Coal: Way of achieving development or getting stuck?(0)
You cannot imagine Mongolia without its coal. Coal is a mineral resource that is responsible for one-fourth of Mongolia’s public budget and total export revenue. Also, coal provides 80 percent of our electric power and 90 percent of heating. We currently have no other choice other than burning coal as a source of heat during the winter because it gets as cold as minus 40 degrees Celsius.
Mongolia has recently started selling its high calorie coal to China. It helped our coal industry develop at a more rapid pace. Total coal reserves of Mongolia are estimated to be 173.3 billion tons while the proven reserves stand at 24 billion tons. In 2013, Mongolia extracted a total of 33 million tons of coal, two-thirds of which was exported and nine million tons were used to produce electricity for domestic use.
UNDER THE SPOTLIGHT
Government policy: It was unusual that the conference this year was attended by the Prime Minister, Minister of Foreign Affairs, Minister of Mining, and Minister of Finance, each of whom gave a speech. Those who represented the government pointed out that the government of Mongolia had finally set a clear policy to be pursued in the coal industry, revised the law to support investment, and stabilized the business environment. They also called on investors to make investments in the coal industry.
GOVERNMENT INVOLVEMENT IN COAL INDUSTRY
It could be clearly seen at the Coal Mongolia 2014 Conference that our government has a great desire to enter the coal industry. The coal industry is operated very well by the private sector almost everywhere in the world. When government gets involved in the business however, free competition is taken away from the industry while corruption takes over. Furthermore, the industry dominated by government involvement becomes a target for political debate and slows down economic growth. Ever since the state-owned Erdenes Tavan Tolgoi Company was established at Tavan Tolgoi mine, Mongolia has been burdened with huge debts and five years were wasted because railroad construction was stopped. Our government today has purchased a paved road built by the private sector using the loans they acquired by issuing bonds. On top of that, the government has taken over the construction work of a railroad that was initially invested by the private sector. In doing so, our government is putting taxpayers’ money in unnecessary risk.
Translated by B.AMAR
Short URL: http://ubpost.mongolnews.mn/?p=8151
The Calandra Report: Shame on Barkerville and their dilutive ilk(0)
[Part of this report is prepared during a Mongolia layover in Beijing -- which on this day, is sunny and clear for the first time in more than one week. The rest is filed from California in real time. All of it is actionable.]
Included: Barkerville Gold, Inovio Pharmaceuticals, West Africa Iron Ore, Bitterroot Resources, Colt Resources.]
BEIJING – I just saw two (actually three) Mongolia coal mines, a coal-consuming Mongolia concrete plant and enough railroad track, (paved) frozen road and Russia border guards to make me a semi-aficionado of the thermal coal business.
Many folks duly warned me: the coal business, whether its thermal coal, met-coal or whatever-coal, hinges on transportation costs and quality levels (kcals/kg) for success.
It’s competitive, too. One British CEO of a private coal company, like Prophecy also north of the capital Ulan Bator, declined to share a Pepsi with me at the city’s popular western sports bar, the Irish Pub.
“They’re our opposition so I’d better not,” Graham Chapman of Sharyn Gol JSC and Hulaan Coal Corp., told me. Mr. Chapman reports in part to a hedge fund that owns a stake in the privately held mine, and he later agreed graciously to meet, but I was gone by then.
OK, I understand. At any rate, the only thing I can say right now is that I am sorting through my Prophecy notes. My mission in Mongolia is to understand the thermal coal business and what it takes for these battered companies (worldwide) to recover their equity standings.
More to come on the solid fossil hydrocarbon known as thermal coal … and on Prophecy, which has had regulatory issues in Canada but which I am expecting will be resolved one way or another in the next several days.
If I am proven correct, the resolution of at least one British Columbia Securities Commission issue will clear up a technical reporting issue involving stated coal pricing from Prophecy.
Let me first say: anything that hints about scanning Prophecy Coal in the positive light of this country’s rip-roaring economic growth (even sans, or ex, Rio Tinto and Turquoise Hill’s politically loaded Oyu Tolgoi copper-gold mine,) will put me in the sites of those who dislike the style of its CEO, Taiwan-born John Lee.
John Lee is aggressive, and even — I do not know the exact word — regarded as a warrior and not to be crossed: by his own office staff and by the 100 or so workers at its producing mine at the Russia border, Ulan Ovoo. And more than half those workers are Mongolian, coal miners and office staff.
