Erdene Announces Q3 2026 Results

Erdene Resource Development Corporation (ERD) released its third-quarter 2026 financial results on November 4, 2026. The company reported a net income of $9,558k for the quarter, a significant improvement from the net loss of $2,749k recorded in Q3 2025. This turnaround was driven primarily by an income from investment in its associate, Erdene Mongol LLC ("EM"), which holds a 50% interest in the Bayan Khundii mine. The associate income stood at $10,593k. Operating expenses included $530k in exploration and evaluation costs and $688k in corporate and administrative expenses. Additionally, the company repurchased and cancelled 130,300 shares under its NCIB at an average price of $5.57.

At the Bayan Khundii mine, operated by EM, production during the quarter included 11,853 ounces of gold and 3,046 ounces of silver. The operation realized prices of US$4,313 per ounce for gold and US$56 per ounce for silver, generating total revenue of US$51 million (C$71 million). Cost of sales amounted to US$23 million (C$32 million), or US$1,942 per ounce, resulting in cash costs of US$1,742 per ounce and all-in sustaining costs (AISC) of US$1,848 per ounce. The mine processed 164,000 tonnes of ore at a rate of 1,788 tonnes per day, with an average feed grade of 2.3 g/t and a recovery rate of 96%. Mining operations moved 415,000 tonnes of ore at a grade of 1.25 g/t, contributing to a total material movement of 4 million tonnes. EM repaid US$30 million of project debt during the quarter, leaving it with US$19 million in cash and US$93 million in debt at the end of the period. The mine maintained a Lost Time Injury Frequency Rate (LTIFR) of 1.4 per million person-hours and reported zero reportable environmental incidents.

Exploration efforts included a 16,500-meter program comprising 9,000 meters at West Striker, 3,000 meters at Dark Horse–Altan Arrow, 2,600 meters of infill drilling at Zuun Mod, and 1,900 meters at the Zuun Mod periphery and Khuvyn Khar copper targets. A Quantec Titan survey covering 100 line-kilometers over the Khuvyn Khar licence is underway, with results expected in the first quarter of 2027. Preliminary heap leach amenability testwork on composites from Dark Horse and Bayan Khundii returned positive results.

The Zuun Mod Preliminary Economic Assessment (PEA), previously released on October 14, 2026, outlines a 34-year mine life with 672 million pounds of molybdenum and 947 million pounds of copper recoverable. The base case scenario, assuming US$25/lb molybdenum and US$5.00/lb copper, projects an NPV8% of US$745 million and an IRR of 16.1%. The spot case scenario, assuming US$33/lb molybdenum and US$6.50/lb copper, projects an NPV8% of US$2.0 billion and an IRR of 27.8%. The project requires US$687 million in upfront capital expenditure and yields an AISC of US$13.89/lb molybdenum net of copper credits. Erdene noted strong interest from Asian offtake partners given the site's proximity of approximately 280 kilometers to the Mongolia–China railhead.

Consolidated revenue for Erdene was zero for the quarter, and consolidated operating cash flow remained structurally negative because EM is equity-accounted. Consequently, the mine’s cash generation does not appear in Erdene’s consolidated cash flow statement, appearing only as the single line item of associate income. There is a discrepancy regarding debt repayment figures between recent releases: the October 19, 2026 operations update stated that US$20 million of debt was repaid, while this financial release states US$30 million was repaid. Both releases confirm that EM ended the quarter with US$93 million in outstanding debt.

Erdene Resource Development Corporation (ERD) reported a net income of $9.6 million for the third quarter, a figure essentially flat compared to the $9.99 million reported in the second quarter of 2026. The company also recorded associate income of $10.6 million, down from $11.2 million in the prior period. The joint venture remains profitable after interest and tax, with deleveraging continuing.

Production for the quarter totaled 11,853 ounces, representing a 1.2% increase over the 11,709 ounces produced in the second quarter. However, revenue declined 3.8%, falling from US$53 million to US$51 million. This decrease was driven by a lower realized gold price of US$4,313 per ounce, compared to US$4,493 per ounce in the second quarter, alongside flat ounce production. Throughput rose 7%, increasing from 153,000 tonnes to 164,000 tonnes, while the head grade processed fell from 2.4 grams per tonne to 2.3 grams per tonne.

