2008 Annual General Meeting June 25 th 2009

Transcription

1 2008 Annual General Meeting June 25 th 2009

2 FORWARD-LOOKING STATEMENTS Certain information regarding Erdene ("the Company") contained herein may constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. The Company cautions that actual performance will be affected by a number of factors, many of which are beyond the Company's control, and that future events and results may vary substantially from what the Company currently foresees. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration results, continued availability of capital and financing and general economic, market or business conditions. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement. The information contained herein is stated as of the current date and subject to change after that date. 2

3 CORPORATE OVERVIEW TSX: Cash and securities (June 2009): Book Value (March 31 st 2009) : Market Capitalization (June 24 th ): Major Shareholders: Sprott: Management Group: AGF: Xstrata: ERD ~C$17M ~C$55M ~C$23M 16% 9% 8% 6%

4 ERDENE OVERVIEW Company Background and 2008 Highlights History 2008 Highlights Carried out annual multi-million dollar exploration and development programs Financed over $60 million, largely through nine issuances 12 M&A & JV deals negotiated successfully since going public in 2004 Completed Underground Rehabilitation and Drilling at Donkin Announced first ever NI resource at Zuun Mod Project Successfully completed private placement of $18.5M at $1/share Sold Galshar Interest for Cash and Royalty Spun-out Kaolin business to form new public company: APM

5 ($17M cash and securities) June Market Capitalization ~$23M

6 STRATEGIC LOCATIONS Industrial Minerals Metals Coal Construction Materials 6

7 MONGOLIA Zuun Mod BV $9M

8 HISTORICAL EXPLORATION - ERD

9 METALS: MOLYBDENUM & COPPER RESOURCE: 272 M lbs of M&I grading ~0.052% Mo, and equal copper, open pit mineable target Market: Asia-Pacific region ~35% of world consumption and fastest growing Project: Zuun Mod: Wholly owned; advanced stage; ~200km from China border and rail 9

10 ZUUN MOD MO-CU PROJECT LOCATION Regional Molybdenum Consumption & Steel Production Gas Pipeline 22 Mlbs Mo World s Largest Steel Producing Region China s Largest Molybdenum Producing Regions

11 ZUUN MOD Infrastructure Building 11

12 ZUUN MOD DEPOSIT BLOCK MODEL May Resource Estimate Cut-off Grade Mo% Resource Category Resources Mt Cu% Mo% Contained Mo Metal Mlbs 0.04% Total Measured & Indicated Total Measured 0.05% & Indicated

13 ZUUN MOD Project Status Post May 2008 Drill Results 428m of 0.060% Mo (172m 0.091%) 373m of 0.063% Mo (94m 0.084%) 399m of 0.055% Mo (36m 0.088%) 410m of 0.057% Mo (96m 0.095%) Mineralization in holes Highlighted begins 22m to 150m from surface 2009 Plans Revised resource estimate report Preliminary assessment study Mining license application 13

14 COAL

15 WORLD COAL MARKETS Erdene s Coal Project Locations Donkin, 25:75 ERD- Xstrata JV Nova Scotia Xstrata/ERD Alliance Mongolia Consumption: US (Mt) Consumption: China (Mt) Erdene Properties Top Consumers Top Exporters Source: Energy Information Administration 15

16 MONGOLIA COAL 2009 ALLIANCE: Erdene Xstrata Coal XSTRATA TERMS: Option to earn up to 75% of any coal opportunity in Mongolia Must fund all work through to completion of feasibility study PRIORITY TARGETS: High Quality Thermal & Metallurgical (open pit, <5:1, 200Mt+, >5800 kcal/kg GAR)

17 GALSHAR THERMAL COAL PROJECT RUSSIA CHITA DARHAN Project Sold late Retained Royalty Adjacent to Trans- Mongolian Railway 65 km to Trans- Mongolian Rail spur Sharyn Gol Eldev Tavan Tolgoi ULAANBAATAR Baganuur Oyu Tolgoi CHOYBALSAN BARUUN-URT GALSHAR EREEN Trans-Mongolian Railway Trans-China Railway BAOTOU HUHOT CHINA BEIJING TIANJIN

18 GALSHAR THERMAL COAL PROJECT Large Open Pit Opportunity 15m Seam 5000 to 5500 kcal CV ad Average strip ratio of 1:6

19 COAL Donkin 75:25 Xstrata ERD JV BV $18M

20 DONKIN COAL PROJECT Coal Quality vs. Competition Average Coal Quality World Coal Resources 16,000 15,000 14,000 13,000 BTUs 12,000 11,000 10,000 9,000 8,000 7,000 Indonesia South Africa Russia Venezuela Cerrejon, Colombia Powder River Basin Central North Appalachian Appalachian Donkin 20

