Erdene Resource Development Corporation

Thank you for standing by. This is the conference operator. Welcome to the Ardene Resource Development Second Quarter 2026 Financial and Operating Results Conference Call Webcast. As a reminder, all participants on the telephone are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then zero. Participants on the webcast may type in their questions in the chat feature of the webcast. Now, let me hand the call over to John Vincic.

Thank you, operator, and hello, everyone, and thank you for joining our call today. A few housekeeping items to note. The accompanying presentation for today's call is available for download from the company's website at www.erdene.com. The press release, financial statements, and MD&A related to this quarter are all posted on Erdene's website and on CEDAR+. I'll point out that management's remarks on the Buyanhandi Gold Mine's operating performance are at the Erdene-Mongol level, a 50-50 joint venture between Erdene and Mongolian Mining Corporation. It is also important to note that this conference call contains forward-looking information that is based on the company's current expectations, estimates, and beliefs. It may also use terms that are non-IFRS performance measures. Please review Erdene's latest disclosure materials, including the company's most recent annual information form, for the risks associated with this forward-looking information and the use of non-IFRS performance measures. Please note that all dollar amounts mentioned on today's call are in Canadian dollars unless otherwise noted. Today's speakers from Erdene are Peter Akerly, President and Chief Executive Officer, and Robert Jenkins, Chief Financial Officer. Peter, please go ahead.

Thanks, John, and hello, everyone. Thank you for joining us today. Erdene Resource Development is an emerging minerals producer. focused on developing a multi-mine, multi-commodity business in the Hyundai Minerals District of Southwestern Mongolia. We've established a foundation for that development by advancing the high-grade gold mine at Bayan Hyundai to commercial production earlier this year. From this initial open pit, we see great potential for continued growth through mine life extension and expansion, which I'll share with you on today's call. Given our more than 20-year exploration history and development track record in the country, we are confident of the value we can deliver to all stakeholders through the continued development of the Hyundai Minerals District. Let me now share with you the highlights of our operating results for Q2 2026, as well as an overview of our growth plans for the balance of the year. We delivered strong performance in the second quarter, growing production and improving mining performance at the Buy and Hyundai Goldmine. co-owned with our strategic partner, Mongolia Mining Corporation. As you can see on slide five, the mine produced nearly 12,000 ounces of gold in the second quarter, a 37% increase compared to Q1, 2026. Ore feed grades were 2.4 grams per ton, a 25% improvement from Q1, largely due to the team's focused on improved mining efficiency, which I'll describe in more detail on the coming slides. We continue to make tremendous progress as we work towards a fee grade of 3.5 grams per ton by year end. The process plant has performed very well to date, operating at expected throughput and outperforming on gold recoveries. The joint venture company is generating strong operating cash flow, allowing for its first debt repayment in the past few weeks, and we have ample liquidity at the corporate level following our $29 million financing in Q1. At ZoonMod, our large-scale molybdenum copper project, we remain on track to deliver a preliminary economic assessment in the next 60 days, which we expect to showcase the scale and economic potential of this asset. The broader molybdenum market is very robust, underpinned by strong demand and growth fundamentals. To that end, we have received off-take interest from several Asian counterparties, demonstrating the attractiveness of our project. given its proximity to key markets with growing demand. On the growth side, the Hyundai Minerals District remains early in its discovery life. Our exploration and development teams are working on several opportunities to expand resources that could support mine life extensions and plant expansions. I'll share those with you as we continue through today's presentation. As shown on slide six, total plant throughput was 153,000 tons of ore at an average rate of 1,682 tons per day, or 94% of capacity during the second quarter. Gold recoveries have remained consistent every quarter at 96% since first production, and in excess of our target of 93%. In total, Buy & Hyundai produced 11,709 ounces of gold, 37% more than previous quarter, Since first gold was poured in September 2025, we have produced nearly 28,000 ounces of gold. Silver production in Q2 was just over 3,300 ounces, largely consistent with the prior quarter. Average realized prices were $4,493 per ounce of gold and $72 per ounce of silver. Turning to slide seven, in Q2, the mining team moved 3.8 million tons of material. 