Modun Resources has agreed to an exclusive deal with Tennant Metals which will see the commodity trader purchase 100% of coal produced at its Nuurst project. The agreement gives Tennant the right to all of the export market coal produced at Nuurst and 50% of the thermal coal produced for the domestic market.
The 489 million tonne Nuurst resource is in central Mongolia, 6km from existing rail infrastructure connecting to the Chinese border.
Modun’s managing director Rick Dalton says, “The signing of a Heads of Agreement with Tennant is in our view a substantial achievement in terms of progressing the Nuurst project through to production.
“We are excited to develop this partnership with Tennant who have significant experience in the key Chinese coal market and this demonstrates the clear demand for Nuurst quality coal in China.”
An updated resource for the project site is due for announcement in coming weeks, which will be used by Tennant to market the coal’s quality.
Tennant’s managing director Dennis Karp says, “We are pleased to be working with Modun, as we see significant potential for its thermal coal sales into China and in the domestic Mongolian market. This agreement provides us with the opportunity to partner with an emerging producer in an exciting coal producing region and facilitate access to a multi-dimensional customer base, while at the same time providing our Chinese customers with access to a new and as-yet untapped supply.”
Bulk samples will be sent to prospective customers to help to determine final pricing and demand. Modun and Tennant anticipate the Nuurst coal is primarily suitable for power production and is likely to be similar in quality to Indonesian sub-bituminous thermal coal currently in high demand. Modun will now complete a JORC level mine plan for the site.