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1、CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31,2024,and 2023(Canadian dollars)KPMG LLP Purdys Wharf Tower One 1959 Upper Water Street,Suite 1000 Halifax,NS B3J 3N2 Canada Telephone 902 492 6000 Fax 902 492 1307 KPMG LLP,an Ontario limited liability partnership and member firm of t
2、he KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.KPMG Canada provides services to KPMG LLP.INDEPENDENT AUDITORS REPORT To the Shareholders of Erdene Resource Development Corporation Opinion We have audit
3、ed the consolidated financial statements of Erdene Resource Development Corporation(the Entity),which comprise:the consolidated statement of financial position as at December 31,2024 and December 31,2023 the consolidated statement of comprehensive(income)loss for the years then ended the consolidate
4、d statement of changes in equity for the years then ended the consolidated statements of cash flows for the years then ended and notes to the consolidated financial statements,including a summary of material accounting policy information (Hereinafter referred to as the“financial statements”).In our
5、opinion,the accompanying financial statements present fairly,in all material respects,the consolidated financial position of the Entity as at December 31,2024 and December 31,2023,its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with IFRS
6、Accounting Standards as issued by the International Accounting Standards Board.Basis for Opinion We conducted our audit in accordance with Canadian generally accepted auditing standards.Our responsibilities under those standards are further described in the“Auditors Responsibilities for the Audit of
7、 the Financial Statements”section of our auditors report.We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and we have fulfilled our other ethical responsibilities in accordance with these requirements.We
8、 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.Page 2 Key Audit Matters Key audit matters are those matters that,in our professional judgment,were of most significance in our audit of the financial statements for the year ended Dece
9、mber 31,2024.These matters were addressed in the context of our audit of the financial statements as a whole,and in forming our opinion thereon,and we do not provide a separate opinion on these matters.We have determined the matter described below to be the key audit matter to be communicated in our
10、 auditors report.Evaluation of the Audit Evidence for the Loss from Investment in Associate Description of the matter We draw attention to Notes 3d,and 5 to the financial statements.The Entity has an investment in an associate with a carrying value of$53,109,742 at December 31,2024 and a correspondi
11、ng loss from investment in associate of$3,245,109 for the year then ended.On January 23,2024,the associate issued shares representing 50%of its equity to MMC in connection with the conversion of convertible promissory notes.The Entity continues to have significant influence over the associate throug
12、h its participation in the governance of the associate;however,the Entity no longer participates directly in the financial reporting functions of the associate.Why the matter is a key audit matter We identified the evaluation of the audit evidence for the loss from investment in associate as a key a
13、udit matter.This matter represented an area of higher assessed risk of material misstatement given the magnitude of the loss from investment in associate.In addition,the Entity no longer participates in the financial reporting functions of the associate and therefore significant auditor effort was r
14、equired to evaluate the audit evidence for the loss from investment in associate.How the matter was addressed in the audit The following are the primary procedures we performed to address this key audit matter.We obtained an understanding of the associate,its environment,and its system of internal c
15、ontrol.We involved,as part of the engagement team,individuals in the jurisdiction of the associate,to assist us in identifying and assessing the risks of material misstatements and planned audit responses which,included two-way communication.We directed,supervised and reviewed the audit work perform
16、ed by individuals in the jurisdiction of the associate to address the identified risks of material misstatement.We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed over the loss from investment in associate.Other Information Management is responsi
17、ble for the other information.Other information comprises:the information included in Managements Discussion and Analysis filed with the relevant Canadian Securities Commissions.Page 3 Our opinion on the financial statements does not cover the other information and we do not and will not express any
18、 form of assurance conclusion thereon.In connection with our audit of the financial statements,our responsibility is to read the other information identified above and,in doing so,consider whether the other information is materially inconsistent with the financial statements or our knowledge obtaine
19、d in the audit and remain alert for indications that the other information appears to be materially misstated.We obtained the information included in Managements Discussion and Analysis filed with the relevant Canadian Securities Commissions as at the date of this auditors report.If,based on the wor
20、k we have performed on this other information,we conclude that there is a material misstatement of this other information,we are required to report that fact in the auditors report.We have nothing to report in this regard.Responsibilities of Management and Those Charged with Governance for the Finan
21、cial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board,and for such internal control as management determines is necessary to enable the pre
22、paration of financial statements that are free from material misstatement,whether due to fraud or error.In preparing the financial statements,management is responsible for assessing the Entitys ability to continue as a going concern,disclosing as applicable,matters related to going concern and using
23、 the going concern basis of accounting unless management either intends to liquidate the Entity or to cease operations,or has no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Entitys financial reporting process.Auditors Responsibilities for the A
24、udit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,whether due to fraud or error,and to issue an auditors report that includes our opinion.Reasonable assurance is a high level of ass
25、urance,but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if,individually or in the aggregate,they could rea
26、sonably be expected to influence the economic decisions of users taken on the basis of the financial statements.As part of an audit in accordance with Canadian generally accepted auditing standards,we exercise professional judgment and maintain professional skepticism throughout the audit.Page 4 We
27、also:Identify and assess the risks of material misstatement of the financial statements,whether due to fraud or error,design and perform audit procedures responsive to those risks,and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.The risk of not detectin
28、g a material misstatement resulting from fraud is higher than for one resulting from error,as fraud may involve collusion,forgery,intentional omissions,misrepresentations,or the override of internal control.Obtain an understanding of internal control relevant to the audit in order to design audit pr
29、ocedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of the Entitys internal control.Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
30、Conclude on the appropriateness of managements use of the going concern basis of accounting and,based on the audit evidence obtained,whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entitys ability to continue as a going concern.If we concl
31、ude that a material uncertainty exists,we are required to draw attention in our auditors report to the related disclosures in the financial statements or,if such disclosures are inadequate,to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditors r
32、eport.However,future events or conditions may cause the Entity to cease to continue as a going concern.Evaluate the overall presentation,structure and content of the financial statements,including the disclosures,and whether the financial statements represent the underlying transactions and events i
33、n a manner that achieves fair presentation.Communicate with those charged with governance regarding,among other matters,the planned scope and timing of the audit and significant audit findings,including any significant deficiencies in internal control that we identify during our audit.Provide those
34、charged with governance with a statement that we have complied with relevant ethical requirements regarding independence,and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence,and where applicable,related safeguards.Plan and perform t
35、he group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the group as a basis for forming an opinion on the group financial statements.We are responsible for the direction,supervision and review of the audit work perf
36、ormed for the purposes of the group audit.We remain solely responsible for our audit opinion.Page 5 Determine,from the matters communicated with those charged with governance,those matters that were of most significance in the audit of the financial statements of the current period and are therefore
37、 the key audit matters.We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when,in extremely rare circumstances,we determine that a matter should not be communicated in our auditors report because the adverse consequences of doing
38、 so would reasonably be expected to outweigh the public interest benefits of such communication.The engagement partner on the audit resulting in this auditors report is Carey Blair.Halifax,Canada March 24,2025 Erdene Resource Development Corp.|Consolidated Financial Statements|2 ERDENE RESOURCE DEVE
39、LOPMENT CORPORATION Consolidated Statements of Financial Position(Canadian dollars)December 31,December 31,Notes20242023AssetsCash and cash equivalents$7,298,399$4,349,599 Receivables14,910 6,722 Prepaid expenses69,988 1,455,652 Current assets7,383,297 5,811,973 Investment in associate553,109,742 51
40、,248,731 Exploration and evaluation assets62,468,070 1,961,506 Property,plant and equipment39,104 21,155 Right-of-use assets-19,581 Non-current assets55,616,916 53,250,973 Total Assets$63,000,213$59,062,946 Liabilities and EquityTrade and other payables$782,851$163,212 Lease liabilities-22,939 Curre
41、nt liabilities782,851 186,151 Total Liabilities782,851 186,151 Shareholders EquityShare capital 9$165,589,487$158,086,286 Contributed surplus930,656,061 30,147,989 Accumulated other comprehensive income(loss)2,725,582 (849,598)Deficit(136,753,768)(128,507,882)Total Shareholders Equity62,217,362 58,8
42、76,795 Total Liabilities and Equity$63,000,213$59,062,946 Commitments(Note 7)The accompanying notes are an integral part of these consolidated financial statements.Approved on behalf of the Board:Signed“Peter C.Akerley”_ Director Signed“Kenneth W.MacDonald”_ Director Erdene Resource Development Corp
43、.|Consolidated Financial Statements|3 ERDENE RESOURCE DEVELOPMENT CORPORATION Consolidated Statements of Comprehensive Loss(Income)(Canadian dollars)December 31,Notes 2024 2023Operating ExpensesExploration and evaluation101,852,642$847,010$Corporate and administration115,043,058 3,137,735 Loss from
44、operating activities6,895,700 3,984,745 Loss from investment in associate53,245,109 2,278,370 Finance income(164,261)(269,609)Interest expense427 2,417 Foreign exchange(gain)loss 5(474,491)26,897 Gain on loss of control of subsidiary5-(6,544,863)Gain on dilution of investment in associate5(1,256,598
45、)-Net Loss(Income)8,245,886$(522,043)$Other comprehensive(income)loss:Foreign currency translation difference arising on translation of foreign subsidiary(166,428)7,508 Foreign currency translation difference on translation of investment in foreign associate5(3,849,522)-Foreign currency translation
