Erdene Resource Development Corp (ERDCF) (Q3 2026) Earnings Call Highlights: Bayan Khundii ... GuruFocus News Tue, November 10, 2026 at 10:07 PM EST 6 min read GC=F +0.58% ERD.TO -3.71% ERDCF -3.95% This article first appeared on GuruFocus.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Bayan Hundi gold mine produced nearly 12,000 ounces in Q3, slightly ahead of Q2, with gold recoveries of 96% exceeding the 93% target.
The joint venture repaid US$30 million of debt in Q3, reducing the outstanding balance to US$93 million, while generating positive cash flow.
The Zun Mod PEA outlines a 34-year mine life with after-tax NPV of US$745 million at base case prices, rising to about US$2 billion at recent spot prices.
Erdene Resource Development Corp has a strong pipeline of exploration projects including Dark Horse, Bayan Hundi West, and Altan Nar, with a 16,500-meter drill program underway.
The company has a healthy cash position of over C$25 million and is buying back shares under a normal course issuer bid, viewing them as undervalued.
Q3 revenue was 5% lower than the prior quarter due to softer metal prices, despite a modest increase in production.
Mining dilution and ore loss, though improved to around 15% dilution and 2.5% loss, remain challenges that impacted grade reconciliation earlier in the year.
The high-grade gold mineralization is highly concentrated, with 80% of value in 20% of ore, requiring precise mining and blending to achieve target grades.
The Zun Mod project requires significant capital expenditure of approximately US$687 million, and the company is still seeking off-take and joint venture partners.
There is no clear timeframe for securing off-take agreements or a joint venture partner for Zun Mod, which introduces uncertainty for project advancement.
Warning! GuruFocus has detected 1 Warning Sign with ERDCF.
Is ERDCF fairly valued? Test your thesis with our free DCF calculator.
Q: What average head grade are you anticipating in Q4 and what is your target in 2027 H1? A: Peter Akerley, President and CEO, said the company targets approximately 3 grams per ton in Q4 as mining moves into the deeper, more consistent high-grade zones in the Striker and Midfield areas. For 2027, the 3 g/t level should be used as a base, with potential to outperform, particularly if high-grade Dark Horse material (close to 5 g/t in the resource) can be brought into the mill feed.
Q: What was the mining dilution in Q3 and how did that compare versus Q2? A: CEO Peter Akerley noted that dilution was very high when Bayan Khundii operations first began, but has reduced significantly in the second half of the year. The operation is now running at around 15% dilution with assumed losses of about 2.5%, both well down from earlier in 2026.
Q: Is the mine grade consistent on average with the geologic model and the resource estimate? A: Peter Akerley, CEO, explained that the high-grade ore body has grades ranging up to 2,000 g/t, creating high variability. The grade control program, with close spacing down to five meters, is improving definition of the deposit. Reconciliation variability is now around plus or minus 10% over the last montha significant improvementand the company expects a much better body of work by year-end to compare against the global resource model and make adjustments.
Q: There are many molybdenum deposits of similar grade as Zunmod. Why should investors get excited about Zunmod and what are the key differences? A: CEO Peter Akerley highlighted that while Zunmod's grade of 0.040.07% is similar to BC and western US deposits, its key differentiators are: proximity to Asia, which consumes about 66% of world molybdenum and faces a supply deficit; scale, with over 650 million pounds of molybdenum and nearly a billion pounds of copper over 34 years, and the deposit is open in all directions; long mine life sought by Asian consumers; and favorable geography with flat terrain and reasonable weather conditions that don't interrupt mining.
Q: The Zunmod PEA highlighted how this 100% owned asset could be a major value creator largely overlooked by the market. The NPV is sensitive to the molybdenum price assumed and the spot moly market is not highly liquid like copper. A big spread exists now between the current spot price for moly and the three-year average and consensus amongst analysts. Are you able to share what buyers' indications have been about pricing and how different these indications were to the spot price? A: Peter Akerley, CEO, said the team has visited multiple molybdenum purchasers over the past 18 months and is seeing very strong demand at spot prices in the $33 per pound range. Some ferro-molybdenum producers are only securing about 60% of required supply. He cited a Mongolian Stock Exchange auction where molybdenum concentrate (inferior to what Zunmod would produce) was bid up 20% from the starting price to achieve $34 per pound, largely from Asian buyers. He added that no major primary moly deposits are coming on stream except one in China at the end of the decade, so the supply deficit should persist.
Q: You've spoken at a high level about the potential for a heap leach facility and how that might fit into the Dark Horse and BK expansion. Can you provide more detail about which resources would lead to a longer life for the CIP facility and which would lead to expansion of total annual ounces from a heap leach? A: CEO Peter Akerley outlined a staged approach: first, establish a resource base from oxide zones along the Dark HorseAltan Arrow trend, ideally reaching about 100,000 ounces of low-grade resource. This would be complemented by low-grade stockpiles at Bayan Khundii (recoveries in the 40% range versus mid-60s for Dark Horse oxide) and an oxide blanket over Altan Nar with over 60,000 ounces. Combined, this could provide 150,000200,000 ounces of low-grade material without further exploration. Column leach testing results look good, with a board decision point in Q4 2026, definitive studies in 2027, and potential construction in 2028. Scale is envisioned at 15,00025,000 ounces per year over a five-year-plus period.
Q: What is your anticipated timeframe for identifying parties for off-take agreements and/or a potential joint venture partner at Zunmod? A: Peter Akerley, CEO, said he could not put a specific timeframe on it but noted a number of very interesting discussions are ongoing with financial partners and operating partners. Discussions will continue until a partner that works for all parties is found, and this is a high priority for the company.
Q: Where do you see all-in sustaining costs settling as grades increase? A: CFO Robert Jenkins said the company continues to expect AISC on a per-ounce basis to come down, with a relatively significant reduction already seen between Q2 and Q3, driven primarily by increased production given that roughly half of costs are fixed. The Erden Mongol team is undergoing business planning and budgeting, with guidance expected in Q1 2027.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
