Australian company C @ Limited has acquired eight highly prospective coal licences in Mongolia’s Ovorhangay and South Gobi provinces. The US$7.8 million share sale agreement is for all the issued capital of BDBL, a subsidiary of Peabody Winsway Resources.
The eight licences include the significant Teeg prospect where C @, which is soon to be renamed Draig Resources, intersected two massive black coal seams containing coking properties. Three other licences are also in the Ongi River basin in the Ovorhangay province. The remaining four are in the South Gobi basin and cover a combined total area of 625sqkm. C @ says all of the licences have had little exploration but offer considerable potential.
The company’s managing director Mark Earley says the acquisition represents a significant and exciting opportunity for C @ to expand the scale of its activities. “This agreement means we are able to position ourselves in a major emerging coal province. We have already identified coking coal properties in Ovorhangay and will now push ahead to confirm a JORC compliant resource by early next year,” he said.
A number of licences are close to existing producing assets and infrastructure with close proximity to major energy markets like China and Russia, which Mark Earley says make the economics of the projects very favourable.
The Ovorhangay licences are about 130km from the provincial capital Aryayheer and about 520km southwest of the Mongolian capital Ulaanbaatar. A recent due diligence exploration program including a six hole drill program was completed where intersections of thick black coal ranged from 40-60 metres. The potential extent of the massive seams intersected remains unknown, but will be part of the second phase of exploration set to begin once the acquisition is finalized by December 10, 2011.
The majority of the South Gobi licences are bordered by the closest town Gurvantes and the Chinese border 80km to the south west. They are characterized by the largest concentration of major black coal deposits in Mongolia, including the 5 billion tonne Tavan Tolgoi and 200 million tonne deposits at Baruun Nuran and Ovoot Tolgoi.
All four South Gobi licences remain underexplored and potential exists to uncover concealed coal extension, which will be a priority for the company on the next drilling program.
C @ is excited by the Mongolian government’s plan to build a 5700km railway connecting the South Gobi to the Russian ports of Zarubino, Vanino and Vladivostok. The first stage of construction is expected to begin in 2012.