46、difference realized on loss of control of subsidiary5-(5,110,896)Foreign currency translation difference realized on dilution of investment in associate5440,770 Other Comprehensive Income(3,575,180)(5,103,388)Total Comprehensive Loss(Income)4,670,706$(5,625,431)$Basic and diluted loss(income)per sha
47、re0.02$(0.00)$Basic weighted average number of shares outstanding348,455,528 344,411,575 Diluted weighted average number of shares outstanding348,455,528 345,969,947 For the years ended The accompanying notes are an integral part of these consolidated financial statements.Erdene Resource Development
48、 Corp.|Consolidated Financial Statements|4 ERDENE RESOURCE DEVELOPMENT CORPORATION Consolidated Statements of Changes in Equity(Canadian dollars)NotesNumber of sharesShare capitalContributed surplusAccumulated other comprehensive income(loss)DeficitTotal equityBalance at January 1,2024344,888,176 15
49、8,086,286$30,147,989$(849,598)$(128,507,882)$58,876,795$Total comprehensive income for the period:Net loss-(8,245,886)(8,245,886)Other comprehensive income-3,575,180 -3,575,180 Options exercised93,305,000 1,182,755 (366,005)-816,750 Warrants exercised913,943,782 6,320,446 (698,766)-5,621,680 Share-b
50、ased compensation9-1,572,843 -1,572,843 Total transactions with owners17,248,782 7,503,201 508,072 -8,011,273 Balance at December 31,2024362,136,958 165,589,487$30,656,061$2,725,582$(136,753,768)$62,217,362$Balance at January 1,2023344,300,376 157,880,069$28,727,197$(5,952,986)$(129,029,925)$51,624,
51、355$Total comprehensive income for the period:Net income-522,043 522,043 Other comprehensive income-5,103,388 -5,103,388 Options exercised9250,000 90,350 (29,850)-60,500 Issue of shares from DSU plan9337,800 115,867 (115,867)-Share-based compensation9-1,566,509 -1,566,509 Total transactions with own
52、ers587,800 206,217 1,420,792 -1,627,009 Balance at December 31,2023344,888,176 158,086,286$30,147,989$(849,598)$(128,507,882)$58,876,795$The accompanying notes are an integral part of these consolidated financial statements.Erdene Resource Development Corp.|Consolidated Financial Statements|5 ERDENE
53、 RESOURCE DEVELOPMENT CORPORATION Consolidated Statements of Cash Flows(Canadian dollars)For the years endedDecember 31,Notes20242023Cash flows from(used in)operating activities:Net(loss)income$(8,245,886)$522,043 Items not involving cash:Depreciation and amortization29,828 36,959 Share-based compen
54、sation91,572,843 1,566,509 Finance income(164,261)(269,609)Foreign exchange not related to cash5(474,491)26,897 Loss from investment in associate53,245,109 2,278,370 Gain on loss of control of subsidiary5-(6,544,863)Gain on dilution of investment in associate5(1,256,598)-Change in non-cash operating
55、 working capital1,997,737 337,159 Cash flows used in operating activities(3,295,719)(2,046,535)Cash flows from(used in)financing activities:Proceeds on exercise of stock options9816,750 60,500 Proceeds on exercise of warrants95,621,680 -Repayment of lease liabilities(22,939)(32,621)Cash flows from f
56、inancing activities6,415,491 27,879 Cash flows from(used in)investing activities:Expenditures on exploration and evaluation assets6(348,887)(1,043,280)Expenditures on property,plant and equipment(27,135)(3,085)Interest received164,261 269,609 Loss of cash from deconsolidation of subsidiary-(254,049)
57、Cash flows used in investing activities(211,761)(1,030,805)Effect of exchange rate changes on cash balances40,789 (22,540)Increase in cash and cash equivalents2,948,800 (3,072,001)Cash and cash equivalents,beginning of period4,349,599 7,421,600 Cash and cash equivalents,end of period$7,298,399$4,349
58、,599 The accompanying notes are an integral part of these consolidated financial statements.ERDENE RESOURCE DEVELOPMENT CORPORATION Notes to Consolidated Financial Statements(Canadian dollars)For the years ended December 31,2024,and 2023 Erdene Resource Development Corp.|Consolidated Financial State
59、ments|6 1.Nature of operations:Erdene Resource Development Corporation(“Erdene”or the“Corporation”)is a Canadian based resource company focused on the exploration and development of precious and base metal deposits in Mongolia.Currently,the Corporations principal development is the Bayan Khundii Gol
60、d Project,located in Bayankhongor province,Mongolia,held by its associate,Erdene Mongol LLC.The Corporations common shares are listed on the Toronto Stock Exchange under the symbol ERD and the Mongolian Stock Exchange under the symbol“ERDN”.The address of the Corporations registered office is 1300-1
61、969 Upper Water Street,Halifax,Nova Scotia,B3J 2V1.2.Basis of presentation a)Statement of compliance The Corporation prepares their annual consolidated financial statements in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board(“IFRS”).The material acc
62、ounting policies are presented in Note 3 and have been consistently applied in each of the periods presented,except as disclosed in Note 4.The consolidated financial statements were authorized for issue by Erdenes Board of Directors on March 24,2025.b)Basis of measurement The consolidated financial
63、statements have been prepared under the historical cost basis,except as disclosed in Note 3.c)Critical judgments and estimates in applying accounting policies The preparation of financial statements in conformity with IFRS requires the Corporations management to make estimates,judgments and assumpti
64、ons that materially affect the amounts reported in the consolidated financial statements and accompanying notes.Judgments and estimates are regularly evaluated and are based on historical experience and other factors,including expectations of future events that are believed to be reasonable under th
65、e circumstances.Actual results may differ materially from these estimates.Further information on managements judgments,estimates and assumptions and how they impact accounting policies are described below and also in the relevant notes to the consolidated financial statements.i)Determination of sign
66、ificant influence:Judgment is needed to assess whether the Corporation has control over its investees as a result of its right to direct relevant activities or,when control is not retained,its interest meets the definition of significant influence and therefore would be accounted for under the equit
67、y method.Management makes this determination based on its legal ownership interest and through an analysis of the Corporations participation in entities decision-making processes.Immediately after the Corporation lost control of Erdene Mongol LLC(“EM”),its Mongolian subsidiary,on January 10,2023(Not
68、e 5),management determined it was able to exert significant influence over EM and accounted for this investment as an associate under the equity method.ii)Impairment of investment in associate:The Corporation follows the guidance of IAS 28,Investments in Associates and Joint Ventures to assess if th
69、ere is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the net investment(a“loss event”),where such loss event(or events)has an impact on the estimated future cash flows from the net investment that can be reliably estimated.In making
70、 this judgement,the Corporations management considers objective evidence that the net investment may be impaired,including observable data about loss events such as significant financial difficulty of the associate,a breach of contract,such as a default or delinquency in payments by the associate,it
71、 becoming probable that the associate will enter bankruptcy or other financial reorganization,or the disappearance of an active market for the net investment in the associate because of financial difficulties of the associate.ERDENE RESOURCE DEVELOPMENT CORPORATION Notes to Consolidated Financial St
72、atements(Canadian dollars)For the years ended December 31,2024,and 2023 Erdene Resource Development Corp.|Consolidated Financial Statements|7 2.Basis of presentation(continued)c)Critical judgments and estimates in applying accounting policies(continued)iii)Functional currency:The functional currency
73、 for the parent entity,its subsidiary and its associate,is the currency of the primary economic environment in which the entity operates.The Mongolian subsidiary and associate have a Mongolian Tugrik functional currency,and the parent has a Canadian dollar functional currency.iv)Recoverability of ex
74、ploration and evaluation assets:At the end of each reporting period,the Corporation assesses its exploration and evaluation assets to determine whether any indication of impairment exists.Judgment is required in determining whether indicators of impairment exist,including factors such as the period
75、for which the Corporation has the right to explore,expected renewals of exploration rights,whether substantive expenditures on further exploration and evaluation of resource properties are budgeted and results of exploration and evaluation activities on the exploration and evaluation assets.Where an
76、 indicator of impairment exists or an exploration and evaluation asset is determined to be technically feasible and commercially viable,and therefore reclassified to property,plant and equipment,a formal estimate of the recoverable amount is made,which is considered to be the greater of the fair val
77、ue less cost of disposal and value in use.v)Share-based compensation:Equity-settled share-based compensation is measured at fair value at the date of grant.Fair value is measured using the Black-Scholes pricing model and requires the exercise of judgment in relation to variables such as expected vol
78、atilities and expected lives based on information available at the time the fair value is measured.3.Material accounting policies The material accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements:a)Basis of consolidation
79、 The consolidated financial statements include those of Erdene Resource Development Corporation and its wholly owned subsidiary Anian Resources LLC,for the years ended December 31,2024 and 2023,as well as those of its wholly owned subsidiary Erdene Mongol LLC up to January 10,2023.Erdene Mongol LLC
80、was deconsolidated on January 10,2023,when control ceased to exist as a result of the Strategic Alliance with Mongolian Mining Corporation to develop the Bayan Khundii Gold Project(Note 5).Control exists when an investor is exposed or has rights to variable returns from its involvement with an inves
81、tee and has the ability to affect those returns through its power over the investee.Subsidiaries are consolidated from the date on which the Corporation obtains control and are deconsolidated from the date that control ceases to exist.All intercompany transactions,balances and unrealized gains and l
82、osses from intercompany transactions are eliminated on consolidation.When control of a subsidiary is lost,the Corporation:i)derecognizes the assets and liabilities of the former subsidiary from the consolidated statement of financial position;ii)recognizes any investment retained in the former subsi
83、diary at its fair value when control is lost and subsequently accounts for it and for any amounts owed by or to the former subsidiary in accordance with relevant IFRS;and iii)recognizes the gain or loss associated with the loss of control attributable to the former controlling interest.Intercompany
84、balances and transactions are eliminated in preparing the consolidated financial statements.Unrealized losses are eliminated in the same way as unrealized gains,but only to the extent that there is no evidence of impairment.ERDENE RESOURCE DEVELOPMENT CORPORATION Notes to Consolidated Financial Stat
85、ements(Canadian dollars)For the years ended December 31,2024,and 2023 Erdene Resource Development Corp.|Consolidated Financial Statements|8 3.Material accounting policies(continued)b)Foreign currencies Items included in the financial statements of the Corporation and its subsidiaries are measured us
86、ing the currency of the primary economic environment in which the entity operates(the“functional currency”).In preparing the financial statements of the individual entities,transactions in currencies other than the entitys functional currency(foreign currencies)are recorded at the rates of exchange
87、prevailing at the dates of the transactions.At the end of each reporting period,monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date,giving rise to foreign exchange gains and losses in the statement of loss.Income and expense items are translated at
