Erdene Reaches Production Milestone at Bayan Khundii; Zuun Mod Resource Base Expands Substantially

Golden Achievement: First Production at Bayan Khundii Gold Mine

Erdene Resource Development Corp. (TSX:ERD; MSE:ERDN; OTCQB: ERFCF) has delivered a landmark operational milestone with the commencement of gold production at the Bayan Khundii Gold Mine during the third quarter of 2025. The September 14 first gold pour represents the culmination of a decade of exploration and development work—a notably swift transition from initial drill intersection to mine operation by industry standards.

The ramp-up phase is tracking to schedule, with management guidance suggesting the operation will reach its designed production capacity by year-end 2025. During the September quarter, the Bayan Khundii operation—managed by the joint venture between Erdene and Mongolian Mining Corporation—sold 342 ounces of gold and 96 ounces of silver at weighted average prices of US$3,805/oz and US$44/oz respectively.

Mining Operations and Plant Commissioning

The mining asset at Bayan Khundii has been engineered to process 650,000 tonnes of ore annually and generate 85,000 ounces of gold per year on a run-rate basis. Completion of construction and commissioning activities occurred during Q3 2025, with both dry and wet commissioning phases for the processing facility finished ahead of the first production event.

By the end of September, cumulative extraction totaled 2.1 million tonnes of material, comprising 1.8 million tonnes of overburden and 133 thousand tonnes of ore suitable for processing. The mine stockpile held 111 thousand tonnes of run-of-mine ore grading approximately 2.30 g/t gold and 1.27 g/t silver as of the quarter-end.

Exploration and Resource Development

Erdene’s approach to long-term value creation extends beyond initial production through systematic exploration across its Khundii Minerals District. A structured drilling program spanning 9,300 metres is currently underway, targeting resource expansion and mine life extension at Bayan Khundii and adjacent prospects including Dark Horse and Altan Arrow.

The company disclosed an updated independent mineral resource estimate for the Zuun Mod molybdenum-copper porphyry deposit in early October. The revised assessment reflects significant upside in the resource base, with measured and indicated molybdenum resources climbing 22 percent to 333 million pounds, while inferred molybdenum resources surged 90 percent to 300 million pounds. Copper resources similarly advanced, with measured and indicated copper increasing 16 percent to 384 million pounds and inferred copper jumping 75 percent to 350 million pounds.

Strategic Property Expansion and Future Opportunities

In July 2025, Erdene executed an option agreement providing exposure to an up to 80 percent interest in the Tereg Uul copper-gold porphyry prospect. This property sits approximately 10 kilometres southwest along the geological trend of the Oyu Tolgoi copper deposit, one of the world’s premier copper-gold districts, positioning the company for potential exploitation of similar mineralizing systems.

Concurrent with property acquisition efforts, Erdene completed a 6:1 share consolidation in September, reducing the count of outstanding common shares from 366.4 million to 61.1 million shares. This corporate action accompanied elevated professional and regulatory expenses associated with consolidated share issuance mechanics.

Financial Performance and Joint Venture Dynamics

Erdene reported a consolidated net loss of $2.75 million for the three months ended September 30, 2025, compared to a net loss of $1.69 million in the comparable period of 2024. The year-over-year loss expansion reflects multiple factors including interest expense escalation at the joint venture to finance Bayan Khundii construction, partially offset by revenue generation from September gold sales.

Exploration and evaluation expenses aggregated $579,333 in Q3 2025 versus $215,903 in the prior-year quarter, predominantly driven by evaluation work on the newly optioned Tereg Uul property and intensified new project assessment activities. Corporate and administrative spending reached $864,892 compared to $582,089 in Q3 2024, influenced by stock-based compensation grants to strategic advisors and heightened professional fees tied to the share consolidation initiative.

The loss from the investment in associate—representing Erdene’s ownership stake in the Bayan Khundii joint venture losses—totaled $1.35 million in the September 2025 quarter, up from $918,600 in the prior-year period, largely attributable to increased financing costs for mine construction infrastructure.

Community Engagement and Operational Excellence

Local workforce participation represents a strategic priority, with approximately 35 percent of on-site personnel drawn from Bayankhongor province residents. Post-quarter-end, the joint venture finalized an updated local cooperation agreement with provincial and sub-provincial authorities to reinforce stakeholder alignment. The operation has engaged regional contractors for selected mine services and environmental stewardship initiatives, embedding economic benefits across the local economy.

Forward Trajectory and Management Outlook

Peter Akerley, President and Chief Executive Officer, characterized the Bayan Khundii achievement as validation of the company’s decade-long value creation thesis. The rapid progression from exploration discovery to commercial mining operation exemplifies operational execution, while concurrent advancement of the Zuun Mod and Tereg Uul properties establishes a multi-asset development pipeline positioned to drive long-term shareholder value creation through disciplined exploration and methodical project advancement.