“He’s a boss,” says Chris Kravits, a Pennsylvania-bred coal geologist, age 61, who acts as operations manager for Prophecy. “I’ve been here three years, and whatever you say about John, I can say, ‘He or someone like him who can crack the whip around here is needed.’ Did we go way over on costs in 2012 and 2013 at this mine? Yes. Is that going to stop? It already has.”
We shall see. Prophecy raised more than $55 million a few years ago to get its Ulan Ovoo act together. “Costs got way out of line,” Mr. Lee says.
Mr. Lee also is seen in the investment community as needy — in the sense of his ambitious salary, about $400,000 yearly, half in PCY shares, since going to Ulan Bator full time in July 2013. There is also the matter of a large severance payment that John Lee received, only to continue later as CEO.
But that is nearly a half-million dollars worth of coal in the fire, I guess — and is documented in proxies. Whilst not exactly humane to shareholders at the time, all of this appears to be disclosed.
I have no verdict yet on PCY shares. The latest article in the local Mongolian newspaper — English language one — describes the wreckage among all Mongolian companies traded publicly in Canada, the USA, Hong Kong and the United Kingdom. Most are down 80 percent in the past 2 1/2 years, and Prophecy is no different.
Turquoise Hill Resources (TSX:T.TRQ, Stock Forum) is negotiating with the liberal government about underground mining procedures, financing, cost overspends at Oyu Tolgoi and other issues. That hammered those shares. Oyu Tolgoi LLC, the Mongol subsidiary, at one time was responsible for more than two-thirds of Mongolia’s emerging market GDP.
TRQ shares are on a two-week tear as executives in the capital and at home in Canada and elsewhere brighten up about those government negotiations whilst underground mining at OT is halted. Up to $4.17 from about $3.40 USA. Turquoise Hill owns about two-thirds of the copper-gold-silver mine in southern Mongolia. Turquoise Hill also holds a 56 percent interest in Mongolian coal miner SouthGobi Resources (TSX:T.SGQ, Stock Forum).
At any rate, I get nothing from Prophecy Coal, and I have yet to purchase the 9-cent shares. Yet the idea of a $25 million market cap company with cash flow in a crushed coal marketplace entices me. Ulan Ovoo is about 17 km from the Russia border, which we crossed briefly on foot, much to the distress of one border guard rough-riding on a motorbike across frozen dirt road.
Mr. Lee’s plan for the past three years has been to sell 4,000 and 5,000 kcal coal into southern Russia concrete plants, boilers and municipalities, among other operations.
This is from Bloomberg News and its office in Ulan Bator: an interview with Mr. Lee from this week: https://www.youtube.com/watch?v=jETP0X_gdfg. It’s in Mongol and English. The shares, PCY, could move on any clearance of that regulatory issue in early March. Please do not bombard me with angry notes about reckless CEOs. But please do bombard me if you see other coal producers trading publicly in the region and have cash flow. I await Prophecy’s Q4 financials — its production numbers for the quarter are up and already disclosed.
Shame on Barkerville Gold (TSX:V.BGM, Stock Forum)– Another senseless and dilutive equity placement — 20 million shares, or about 20 percent of the common outstanding. With possible finders’ fees? Fuhgeddaboutit. To be candid, I do not care if part of the discounted offering (at 50 cents a share) is going to relieve debt load. I do not care about the company’s looming gold pour at its British Columbia property. (See Stockhouse article.)
What I see is this: Barkerville’s paper manufacturing is among the best examples of the worst equity destruction in modern Canada-junior mining history. I see the company must extend its capital working requirement and agrees to give more gold to its main lender, essentially Eric Sprott’s Ontario partnership. See: statement.
I wonder how the shares of J. Frank Callaghan‘s Barkerville are staying above 50 cents in the wake of the offering announcement Friday. They are down about 18 percent in the usual Vancouver PDAC manoeuvre: try to raise shares amidst the possible glory of the annual Prospectors gathering in Toronto (next week).
Shame. Shame. A thousand times shame. I do not own BGM shares.
Speaking of equity placements: Dr. Joseph Kim at Inovio Pharma (NYSE:INO, Stock Forum) told me he had no plans to raise capital with the sale of equity at any time in at least the next 18 months. That came at a conference in December 2013. It is in my notebook. I published it!
Big deal, right? Look, Inovio Pharma’s offering of 19 million shares at $2.90 each is getting respect from investors. The stock right now, as the offering is in motion, is at $3.50. “No comment while the offering is going on,” says a spokesman for Inovio.
