Hunnu Coal is acquiring a 60% interest in the Unst Khudag Coal Mine and surrounding licences in the Dundgobi Province of Mongolia.
The Unst Khudag mine is 290km from Ulaanbaatar and about 200km from the Mongolian railway grid. The project consists of two exploration licences and one mining licence covering more than 59,000 hectares.
The mining licence covers about 1600 hectares on which the relevant government authority has approved the mining of 98.7 million tonnes of coal.
Exploration programs undertaken at Unst Khudag have included mapping at various scales, trenching, geophysical surveys and drilling. A total of 39 drill holes have been completed to depths less than 100 metres.
Drilling has intersected a single coal seam with thicknesses varying from 5 to 31 metres. The coal seam has about four metres of unconsolidated overburden and dips under cover gently at zero to five degrees.
The exploration target is 250 million to 500 million tonnes, there is a low strip ratio of less than 1:1 from start-up and coal analysis reveals high quality thermal coal with quality parameters averaging 6460 kCal/kg, ash of 13.9% and moisture content of 23.9%.
Hunnu is targeting first production from Unst Khudag in the latter half of 2010 and is discussing off-take agreements with Mongolian and Chinese coal users.
There has also been trial production of about 30,000 tonnes for bulk test work with potential off-take partners and local utilities.
Hunnu is undertaking a detailed operational review of the project with particular attention to quantifying coal tonnages and coal quality on the mining licence and surrounding exploration licences; reviewing existing coal test work and bulk sampling results; reviewing the current mine plan and feasibility study; and examining near term staffing requirements.
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