development.
• Zunmod: A copper-molybdenum-gold project with significant exploration potential.
• Altan Nar: A gold deposit undergoing feasibility studies for potential development.
• ASC (All-In Sustaining Cost): A key metric for gold mining profitability.
• Supergene Enrichment: A process of mineral enrichment near the surface, resulting in easily processed ore.
• Heap Leaching: A mining process used to extract metals from ore.
• CIP (Carbon-in-Pulp): A gold extraction process.
• Commercial Production: The point at which a mine consistently meets production targets and is financially self-sustaining.

I. 2025 Achievements & Strategic Foundation

Erdine Resource Development Corporation achieved a significant milestone with the commencement of gold production at the Bay Hyundai mine in late Q3 2025. This achievement marks a transition from exploration to producer status, enabling the company to execute its strategy of building a multi-mine, multi-commodity district in southwestern Mongolia. The Bay Hyundai build was completed in 22 months, on time and within a $115 million budget. Immediately following production, three exploration programs were initiated: expansion of the Bay Hyundai mine, exploration north into Darkhorse, and work on the Zoomod deposit and associated copper targets. This demonstrates a proactive approach to maximizing resource potential.

II. Operational Performance & Challenges at Bay Hyundai

The initial phase of operations at Bay Hyundai has been largely successful. The plant is currently operating at approximately 90% of its 1,780 tonnes per day nameplate capacity. Chemical consumption and gold recovery rates are meeting expectations. Initial challenges related to blasting and fragmentation of ore have been addressed with the introduction of a mobile crusher to process coarse material. The company is transitioning from bulk mining of lower-grade ore to selective mining of higher-grade ore, aiming to increase the head grade from the current 2g/tonne to the reserve grade of 3.8g/tonne. This transition will be a gradual, step-by-step process. A six-month program is in place to reach commercial production levels by early Q2 2026.

III. Exploration & Project Pipeline – Expanding Optionality

Erdine has a robust exploration pipeline with multiple projects in various stages of development. The company recognizes the potential distraction of managing multiple opportunities but views it as a positive challenge. Key projects include:

• Darkhorse: A 7g/tonne deposit with 48,000 ounces of gold, targeted for near-term development with a lower strip ratio than Bay Hyundai. Consideration is being given to heap leaching of oxide material at Darkhorse to complement the existing CIP plant.
• Altan Nar: A 15km north of Bay Hyundai, undergoing feasibility studies with potential for development within three years. Options include concentrate flotation or integration with the Bay Hyundai complex.
• Zunmod: A copper-molybdenum-gold project with a Preliminary Economic Assessment (PBA) expected mid-year, potentially attracting investment. Significant copper intersections have been identified.
• Terra Gold: An early-stage grassroots project near Oyu Togoy, with drill targets to be tested in 2026.

A five-year plan, developed in collaboration with MMC, guides project prioritization and development.

IV. Financial Position & Capital Discipline

Erdine currently has $123 million in debt outstanding, comprised of a $50 million commercial loan and a $60 million shareholder loan from MMC (originally $80 million). The company intends to prioritize debt repayment, initially focusing on the commercial loan. Bay Hyundai is now self-sustaining and does not require additional operational funding. A $10 million exploration budget has been approved for 2026, alongside continued exploration spending from the previous year. The company is committed to capital discipline, leveraging the expertise of MMC, which successfully brought a billion-dollar coal mine into production on budget. Increased gold prices provide additional financial flexibility.

V. Investor Relations & Stakeholder Perception

Achieving production has significantly altered investor perception. Trading volumes have increased fourfold since commencing production, attracting a different audience of investors. The Mongolian government and regulatory bodies recognize Erdine and MMC as capable partners, opening opportunities for collaborative projects. The company is focused on attracting and retaining talent, integrating experienced personnel into key operational roles.

VI. Reserves & Resource Updates – Demonstrating Value

Erdine plans to release updated resource estimates for all projects (Gulahan, expanded Bay Hyundai, Altan Nar, and Darkhorse) in Q2 2026. This will be followed by updated reserves and a revised mine plan for Bay Hyundai, reflecting the higher gold price environment. Converting resources into minable reserves is a key priority for demonstrating long-term value.

VII. Operational Synergies & Future Development

Erdine is exploring potential synergies between Bay Hyundai and Darkhorse, including blending ore and optimizing plant throughput. The company is also investigating the potential for expanding the Bay Hyundai plant, including the addition of a gravity circuit to increase processing capacity. The higher gold price has lowered cutoff grades, potentially unlocking additional value from oxide material at Darkhorse through heap leaching.

Notable Quotes:

• “We set out to build a mine in an environment that was considered infrastructurally challenged, remote…much of what was considered a challenge was mitigated through the good contractors we had on site, but also that changing infrastructure.” – Peter Erdine, President & CEO
• “We do have the money. I see Bay Hyundai now safe, self-sustaining.” – Peter Erdine, President & CEO

Conclusion:

Erdine Resource Development Corporation has successfully transitioned from an exploration company to a gold producer, establishing a strong foundation for future growth. The company’s diversified project pipeline, commitment to capital discipline, and proactive approach to operational optimization position it for continued success in a favorable commodity price environment. The focus for 2026 is on optimizing Bay Hyundai, advancing exploration projects, and converting resources into reserves to unlock long-term value for shareholders. Significant news flow is anticipated throughout the year as these initiatives progress.