19% more than in Q1, mining 247,000 tons of ore at an average grade of 1.4 grams per ton, a 59% increase in ore volume compared to Q1. This is a result of multiple improvements across the mining effort, increasing experience in high-grade selective gold mining, greater precision in defining and mining the high-grade zones, improved blasting techniques and program design, and ore tracking using high-precision GPS. have all led to improved efficiency and less dilution and loss. The front-end mobile crusher is now operating consistently, which has reduced stockpiling of oversized material containing relatively higher-grade ore. Additionally, during the quarter and continuing into July, we continue to expand the pit laterally, generating low- to mid-grade material to position us to drive into higher-grade zones and achieve target head grades of 3.5 grams per ton by year-end. which should result in increased metal production and lower unit costs. At June 30, 2026, the mining fleet consisted of 18 dump trucks, 5 excavators, 3 dozers, and associated support equipment. While we are very pleased with the recent improvements in mining performance, we are also pursuing resource expansion opportunities near the mine. As seen on slide 8, Our immediate focus is two areas adjacent to the Bayan Hyundai mine, Hyundai West, including Ulan and Dark Horse. Both have seen limited deep or expansion drilling, given our focus over the past few years on mine construction. They are part of the same Bayan Hyundai hydrothermal system and are expected to add ounces that will support mine life extension and potentially capacity expansion of the Bayan Hyundai plant complex. At Dark Horse, we will be testing along the three-kilometer strike length to expand the near-surface oxide resource for both CIP and possibly heap leach processing. Hyundai West provides substantial upside to expand Bayan Hyundai pit westward, laying the groundwork for a much larger pit. Initially, the pit will expand west from Bayan Hyundai, and in the future, potentially incorporate both the Herr & Saab and Ulan resources, subject to agreement with Erdnuss Alt, the entity that holds the narrow triangle of ground between the Hyundai and Ulan licenses. A 12,000-meter exploration program has been approved for the second half of 2026 that will focus on these targets. I'll now share with you some of the details of this program. On slide nine, you can see a plan map on the left of the Bayan Hyundai deposit expanding into Stryker West and a section through that area on the right. The Stryker West resource is now incorporated into a planned development by virtue of a revised pit reflecting current gold price. However, this area has seen limited closed space or expansion drilling, as can be seen in the section. The highlighted boxes are substantial mineralized zones, as reported in the table, and include significant zones outside of the defined resource and also the highest grade zone reported in the area, including intersections of 22 meters of 6 and 42 meters of 7, respectively. A 9,000-meter drill program will commence in the coming weeks to provide the information necessary to improve confidence in the continuity of the high-grade zones and, in some instances, to bring new material into resources and reserves. This program will allow for the development of final plans and design for the Stryker West expansion later in the development of the Bayanhande mine. Discussions are also underway with Erdniss Alt, the Mongolian state-owned company that holds the narrow strip of land between the two licenses. focused on incorporating the resources of the Her and Saab license into a potential collaborative super pit. That development would drive into deeper resources than the current design in Stryker West, and the western extension of that pit would cross into our Ulan license, where we currently have a reported resource of 78,000 ounces of indicated and 38,000 ounces of inferred at a grade of 1.9 grams per ton at the 0.7 cutoff, with room for further expansion. As shown on slide 10, just 2.5 kilometers north of Bayan Hyundai is the Dark Horse area, host to the Dark Horse South Satellite Reserve, which currently hosts a 50,000-ounce high-grade gold deposit at surface. This deposit is positioned within a 3-kilometer mineralized trend with multiple adjacent gold mineralized structures exposed at surface, providing exceptional exploration potential, as highlighted in our March update and displayed on this slide. Highlights from that drilling included very high-grade near-surface intercepts of 9.6 grams per ton over 19 meters and 28.7 grams per ton over 3 meters in areas expanding the limits of the resource. Grade-controlled drilling is underway at Dark