The mine achieved the 2.4 grams per tonne grade in the second quarter by drawing on higher-grade stockpiles. In the third quarter, the mine actually mined 415,000 tonnes at 1.25 grams per tonne while milling 164,000 tonnes at 2.3 grams per tonne. This process added approximately 251,000 tonnes of 1.25 grams per tonne material to stockpiles, meaning feed grade ran ahead of mined grade. The company’s stated trajectory, outlined during the second quarter 2026 earnings call, was to reach a 3.5 grams per tonne processing grade and approximately 10% dilution by the end of 2026.

Year-to-date production stands at 32,089 ounces, calculated from 8,527 ounces in the first quarter, 11,709 ounces in the second quarter, and 11,853 ounces in the third quarter. Against an explicit full-year target of approximately 50,000 ounces, the fourth quarter must deliver roughly 17,900 ounces, a 51% sequential increase. At a processing rate of 1,788 tonnes per day and 96% recovery, achieving this volume requires a grade of about 3.5 grams per tonne; even at the nameplate capacity of 1,950 tonnes per day, it requires about 3.2 grams per tonne.

On the balance sheet, US$93 million of project debt remains at interest rates between 11.8% and 13.8%, against US$19 million in cash at Erdene Mining. The company retired US$30 million in debt in a single quarter. With a realized price of US$4,313 per ounce and an all-in sustaining cost (AISC) of US$1,848 per ounce, the margin is approximately US$2,465 per ounce. The joint venture is positioned to be net cash within three to four quarters, absent new capital expenditure.

Erdene Resource Development Corporation (TSX: ERD; MSE: ERDN; OTCQX: ERDCF) is a Canada-domiciled miner operating in the Khundii Minerals District in the Trans Altai Terrane of southwestern Mongolia. Its flagship asset is the Bayan Khundii Gold Mine, an open-pit operation featuring a 650 ktpa / 1,950 tpd carbon-in-pulp plant. The facility was constructed over 22 months for US$120M, with the first gold pour scheduled for September 2025 and commercial production declared in Q1 2026.

The mine is held through Erdene Mongol LLC, a 50:50 joint venture with Mongolian Mining Corporation (MMC). Erdene equity-accounts for the asset, resulting in a 50% economic interest and the absence of consolidated revenue.

Reserves and resources as presented include: - Bayan Khundii reserves (0.35 g/t cut-off): Proven 2,788 Kt @ 2.11 g/t (189 koz) plus Probable 4,928 Kt @ 1.51 g/t (239 koz) = 7,716 Kt @ 1.73 g/t for 428 koz gold. - Bayan Khundii resources (0.7 g/t cut-off): M&I 2,625 Kt @ 4.47 g/t for 377 koz; Inferred 8 koz. - Satellite assets: Dark Horse (Probable 350 Kt @ 5.31 g/t for 60 koz; Indicated 67 koz, Inferred 9 koz), scheduled to feed the mill from 2027; Altan Nar (Indicated 313 koz Au plus 2,275 koz Ag; Inferred 210 koz Au), 16 km north; Ulaan (Indicated 78 koz, Inferred 38 koz), immediately west. - Zuun Mod Mo-Cu (100% per the release): M&I 407.1 Mt @ 0.048% Mo and 0.062% Cu for 579.2 Mlb MoEq; Inferred 596.2 Mt for 783.0 Mlb MoEq. - Khuvyn Khar copper porphyry and the Tereg Uul option (up to 80%, ~10 km southwest of Oyu Tolgoi).

Stated production ambitions include >75,000 oz/yr Au steady state from 2026–2030, and >100,000 oz/yr with district expansion to 2040. Altan Nar is targeted at 75,000–100,000 oz AuEq/yr from 2029–2040, and Zuun Mod at 15–25 Mlb Mo/Cu per year from 2030. The current annualized run-rate is roughly 47,000 oz.