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 SEDAR+.

I'll point out that management's remarks on the Bayan Khundii 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 Akerley, 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 Khundii Minerals District of Southwestern Mongolia. We've established the foundation for that development by advancing the high-grade gold mine at Bayan Khundii 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 Khundii 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 Bayan Khundii Gold Mine, co-owned with our strategic partner, Mongolian Mining Corporation.

As you can see on slide 5, 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 tonne, a 25% improvement from Q1, largely due to the team's focus on improved mining efficiency, which I'll describe in more detail in the coming slides.

We continue to make tremendous progress as we work towards a feed grade of 3.5 grams per tonne 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 Zuun Mod, 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 offtake 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 Khundii 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 6, total plant throughput was 153,000 tonnes of ore at an average rate of 1,682 tonnes 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, Bayan Khundii produced 11,709 ounces of gold, 37% more than the 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 7, in Q2, the mining team moved 3.8 million tonnes of material, 19% more than in Q1, mining 247,000 tonnes of ore at an average grade of 1.4 grams per tonne, 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 tonne by year-end, which should result in increased metal production and lower unit costs. At June 30th, 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 Khundii Mine: Khundii West, including Ulaan 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 Khundii hydrothermal system and are expected to add ounces that will support mine life extension and potentially capacity expansion of the Bayan Khundii plant complex.

At Dark Horse, we will be testing along the 3-kilometer strike length to expand the near-surface oxide resource for both CIP and possibly heap leach processing. Khundii West provides substantial upside to expand Bayan Khundii pit westward, laying the groundwork for a much larger pit.

Initially, the pit will expand west from Bayan Khundii, and in the future, potentially incorporate both the Khuvyn Khar and Ulaan resources, subject to agreement with Erdenes Alt, the entity that holds the narrow triangle of ground between the Khundii and Ulaan 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 9, you can see a plan map on the left of the Bayan Khundii deposit expanding into Striker West, and a section through that area on the right.

The Striker 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 close-spaced 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 Striker West expansion later in the development of the Bayan Khundii Mine. Discussions are also underway with Erdenes Alt, the Mongolian state-owned company that holds the narrow strip of land between the two licenses, focused on incorporating the resources of the Khuvyn Khar license into a potential collaborative super pit.

That development would drive into deeper resources than the current design at Striker West, and the western extension of that pit would cross into our Ulaan 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 tonne at the 0.7 cutoff, with room for further expansion. As shown on slide 10, just 2.5 kilometers north of Bayan Khundii 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 the slide. Highlights from that drilling included very high-grade near-surface intercepts of 9.6 grams per tonne over 19 meters and 28.7 grams per tonne over 3 meters in areas expanding the limits of the resource.

Grade control drilling is underway at Dark Horse South, supporting mine plans 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 planned 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 material suitable for the CIP plant, but also a substantial volume of lower-grade oxide material that appears amenable for feed to a potential heap leach development. Continuing northeast of Dark Horse, the mineralized structure has been traced over an additional 1.7 kilometers at Altan 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. Altan 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 heap leach 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, under-explored 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 Khundii and Dark Horse to support the initial mining period, and we have the related infrastructure to support an extension and expansion of the Bayan Khundii complex.

With 10 kilometers of interconnected structures already mapped, the Bayan Khundii 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 Altan Nar deposit, located just 16 kilometers north of Bayan Khundii.

The deposit hosts an indicated resource of 313,000 ounces at 2.16 grams per tonne gold and 15.7 grams per tonne 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 Khundii, build a flotation plant on site to produce a concentrate, or some combination of the two.

With about 14% of the gold inventory at Altan Nar hosted in oxides, it's also a potential feed source for a proposed heap leach operation at Bayan Khundii. 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 5.5 kilometers long and 1/2 kilometer wide, with more than 20 targets identified along trend. The corridor has seen no exploration in the past several years, given our focus on Bayan Khundii.

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 exploration program to be carried out in 2027. Altan Nar provides opportunity to expand existing resources and the optionality to develop a deposit that feeds high-grade material into an expanded gravity circuit at the Bayan Khundii plant, complementing the existing CIP plant and possible new heap leach plant.