88、the average exchange rates for the period,unless exchange rates fluctuated materially during that period;in this case,the exchange rates at the dates of the transactions are used.Equity transactions are translated using the exchange rate at the date of the transaction.Exchange differences arising fr
89、om assets and liabilities held in foreign currencies are recognized in other comprehensive income(loss)as cumulative translation adjustments.On the loss of control of a foreign operation,all the exchange differences accumulated in equity in respect of that operation attributable to the owners of the
90、 Corporation are recognized in the income statement as part of the gain or loss on sale.c)Financial instruments Erdene recognizes financial assets and financial liabilities when it becomes a party to a contract.Financial assets and financial liabilities,with the exception of financial assets and lia
91、bilities classified as fair value through profit and loss(“FVTPL”),are measured at fair value,plus transaction costs on initial recognition.Financial assets and liabilities classified at FVTPL are measured at fair value on initial recognition and transaction costs are expensed when incurred.Each typ
92、e of fair value is categorized based on the lowest level of input that is material to the fair value measurement in its entirety.The following table summarizes the Corporations classification and measurement of financial assets and liabilities:TypeClassificationMeasurementFinancial AssetsAmortized c
93、ostReceivablesFinancial AssetsAmortized costTrade and other payablesFinancial LiabilitiesAmortized cost The Corporation derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire,or when it transfers the financial assets and substantially all the as
94、sociated risks and rewards of ownership to another entity.Gains and losses on derecognition are recognized in the consolidated statements of comprehensive loss.The Corporation derecognizes financial liabilities only when its obligations under the financial liabilities are discharged,cancelled or exp
95、ired.The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable,including any non-cash assets transferred or liabilities assumed,is recognized in the consolidated statements of comprehensive(income)loss.Cash and equivalents include cash,
96、term deposits,treasury bills and money market investments with original maturities of less than 90 days.ERDENE RESOURCE DEVELOPMENT CORPORATION Notes to Consolidated Financial Statements(Canadian dollars)For the years ended December 31,2024,and 2023 Erdene Resource Development Corp.|Consolidated Fin
97、ancial Statements|9 3.Material accounting policies(continued)d)Investment in associate Associates are entities over which the Corporation has significant influence,but not control.The Corporation also does not participate directly in the financial reporting functions of its associates.The financial
98、results of the Corporations investments in its associates are included in the Corporations results according to the equity method.Under the equity method,the investment is initially recognized at fair value,and the carrying amount is increased or decreased to recognize the Corporations share of prof
99、its or losses of associates after the date of acquisition.The Corporations share of profits and losses and other comprehensive loss(income)of associates is recognized in the statement of comprehensive loss(income).Unrealized gains on transactions between the Corporation and an associate are eliminat
100、ed to the extent of the Corporations interest in the associate.Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.Dilution gains and losses arising from changes in interests in investments in associates are recognized in the state
101、ment of(income)loss.The Corporation assesses at each period end whether there is any objective evidence that its investments in associates are impaired.If impaired,the carrying value of the Corporations share of the underlying assets of associates is written down to its estimated recoverable amount(
102、being the higher of fair value less costs of disposal and value in use)and charged to the statement of(income)loss.e)Exploration and evaluation assets Pre-exploration expenditures are expensed as incurred.All direct costs related to the acquisition of resource property interests are capitalized by p
103、roperty.Exploration costs are charged to operations in the period incurred until such time a property,or an areas potential has been determined,as approved by the Board,in which case subsequent exploration and evaluation costs are capitalized.Exploration and evaluation assets are initially measured
104、at cost and classified as tangible assets.Exploration and evaluation assets include expenditures on acquisition of rights to explore,studies,exploratory drilling,trenching,sampling,and other direct costs related to exploration or evaluation of a project.Exploration and evaluation assets are assessed
105、 for impairment at each reporting period,or when facts and circumstances indicate that the carrying amount may exceed their recoverable amount.In circumstances where indicators of impairment exist,an impairment test is required to determine if the carrying amount of the exploration and evaluation as
106、set exceeds its estimated recoverable amount.To the extent this occurs,the asset is assessed for impairment and any impairment is fully provided against the carrying amount,in the financial year in which this is determined.Exploration and evaluation assets are reassessed on a regular basis and these
107、 costs are carried forward provided at least one of the conditions below is met:i)such costs are expected to be recouped in full through successful development of the area of interest or alternatively,by its sale;or ii)exploration and evaluation activities in the area of interest have not yet reache
108、d a stage that permits a reasonable assessment of the existence or otherwise of economically recoverable reserves,and active and material operations in relation to the area are continuing or planned for the future.An exploration and evaluation asset is no longer classified as such when the technical
109、 feasibility and commercial viability of extracting a mineral resource are demonstrable and a decision has been made to proceed with development.Such exploration and evaluation assets shall be assessed for impairment,and any impairment loss recognized,before reclassification to property,plant and eq
110、uipment as mine development costs.ERDENE RESOURCE DEVELOPMENT CORPORATION Notes to Consolidated Financial Statements(Canadian dollars)For the years ended December 31,2024,and 2023 Erdene Resource Development Corp.|Consolidated Financial Statements|10 3.Material accounting policies(continued)f)Proper
111、ty,plant and equipment Property,plant and equipment is measured at cost less accumulated depreciation and accumulated impairment losses.Cost includes expenditures that are directly attributable to the acquisition of the asset.The cost of self-constructed assets includes the cost of materials and dir
112、ect labour and any other costs directly attributable to bringing the assets to working condition for their intended use.Depreciation of property,plant and equipment is calculated using the declining balance method to allocate cost,net of residual value,over the estimated useful life at the following
113、 rates:AssetBasis RateVehicles&field equipmentDeclining balance30%Equipment,furniture&fixturesDeclining balance20%Software&computersDeclining balance33%Depreciation commences when the property,plant and equipment assets are considered available for use.Depreciation methods,useful lives and residual
114、values are reviewed at each financial year end and adjusted prospectively,if appropriate.g)Share-based compensation Equity-settled share-based awards to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date using the Black-Scholes
115、pricing model.The fair value determined at the grant date is expensed as services are rendered over the vesting period,based on the Corporations estimate of the shares that will eventually vest and adjusted for the effect of non-market-based vesting conditions.Equity-settled share-based payment tran
116、sactions with parties other than employees and those providing similar services are measured at the fair value of the goods or services received,except where the fair value cannot be estimated reliably,in which case they are measured at the fair value of the equity instruments granted,measured at th
117、e date the entity obtains the goods or the counterparty renders the service.h)Loss(Income)per share The Corporation presents basic and diluted income or loss per share data for its common shares.Basic income or loss per share is calculated by dividing the profit or loss attributable to common shareh
118、olders of the Corporation by the weighted average number of common shares outstanding during the period.Diluted income or loss per share is determined by adjusting the profit or loss attributable to common shareholders and the weighted average number of shares outstanding adjusted for the effects of
119、 all dilutive potential common shares.The Corporation uses the treasury stock method to compute the dilutive effect of options,warrants and other similar instruments.Under this method,the weighted average number of shares outstanding used in the calculation of diluted loss per share assumes that the
120、 deemed proceeds received from the exercise of stock options,share purchase warrants and their equivalents would be used to repurchase common shares of the Corporation at the average market price during the period.ERDENE RESOURCE DEVELOPMENT CORPORATION Notes to Consolidated Financial Statements(Can
121、adian dollars)For the years ended December 31,2024,and 2023 Erdene Resource Development Corp.|Consolidated Financial Statements|11 4.Changes in accounting policies Erdene has adopted the following amendments,effective January 1,2024.These changes were made in accordance with applicable transitional
122、provisions.IAS 1 Presentation of Financial Statements In October 2022,the IASB finalized issuance of Classification of Liabilities as Current or Non-Current,which made amendments to IAS 1 Presentation of Financial Statements,providing a more general approach to the classification of liabilities.The
123、amendment clarifies that the classification of liabilities as current or noncurrent depends on the rights existing at the end of the reporting period as opposed to the expectations of exercising the right for settlement of the liability.The amendments further clarify that settlement refers to the tr
124、ansfer of cash,equity instruments,other assets,or services to the counterparty.The application of the amendment has been made on a prospective basis and did not have an impact on the Corporation.New accounting standards not yet adopted IAS 21 The Effects of Changes in Foreign Exchange Rates In Augus
125、t 2023,the IASB issued amendments to IAS 21 Effects of Changes in Foreign Exchange Rates,to help entities assess exchangeability between currencies and to determine the spot exchange rate,when exchangeability is lacking.An entity is impacted by the amendments when it has a transaction or an operatio
126、n in a foreign currency that is not exchangeable into another currency at a measurement date for a specified purpose.A currency is exchangeable when there is an ability to obtain the other currency(with a normal administrative delay),and the transaction would take place through a market or exchange
127、mechanism that creates enforceable rights and obligations.The amendments are effective for annual periods beginning on or after January 1,2025,though earlier application is permitted.The Corporation anticipates that the application of these amendments will not have a material effect on the Consolida
128、ted Financial Statements as the currencies in which the Corporation transacts have not historically experienced significant issues in exchangeability.IFRS 18 Presentation and Disclosure in the Financial Statements On April 9,2024,the IASB issued IFRS 18 Presentation and Disclosure in the Financial S
129、tatements(“IFRS 18”)replacing IAS 1.IFRS 18 introduces categories and defined subtotals in the statement of profit or loss,disclosures on management-defined performance measures,and requirements to improve the aggregation and disaggregation of information in the financial statements.As a result of I
