Erdene receives its first royalty from Georgia project

Eleven years may not be a long time in the mining business, but Halifax-based Erdene Resource Development Corp. is still happy to finally realize a return on its investment in a granite project in the American Deep South.

Erdene reported Tuesday that its partner, Aggregates USA (Sparta) LLC, had started commercial production at the Granite Hill construction aggregate property in central Georgia.

Consequently, Erdene received its first royalty — US$165,000 — on the project from its operating partner.

“Any time you can begin to establish cash flow on a project like this is a big day for a company,” said Erdene president and CEO Peter Akerley.

His company has been involved in the Granite Hill project since 2001, when a firm called Kaoclay Inc., which was eventually purchased by Erdene, struck a deal with Rinker Minerals, a predecessor company to Aggregates USA.

Erdene owns the 138-hectare property and has given its partner the right to mine, process and sell the aggregate, which is targeted for the United States construction industry.

For the quarter ended Sept. 30, 2011, Erdene lost $1.3 million, compared to a loss of $834,437 for the same period in 2010.

In an interview Tuesday, Akerley stressed that the company’s best prospects are far from Georgia. Erdene holds a 25 per cent stake in Xstrata Coal Canada Ltd.’s plan to develop the Donkin coal field in Cape Breton.

Mining giant Xstrata is planning a $300-million, 2.75-million-tonne-per-year coking coal operation at the Donkin site, assuming environmental watchdogs give it the go-ahead.

In December, Erdene raised $2.2 million through a private equity placement with Mongolian investors for exploratory drilling on its Mongolian properties.

Since 2009, the company has been exploring for copper, gold and molybdenum in prospects in southwestern Mongolia near the Chinese border.

Tuesday, Erdene shares closed at 39 cents on the TSX, up four cents.

(jdemont@herald.ca)

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By JOHN DEMONT Business Reporter