Taking into consideration the impact of higher metal prices, depletion of the Bayan Khundii 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 Erdene Mongol within the Khundii Minerals District, which includes the Bayan Khundii deposit, Dark Horse deposits, Ulaan, and Altan Nar, as shown on slide 12. Considering that the operating cutoff grade for the Bayan Khundii plant is in the range of 0.7 grams per tonne, 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 heap leach facility.

The table displayed summarizes the updated gold resources for the Erdene Mongol deposits. It's important to recognize that while the Bayan Khundii and Dark Horse resources utilize actual costs, the other deposits will not translate to reserves equally.

However, it provides a useful snapshot of the potential for mine life extension at Bayan Khundii. The global resource includes 835,000 ounces at 2.9 grams per tonne and 9 grams per tonne silver in the measured and indicated categories, with a further 265,000 ounces at 1.5 grams per tonne inferred.

We believe this strongly supports the ability to extend production life to in 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 heap leach 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-tonne 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 Khundii Minerals District once we reach 400,000 ounces of production. In September, our three large mineralized deposits and associated prospects in the Khundii Minerals District will be the subject of a Khundii 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 are confident that the exploration opportunities in the Bayan Khundii, Dark Horse, and Altan Nar areas, combined with our history of exploration success in the region, support delivery of these ambitious but achievable goals.

We see the Bayan Khundii complex as the foundation for further discoveries in this vast and under-explored 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 Zuun Mod molybdenum-copper project.

As shown on slide 13, Zuun Mod 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 and copper concentrates to the Asian market, and one that can leverage the infrastructure we've already established in the Khundii 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 Zuun Mod for Erdene shareholders. As shown on slide 14, Zuun Mod 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 2 years and have stabilized above US$30 a pound over the past 6 months. At this price level, Zuun Mod 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 moly 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 Khuvyn Khar copper prospect and the Tsagaan Suvarga property in the Oyu Tolgoi district. Khuvyn Khar, 4.5 kilometers northwest of the Zuun Mod 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 30 meters of 1.25% copper we reported earlier this year. At Tsagaan Suvarga, just 10 kilometers from the Oyu Tolgoi 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 8 of 9 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 and a propylitic 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 Erdene shareholders. In summary, the Bayan Khundii complex is our foundation, but the vast exploration pipeline in the Khundii Minerals District is our future.

Expansion at the gold exploration targets held by Erdene Mongol and advancing our Zuun Mod, Khuvyn Khar, and Tsagaan Suvarga projects provide significant opportunities for mine life extension and optimization, along with new discoveries that will create sustained value for our shareholders. Now I would like to turn the call over to Bob to provide financial highlights for the quarter.

Bob?

Thank you, Peter. Moving to slide 16, let me provide the financial highlights for the quarter ended June 30th, 2026.

Before getting into the details of Erdene's financial results, a reminder to everyone on the call that Erdene's investment in Bayan Khundii is held through a 50% joint venture stake in the Mongolian company Erdene Mongol LLC. Included on this slide are financial excerpts representing 100% of the joint venture operations for Erdene Mongol, as well as the consolidated results for Erdene Resource Development, representing our proportionate share of Erdene Mongol's performance and our corporate operations.

All figures are in Canadian dollars unless otherwise noted. Starting with Erdene Mongol, in Q2, the business generated US$53 million of revenue on sales of nearly 12,000 ounces of gold and over 3,300 ounces of silver at average sale prices of US$4,493 and US$72 per ounce, respectively, or $75 million Canadian dollars.

Revenues were 32% higher in Q2 than in Q1, reflecting higher sales volumes, despite modestly lower metal prices. Total cost of revenue for the quarter was US$24 million or Canadian $33 million, approximately US$2,000 per ounce sold.

Given minimal sustaining capital expenditures in the period, as we are within the first year of operations, all-in sustaining costs are not materially different from this figure. Overall, costs per ounce were approximately 20% lower than in Q1, given the increase in production and improvements in mining efficiency that Peter has outlined earlier.