130、FRS 18,amendments to IAS 7 were also issued to require that entities use the operating profit subtotal as the starting point for the indirect method of reporting cash flows from operating activities and also to remove presentation alternatives for interest and dividends paid and received.Similarly,a
131、mendments to IAS 33“Earnings per Share”were issued to permit disclosure of additional earnings per share figures using any other component of the statement of profit or loss,provided the numerator is a total or subtotal defined under IFRS 18.IFRS 18 is effective for annual reporting periods beginnin
132、g on or after January 1,2027 and is to be applied retrospectively,with early adoption permitted.The Company is currently assessing the impact of the standard on its financial statements.IFRS 7&9 Financial Instruments and Disclosures In May 2024,the IASB issued Amendments to the Classification and Me
133、asurement of Financial Instruments(Amendments to IFRS 9 and IFRS 7).These amendments updated classification and measurement requirements in IFRS 9 Financial Instruments and related disclosure requirements in IFRS 7 Financial Instruments:Disclosures.The IASB clarified the recognition and derecognitio
134、n date of certain financial assets and liabilities,and amended the requirements related to settling financial liabilities using an electronic payment system.The amendments are effective for annual periods beginning on or after January 1,2026 with early application permitted.The Company is currently
135、assessing the effect of these amendments on its financial statements.ERDENE RESOURCE DEVELOPMENT CORPORATION Notes to Consolidated Financial Statements(Canadian dollars)For the years ended December 31,2024,and 2023 Erdene Resource Development Corp.|Consolidated Financial Statements|12 5.Investment i
136、n associate On January 10,2023,the Corporation entered into Strategic Alliance and Investment Agreements(“Agreements”)with Mongolian Mining Corporation(“MMC”)for the development of the Bayan Khundii Gold Project.The key economic terms of the Agreements are as follows:MMC to invest US$40 million thro
137、ugh a series of convertible promissory notes in return for a 50%equity interest in Erdenes primary Mongolian subsidiary,Erdene Mongol LLC(“EM”),which holds the Khundii and Altan Nar mining licenses,as well as the Ulaan exploration license.Erdene will retain a 50%equity interest in EM and a 5.0%Net S
138、melter Return(“NSR”)royalty on all production from the Khundii,Altan Nar and Ulaan licenses,as well as any properties acquired within 5 kilometres of these licenses,beyond the first 400,000 ounces of gold recovered.While Erdene owned 100%of the equity of EM during the year ended December 31,2023,the
139、 Agreements included certain governance provisions that no longer gave the Corporation rights to unilaterally direct relevant activities of EM.Consequently,the Corporation concluded that control of EM was lost and derecognized the assets and liabilities of EM on January 10,2023.However,Management de
140、termined that Erdene maintained significant influence over the decision-making process of EM and began using the equity method to account for this investment from this date.At the date that control of this subsidiary was lost,the Corporation calculated the fair value of its investment retained in EM
141、 as$53,527,101 using the value implied by MMCs investment,as such value was agreed through negotiation between arms length,market participants.Consequently,a gain of$6,544,863 was recognized,net of$5,110,896 of foreign currency translation difference realized on loss of control,in its consolidated s
142、tatement of comprehensive income for the year ended December 31,2023.The following tables summarize the financial information relating to Erdenes investment in EM on January 10,2023,which was immediately prior to deconsolidation.The amounts disclosed are before intercompany eliminations:January 10,A
143、s at2023Cash and cash equivalents254,049$Receivables69,558 Other current assets43,236 Current assets366,843 Current liabilities(1,145,712)Current net assets(778,869)Exploration and evaluation assets(Note 6)42,130,165 Property,plant and equipment520,046 Non-current assets42,650,211 Total net assets41
144、,871,342 A summary of changes in the Corporations Investment in associate during the year ended December 31,2023 is as follows:Investment in associate,January 10,202353,527,101$Share of loss of associate from January 10,2023(2,278,370)Investment in associate,December 31,202351,248,731$ERDENE RESOURC
145、E DEVELOPMENT CORPORATION Notes to Consolidated Financial Statements(Canadian dollars)For the years ended December 31,2024,and 2023 Erdene Resource Development Corp.|Consolidated Financial Statements|13 5.Investment in associate(continued)On January 23,2024,EM issued shares representing 50%of its eq
146、uity to MMC in connection with the conversion of the convertible promissory notes.At the date MMC subscribed to shares in EM,the Corporation recognized a gain on dilution of its investment retained in EM of$1,256,598,calculated in reference to MMCs investment in EM through the convertible promissory
147、 notes.The Corporation continues to have significant influence over EM through its participation in the governance of the EM;however,the Corporation no longer participates directly in the financial reporting functions of EM.A summary of changes in the Corporations Investment in associate during the
148、year ended December 31,2024 is as follows:Investment in associate,December 31,202351,248,731$Income from associate to January 23,202454,073 Gain on dilution,January 23,20241,256,598 Loss from associate from January 23,2024(3,299,182)Effect of movements in exchange rates3,849,522 Investment in associ
149、ate,December 31,202453,109,742$The following tables summarize the consolidated financial information of EM on a 100%basis,taking into account fair value adjustments made by the Corporation for equity accounting purposes.A reconciliation of EMs summarized financial information to the Corporations inv
150、estment carrying value is as follows:December 31,December 31,As at20242023Total current assets26,826,631$10,692,069$Total non-current assets190,020,662 96,529,698 Total current liabilities(6,993,430)(55,973,036)Total non-current liabilities(103,634,379)-Total net assets106,219,484$51,248,731$For the
151、 year ended December 31,20242023Revenue-$-$Net loss6,541,648 2,278,370 December 31,December 31,As at20242023Net assets of EM106,219,484$51,248,731$Erdene Resource Development Corporation ownership50.00%100.00%Erdenes share of EMs net assets53,109,742 51,248,731 Carrying value of investment in EM53,1
152、09,742 51,248,731 ERDENE RESOURCE DEVELOPMENT CORPORATION Notes to Consolidated Financial Statements(Canadian dollars)For the years ended December 31,2024,and 2023 Erdene Resource Development Corp.|Consolidated Financial Statements|14 6.Exploration and evaluation assets Bayan KhundiiAltan NarUlaanZu
153、un Mod&OtherTotalBalance,January 1,2024-$-$-$1,961,506$1,961,506$Additions-348,887 348,887 Effect of movements in exchange rates-157,677 157,677 Balance,December 31,2024-$-$-$2,468,070$2,468,070$Balance,January 1,202336,183,734$4,257,954$1,688,477$923,991$43,054,156$Deconsolidation(Note 5)(36,183,73
154、4)(4,257,954)(1,688,477)-(42,130,165)Additions-1,043,280 1,043,280 Effect of movements in exchange rates-(5,765)(5,765)Balance,December 31,2023-$-$-$1,961,506$1,961,506$Mongolian mineral exploration licenses are valid for a period of three years and,through renewals,can be extended to a maximum of t
155、welve years.Mining licenses are issued for an initial term of 30 years with two 20-year extensions possible.With the loss of control of its subsidiary EM as at January 10,2023,the Corporations exploration and evaluation assets for its Bayan Khundii,Altan Nar and Ulaan licenses are reported within it
156、s Investment in associate from this date.The Zuun Mod property is located in Bayankhongor province in Mongolia and is comprised of a 6,041-hectare molybdenum-copper mining license,issued in 2011.In 2021,the Corporation completed a strategic and economic review of the property which confirmed the pot
157、ential viability of the property.Recent exploration expanded mineralization at the large porphyry deposit,further demonstrating the potential of the project.7.Commitments Sandstorm Gold Ltd.(“Sandstorm”)holds a 1%net smelter returns royalty(“NSR Royalty”)on the Altan Nar,Khundii and Ulaan licenses h
158、eld by EM,that is guaranteed by the Corporation.Sandstorm has been given a right of first refusal on future stream or royalty financings related to these licenses.Sandbox Royalties Corp.holds a 1.5%NSR Royalty on Erdenes Zuun Mod license.Erdene has the option to buy down a portion of the royalty if
159、certain production milestones are achieved.On February 8,2024,Erdene and EM executed financing documents with MMC to develop the Bayan Khundii Gold Project.The financing has been structured as a shareholder loan from MMC to EM,the entity co-owned by Erdene and MMC.The shareholder loan is secured by
160、a 50%guarantee by Erdene and Erdenes interests in the Bayan Khundii Gold Project,including its shares of EM and net smelter return interest,as well as preferential rights over the Khundii,Altan Nar and Ulaan licenses.For so long as the loan is outstanding,MMC will be granted priority voting rights u
161、nder the Strategic Alliance agreement between the parties and a right of first refusal over Erdenes Zuun Mod project.Erdene has the right to purchase 50%of the loan and participate as a lending shareholder on the same terms as MMC for the term of the shareholder loan.ERDENE RESOURCE DEVELOPMENT CORP
162、ORATION Notes to Consolidated Financial Statements(Canadian dollars)For the years ended December 31,2024,and 2023 Erdene Resource Development Corp.|Consolidated Financial Statements|15 8.Income taxes The Corporations provision for income taxes differs from the amount computed by applying the combine
163、d Canadian federal and provincial income tax rates to income(loss)before income taxes as a result of the following:December 31,December 31,20242023Statutory tax rates29.0%29.0%Income taxes(recovery)computed at the statutory rates$(2,391,000)$151,000 Benefit of temporary differences not recognized 1,
164、155,000 6,541,000Expenses not deductible for tax purposes525,000458,000Effect of foreign tax rates134,00014,000Loss from investment in associate not recognized941,000 661,000 Permanent differences arising from loss of control of subsidiary -(7,825,000)Differences arising from gain on dilution of inv
165、estment in associate(364,000)-Provision for income taxes-$-$The enacted tax rates in Canada 29.0%(2023 29.0%)and Mongolia 10.0%(2023 10.0%)where the Corporation operates are applied in the tax provision calculation.The following table reflects the Corporations deferred income tax assets(liabilities)
166、:December 31,December 31,20242023Non-capital losses carried forward$407,000$212,000 Deferred income tax assets407,000 212,000 Unrealized foreign exchange(407,000)(212,000)Net deferred income tax assets(liabilities)$-$-The following temporary differences,non-capital losses and capital losses have not
167、 been recognized in the consolidated financial statements.December 31,2024CanadaMongoliaTotalNon-capital losses carried forward$27,507,000$148,000$27,655,000 Property,plant and equipment 274,000 -274,000 Share issuance costs 281,000 -281,000 Intangible assets 378,000 -378,000 Exploration and evaluat
168、ion assets -4,361,000 4,361,000 Investment in associate 4,069,000 -4,069,000$32,509,000$4,509,000$37,018,000 ERDENE RESOURCE DEVELOPMENT CORPORATION Notes to Consolidated Financial Statements(Canadian dollars)For the years ended December 31,2024,and 2023 Erdene Resource Development Corp.|Consolidate
169、d Financial Statements|16 8.Income taxes(continued)December 31,2023CanadaMongoliaTotalNon-capital losses carried forward$23,867,000$86,000$23,953,000 Property,plant and equipment 272,000 -272,000 Share issuance costs 707,000 -707,000 Intangible assets 378,000 -378,000 Exploration and evaluation asse
170、ts 26,176,000 3,994,000 30,170,000 Investment in associate 1,488,000 -1,488,000$52,888,000$4,080,000$56,968,000 As at December 31,2024,the Corporation has non-capital losses to be carried forward and applied against taxable income of future years.The non-capital losses have expiry dates as follows:D