The point is that all CEOs and CFOs, or most of ‘em, will promise to refrain from diluting their shareholders, then turn around and do it anyway when the stock roars.
In Inovio’s case, the company’s technology of developing and delivering vaccines and treatments for a wide range of cancers and infectious diseases is outstanding. And yes, I did write in early December 2013, the following:
I quote TCR: Best prospects for catapult gains in a review of some 30 presenting companies: Coastal Contacts (COA in USA), albeit after some of the easiest money was made as the Canada eyeglass maker and seller approached consistent profitability this year;and Inovio Pharmaceuticals (INO in USA) — still a half-step before its catapult moment as it awaits Phase II results (likely in mid-2014) for a human papilloma virus vaccine to treat cervical intraepithelial neoplasia.
At the time, I said Inovio’s lab in San Diego, California, would provide enough research power to turn this company into the next Illumina, (NASDAQ:ILMN, Stock Forum) the genomic tools pioneer that quintupled and more my money over six or seven years, even with my (our family money) early eject of ILMN shares (in hindsight, naturally).
Look, I believe that still. About Illumina, which is now a $22 billion market-cap company. (We sold at perhaps $6 billion market cap after visiting the San Diego-area company’s facilities in 2003, when it was perhaps a $400 million equity.)
I also believe the future looks promising about Inovio, branded as innovative but excessively promotional with individual shareholders, and Dr. Lee and staff having a shot at curing some types of cancer, for one. Or at least vaccinating against some formidable diseases. But I sold my shares on the way up from $1.80 in November/December or so to its current $3.50 (to purchase more BioCryst Pharma – (NASDAQ:BCRX, Stock Forum)– and more junior metals miners).
Call me Mr. Early — I used to know a gal by that moniker. Call me Mr. Stoooopid. JUST please don’t promise me you will withhold from financing at current shareholders’ expense. Most CEOs and CFOs probably have a fiduciary responsibility to sell stock via S-1 or S-3 or whatever s-h-$-t filing they call it in the USA or Canada … and keep the capital burning, like the thermal coal at that concrete plant that is supplied with Prophecy’s Ulan Ovoo, Mongolia, coal. JUST WALK YOUR FINANCING BRAVADO TALK or keep your lips sealed when I ask the question, ‘So, plans to finance?’
This from CEO Mike Carr on another financing from his Michigan prospector: “Bitterroot’s major shareholders want me to drill our best Ni-Cu-PGM targets in Michigan asap, and they are prepared to put up the funds to help me do it.” I own a lot of it. BITTERROOT RESOURCES. (TSX:V.BTT, Stock Forum)
The latest from Colt Resources: Pakistan related –
http://www.brecorder.com/top-news/108-pakistan-top-news/159988-pakistan-provides-immense-business-potential-for-international-investors-dar.htmlI hope to see Pakistan in May. Colt (TSX:V.GTP, Stock Forum) is one of the TCR 8.
Best TCR gainer this week: Pilot Gold (TSX:T.PLG, Stock Forum) after 6-gram-plus results from its Kinsley gold project in Nevada. The shares also are roaring, and I own it — as I do all the TCR 8 companies.
Speculative action: Take a look at West Africa Iron Ore, Guy DuPort’s company. (TSX:V.WAI, Stock Forum) in Canada. Crushed. Two-cent stock. Perhaps this is the time when many of these worthless equities become less worthless? I do NOT own the stock but might purchase some an hour or two after this goes to our TCR family Friday. I used to own WAI shares and sold at a loss in 2013.
Finally: Can’t wait to see the new Liam Neeson film about the air marshall. Out of one plane and into another, thankfully this one is on a screen. … Speaking of jets, I am not jetting to Toronto next week for PDAC. The idea here was first to get some acupuncture for my left hip after MRI and CT scans showed normal athletic wear and tear but came up with no reason for the extreme (9 out of 10) pain. (Except for 36 years of daily swimming, running and biking. I started at age 21 or so after wasted, literally, teen years.) I did that in Ulan Bator, electro-style — 5 needles into the hip and connected to a conductive wire, which delivers electrical impulses that jolt the area of pelvis, femur and thigh. The pain disappeared for two days and is back now. (By the way, the electrical part is to cut costs in part — as anyone who spends 45 minutes or more manipulating needles with hands, well, how do you scale up a business like that? Seriously, electro-acupuncture is interesting, and forceful in terms of the jolts to nerves, bones and body every two seconds or so. But is it better and more effective, more invigorating than organic acupuncture, which I got one year in Beijing whilst travelling with Robert Friedland? Absolutely not. I am scheduled early next week in California for the next clinical step: possibly cortisone injections, followed by more physical therapy; and/or orthopedic surgery of some type. All to get hip, I guess.