Erdene Mongol ended the quarter with US$40 million of cash, and the project debt was approximately US$120 million or $175 million CAD. Subsequent to quarter-end, the business made a US$10 million debt repayment on the project's fully drawn $50 million working capital facility.

With the mine generating cash, capital allocation priorities will be to pay down the project's debt while investing in the expansionary exploration programs described by Peter earlier. Turning to Erdene's consolidated financial performance in Q2, our share of income from Erdene Mongol totaled $11.2 million, 60% ahead of Q1, reflecting the higher sales and lower unit costs partially offset by lower gold prices.

For Q2 2026, exploration and evaluation expenses for Erdene Resource Development, representing the work by our team on controlled properties, totaled just over $700,000, compared to $900,000 for the 3 months ended March 31st, 2026. The quarter-over-quarter reduction was primarily due to the timing of payments under the corporation's incentive compensation program to technical staff, partially offset by increased activity associated with exploration at Tsagaan Suvarga.

Corporate and administrative expenses, representing Erdene's public company costs, totaled $1.6 million in Q2 2026, compared to $1.6 million in Q1 2026. The quarter-over-quarter change is primarily due to increased marketing and investor relations efforts, as well as costs associated with the company's annual general meeting, which took place in May.

In total, Erdene generated net income of $10 million or 15 cents per share in the second quarter, compared to $4.8 million or 7 cents a share in the first quarter. Erdene ended the quarter with $28 million of corporate cash and an ample liquidity position to grow the business in the period to receive returns of capital from our investment in Erdene Mongol.

On June 30th, the company launched a normal course issuer bid, allowing for the buyback of up to 10% of the company's free-trading stock. Since that date, Erdene has bought back and canceled almost 100,000 shares at an average price of $5.20 per share.

We believe the market price of our shares may at certain times not reflect the inherent value of the company, and we will selectively repurchase as we see this as an efficient use of capital to increase shareholder value. This concludes the review of our financial performance for the second quarter.

I'll turn the call back to Peter.

Thank you, Bob. Turning to slide 17, the health and safety of our employees, contractors, and local communities is a top priority and the core foundation of our operational success.

At the end of Q2 2026, there were 565 staff and contractors on site, with a total of 520,000 person-hours worked during the quarter. The 12-month rolling average lost time injury frequency rate was 2 per million person-hours.

While a respectable result, we will continually strive towards zero. Zero reportable environmental incidents did occur during the quarter.

Environmental management efforts remained focused on mitigating potentially adverse impacts and advancing environmental protection activities, such as the endemic vegetation trials at the 2-hectare plantation at the Bayan Khundii Mine. One of our ongoing community initiatives is our operator training program, conducted in partnership with Mongolian Mining Corporation and focused on local employment.

More than 180 residents of Bayankhongor Province have taken part in a classroom and hands-on program at MMC's UHG mining complex over the past 2 years, with many of those joining the Bayan Khundii mining team. Erdene Mongol has also been actively supporting community partnership initiatives.

Over the past several weeks, the team sponsored the annual Naadam festival in Shinest, the nearest community to Bayan Khundii, and Erdene Mongol has also recently awarded scholarships to over 50 local youngsters, investing in the education of our community. As outlined on slide 18, our key deliverables for 2026 reflect our commitment to value creation in support of our long-term plan to develop a multi-mine, multi-commodity district.

Bayan Khundii is rapidly establishing itself as a reliable, steady-state gold producer. This strong operational foundation generates consistent cash flow while enabling us to execute targeted exploration programs across our portfolio.

This work, in turn, is paving the way towards our longer-term goal of expanding production and extending mine life beyond 10 years. While the first half of 2026 was highly productive, our second half will deliver several major catalysts, including: continued improvement of grade and production, targeting 3.5 grams as we move through year-end into 2027; preparation to accelerate the Dark Horse deposit for 2027 mining and continued expansion of the adjacent resources to support both CIP and potentially heap leach; exploration and potential partner developed to expand westward at Bayan Khundii, leading to an enhanced mine plan; and the delivery of the Zuun Mod PEA alongside exploration results in the adjacent copper targets.

As we reach each of these goals, we expect to unlock substantial incremental value for shareholders. In closing, I believe we are well positioned to deliver on these objectives and create value for shareholders and stakeholders alike.