171、ecember 31,December 31,202420232024 -5,000 2025 6,000 6,000 2026 1,509,000 1,535,000 2027 2,319,000 2,319,000 Thereafter 25,225,000 20,819,000$29,059,000$24,684,000 9.Share capital and contributed surplus Authorized An unlimited number of common shares with no par value.Warrants During the year ende
172、d December 31,2024,13,943,782 warrants were exercised at an average price of$0.40,generating proceeds of$5,621,680(2023-no warrants exercised).Also,during the year ended December 31,2024,11,320,340 warrants expired(2023 no warrants expired).No warrants are outstanding as at December 31,2024.The foll
173、owing table summarizes the continuity of the warrants for the years ended December 31,2024,and 2023:Number of warrantsWeighted average exercise priceNumber of warrantsWeighted average exercise priceOutstanding at January 125,264,122 0.42$25,264,122 0.42$Exercised(13,943,782)0.40 -Expired(11,320,340)
174、0.45 -Outstanding at December 31-$25,264,122 0.42$Exercisable at December 31-$25,264,122 0.42$December 31,2024December 31,2023 ERDENE RESOURCE DEVELOPMENT CORPORATION Notes to Consolidated Financial Statements(Canadian dollars)For the years ended December 31,2024,and 2023 Erdene Resource Development
175、 Corp.|Consolidated Financial Statements|17 9.Share capital and contributed surplus(continued)Omnibus equity incentive plan and Legacy Plans The Corporation adopted an omnibus equity inventive plan(the“Omnibus Plan”)which was approved by the shareholders of the Corporation on June 22,2023.The Omnibu
176、s Plan provides the Corporation with share-related mechanisms,including incentive stock options,deferred share units(“DSUs”),restricted share units(“RSUs”),and performance share units(“PSUs”),to attract,retain and motivate qualified directors,employees and consultants of the Corporation and its subs
177、idiaries.The Omnibus Plan replaced legacy plans including an incentive stock option plan and a deferred stock option plan(the“Legacy Plans”).Awards granted under these legacy plans remain in place under the terms of their initial issuance.The Omnibus Plan is a variable plan and the aggregate number
178、of common shares that may be issued upon the exercise or settlement of awards granted under the Omnibus Plan,together with awards outstanding under the Legacy Plans,shall not exceed 10%of the Corporations total issued and outstanding common shares at any time.Stock options The Corporations Omnibus P
179、lan and Legacy Plans allow for the grant of options to purchase common shares of the Corporation by directors,officers,employees and consultants of the Corporation.The terms and conditions of each grant of options are determined by the Board of Directors.If there are no terms specified upon grant,op
180、tions vest immediately on the grant date.During the year ended December 31,2024,5,680,000 options were granted at a weighted average exercise price of$0.30(2023 6,325,000 options granted at average exercise price of$0.36).Also 415,000 options expired(2023 3,145,000 options expired).During the year e
181、nded December 31,2024,3,305,000 options were exercised at an average price of$0.25,generating proceeds of$816,750(2023 250,000 options exercised at average price of$0.24,for proceeds of$60,500).Changes in stock options during the years ended December 31,2024,and 2023 were as follows:Number of option
182、sWeighted average exercise priceNumber of optionsWeighted average exercise priceOutstanding at January 120,485,000 0.35$17,555,000 0.36$Granted5,680,000 0.30 6,325,000 0.36 Expired(415,000)0.40 (3,145,000)0.40 Exercised(3,305,000)0.25 (250,000)0.24 Outstanding at December 3122,445,000 0.35$20,485,00
183、0 0.35$Exercisable at December 3122,445,000 0.35$20,485,000 0.35$December 31,2024December 31,2023 ERDENE RESOURCE DEVELOPMENT CORPORATION Notes to Consolidated Financial Statements(Canadian dollars)For the years ended December 31,2024,and 2023 Erdene Resource Development Corp.|Consolidated Financial
184、 Statements|18 9.Share capital and contributed surplus(continued)All stock options granted in 2024 and 2023 vested immediately and have a five-year term.The following table summarizes information concerning options outstanding at December 31,2024 and 2023.Expiry dateNumber of OptionsExercise priceNu
185、mber of OptionsExercise priceJune 20,2024-2,060,000 0.20 November 29,2024-100,000 0.18 December 20,2024-50,000 0.18 February 11,202550,000 0.27 50,000 0.27 May 13,2025500,000 0.22 500,000 0.22 August 27,20253,060,000 0.49 3,155,000 0.49 December 1,2025200,000 0.38 200,000 0.38 January 29,2026-100,00
186、0 0.43 June 23,20263,075,000 0.37 3,180,000 0.37 August 18,2026200,000 0.43 350,000 0.43 October 28,2026100,000 0.43 100,000 0.43 September 27,20273,795,000 0.31 4,160,000 0.31 December 30,2027175,000 0.30 175,000 0.30 May 9,20285,810,000 0.36 6,305,000 0.36 February 12,20295,480,000 0.30 -22,445,00
187、0 0.35$20,485,000 0.35$December 31,2024December 31,2023 The fair value of each option granted is estimated at the time of grant using a Black-Scholes option pricing model with weighted-average assumptions for grants during the years ended December 31,2024 and 2023 as follows:Year Ended December 31,2
188、024Year Ended December 31,2023Share price at grant date0.33$0.36$Exercise price0.30$0.36$Risk-free interest rate3.8%3.2%Expected life4.6 years4.4 yearsExpected volatility54%56%Expected dividends0.0%0.0%Weighted average grant date fair value0.17$0.17$Expected volatility is estimated considering histo
189、ric average share price volatility.Options issued in 2024 resulted in a charge of$939,500 to share based compensation included in exploration expenses and in corporate and administration expenses(2023$1,078,275).Deferred share units During the year ended December 31,2024,the Corporation granted 1,54
190、8,998 DSUs with an average fair value,calculated using the five-day volume weighted average price preceding the grant date,of$0.41 per DSU(2023 1,492,778 DSUs with fair value of$0.33 per DSU).The fair value of$633,344(2023$488,234)was charged to share based compensation included in exploration expen
191、ses and corporate and administration expenses.During the year,the Corporation did not settle any DSUs through the issuance of shares(2023 337,800 shares issued at an average value of$0.34 per DSU).ERDENE RESOURCE DEVELOPMENT CORPORATION Notes to Consolidated Financial Statements(Canadian dollars)For
192、 the years ended December 31,2024,and 2023 Erdene Resource Development Corp.|Consolidated Financial Statements|19 9.Share capital and contributed surplus(continued)On the grant date,DSUs vest immediately and plan members are credited with the DSUs granted to them.Upon termination or death of the pla
193、n member,the Corporation pays the then market value of the plan members shares either in cash or in shares,at the sole discretion of the Corporation.Since the type of payout is at the discretion of the Corporation,and the Corporation does not intend to cash settle awards under the plan,the plan is a
194、ccounted for as an equity settled plan.The provisions of DSUs issued under the Omnibus Plan adopted on June 22,2023,are consistent with those of the legacy DSU plan.The following table summarizes the continuity of DSUs for the years ended December 31,2024,and 2023:December 31,2024December 31,2023Num
195、ber of DSUsNumber of DSUsOutstanding at January 18,442,250 7,287,272 Granted1,548,998 1,492,778 Settled for shares-(337,800)Outstanding at December 319,991,248 8,442,250 10.Exploration and evaluation expenses The following table summarizes exploration and evaluation expenses for the years ended Dece
196、mber 31,2024,and 2023:For the year ended December 3120242023Depreciation&amortization4,227$-$Direct costs383,557 111,087 Employee compensation costs2,046,890 71,694 Share-based compensation518,129 664,229 Amount reimbursed by associate(1,100,161)-1,852,642$847,010$The Corporation and its associate,E
197、M,are parties to an agreement under which EM reimburses the Corporation US$1 million per annum,less applicable withholding taxes,for the provision of geologic services.ERDENE RESOURCE DEVELOPMENT CORPORATION Notes to Consolidated Financial Statements(Canadian dollars)For the years ended December 31,
198、2024,and 2023 Erdene Resource Development Corp.|Consolidated Financial Statements|20 11.Corporate and administration expenses The following table summarizes corporate and administration expenses for the years ended December 31,2024,and 2023:For the year ended December 3120242023Administrative servic
199、es1,198,872$935,025$Depreciation and amortization25,600 36,958 Directors fees and expenses114,901 122,244 Financing costs1,495,147 -Investor relations and marketing487,533 318,225 Office and sundry96,865 105,686 Professional fees379,827 504,095 Regulatory compliance90,749 109,322 Share-based compens
200、ation1,054,714 902,280 Travel and accommodations98,850 103,900 5,043,058$3,137,735$12.Financial instruments Credit risk:The carrying amount of financial assets represents the maximum credit exposure.The maximum exposure to credit risk at the reporting date was:Carrying AmountDecember 31,December 31,
201、20242023Cash and cash equivalents7,298,399$4,349,599$Receivables14,910 6,722 7,313,309$4,356,321$The Corporation manages credit risk by holding the majority of its cash and cash equivalents with high quality financial institutions in Canada,where management believes the risk of loss to be low.At Dec
202、ember 31,2024,$121,756 or 2%of the balance of cash was held in banks outside Canada(2023-$33,759 or 1%).Liquidity risk:Liquidity risk is the risk that the Corporation will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or
203、 another financial asset.The Corporations approach to managing liquidity is to ensure,to the extent possible,that it will always have sufficient liquidity to meet its liabilities when due,under both normal and stressed conditions.All of the Corporations financial liabilities are expected to be settl
204、ed within the next twelve months.Market risk:Market risk is the risk of loss that may arise from changes in market factors such as interest rates,foreign exchange rates,and commodity and equity prices.a)Interest rate risk The Corporation invests excess cash in interest bearing savings accounts,which
205、 are subject to interest rate risk.ERDENE RESOURCE DEVELOPMENT CORPORATION Notes to Consolidated Financial Statements(Canadian dollars)For the years ended December 31,2024,and 2023 Erdene Resource Development Corp.|Consolidated Financial Statements|21 12.Financial instruments(continued)b)Foreign cur
206、rency risk The functional currency of the Corporation is the Canadian dollar,and the functional currency of the Corporations subsidiary and associate is the Mongolian tugrik.Additionally,the Corporation incurs expenses in US dollars.Fluctuations of the Canadian dollar in relation to other currencies
207、 impacts the fair value of financial assets,liabilities and operating results.Financial assets and liabilities subject to currency translation risk primarily include US dollar denominated cash,accounts payable and accrued liabilities,as well as the Corporations net investment in its Mongolian associ
208、ate.The Corporations exposure to US dollar currency risk was as follows:December 31,December 31,20242023Cash and cash equivalents414,149$1,050,778$Trade and other payables(12,461)(5,949)401,688$1,044,829$A 10%change in the US dollar exchange rate would affect net and comprehensive(gain)loss and defi
209、cit by approximately$40,200(December 31,2023-$104,500).The Corporations exposure to Mongolian Tugrik currency risk was as follows:December 31,December 31,20242023Cash and cash equivalents12,341$876$Trade and other receivables15,043 2,138 Trade and other payables(1,991)(18)25,393$2,996$A 10%change in
210、 the Mongolian Tugrik exchange rate would affect net(income)loss and deficit by approximately$2,500(December 31,2023-$300).c)Price risk The Corporations financial instruments are not exposed to direct price risk other than that associated with commodity price fluctuations impacting the mineral explo
211、ration and mining industries as the Corporation has no significant revenues.Fair Value:Assets and liabilities measured at fair value in the consolidated statements of financial position,or disclosed in the notes to the financial statements,are categorized using a fair value hierarchy that reflects t