@thomcalandra for Twitter
Newera Resources poised to drill at Ulaan Tolgoi coal project in Mongolia(0)
Newera Resources (ASX: NRU) is poised to start 2,000 metres of diamond drilling to test for potential coal deposits underlying five seismic lines that have produced positive results at its Ulaan Tolgoi coking coal project in Mongolia.
In the first of two phases, it plans to drill two diamond holes of about 300 metres each into the best prospects identified as a pre-cursor to the 1,400 metre phase two.
The company has already completed all necessary regulatory and other requirements and notifications to enable drilling to begin once local weather permits.
In addition, the drilling contractor, Best Drilling, has re-located a suitable diamond drilling rig to the regional city of Dalanzadgad in preparation for easy transport to the Ulaan Tolgoi site.
Newera expects that by the time the rig has been mobilised to site and before commencement of the first hole, it will have earned a 51% interest in CMNM LLC – the Mongolian registered company holding 100% of the Ulaan Tolgoi exploration licence as its only asset.
The 43,000 hectare Ulaan Tolgoi project is located in the South Gobi province of Mongolia – 100 kilometres from the Chinese Border.
Minor coal outcrops and a number of water wells along the Nariin Sukhait thrust fault 300km to the west of Ulaan Tolgoi led to the discovery of the large MAK and Ovoot Tolgoi coking/thermal coal deposits.
Guildford Coal Ltd : Guildford Coal Limited – Mongolia Mine Commissioning, Baruun Noyon Uul mine(0)
ENP Newswire - 11 February 2014
Release date- 07022014 - Guildford Coal Limited (ASX: GUF) is pleased to announce that the Company’s Baruun Noyon Uul mine has been successfully and formally commissioned for operations and sales by the Mongolian Government.
This is a significant development milestone that enables the BNU mine to extract coal in readiness for first sale. We now await final permitting of the coal transport company that will deliver first Sales from the Mine to the coal distribution hub at Ceke, on the China border.
The Company has positioned itself as the project developer of choice in the region, an important step in providing other opportunities for future growth.
Tel: 07 3005 1533
(c) 2014 Electronic News Publishing -
Mongolia commissions Guildford Coal’s BNU mine(0)
The Mongolian Government has successfully and formally commissioned Guildford Coal’s Baruun Noyon Uul (BNU) mine for operations and sales.
The commissioning, which marks a significant development milestone, allows BNU mine to extract coal in readiness for first sale.
Guildford Coal is due to receive final permitting of the coal transport company to deliver first sales from the mine to the coal distribution hub at Ceke, on the China border, the company said.
Guildford Coal is an emerging resource explorer and hold projects in the prime coal bearing regions of Queensland, Australia and Mongolia, Central Asia.
Terra Energy, a unit of Guildford coal in Mongolia, also holds two projects in the coal bearing regions of the South Gobi and Middle Gobi.
Prophecy Coal Reports Preliminary Fourth Quarter Coal Production and Operation Update(0)
VANCOUVER, BRITISH COLUMBIA–(Marketwired – Feb 10, 2014) - Prophecy Coal Corp. (“Prophecy” or the “Company”) (PCY.TO)(PRPCF)(1P2.F) is pleased to follow up its announcement of November 4, 2013, and report its preliminary figures on coal production and sales volumes from its 100% owned Ulaan Ovoo mine (“Ulaan Ovoo”) in Mongolia for the fourth quarter ended December 31, 2013:
In early November 2013, the Company resumed mining operations at Ulaan Ovoo. Mining and road conditions to the Sukhbaatar rail siding (“Sukhbaatar”) are currently normal and coal is being sold on a continual basis to a number of Prophecy customers. The Company is pleased with coal production and sales volumes.
In 2014, the Company sold and successfully delivered a coal shipment from Sukhbaatar to a Russian customer. The coal was approximately 5,300kcal/kg GCV, 0.5% Sulphur, and 5% ash. Management recently visited a number of Russian coal end users with the goal of establishing continuous shipments to Russia in 2014.
In addition, the Mongolia Ministry of Road and Transportation recently issued the terms of reference (“TOR”) for the Zeltura Road feasibility study. After the TOR were issued, Prophecy started the feasibility study on upgrading the road from Ulaan Ovoo mine to Zeltura border.