21 DONKIN COAL PROJECT Resources Indicated & Inferred Harbour Seam High volatile-a bituminous (12,000-14,000 Btu), high sulphur, medium ash coal Seam Indicated Inferred (Millions of Metric Tonnes) Lloyd Cove Hub Harbour TOTAL

22 DONKIN COAL PROJECT Local Infrastructure No. 26 Colliery 22

23 DONKIN COAL PROJECT Atlantic Seaborne Coal Transportation Costs (Q308) 300 km from Pit to Port 45 km from Pit to Port Appalachia U.S.A. $28/t $28/t DONKIN $11/t $11/t $59/t $59/t $36/t $58/t $88/t Cerrejon Colombia 150 km from Pit to Port Avg Transportation Costs (3Q08 to 1Q09) Rail - $0.08 to 0.065/ton-mile Ship - $0.01 to /ton-mile From South Africa 350 km from Pit to Port 23

24 DONKIN COAL PROJECT Valuation Factor Base Case $52/Mt Price 2015 Start-up 10% Discount Sensitivity Price ($57/Mt) Sensitivity Start-up (2012) Sensitivity Discount (8%) Sensitivity Discount and Price NPV ERDENE (25%) (US$) $49M $68M $66M $78M $106M Erdene s Average Net Cash Flow $CDN after Taxes and Royalties (Norwest) First 20 years of full production >$20M per annum Source: Norwest Preliminary Assessment Nov. 07 CURRENT THERMAL COAL PRICE: $60 - $80/Mt Source: Energy Information Administration 24

25 DONKIN COAL PROJECT Timeline Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 DCA Approves CM Feasibility CM Decision Longwall Decision CM Construction Longwall Construction CM Production Longwall Production CM: Continuous Miner Evaluation & Development Program 25

26 CONSTRUCTION MATERIAL Granite Hills BV $3.2M

27 GROWTH RATE World s Most Populous Nations Growth through % 35% 30% 25% 20% 15% 10% 5% 0% China Indonesia United States India US Population Increase 94 million Source: Economist Magazine

28 CONSTRUCTION AGGREGATE Aggregate Consumption USA ~9 tons per person/annum Equates to ~10 million tons of new demand annually in the region Secondary Market Target Population Growth >10M 1M 10M TX. Primary Market Target FLA. 79.5% 500K 1M 250K 500K 100K 250K Source: U.S. Census Bureau 28

29 CONSTRUCTION AGGREGATE East Coast Target Markets Eastern Canada Projects Fall Fall Line Line 50% increase in aggregate imports to SE U.S. ports from 2002 to 2006 Canada provides ~42% of SE U.S. international imports Source: USGS Granite Hill, Central Georgia Mode Marine Transport Advantage Cost/tonne/mile 500km Caribbean Road Rail Marine $ $ $

30 CONSTRUCTION AGGREGATE Granite Hill Project Ready Mix USA Royalty Agreement Augusta Charleston Savannah Jacksonville Railroad (owner) CSTX FEC NS Tampa Clearwater CASH FLOW PENDING PRODUCTION DECISION 2009 Miami CASH FLOW PENDING PRODUCTION DECISION

31 CONSTRUCTION AGGREGATE Aerial Concept of Marine Aggregate Operation 6/25/2009

32 INDUSTRIAL MINERALS APD BV $4M

33 APM CORP. Create value for both ERD and APM stakeholders through the spinout of undervalued asset Formerly Beta Minerals Inc. - TSXV listed company Acquired by ERD Feb 27, 2009 by RTO Name changed to APM and trading symbol changed to TSXV:APD ERD controls ~ 62% of issued common shares (opportunity to increase to 77%)

34 APM CORP. Strategy Become North America s leading specialized primary kaolin producer Focus on value versus volume Target replacement of high value European primary clay imports through elimination of FX and logistical risk ~25K tpa Provide the highest quality product possible from our premium primary kaolin resource

35 APM CORP. Highlights High Quality Resource Experienced Management Team and Board Demonstrated Market Acceptance Production History and New Product Commitments Advanced Stage Commercial Trials Production Commencing July 2009 New Processing Plant and Proprietary Technology Two Phase Business Plan

36 APM CORP. Primary Kaolin 25.5 million tons premium quality NI compliant primary kaolin resource with 4 unique characteristics vs. sedimentary kaolin. The 4 C s: Color - Superior brightness/color Coverage - Platy particle shape with high aspect ratio Coarseness - Coarse particle size Chemistry - Broad range of chemistry to meet customer s specialty product needs