212、he significance of the inputs used in determining the fair values:a)Level 1:quoted prices(unadjusted)in active markets for identical assets or liabilities;b)Level 2:inputs other than quoted prices included within level 1 that are observable for the asset or liability,either directly(i.e.,as prices)o
213、r indirectly(i.e.,derived from prices);and c)Level 3:inputs for the asset or liability that are not based on observable market data(unobservable inputs).The fair value of financial assets and liabilities are approximately equal to their carrying values given the short term to maturity of such instru
214、ments.ERDENE RESOURCE DEVELOPMENT CORPORATION Notes to Consolidated Financial Statements(Canadian dollars)For the years ended December 31,2024,and 2023 Erdene Resource Development Corp.|Consolidated Financial Statements|22 13.Related parties The Corporation has defined key management personnel as se
215、nior executive officers,as well as the Board of Directors.The total remuneration of key management personnel and the Board of Directors was as follows:Year ended December 31,20242023Directors fees and other compensation111,000$168,000$Share-based compensation to directors645,600 520,400 Executive co
216、mpensation and benefits1,677,280 1,616,957 Share-based compensation to key management587,337 554,382 3,021,217$2,859,739$MANAGEMENTS DISCUSSION AND ANALYSIS Year ended December 31,2024 Erdene Resource Development Corp.|Managements Discussion and Analysis|2 MANAGEMENTS DISCUSSION AND ANALYSIS Year en
217、ded December 31,2024 Contents Page No.Company Overview 3 Highlights and Significant Subsequent Events 4 Strategy and Outlook 5 Bayan Khundii Project Development and Construction Update 6 Development and Exploration Projects 8 NI 43-101 Technical Reports Resources and Reserves 8 Khundii Minerals Dist
218、rict 8 Khundii Minerals District Exploration 13 Acquisitions 17 Selected Annual Financial Information 18 Discussion of Operations 18 Fourth Quarter 19 Summary of Quarterly Results 20 Liquidity and Capital Resources 20 Outstanding Share Data 20 Contractual Obligations 21 Other Financing Arrangements
219、and Commitments 21 Off-Balance Sheet Arrangements 22 Critical Judgments and Estimates in Applying Accounting Policies 22 Adoption of New Accounting Standards and Future Changes in Accounting Policies 22 Financial Instruments and Other Risks 23 Disclosure Controls and Internal Controls Over Financial
220、 Reporting 24 Qualified Person 25 Other Information 25 Appendix Bayan Khundii Ore-Control Drill Results 26 This Management Discussion and Analysis(“MD&A”),dated March 24,2025,relates to the operating results and financial condition of Erdene Resource Development Corporation(“Erdene”or the“Company”or
221、 the“Corporation”)and should be read in conjunction with the Corporations audited consolidated financial statements for the years ended December 31,2024 and 2023,and the notes thereto.The consolidated financial statements of the Corporation have been prepared in Canadian dollars in accordance with I
222、FRS Accounting Standards as issued by the International Accounting Standards Board(“IFRS”).This MD&A includes certain statements that may be deemed“forward-looking statements”.All statements in this MD&A,other than statements of historical fact,including statements concerning the timing of productio
223、n at Bayan Khundii,construction and commissioning timelines and expectations that address reserve potential,exploration drilling,exploitation activities,budgeted financial results,and events or developments that the Corporation expects,are forward-looking statements.Although the Corporation believes
224、 the expectations expressed in such forward-looking statements are based on reasonable assumptions(including,but not limited to,assumptions in connection with the continuance of the Corporation,its subsidiary and associate as a going concern,general economic and market conditions,geopolitical stabil
225、ity,metal and mineral prices,capital and operating costs,currency exchange rates,availability of financing,equipment and personnel,and the accuracy of mineral resource and mineral reserve estimates),such statements are not guarantees of future performance and actual results or developments may diffe
226、r materially from those in the forward-looking statements.Factors that could cause actual results to differ materially from those in forward-looking statements include changes in development and operating costs,volatility of market and commodity prices,geopolitical and regulatory conditions in the j
227、urisdictions where the Corporation or its subsidiary and associate conduct business,exploration and evaluation results,continued availability of capital and financing and general economic,market or business conditions and additional factors noted under“Risk Factors”in the Corporations latest Annual
228、Information Form,a copy of which is available on the Corporations SEDAR+document page at www.sedarplus.ca.The risk factors identified above are not intended to represent a complete list of the factors which could affect the Corporation and there may be other factors that cause actual results or cond
229、itions to differ from those anticipated,estimated or intended.Forward-looking statements are made as of the date of this MD&A and the Corporation disclaims any obligation to update or revise any forward-looking statements,whether as a result of new information,future events,or results or otherwise,e
230、xcept as required by applicable law.Any financial outlook or future-oriented financial information in this MD&A,as defined by applicable securities legislation,has been approved by management of the Corporation as of the date of this MD&A.Such financial outlook or future-oriented financial informati
231、on is provided for the purpose of providing information about managements current expectations and plans relating to the future.Readers are cautioned that such outlook or information should not be used for purposes other than for which it is disclosed in this MD&A.Erdene Resource Development Corp.|M
232、anagements Discussion and Analysis|3 Company Overview Erdene Resource Development Corporation is a Canadian based resource company focused on the acquisition,exploration,and development of large,high-grade,near-surface,precious and base metals deposits in under-explored and highly prospective Mongol
233、ia.Erdene is listed on the Toronto Stock Exchange(TSX:ERD)and Mongolian Stock Exchange(MSE:ERDN).The Company holds interests in three mining licenses and an exploration license in southwest Mongolia,where exploration success has led to the discovery of the Khundii Minerals District(“KMD”).The KMD is
234、 located within the Trans Altai Terrane of the Central Asian Orogenic Belt(“CAOB”).The COAB hosts several world class copper and gold deposits,including one of the worlds largest gold deposits,Muruntau,in Uzbekistan,as well as Rio Tintos Oyu Tolgoi copper-gold deposit,located approximately 650 kilom
235、etres east of the KMD in southeast Mongolia.The discovery of the KMD is the result of almost 20 years of exploration by Erdene in southwest Mongolia.Over this period,Erdene has defined the Altan Nar(“AN”),Bayan Khundii(“BK”)and Dark Horse Mane(“DH”)epithermal gold deposits,the Ulaan and Greater Dark
236、 Horse gold prospects,the Zuun Mod(“ZM”)molybdenum-copper porphyry deposit,and several other prospects.Collectively,these discoveries form the core of the KMD,an area approximately 50 by 100 kilometres,elongated northwest.In January 2023,Erdene entered a Strategic Alliance with Mongolian Mining Corp
237、oration(“MMC”),the countrys largest independent miner,to develop the Bayan Khundii Gold Project(“BK”or“Project”),which closed in January 2024.Under the terms of the Strategic Alliance,MMC invested US$40 million for a 50%interest in Erdenes Mongolian subsidiary,Erdene Mongol LLC(“EM”),which holds the
238、 Khundii and Altan Nar mining licenses and the Ulaan exploration license.Erdene retains a 50%equity interest in EM as well as a 5%Net Smelter Return(“NSR”)royalty on all production from the Khundii,Altan Nar and Ulaan licenses,and any properties acquired within five kilometres of these licenses,afte
239、r the first 400,000 ounces of gold recovered.Erdene holds a 100%interest in the Zuun Mod copper-molybdenum project.Following the execution of the Strategic Alliance,EM launched the early construction works program for the Bayan Khundii gold project,which was completed in late 2023.In January 2024,EM
240、 reached a formal decision to commence construction at BK.This decision was followed by the announcement in February 2024 of the execution of financing documents between EM,MMC and Erdene for an up to US$80 million senior debt facility for EM,that along with the US$40 million investment through the
241、Strategic Alliance,will fund construction.In December 2024,EM executed a US$50 million facility with the Trade and Development Bank of Mongolia(“TDB”)that will bridge the company through to commercial production.At the end of 2024,construction of the Bayan Khundii Gold Project was approximately two-
242、thirds complete,with the process plant,the critical path facility,67%constructed.All major mechanical equipment is installed and construction of non-process infrastructure is proceeding well.Total capital expended to year-end was US$83 million.EM management estimates that capital expenditures may in
243、crease by approximately 15%from the initial capital budget of US$100M due to inflation,the impact of weather and logistical delays and scope changes and is working with Engineering,Procurement and Construction(“EPC”)contractors to confirm the impact;however,no further equity funding is expected from
244、 Erdene or MMC for BK.While EM is focused on advancing BK to first gold,exploration has continued to assess expansion potential at Bayan Khundii and further define priority targets in the Greater Dark Horse area.Exploration in Q3 2024 adjacent to the planned Bayan Khundii open pit returned the highe
245、st-grade mineralization in areas adjacent to the deposit.Ore control drilling was conducted in late 2024,with results received subsequent to year-end.This drilling confirmed mineralization in previously defined blocks;however,drilling in 10 areas intersected mineralization that has the potential to
246、extend ore blocks.A further 100+holes are planned to verify these newly identified areas.Drill results will be incorporated into an updated mine plan in 2025.Concurrently,Erdene is progressing its ZM project,one of Asias largest undeveloped molybdenum-copper deposits.In 2023 the Company completed a
247、4,100-metre drill program,where multiple drill holes along the current resource boundary expanded mineralization.Additionally,the discovery of resource-grade mineralization in an exploration hole 1.7 kilometres north of the deposit demonstrates the upside of this large porphyry complex,which remains
248、 open in all directions.Surface sampling work in mid-2024 identified a new gold prospect on the license,4.5 kilometres west of the Zuun Mod molybdenum-copper deposit.Furthermore,Erdene sees the potential to increase resources through the acquisition of licenses in the KMD.The district hosts the full
249、 spectrum of arc-related base and precious metal systems,including copper-molybdenum porphyries,intermediate sulphidation/carbonate base-metal gold deposits,and low sulphidation epithermal gold and gold-silver systems.As the longest established Company operating in southwest Mongolia,Erdene is well
250、positioned to expand its license portfolio in Mongolia.Erdene Resource Development Corp.|Managements Discussion and Analysis|4 Highlights and Significant Subsequent Events Bayan Khundii Gold Project Announced formal construction decision for Bayan Khundii on January 15,2024 o Awarded the Projects En
251、gineering,Procurement and Construction(“EPC”)services contract to MCS Property LLC(“MCSP”),a leading Mongolian construction firm o Entered a power purchase agreement(“PPA”)for the construction of an overhead transmission line with MCS International LLC(“MCSI”),one of Mongolias leading private energy
252、 companies Achieved approximately 66%construction progress by December 31,2024 o Incurred US$83 million of expenditures to the end of Q4 2024 potential cost increases due to logistical and weather delays and scope changes are expected to be within available funding o Process plant,the critical path