With that, I'll hand it back to the operator to begin the Q&A session. Thank you.

Hi, guys. This is a question for Bob.

Congrats on the ramp-up. It looks like it's going well.

Question for you: did you say that your all-in sustaining costs are around $2,000 an ounce for this quarter?

That's correct.

Okay. Then your cost of revenue, $33 million, do you see that staying stable into Q3 and Q4 of this year?

We expect that to come down as we look to the back half of the year, Hanif.

Really,

it's as simple as a significant portion of the costs in the business would be fixed, and the grade has been a little bit below where we expect to be. Once we get closer to that 3.5 that Peter mentioned as our target, we expect to see the ASIC end up in the range of about $1,500 per ounce US if we're able to see those improvements.

Got it. Okay.

Thanks. I have no more questions.

Thank you.

good morning, guys. Good progress in the second quarter.

Peter, just a couple of questions on the current operations. I actually have some others as well, but I'll just focus on the current operations for the moment.

The grade outlook, you said you're targeting 3.5 grams by year-end. Is that, do you think that's kind of the stable, steady-state grade that you can maintain at the project?

Maybe just start with the core resource, Don. When we look at Dark Horse and Bayan Khundii combined, we have at a 0.7 cutoff, around a 4.5-gram average grade at a 0.7 cutoff.

If you factor in dilution, you get down into that 4-gram range. Factoring or targeting 3.5 grams, I think, is achievable by year-end.

One of the key elements that could influence that and perhaps enhance it is the acceleration of the Dark Horse development next year. As we have a very high-grade, supergene satellite deposit that we're now looking to bring on earlier, and if that comes into the mix by mid-year, then we could see that 3.5 gram improved upon.

I feel comfortable with that target. We've seen great strides in both the dilution control and our engineers and geology teams getting a better handle on pit sequencing.

I think just moving dirt in the right time and place is a critical part of this as well, but yeah, I feel confident with those targets.

When we go back to the reserve model reconciliation, how do you feel now that that exercise during a feasibility study is always somewhat academic, becomes very difficult when you're actually trying to chase narrow structures in a pit at substantial volumes. How is the reconciliation working out, not just in terms of ounces and grade, but just the internal dilution versus the blasted dilution?

Yeah. It's taken a while to get to the point where we're comfortable with the grade control models reflecting mining, but I'd say just in the last month or so, we're seeing those start to line up.

Early on, with the amount of dilution, we were underperforming significantly in terms of delivering what was reported in the mine to the mill, but in the last few months, that has flipped with us overachieving. We're working with the modelers and the engineers to refine those grade control models further, and I'd say just in the last few weeks, they're starting to line up.

It's taken a bit of back and forth amongst the modelers, geologists, and the mill reported grades, but it's coming into line now. Shifting into the dilution side, I would guess we're in that 30% to 40% range for the first few months and getting down into that 20% or less range today.

Ultimately, our target is to be closer to 10%, but that's also headed in the right direction. Still work to do, but yeah, it's lining up.

The resource estimate that we did for Bayan Khundii most recently used a vein-type model as opposed to intrusive-type model, and it came in about 10% less overall when you look at the lower-grade cutoff. The high-grade core remains intact, and that's at the 0.7 or higher level.

Hopefully that answers your question, but let me know if I missed anything in there.

Overall, the ounces are there and the grade from what was originally expected once you look through the mining dilution, the original model, I guess,

yeah. Today, as we look at the grade delivered by the mine and reported in the mill is starting to line up, so that verifies the model we're using to determine those block grades being delivered to the mill.

Great, great. Then, just specific to the mill, because the recovery's been terrific.

You're at 6% below rated capacity. What we often see with mills is they are actually able to run at higher than rated capacity once the mine is able to deliver the volume.

The mine can usually deliver more than the mill can handle, or they bury the mill, as they like to call it. This is more selective mining.

Do you think the mill has the capacity to run at higher than rated capacity based on what you've seen, or will it always be constrained by the ability of the mine to deliver the kind of grade that you want to see?