Horse South, supporting mine plants to bring this high-grade satellite deposit into the mill feed in H2 2027, ahead of the original year 3 sequencing in 2028. The addition of this very high-grade satellite deposit will provide the ability to deliver higher grades to the BK plant in 2027. At Dark Horse North, 500 meters north of the plant, Dark Horse Pit, the mineralized area spans 700 meters of strike length, with oxide material extending to 100 meters depth and hosting both high-grade materials suitable for the CIP plant, but also a substantial volume of lower-grade oxide material that appears amenable for feed to a potential heat bleach development. Continuing northeast of Dark Horse, the mineralized structure has been traced over an additional 1.7 kilometers at Alton Arrow. This area and adjacent structures to the south will be subject to a 3,000-meter drill program later this year, as shown on the plan map on slide 10. Alton Arrow is at an earlier stage of exploration. However, the gold and silver-bearing shallow oxide zones are very encouraging, and it could provide additional resources to support the heat bleach facility. Composites from Dark Horse are undergoing heap leach amenability testing at Blue Coast Research in British Columbia, with initial results indicating good recoveries to support the heap leach facility. The greater Dark Horse area is a large underexplored portion of the BK complex that provides exceptional potential to continue to add ounces, extending mine life at the BK CIP plant, as well as a very real opportunity to expand production through the addition of a heap leach facility. We have established cornerstone open pit reserves at Bayan-Hundi and Dark Horse to support the initial mining period. And we have the related infrastructure to support an extension and expansion of the Bayan-Hundi complex. With 10 kilometers of interconnected structures already mapped, the Bayan-Hundi epithermal system is still in its exploratory life with excellent growth potential. As seen on slide 11, I'd also like to remind everyone of the potential and plans for the Altanar deposit. located just 16 kilometers north of Bayan Hyundai. The deposit hosts an indicated resource of 313,000 ounces at 2.16 grams per ton gold and 15.7 grams per ton silver, plus a further 210,000 ounces of inferred resources. What makes this deposit particularly attractive is how shallow it is. Roughly 90% of the resource sits within 150 meters of surface and it remains open at depth. This gives us development flexibility. We can truck selected ore to our existing plant at Bayan Hyundai, build a flotation plant on site to produce a concentrate, or some combination of the two. And with about 14% of the gold inventory at Altenaer hosted in oxides, it's also a potential feed source for a proposed heap leach operation at Bayan Hyundai. But the real story here is growth. Today's resource is confined to just two zones, Union North and Discovery. with a mineralized corridor that runs five and a half kilometers long and a half kilometer wide with more than 20 targets identified along trend. The corridor has seen no expiration in the past several years given our focus on Bayan Hyundai. Our 2026 metallurgical program is now complete with excellent results and we have an AI based evaluation of the property underway with planning for a large scale expiration program to be carried out in 2027. Altanar provides opportunity to expand existing resources and the optionality to develop a deposit that feeds high-grade material into an expanding gravity circuit at the Bayan Hyundai plant, complementing the existing CIP plant and possible new heat bleach plant. Taking into consideration the impact of higher metal prices, depletion of the Bayan Hyundai pit in the first year, and recent drill results from Dark Horse, we recently updated the mineral resource estimates for the gold projects held by Arden Mongold within the Hyundai Minerals District, which includes the Buy and Hyundai Deposit, Dark Horse Deposit, Soulan, and Altonar, as shown on slide 12. Considering that the operating cutoff grade for the Buy and Hyundai plant is in the range of 0.7 grams per ton, it's most useful to look at the resources at that cutoff and consider the remaining low grade as stockpiled for future blending or as a potential feed for a heat bleach facility. The table displayed summarizes the updated gold resources for the Erd and Mongol deposits. It's important to recognize that while the Bayan Hyundai and Dark Horse resources utilize actual cost, the other deposits will not translate to reserves equally. However, it provides a useful snapshot of the potential for mine life extension at Bayan Hyundai. The global resource includes 835,000 ounces at 2.9 grams per ton and 9 grams per ton silver in the measured and indicated categories. with a further 265,000 ounces at 1.5 grams per ton inferred. We believe this strongly supports the ability to extend production