37 APM CORP. Demonstrated Market Acceptance : Production of APM kaolin by J.M. Huber Corp. (now KaMin LLC) for LWC product for leading global paper company April 2009: APM received production commitment from major global sanitary-ware producer (replacing European supply) June 2009: APM received first commercial glazing product order from major North American ceramic tile producer (replacing European supply) Advanced customer trials underway which demonstrate primary kaolin products meet or exceed performance of comparable foreign imports

38 APM CORP. New Processing Plant - Dearing, GA.

39 APM CORP. Production Commencing July 2009 Phase I (Dry Process) Establish brand with low capex of $US 1.4mm 50,000 tpa capacity Toll processing contract Ph II product development and feasibility by 2011 Phase II (Dry/Hydrous/Calcined) Focusing business model on inherent quality strengths Modular expansion to larger scale processing (dry & wet) Targeting value added, performance enhancing kaolin products Build on competitive advantages and strengths from Phase I

40 APM CORP. Financial Parameters Phase I - Operating 50,000 tpa capacity Target market price range - US$125 - $300/t Targeting 20,000 tpa sales by 2011 Phase II - Framework Start-up ,000 tpa capacity Target market price range of US$100 - $650/t Targeting 120,000 tpa sales by 2016

41 APM CORP. Corporate Facts Cash & Securities: Issued & O/S Shares: Fully Diluted Position: Trading Symbol: Website: Market Cap. June 2009: $1.4M 109,742, ,542,853 TSX.V:APD advminerals.com $5.5 million

42 ERD FINANCIAL MANAGEMENT October 2008: Initiated immediate cost reduction program 30% reduction in Corporate administration expenses YTD YTD Budget vs. Actual Expenses: 32% less than 2009 budget YTD Expenditures: 48% less than 2008 October 2008 to April 2009: Received board approval to act on strategic M&A opportunity resulting in a realized gain of ~$1 million. February 2009 Dilution gain on acquisition of Beta Minerals Inc. of $880K (excess of value rec d over consideration given) Cash and securities acquired on closing of $2.0 million Continue to manage expenditures closely Seeking strategic partnerships to offset costs and prevent further dilution

43 BUDGET Remaining 2009 budget: $5.52 million Donkin - $3.0 million Mongolia/Construction Materials/Admin - $2.52 Exploration Partner Budget and Contributions Xstrata funding first $10 million of CM Exploration & Development program Xstrata funding up to $1 million in Mongolia coal exploration US Ready-Mix fully funding Granite Hill development Industrial minerals spin-off self funding Current cash of $17 million sufficient to meet budgeted expenditures to 2012

44 MONGOLIA Zuun Mod BV $9M

45 MONGOLIA Continue to establish our Mongolian Company as the partner of choice for western companies active in the country Increase inventory of metals and coal projects Advance Zuun Mod to the pre-feasibility/mining licence stage and secure partner

46 COAL Donkin 75:25 Xstrata ERD JV BV $18M

47 COAL DONKIN COAL : Advance Donkin Coal Mine to CM Production and Complete Longwall Feasibility 2013: Longwall Production establishing significant cash-flow for Company and Investors MONGOLIA COAL Advance projects under Xstrata Alliance Assist partners in advancing Galshar project

48 CONSTRUCTION MATERIAL Granite Hills BV $3.2M

49 CONSTRUCTION MATERIAL : Project royalty cash-flow from Granite Hill : Secure and advance through feasibility and permitting world-class construction aggregate projects in strategic areas relative to east coast US markets

50 INDUSTRIAL MINERALS APD BV $4M

51 INDUSTRIAL MINERALS APM : Gain commercial acceptance as a specialized primary kaolin producer Establish significant cash-flow for Company and Investors 2012: Achieve significant expansion of business through Phase II Program

52 RESOURCE PROPERTY INTERESTS & CASH VALUE ~ $52M APD $4M ~ $52M Granite Hills $3.2M Zuun Mod $9M ($17M cash and securities) Donkin $18M June Market Capitalization ~$23M

53 ERD CORP. Corporate Facts Cash and Securities: Issued & O/S Shares: Fully Diluted Position: Trading Symbol: Website: Market Cap. June 2009: $17M ~89,230,000 ~93,308,000 TSX:ERD erdene.com $23 million

54 Sustaining GROWTH Maintaining STABILITY V A L U E C R E A T I O N

55 Thank You 2008 Annual General Meeting June 25 th 2009