Erdene Resource Development Corp. intends to buy back a 1% net smelter royalty on its Khundii gold project in Mongolia from Sandstorm Gold Ltd.

Sandstorm acquired a 2% NSR on the project in April 2016 as part of a C$2.5 million exploration deal with Erdene. Under the agreement, Erdene has a three-year option to repurchase half of the NSR for C$1.2 million.

The results of a recent preliminary economic assessment, which valued Khundii at US$99 million, and the project's exploration potential prompted Erdene to exercise its buyback option, according to a March 26 release.

Erdene said it will fund the repurchase with cash on hand.