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Erdene Announces Closing of Financing Donkin Coal Project Drilling Program Initiated

Monday, December 17th, 2007

Erdene Gold Inc. announce the final closing of its flow-through share financing. An aggregate of 3,326,500 flow-through common shares were issued in two tranches at $1.40 per share for aggregate proceeds of $4,657,100. The offering was increased from the $4.2 million previously announced in order to satisfy investor demand. The flow-through shares are subject to a hold period of four months and one day from the date they were issued.
The proceeds of the financing will be used for exploration and evaluation of the Donkin Coal Resource Block located in Cape Breton, Nova Scotia. These funds will satisfy Erdene’s current requirement to fund its portion of the prefeasibility and feasibility studies underway which will be followed by a development decision by the Donkin Coal Alliance. Erdene has a 25% joint venture interest in the Donkin Coal Alliance with Xstrata Coal Canada Limited holding 75%. The Donkin project is being managed by Xstrata Coal Donkin Management Limited, a related party to Xstrata Coal Canada Limited.
Drilling from the coal face commenced on December 13, 2007 and will provide information regarding the gas desorption rates that ultimately will determine the most appropriate method for gas drainage and related production rates. This work will directly determine the ramp up time required before longwall coal is first produced. A bulk sample collected from the Harbour seam in November 2007 is currently being analysed to provide direction as to the best mining horizon and coal treatment to meet market requirements.
The company recently received a positive Preliminary Assessment (see release November 26, 2007) for the Donkin Coal Project completed by Norwest Corporation. The Donkin Resource Block includes the targeted Harbour Seam that has a current resource of 101 million indicated tonnes and 115 million inferred tonnes of thermal and metallurgical coal and is considered the last remaining undeveloped block of high quality coal offshore Cape Breton. The resource is classified as high volatile A bituminous, high sulphur, medium ash coal. The property currently has two slopes (tunnels) that provide access to the Harbour Seam, which is suited to development using the high productivity longwall mining method.
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