life to an excess of 10 years. Beyond that, we have room for increased production through three key expansion paths, the CIP plant optimization, adding a gravity circuit, and potentially introducing heat bleach processing as we continue to grow resources in the region. For 2026, we are targeting approximately 50,000 ounces of gold. Looking ahead, our objective is to reach the 3.5 gram per ton processing grade target by year end and continue that into 2027, with grade enhancement brought into the mix with the development of dark horse. It's also important to note that Erdene holds a 5% NSR on all minerals produced from our licenses in the Hyundai Minerals Districts once we reach 400,000 ounces of production. In September, our three large mineralized deposits and associated prospects in the Hyundai Minerals District will be the subject of a Hyundai Geosymposium, which we are hosting in collaboration with the Canadian government in Mongolia. We are bringing together global experts and expect to generate new ideas and exploration approaches for the exploration of the district. We're confident that the exploration opportunities in the Bayan-Hyundai, Dark Horse and Altanar areas, combined with our history of exploration success in the region, support delivery of these ambitious but achievable goals. We see the Bayan Hande Complex as the foundation for further discoveries in this vast and underexplored region, positioning it to underpin the long-term growth of our business. Now, let me turn to Erdene's controlled exploration and development projects, in particular, the giant Zunmad molybdenum copper project. As shown on slide 13, Zunmad is one of Asia's largest undeveloped molybdenum copper deposits. located just 200 kilometers from China, the world's largest consumer of both of these critical metals. The deposit is exposed at surface and hosted within a much larger copper porphyry system. We envision a low-strip, large-scale open-pit operation delivering molybdenum copper concentrates to the Asian market and one that can leverage the infrastructure we've already established in the Hyundai Minerals District. Against that backdrop, We are well advanced on the preliminary economic assessment. Mineral resources, mining, metallurgy, and marketing studies are substantially complete, with process engineering, power, infrastructure, and modeling work underway. We expect to deliver the PEA in mid-H2. We see this study as a major opportunity to surface the value of ZoonMod for Erdene shareholders. As shown on slide 14, ZoonMod looks set to come online in an environment of tight supply and increasing demand. Given molybdenum's use in specialty steels for energy, defense, and construction, and emerging use cases in the computer chip industry, including tungsten replacement, prices have increased significantly over the past two years and have stabilized above US$30 a pound over the past six months. At this price level, Zumad is a very attractive project, further supported by its location only 200 kilometers from the world's largest molybdenum consumer. The timing is compelling, several of China's Mali mines are approaching end of life, and the resulting supply deficit, combined with growing demand, is supporting historically strong molybdenum prices. The other projects in our portfolio include the Houvenhaar Copper Prospect and the Terigul Property in the Ouyutogoy District. Houvenhaar, 4.5 km northwest of the Zunmad Project, is a high-grade copper discovery. We have engaged Quantec Geoscience, a global leader in geophysics, to conduct an extensive survey starting in late Q3 that will provide deeper targets for follow-up as we seek to build on the intersection of the 30 meters of 1.25% copper we reported earlier this year. At Tarigul, just 10 kilometers from the Oyotogoy mine, which is on track to be the fourth largest globally by the end of the decade, we recently wrapped up our Maiden Drill Program. This 11-hole, 2,700-meter program was a success, with eight of nine shallow holes at the web prospect intersecting gold mineralization, outlining a 1.5-kilometer trend, and a deeper hole in the central part of the license intersecting native copper in a propolytic alteration zone. On the basis of these results, Erdene extended its option to acquire up to 80% of the license for another year in July. While these projects are at an earlier stage, they have tremendous value creation potential for adene shareholders. In summary, the Bayan-Hundi Complex is our foundation, but the vast exploration pipeline in the Hundi Minerals District is our future. Expansion of the gold exploration targets held by Erd and Mongol, and advancing our Zunmad, Huwenhar, and Teragul projects provide significant opportunities for mine life extension and optimization, along with new discoveries that would create sustained value for our shareholders. Now I'd like to turn the call over to Bob to provide financial highlights for the quarter. Bob?