BAYAN KHUNDI GOLD PROJECT

The Bayan Khundii gold deposit is located in southwestern Mongolia, within the Khundii Gold District, approximately 16 kilometres south of the Altan Nar deposit. In August of 2019, Erdene secured a mining license for Bayan Khundii from the Mineral Resource and Petroleum Authority of Mongolia (“MRPAM”). The Bayan Khundii mining license covers 2,309 hectares and, in addition to the Bayan Khundii high-grade gold deposit, includes Erdene’s highly prospective Altan Arrow, Dark Horse (Khar Mori) and Khundii North prospects. The mining license is valid for an initial term of 30 years with the ability to extend to 70 years.

Bankable Feasibility Study

In July 2020, Erdene announced the results of an independent Bankable Feasibility Study (“BFS”) for Bayan Khundii Gold Project. The BFS included an updated Mineral Reserve for Bayan Khundii. Please refer to the Company’s July 20, 2020 news release and the BFS NI 43-101 Technical Reportfor full details.

BFS highlights (assuming US $1,400/oz gold price):

• Base Case after-tax Net Present Value of US$100 million (NPV5%) and 42% Internal Rate of Return (IRR), increasing to US$216 million and 77% IRR, respectively, at current gold price of US$1,800/oz
• Life of Mine Earnings Before Interest, Taxes and Depreciation of US$257 million, increasing to US$400M at a US$1,800/oz gold price
• Total recovered gold over the initial phase of the Khundii Gold District development of 381,700 ounces
• All-in sustaining cost (“AISC”) of US$733/ounce of gold recovered and upfront capital costs of US$59 million
• BK Measured and Indicated Resources of 521,000 ounces gold at an average grade of 3.16 g/t gold
• BK Proven and Probable Reserves of 409,000 ounces gold at an average grade of 3.7 g/t gold
• Average annual gold production of 63,500 ounces, including 77,600 ounces in Year 2
• Eight-year project, comprising one-year pre-production, six-year operating life and one-year mine closure
• Payback period of less than 2 years
• Adjacent high-grade resources and recent discoveries provide high probability growth options
• Significant benefits to Mongolia, including Life of Mine royalties and taxes of US$103 million and approximately 400 new direct jobs in Bayankhongor Province

Mineral Resources and Reserves

Bayan Khundii Gold Deposit –Mineral Resource Estimate for Cut-off Grade of 0.55 g/t Gold (Au), October 1, 2019

Bayan Khundii Gold Deposit – Mineral Reserve Statement, July 1, 2020

Please refer to the Company’s July 20, 2020 news releaseand the BFS NI 43-101 Technical Report for full details.

Project Financing

In November 2020, Erdene announced (press release) that it executed a mandate letter with Export Development Canada (“EDC”) for an up to US$55 million senior secured debt facility to develop the Bayan Khundii Gold Project. EDC’s financing for the Project is conditional upon the satisfactory completion of due diligence.

Construction Readiness

Work to advance the Bayan Khundii Gold Project towards construction and development are ongoing. Construction readiness activities have commenced, including:

• Detailed design and engineering for the Carbon-in-Pulp (“CIP”) processing plant and mine support infrastructure is underway and expected to be submitted for approval in Q1 2021;
• The balance of the technical drawings for site infrastructure is expected to be submitted for approval by Q1 2021, allowing for a rapid construction ramp up beginning Q2 2021;
• Tender and contracting for critical facilities and services has been initiated;
• Environmental monitoring stations have been installed at the site; and
• Constructability review, value engineering, and HAZOPS development are also underway.

Environmental, Social, and Governance

Erdene continues ongoing stakeholder engagement activities for the ESIA and the Mongolian statutory Detailed Environmental Impact Assessment (“DEIA”), including:

• European Bank for Reconstruction and Development (“EBRD”) ESIA public disclosure period satisfactorily completed in Q3 2020;
• Additional baseline studies are ongoing, collecting targeted social and environmental data in line with the ESIA commitments; and
• Public consultations are ongoing for the Mongolian DEIA.

To date, Erdene has obtained key permits and advanced regulatory approvals required for mine development, including:

• Land use permits issued, granting access to an initial approximately 100-hectare area required to construct the BK open-pit and associated surface infrastructure; and
• Completed regulatory review of the general site arrangement.

Upside Potential

In August 2020, Erdene commenced a planned 18,000-metre drill program at its Khundii Gold District. At year-end 2020, 14,300 metres were completed, consisted of 9,345 metres over 54 holes (including four extension holes) at Bayan Khundii and 4,660 metres over 25 holes at the recently discovered Dark Horse prospect located on the Bayan Khundii Mining license. Results at the Midfield North and Striker SW Bayan Khundii zones included several high-grade intersections outside the Bayan Khundii economic pit that have the potential to add to Bayan Khundii resources meaningfully.

Drilling at Dark Horse included the discovery of a new high-grade, shallow, gold discovery, including multiple holes reporting wide zones of mineralization (from 45 m of 5.97 g/t Au to 130 metres of 0.54 g/t Au) with higher-grade intersections up to 22 metres of 21.2 g/t Au. These drill holes are hosted in a 4-kilometre long structure in the western portion of the Dark Horse target area, demonstrating the potential for significant gold discoveries near the Bayan Khundii deposit. Please refer to the Dark Horse Project pagefor further details.

In addition to Dark Horse, there are several other prospects located on the Khundii Mining license with significant upside potential, including:

• South Bayan Khundii prospect located 350 m south-southwest of the Bayan Khundii gold deposit where drilling has intersected multiple 1m intervals of anomalous gold (>0.1 g/t) were intersected within the altered unit with up to 1 metre of 2.45 g/t gold. This discovery opens up a large area south of the deposit for additional exploration.
• Altan Arrow prospect located 4.0 km north of the Bayan Khundii gold deposit, along a gold-bearing structure in the central portion of the Khundii mining license. Drilling to date has concentrated in an area along and south of the main structure, where several high-grade zones have been intersected, including 39 g/t gold over 1 metre and 24 g/t gold and 70 g/t gold over 2 metres. Overall, 77% of the 21 holes (2,605 metres) drilled at Altan Arrow have intersected anomalous gold.
• Khundii North target located 4 kilometres northeast of the Bayan Khundii gold deposit. The area was identified through surface exploration in late 2017, when sampling of quartz vein material returned high grade gold mineralization of up to 22 g/t gold from a structurally controlled quartz vein stockwork and breccia zone traced over a 1,500-metre strike length and drilling has intersected the zone up to 35-metre wide (AAD-29) and have associated anomalous gold, locally up to 2.1 g/t over one metre intervals (AAD-30) and locally anomalous copper (>500ppm).

The Bayan Khundii license has a 1.0% net smelter returns royalty (“NSR Royalty”) in favour of Sandstorm Gold Ltd.

Peter Dalton, P.Geo. (Nova Scotia), Senior Geologist, Erdene Resource Development Corporation, is a Qualified Person within the meaning of National Instrument 43-101 and has reviewed and approved the scientific and technical information contained herein.