A second Mongolian Government power authority has signed an initial non-binding Memorandum of Understanding (MoU) relating to future potential coal supply, with Auminco Mines, an unlisted public coal development company which is the subject of a takeover by ASX-listed Viking Mines. To date more than 97% of Auminco’s shareholder base has accepted the Viking offer.

The MoU, signed with Erdenet Power Plant State Owned Stock Company (EPP) is the second agreement secured for Auminco’s Berkh Uul Bituminous Coal Project in northern Mongolia.

Viking’s managing director Peter McMickan says, “The fact that Berkh Uul project continues to be recognized by the Mongolian Government as a potential key supplier of coal to the EPP is a further significant milestone in the development of the project.

“Auminco’s ongoing discussions with domestic end-users continue to confirm a local industrial demand in northern Mongolia for unwashed Berkh Uul coal, due to its low ash, low sulphur and relatively high calorific value. This second MoU provides more evidence of the potential customer base for Berkh Uul’s coal.”

EPP, a Mongolian Government entity, is the major supplier of electricity to the Erdenet copper mine, 180km west of Darkhan City in the northern region of Mongolia. Currently the EPP consists of a 36MW power plant that annually consumes about 250,000 tonnes of coal.

The non-binding MoU, signed with Auminco’s Mongolian subsidiary BRX LLC, relates to the intent by EPP to enter into future purchase agreements for Berkh Uul coal. It also establishes a basis for technical evaluation of the quality and quantity of coal, which includes testing of a bulk sample.

The company’s first MoU with the Darkhan Thermal Power Plant (DTPP) was signed in April. DTPP is the major supplier of electricity to Mongolia’s second largest city, the commercial and industrial centre of Darkhan, and the northern region of Mongolia.

Berkh Uul is 200km east of Darkhan City, and within 40km of rail access to the existing Trans-Mongolian Railway, which provides a transport link to Darkhan to the south and Russia to the north. It has JORC resources of 38.3 million tonnes of high quality, open pittable unwashed bituminous coal.

Viking Mines is the new name for Viking Ashanti Ltd. The Australian Securities and Investments Commission recorded this change of name on May 15. www.vikingmines.com

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