I don't see a constraint on delivery of ore as we get to this higher level of efficiency that we've just talked about. The plant is designed for a maximum capacity of about 1,950 tonnes per day, and we've always kind of looked at our targeted throughput at about 92% of that.

That gets you up, I think, into the mid-17, sort of 1,750 tonnes per day, a little higher. The reported throughput, as you would have seen in today's announcement, was, I think it was 1,686, a little lower than what our target is, but that doesn't account for the days of shutdown as we started things up.

We had I think a 3- or 4-day shutdown. On a daily basis, we are exceeding that 1,780 or that 92% of maximum throughput.

I do feel steady state we can get up a little higher than where we are today. I'd also point out, from a conservative perspective, that you're always going to have softer rock in the upper benches, which is where we've been, so as we get deeper into this mine, we could see somewhat harder rock that would probably keep you closer to our target.

Just a little bit more detail around the throughput.

Sure. That makes sense.

That's great. Onwards and upwards.

I have some other questions about the future, but I'll pass it back to the operator in case somebody else has some questions.

Thank you, operator. Peter, I'll give you a question from the webcast before you go back to Don for his follow-ups.

The script mentions that the heap leach opportunity several times: Dark Horse North, Altan Arrow, Altan Nar oxides, the low-grade stockpiles. What are the decision gates and rough timeline to sanctioning this, and what did the Blue Coast results actually show?

Maybe just to back up a little bit on Mongolia in general, there's half a dozen heap leach gold operations in Mongolia that are operating today, in fact, one, I think about a hundred and some kilometers to the west of us. It is sort of a proven technology.

We often get asked about cold-weather climates for heap leach, but a number of viable operations in country, and therefore a number of experienced operators in the heap leach industry in country. When we first went into the Bayan Khundii District or the Khundii District, we didn't expect to see the depth of oxidation we see today, and we're seeing it now at each of our project areas.

Dark Horse has been the one we focused on the most, given that that entire 50,000 ounces of 7 grams sits in an oxidized supergene, we began to step out from that. We see Dark Horse, Altan Arrow, that 3-kilometer trend, as the key delivery of ounces for a heap leach, and what we'd like to see is economic viability utilizing that as the resource base.

We do have, as I've mentioned, multiple sources for additional oxide from the other projects, and we also have the low-grade stockpile that's growing at Bayan Khundii that won't give as high a recovery as we see in the oxides, but we're still seeing in the range of 50% recoveries from that 0.7 and less material at Bayan Khundii, another potential source. I feel like after we get this drilling done in Q4, we will update the resource again and be targeting somewhere around 100,000 ounces as a baseline to justify the startup of a moderate-sized heap leach facility.

The column leach test is not complete yet at Blue Coast, but we do expect recoveries well in excess of 60% from Dark Horse material and perhaps in that low 70s, but we'll see as we get final results out of that. There are some synergies that we can bring into play from the Bayan Khundii facility, but we would look to have a pad set up somewhere in the neighborhood of the Bayan Khundii plant.

We feel like once we've made that investment decision in 2027, we would have perhaps a year or so to put that in place, a 2028 bringing on stream of a complementary heap leach production facility.

Thank you, Peter. Another question from the webcast.

Once the Zuun Mod PEA is complete and published in the next 60 days, how would a gold-focused company fund a large molybdenum-copper development project? Are the Asian offtake discussions potentially strategic partnerships, and does Zuun Mod compete with Khundii for capital?

Good question. Given the financial element there, I'll let Bob cover that one.

Thanks for that, John. Just as a reminder to all on call, the Zuun Mod project is wholly owned by Erdene, while the gold projects are held by Erdene Mongol, the joint venture with our strategic partner, Mongolian Mining Corporation.

Given the success at Bayan Khundii, the gold extension and expansion projects that we've discussed on today's call are likely to be self-funded within the joint venture, either from operating cash flows or asset-level debt. With that as background, there's not necessarily an inherent competition for the capital.

Maybe some more color just on what we're seeing at Zuun Mod and how we're thinking about this: we are working on several different funding options, considering that a project of this scale will require a fair bit of capital. Any offtake agreement from a counterparty does provide certainty to all the financiers, reducing overall financing risk.