253、facility,was 67%complete at year end,with concrete and structural substantially completed and all major equipment in place o Construction progress for non-process buildings was 60%,infrastructure facilities were 80%,and power supply was 52%,largely consistent with schedule o Commissioning of the int
254、egrated mineral waste facility was completed in Q4 2024 with the balance of the facilities planned progressively throughout Q1 and Q2 2025 o Construction expected to be largely complete in May 2025 to allow commissioning of the process facilities in Q2 2025 and first gold production in Q3 2025 Deliv
255、ered on community development and local employment stakeholder programs o Local Cooperation Agreement for 2024 implemented supporting local development programs o Recruitment and training of Bayan Khundii mine workforce continued with eighth cohort of local residents selected for equipment operator
256、training at MMCs UHG mine,for a cumulative total of over 160 people undertaking the training o Company supported installation and improvement of three rural water wells to increase water availability for residents Khundii Minerals District Exploration Conducted 15,000 metre Bayan Khundii ore-control
257、 drill program o Drilled 89 shallow diamond drill holes totaling 1,048 metres in Q3 2024,focused on near-surface high-grade zones,scheduled to be developed in the first 3-4 months of mining and a further 10 holes totaling 456 metres to assist with future mine planning o Second phase of the program i
258、n Q4 2024 consisting of 106 diamond core holes totaling 1,168 metres and 812 reverse circulation holes for 12,273 metres for which results were received subsequent to year end o Results confirmed high-grade domains in the current block model and indicated areas of expansion with highlight intersecti
259、ons of 101.0 g/t gold over 4 metres,starting 7 metres downhole(BKGC-58)and 115.1 g/t gold over 4 metres from 11 metres(BKGC-286)Completed 950 metre Bayan Khundii expansion program on the periphery of the planned open pit o Drilling intersected gold mineralization in all holes,demonstrating the poten
260、tial for resource growth and pit extension o Results included the highest-grade drilling results to date in Striker West,adjacent to the Bayan Khundii open-pit,including 7.3 g/t gold over 42 metres,with multiple high-grade metre intersections of 15 to 79 g/t gold(BKD-377)Conducted surface sampling p
261、rogram at the Greater Dark Horse area and at Zuun Mod o Multiple samples from Greater Dark Horse returned high grade gold(up to 37.7 g/t Au)and silver(over 100 g/t Ag),providing targets for follow-up drilling o Discovered new gold prospect 4.5 km west of the Zuun Mod molybdenum-copper deposit Added
262、Kelly Cluer as Technical Advisor to assist exploration team o Brings more than 30 years experience including over a decade in Mongolia where he led the discovery and definition of two of the Countrys largest gold deposits Erdene Resource Development Corp.|Managements Discussion and Analysis|5 Corpor
263、ate Closed strategic alliance with MMC on January 23,2024 o MMC invested US$40 million for a 50%equity interest in EM,the company holding the BK Project o Erdene retains a 50%equity interest in EM as well as a 5%NSR royalty on production from the Khundii District after the first 400,000 ounces of go
264、ld production and 100%interest in Zuun Mod Secured BK Project Finance from strategic partner MMC o Up to US$80 million shareholder loan to EM,the entity co-owned by Erdene and MMC o Five-year bullet maturity,bearing interest at 13.8%per annum,payable in arrears o Secured by Erdenes interests in EM a
265、nd preferential rights over Erdenes properties Obtained US$50 million financing for BK from Trade and Development Bank of Mongolia o 24-month term and repayable in equal monthly payments during the final six months of the loan o Facility bears interest at 13.3%per annum and is secured by BKs process
266、 plant assets Recorded net loss of$8,245,886 for the year ended December 31,2024,compared to net income of$522,043 for the year ended December 31,2023 o Exploration and evaluation expenses totaled$1,852,642 for the year ended December 31,2024,compared to$847,010 in 2023,as certain salaries,consultan
267、t costs,and travel expenditures historically incurred by the associate Erdene Mongol were incurred directly following the close of the Strategic Alliance o Corporate and administrative expenses totaled$5,043,058 for the year ended December 31,2024,compared to$3,137,735 for the year ended December 31
268、,2023,with the year-on-year change primarily due to the write-off of previously deferred project finance and other arrangement costs following the termination of project finance diligence due to the Bayan Khundii shareholder loan with MMC,as well as the accrual of first gold bonuses for senior staff
269、 in the current year,and cost of living salary increases o Loss from investment in associate of$3,245,109 for the year ended December 31,2024,compared to$2,278,370 in the prior year due to an increase in non-capitalized interest expenditures by EM following the February 2024 financing partially offs
270、et by Erdenes change in ownership following the close of the Strategic Alliance in Q1 2024 o Non-cash gain on dilution of$1,256,598 in the year ended December 31,2024 due to the close of the Strategic Alliance with MMC,compared to a gain on loss of control of EM of$6,544,863 upon the signing of the
271、Strategic Alliance with MMC in January 2023 Strategy and Outlook Erdene is focused on the discovery and development of precious and industrial metal deposits in the KMD.Erdenes two strategic priorities are advancing BK to production through its strategic partnership with MMC,and through exploration
272、and acquisition,expanding and subsequently developing other deposits in the KMD.In January 2024,the Company closed the Strategic Alliance with MMC to develop BK.MMC is the largest private producer and exporter of high-quality washed hard coking coal in Mongolia.MMC owns and operates the Ukhaa Khudag
273、 and the Baruun Naran open pit coking coal mines,both located in Umnugovi Aimag(South Gobi Province),Mongolia.The shares of MMC are listed on the Hong Kong Stock Exchange(HKEx:0975),and the company has a market capitalization of approximately US$1 billion.MMCs largest beneficial shareholder is MCS G
274、roup,one of Mongolias leading conglomerates.MCS has operated in Mongolia for over 30 years,and has operations in engineering and construction,energy,communications,property,mining,consumer goods,health,and hospitality.MCS employs approximately 13,000 staff in Mongolia and is one of the Countrys larg
275、est private taxpayers.Erdenes exploration and pre-development capabilities,MMCs mining and operational expertise and the ability of MCS Group companies to provide complimentary engineering,infrastructure and energy solutions creates the ideal platform to develop Bayan Khundii for the benefit of all
276、stakeholders.Erdene and MMC reached a formal construction decision for Bayan Khundii in early 2024.An Engineering,Procurement and Construction contract is in place with MCS Properties,and the Projects Power Purchase Agreement has been executed with MCS International,one of Mongolias leading private
277、energy Erdene Resource Development Corp.|Managements Discussion and Analysis|6 companies.Construction is progressing well with approximately 650 contractors and staff on site.Construction is progressing largely to schedule,though logistical delays due to border congestion,increased competition for l
278、abour and extreme weather events(e.g.heavy rains,higher than normal temperatures)have been encountered.Construction is expected to be completed in Q2-2025 and first gold is scheduled for Q3-2025.Exploration suggests the greater Khundii-Ulaan alteration zone,including the BK Deposit,Dark Horse prospe
279、ct and Ulaan,are part of the same,large,gold-bearing hydrothermal system,that shows the potential to host a multimillion-ounce gold deposit.During Q3 2024,a six-hole diamond drilling program,totaling 950 metres,was completed to test the potential for expansion of near-pit resources to the west and n
280、orth of the planned Bayan Khundii open-pit.All holes intersected gold mineralization,including the highest-grade results to date for an area west of the planned Bayan Khundii Open Pit,known as Striker West.Intersections included 7.3 g/t gold over 42 metres,with multiple high-grade intervals of 15 to
281、 79 g/t gold over a metre(hole BKD-377).A second hole,approximately 110 metres north,(BKD-378),also returned excellent results outside the current open-pit resource boundary,including 22 metres of 6.1 g/t gold starting at a depth of 178 metres.A hole at the northern end of the pit(BKD-381)intersecte
282、d ore grade mineralization continuing north and beginning at a shallower depth than the reserve model,with 4.1 g/t gold over 54 metres,including metre intervals of 16.9,56.8,78.1 and 11.1 g/t gold.Additionally,recent exploration at the Greater Dark Horse and Ulaan prospects provided new targets for
283、follow-up.In 2023,Erdene completed a 4,100-metre drill program at its ZM project,one of Asias largest undeveloped molybdenum-copper deposits,successfully expanding mineralization.Along with additional exploration,Erdene will complete further market,technical and economic studies as well as permittin
284、g work in the coming months to build upon the conceptual assessment completed by RPMGlobal(formally Minarco-Mine Consult).Beyond the ZM Deposit,the broader license hosts several high-potential copper and molybdenum prospects.The northern portion of the ZM porphyry complex hosts a large area of disse
285、minated copper mineralization within several kilometres of phyllic and potassic altered quartz monzonite and granodiorite intrusives.Multiple copper mineralized zones have been intersected in wide-spaced drilling,including 34 metres of 1.3%copper and 9.24 g/t silver from 308 to 342 metres(hole ZMD-1
286、21).The large ZM porphyry complex remains largely untested and management sees several potential areas for resource expansion and discovery across the license.Furthermore,surface sampling work in mid-2024 identified a gold prospect on this license,4.5 kilometres west of the molybdenum-copper deposit
287、.Erdene continues to evaluate acquisition opportunities throughout the KMD.Over the past decade Erdene has developed the largest proprietary geologic database of Southwest Mongolias mineralization that has led to the identification of more than 20 high-priority targets for acquisition,and the Compan
288、y will be an active participant in license tenders in the KMD.Additionally,the Company will selectively evaluate precious and industrial metals opportunities in other parts of the country where the Companys historical work has demonstrated prospectivity.Bayan Khundii Project Development and Construc
289、tion Update EM announced the construction decision for Bayan Khundii in January 2024 following the completion of early works in late 2023.Subsequently,mobilization for full construction began in February 2024.At year end,there were 430 staff and contractors on site.In October 2024,the Project record
290、ed its first lost time incident,resulting in an annual total recordable injury frequency rate of 0.6 per 200,000 person hours for 2024.Zero reportable environmental incidents have occurred at the Project to date.Environmental management efforts remain focused on mitigating adverse impacts and advanc
291、ing environmental protection activities,such as targeted dust suppression on access roads and endemic plant vegetation trials at the two-hectare greenhouse facility on site.Schedule and Budget At the end of 2024,approximately 66%of total construction was complete,including 67%progress for the proces
292、s plant,the critical path facility for the Bayan Khundii Gold Project.Construction completion dates for most facilities are scheduled for Q1 and early Q2 2025.Process plant commissioning is expected to commence in May 2025,with first gold production scheduled in Q3 2025.Project expenditures to Decem
293、ber 31,2024 were approximately US$83 million compared to the Feasibility Study(2023)budget of US$100 million.Management estimates that capital expenditures may increase by approximately 15%from the initial construction budget due to inflation,the impact of weather and logistical delays and minor sco