Given the current dynamics in the moly market, we've received offtake interest from several potential counterparties from across Asia, being China, Korea, and Japan, just at least from an initial indication of interest. We've also had preliminary discussions with the major development banks in the region, where we've got pretty strong relationships, and they again, at an early stage, have expressed some interest in pushing this project forward.

Given that we're still 60 days or so from the release of the PEA, we expect these discussions to really ramp up once that's out in the market and we've got some firm figures we can start to speak to.

Thanks, Bob. A question from the webcast on the 5% royalty.

Can you clarify the 5% royalty mentioned on the call? Is that an NSR payable to Erdene on 100% of JV production once 400,000 ounces is reached, and what is it worth?

The first part of that question is easy to answer. I'll address the second.

The royalty is payable on all ore derived from the joint venture licenses. It's a net smelter royalty, off the top, 5% payable to Erdene on 100% of production.

If you look at what we're producing today or targeting to produce, it's pretty simple math: you could multiply the ounces by 4,000 ounces, and that would be our pre-tax payment. At 80,000 ounces per year, which is our target, that would be $16 million US per year, but you can do some more creative math on what this could look like 4 years out should we bring on some of these other projects.

That's the royalty, John.

Thank you, Peter. Question on the super pit: what needs to happen with Erdenes Alt to incorporate Khuvyn Khar and Ulaan into the mine plan, who funds what, and when would this potentially show up in the mine plan?

Just a little bit of background here or painting the picture: the Bayan Khundii deposit is continuous to the west. It stretches for well over a kilometer from the northeast side of the pit across West Striker, across the Khuvyn Khar license, which is about 300 meters wide, and onto Ulaan, where we have over 100,000 ounces that would form the back portion of this.

Both the Khuvyn Khar and Ulaan licenses are currently exploration stage, in order to advance those to a mining development, they have to go through that government regulatory process, which both parties have now embarked upon. We've had discussions that will bring us to a point where, once the mining license is established, resources registered, we will look at jointly developing a development plan, and based on that, begin to enter into discussions on how to share development, is this a product sharing?

There's a number of different routes that we could take, but I expect to see that start to mature in 2027. There's plenty of room for us to continue development as we move to West Striker and Dark Horse in the coming years, this is out a few years from now, but that's the plan that we've discussed with the Erdenes Alt folks at this point.

I'd also highlight that there's significant potential for additional exploration as we move to that westerly area, both at depth in West Striker, Khuvyn Khar, and Ulaan as well, plenty of room for growth in that area. It's good to see us moving forward with Erdenes Alt on that plan.

Thanks, Peter. I'm just going to turn it back to the operator to repoll to see if anybody else wants to come back into the queue on the live call.

Mhm.

Thank you, operator. Just touching on the future, I was really intrigued with the Altan Nar metallurgy and comment that it could be a potential feed to the Bayan Khundii mill, because it's a large resource.

You talk about the threshold for heap leach being 100,000 ounces, but Altan Nar's quite a bit larger than that. Can you just provide us a bit more color on what the metallurgy is saying as to the possibility of actually feeding that into the Bayan Khundii mill, because that would extend the project life a lot.

We had some good results come out in our metallurgical testing this year on a high-grade sample from Altan Nar, which we carried out at Blue Coast, and also just going back and re-evaluating where the cutoff would be in terms of the polymetallic nature of the ore and what could go into the CIP plant. We've arrived at approximately 80% of the ore that's reported would be amenable to the CIP processing.

20% is higher in arsenic, but fairly well isolated, and we could selectively mine around that. We're seeing 89% recovery of gold in the higher-grade sample.

We're up in the 5-gram range on that sample, but that is it's probably about 70% of the ore, it's another high-grade deposit. Overall, we think we could be seeing 75% recovered from the resources we've reported.

I'd also just note that the exploration opportunity here is immense. We've only tested a small portion of the strike length to come up with that 1/2 a million ounces, and our objective in 2027 from an exploration perspective is to focus much of our budget on Altan Nar growth.

That's quite a different sort of view to at least the way I've been looking at it. I'm not sure how other investors have looked at Altan Nar, because looking at it as a concentrate, that's a whole different process, a whole bunch of additional infrastructure, whereas being able to make use of the Bayan Khundii mill saves a lot of capital.

One would think more than justifying the recovery difference.

The improved recoveries and sort of our look at the deposit that provides us with that higher amenable ore has really kind of changed our thinking, and on a trade-off study, we see the route as being superior to truck it into the CIP. You're correct, if we paid $120 million to build Bayan Khundii and we add inflation, assume a similar size plant, we're probably up in the $140 million, $150 million range by the time we build Altan Nar, which is capital we don't have to inject.

It's only a 16-kilometer trucking distance. The oxide cap could become quite valuable to us as well, with I think it was about 12% of the resources oxide near surface, with plenty of room to expand that as well.

Getting excited about that opportunity. Obviously, we could accelerate that production, we could be providing some high-grade material to blend upwards in the early days.

I really like the optionality that's starting to materialize with Altan Nar, which, as I spelled out in our presentation, would certainly give us that ability to be well in excess of 10 years with the combined resources available to us.

What's the next step, Peter? Are you doing more metallurgical work on I guess lower-grade, more representative samples?

We will, but what I want to do first is make sure we've completed that much more complete exploration program, and then characterize the ore that we have based on that larger resource, and then invest in the metallurgical work. So 2027 the focus will be on Altan Nar to do both of those things, and ideally, as you're coming out the back end of 2027 into 2028, you can put a pin in this, let's say what is a conceptual option to go to the CIP, put a pin in that and start to really develop that plan to be trucking ore into Bayan Khundii in the future.

Excellent. I guess the other question on the Zuun Mod, I know you don't have the answers from the PEA in hand yet, but a couple of questions.

Do you think the market attaches any value to this, based on your discussion with investors?

No, I think that it's a curiosity for some, but I really don't think we're valued at much more than what our 6-year gold production profile is. We've never had an economic study out, ideally, as we move into that phase in September, we'll be able to demonstrate that value, but we'll also begin to look at what opportunities do we have corporately to restructure, spin out.

We'll take a closer look at that because I think that may be the path we need to take to crystallize full value for Zuun Mod.

It is a bit of chalk and cheese relative to the gold side, but projects of that scale generally are pretty sensitive to the price that you see or being used in the study. There's a big delta between sort of what the, shall we say, 3-year average prices and what the current spot is, so that would suggest this thing would have a lot of sensitivity to the metal price.

Do you have any kind of visibility about how the project economics, are they looking encouraging in the low $20s, or is it way too early to tell, the low $20 a pound for moly?

I think you need to be in the low $20s to make this project attractive. I think the 3-year trailing, and maybe it's 5, Bob, is $22.50, in that range.

Current spot price is closer to $32, $33. We feel pretty comfortable in between those two numbers this project becomes very robust.

Looking at the demand we're seeing long term, and we've done a lot of our own marketing work on the ground in Asia, speaking with the entire industry, we do feel good about that long-term demand continuing and growth rate continuing at close to 4%, which will generate a need for pretty much the equivalent of what we plan to produce from Zuun Mod coming online every year. I think we're right time, right place, we're on the border of the largest consumer who's in deficit, they've put export controls on molybdenum.

In our discussions with those users, end users bid by our concentrate today. I think it's a good time from a market perspective, but I'd also like to just revisit the fact that if you look back 10 years ago, this project was considered too remote, but today we have a metallurgical coal haul road within 30 kilometers of Zuun Mod just completed.

We have now demonstrated you can bring power in from the grid. A lot has changed in terms of infrastructure, and it couldn't be in a better place than next door to a country that's consuming more molybdenum than anywhere else and can't find enough of it.

We're excited about what Zuun Mod is about to bring for us.

Now that'll be very interesting to see how this looks when it comes out in H2. Could be a surprise for lots of people, myself included.

That's great. Thank you very much.

Thanks, Don.

Best of luck on Q3.

Appreciate it.

Thank you, everyone, for joining us today. We look forward to speaking again in a few months, and as always, in the meantime, should you have any questions, please reach out to Bob or I, and please have a good day.

Thank you.