294、pe changes.However,EMs current finances,including the working capital facility Erdene Resource Development Corp.|Managements Discussion and Analysis|7 secured from the Trade and Development Bank of Mongolia in December 2024,are expected to fully fund construction and project commissioning without fu
295、rther equity contributions from shareholders.Process Plant Earthworks and excavation for the process plant,including the grinding and crushing circuit,were completed during the early works phase in 2023 and excavation of crushed ore conveyor foundations was started in the first quarter of 2024.Reinf
296、orced concrete works for the process plant were substantially complete as of December 31,2024,with over 16,000 m3 of concrete poured in total.Structural steel and tank material deliveries began in Q1 2024,and in March 2024,structural steel installation commenced at the main process plant building.As
297、 of December 31,2024,over 90%of structural steel was installed.Tank installation continued,with effective completion of the leach area,CIP and tailings dewatering over 60%,and work started in all remaining areas.Mechanical installation of the SAG and Ball mills was substantially completed in Q3 2024
298、.Thickeners installation reached over 90%this quarter,in line with schedule.Installation was at 30%for crushers,and pressure filters reached 50%completion.Architectural,piping,and electrical installation progress at the process plant continued in accordance with schedule,reaching 16%,6%,and 15%respe
299、ctively at year-end.Non-process Infrastructure Bulk earth works and excavation for key non-process facilities were completed by end of Q1 2024.Concrete works were completed for the assay laboratory,warehouse,security guard house,and administration office by Q3 2024,and structural installation for th
300、ese facilities was complete at the end of the fourth quarter.The permanent camp,workshop,chemicals storage,water supply system and utilities reticulation works began in Q2 2024,with overall progress for these facilities reaching at least 43%at quarters end.Architectural,piping,HVAC,and electrical wo
301、rks continued on the most advanced non-process facilities this quarter.Power supply installation work continued to progress according to schedule,with 52%completion by end of quarter,in line with scheduled commissioning in Q2 2025.Mining To date,approximately 35,000 tonnes of overburden have been re
302、moved from the Bayan Khundii pit for construction purposes.No mining activities occurred during Q4 2024.Construction material excavation and handling are conducted by the relevant construction contractors.Works commenced in Q3 2024 to establish the Projects integrated mineral waste facility(“IWF”).T
303、he IWF will store dry cake tailings(with a final target moisture content of 15%)within lined cells at the core of a waste rock structure.The IWF will be constructed in three stages,with the initial stage of development sized to provide capacity for at least 12 months of tailings production.The first
304、 stage IWF was commissioned in December 2024.Construction Permitting All major permits required for construction have been received,including the statutory feasibility,environmental assessment,land and water permissions.Design and construction permits have been received for all necessary facilities,
305、including the process plant and key non-process infrastructure.Statutory commissioning of the mine will take place in three stages,covering technical construction completion,mine site operations,and processing and chemicals permitting.Construction commissioning is planned in batches,as facilities re
306、ach completion and pass inspection and testing requirements.Project commissioning activities started in late Q4 2024 and are planned to continue through until mid-Q2 2025 ahead of the targeted first gold production in Q3 2025.Human Resources At the end of the fourth quarter,430 people were employed
307、at the project site,including contractors.Approximately 30%of site personnel were residents of Bayankhongor province,a significant portion of whom reside in Shinejinst,the closest settlement to the Bayan Khundii Project.Of the Projects total employees and contractor personnel,approximately 15%were f
308、emale.Community Programs Beyond the Projects employment at site,the company has supported equipment operator training for residents of Bayankhongor Province through a partnership with MMC.To date,over 160 people completed the training,and 90 percent of trainees received offers of full-time employmen
309、t at MMCs Ukhaa Hudag mining complex and are expected to be deployed to work at the Bayan Khundii mine for the start of mine Erdene Resource Development Corp.|Managements Discussion and Analysis|8 operations planned in Q2 2025.At least two additional operator trainings are planned in 2025,with a tar
310、get of at least 200 people completing the training.The Company executed a Local Cooperation Agreement(“LCA”)with the Provincial and Sub-Provincial governments that host the Bayan Khundii project as well as the companys other projects in Bayankhongor.Under this agreement,the Company provided approxim
311、ately US$450,000 of funding in 2024 for local development programs focused on public infrastructure,education and health.Additionally,EM is conducting community development programs focused on small and medium-sized entities through a low interest commercial loan program,local procurement,supporting
312、 public health services,youth education support,and support for agricultural communities,including installation and improvement of three community-designated rural water wells in the sub-province to increase water availability for local residents.Development and Exploration Projects NI 43-101 Techni
313、cal Reports Resources and Reserves On September 15,2018,the Company announced a resource estimate for the Bayan Khundii and Altan Nar deposits.Since this date,the Company has commissioned progressive technical reports,prepared to the standards defined by National Instrument 43-101 Standards of Discl
314、osure for Mineral Projects(NI 43-101)for its Bayan Khundii Gold Project.Most recently,on September 25,2023,the Company filed the Technical Report entitled“Bayan Khundii Gold Project,Feasibility Study Update,NI 43-101 Technical Report”with an effective date of August 15,2023.Apart from Altan Nar,Dark
315、 Horse and Zuun Mod,the Companys other targets are early stage and do not contain any mineral resource estimates as defined by NI 43-101.Except for those deposits already delineated,potential quantities and grades disclosed in this MD&A are conceptual in nature,and there has been insufficient explor
316、ation to define a mineral resource estimate for other targets disclosed herein.It is uncertain if further exploration will result in these targets being delineated as a mineral resource.Additional information about our projects is also summarized in our AIF and the respective NI 43-101 Technical Rep
317、orts and can be viewed under the Companys issuer profile on SEDAR+at www.sedarplus.ca.Khundii Minerals District The Khundii Minerals District includes EMs high-grade,near-surface Bayan Khundii,Dark Horse Mane and Altan Nar deposits,Ulaan SE and Greater Dark Horse prospects and Erdenes Zuun Mod Molyb
318、denum-Copper resource.The Bayan Khundii Gold Project is located on the 2,309-hectare Khundii mining license held by EM.The Khundii mining license includes the Bayan Khundii and Dark Horse mineral resources and reserves reported in“Bayan Khundii Gold Project,Feasibility Study Update,NI 43-101 Technic
319、al Report”.Erdene Resource Development Corp.|Managements Discussion and Analysis|9 Bayan Khundii Gold Project On August 15,2023,Erdene announced the results of an updated independent Bankable Feasibility Study for the Bayan Khundii Gold Project.The report,titled“Bayan Khundii Gold Project Feasibilit
320、y Study Update,NI 43-101 Technical Report”,dated September 25,2023,and with an effective date of August 15,2023,was prepared by international and Mongolian firms with significant experience operating in Mongolia.The study incorporates detailed mine design and scheduling,front-end engineering and des
321、ign for the processing plant and site infrastructure,a hydrogeological assessment,mineral waste facility design,comprehensive capital and operating cost estimation,and an updated economic model.The 2023 FS envisions a high-grade,open pit mine beginning at surface in the southern portion of the BK de
322、posit(Striker and Gold Hill),expanding northward into adjacent zones at Midfield and North Midfield.The Dark Horse deposit will commence mining concurrently with BK from the third year of operations.The Project incorporates conventional crushing and grinding,leach and a Carbon in Pulp plant with pro
323、cessing capacity of 1,950 tonnes per day.The 2023 FS includes 4.0 million mineable tonnes from the BK resource at an average diluted head grade of 4.0 g/t gold,all of which are Proven and Probable Reserves.The 2023 FS is based on an open-pit mining operation targeting 650,000 tonnes per year of feed
324、 material for the processing plant.The total mineable mineralized plant feed is 4.0 million tonnes at an average diluted head grade of 4.0 g/t gold and average strip ratio of 10.9:1(waste tonne:plant feed tonne).Mineralization starts at surface,with the majority of the deposit contained within the t
325、op 100 metres.The deposit structure,grades and depth suggest selective open cut mining will be utilized.Mining will use hydraulic excavators in backhoe configuration.Drilled and blasted material will be loaded into haul trucks,with waste rock deposited in an engineered Integrated Waste Facility(“IWF
326、”)adjacent to the pit,and ore hauled to a crusher or run-of-mine(“ROM”)pad adjacent to the processing plant.As part of the 2023 FS,an updated BK Gold Deposit Mineral Resource Estimate(“BK Mineral Resource”)was prepared in accordance with NI 43-101 and CIM standards by AGP Mining Consultants Inc.(“AG
327、P”)with an effective date of April 20,2023.The BK Mineral Resource was prepared by Paul Daigle,P.Geo.,who is a qualified person(“QP”)as defined by NI 43-101.The Mineral Resource has been constrained to a conceptual pit shell and is reported at a cut-off grade of 0.40 g/t gold.The assumptions and par
328、ameters utilized to establish the cut-off grade and pit shell are reported below in notes to the resource table.BK Gold Deposit Mineral Resource Estimate Summary,April 2023 Resource Classification Quantity(Mt)Gold Grade(Au g/t)Ounces Gold(Koz)Silver Grade(Ag g/t)Ounces Silver(Koz)Measured 4.0 3.03 3
329、94 1.44 187 Indicated 3.3 2.04 219 1.22 131 M&I 7.4 2.58 613 1.34 319 Inferred 0.2 1.08 6 1.32 8 Notes:1.Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.2.Summation errors may occur due to rounding.3.The effective date of the Mineral Resources is April 20,
330、2023.4.Open pit mineral resources are reported within an optimized constraining shell.5.Open pit cut-off grade is 0.4 g/t Au based on the following parameters:Gold Price of US$2,000/oz Au Gold recovery of 95%Mining Costs of US$3.00/t Milling Costs and G&A of US$22.00/t Capping of gold grades was 200
331、 g/t Au and 50 g/t Ag on 1m composite values.The density varies between 2.58 g/cm3 and 2.66 g/cm3 depending on lithology.Dark Horse Mane Mineral Resource Estimate As part of the 2023 FS,the Company reported the maiden mineral resource estimate for the Dark Horse Mane Gold Deposit(“Dark Horse Mineral
332、 Resource”)discovered in 2021 and located just two kilometres north of the BK Gold Deposit.The Dark Horse Mineral Resource was prepared in accordance with NI 43-101 and CIM standards by RPM Global(“RPM”)with an effective date of November 1,2022.The Dark Horse Mineral Resource is reported above a gol
333、d cut-off grade of 0.35 g/t gold for oxide and transition mineralization and 1.02 g/t gold for fresh mineralization.The Mineral Resource has been constrained to a conceptual pit shell.The assumptions and parameters utilized to establish the cut-off grade and pit shell are reported below in notes to the resource table.Erdene Resource Development Corp.|Managements Discussion and Analysis|10 Dark Hor
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