Given that the mine is just 17km from the Zeltura border (as opposed to approximately 120km from the mine to Sukhbaatar), re-opening of the Zeltura border would reduce the transportation cost and potentially further increase coal sales to Russia. After the study is complete (target May 2014) and if accepted by the Ministry of Road and Transportation, the road upgrade can begin and is expected to take up to four months based on preliminary tenders received. The Company will advise when feasibility is completed and if accepted.
Concurrently, the Company is working with the Ministry of Finance on creating a customs clearing zone at Ulaan Ovoo for Russian exports. While the Company is pleased with the overall progress and appreciates the support from the Mongolian and Russian authorities, it cannot offer certainty or a definitive time frame to start transporting coal through Zeltura.
In July 2013, the Company applied for a concession with the Ministry of Economic Development (MOED) for the 600MW Chandgana mine mouth power project. Already with the power plant land use right, construction license, and coal mining license, Chandgana is an advanced green-field project designed to supply much needed electricity to a rapidly growing domestic Mongolia market. After extensive document submissions and discussions, the Mongolian Cabinet approved Chandgana as a concession project in January 2014. Subject to negotiations, a concession project may be entitled to stable tax rates, favorable VAT and customs duties, as well as other forms of government subsidies, endorsement and support; all of which can enhance bankability and lead to better financing options for the project. While the Company is pleased with the overall progress and appreciated support from various Mongolian authorities, it cannot offer certainty or a definitive time frame to conclude the Concession Agreement with MOED, or the Power Purchase Agreement with the Ministry of Energy.
As Prophecy’s results of operations for the 2013 fiscal year have not yet been finalized, the preliminary results included in this press release are subject to change as a result of the period-end closing process and the audit of Prophecy’s financial statements by its independent registered public accounting firm. Please see “Caution Concerning Preliminary Financial Results” below. Management and the Board of Directors look forward to providing further detail once the 2013 fiscal year figures are finalized.
About Prophecy Coal
Prophecy Coal Corp. is a Canadian company listed on the Toronto Stock Exchange engaged in developing energy projects in Mongolia. Further information on Prophecy Coal can be found atwww.prophecycoal.com.
PROPHECY COAL CORP.
ON BEHALF OF THE BOARD
JOHN LEE, Executive Chairman
Neither the Toronto Stock Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Toronto Stock Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Note Regarding Preliminary Financial Results
Prophecy is currently undergoing its year-end closing and audit process, which is not expected to be completed for some time after the date of this press release. Because Prophecy’s results of operations for the fourth quarter ended December 31, 2013 have not yet been finalized, the preliminary results included in this press release are subject to change as a result of the period-end closing process and the audit of Prophecy’s financial statements by its independent registered public accounting firm, Davidson & Company LLP. These changes may be material. The preliminary financial results included in this press release have been prepared by, and are the responsibility of, Prophecy’s management. Davidson & Company LLP has not completed its audit of Prophecy’s 2013 fiscal year financial statements, and accordingly, Davidson & Company LLP does not express an opinion or any form of assurance with respect to these preliminary financial results. These preliminary financial results are not (and Prophecy’s final financial results will not be) necessarily indicative of results of future operations. Accordingly, readers should not place undue reliance on Prophecy’s preliminary or final financial results. These preliminary financial results should be read in conjunction with Prophecy’s previously disclosed consolidated historical financial statements (and related notes) and related management’s discussion and analysis.
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this news release, including statements which may contain words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates”, or similar expressions, and statements related to matters which are not historical facts, are forward-looking information within the meaning of applicable securities laws. Such forward-looking statements, which reflect management’s expectations regarding Prophecy’s future growth, results of operations, performance, business prospects and opportunities, are based on certain factors and assumptions and involve known and unknown risks and uncertainties which may cause the actual results, performance, or achievements to be materially different from future results, performance, or achievements expressed or implied by such forward-looking statements. These estimates and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies, many of which, with respect to future events, are subject to change and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by Prophecy. In making forward-looking statements as may be included in this news release, Prophecy has made several assumptions that it believes are appropriate, including, but not limited to assumptions that: there being no significant disruptions affecting operations, such as due to labour disruptions; currency exchange rates being approximately consistent with current levels; certain price assumptions for coal, prices for and availability of fuel, parts and equipment and other key supplies remain consistent with current levels; production forecasts meeting expectations; the accuracy of Prophecy’s current mineral resource estimates; labour and materials costs increasing on a basis consistent with Prophecy’s current expectations; and that any additional required financing will be available on reasonable terms. Prophecy cannot assure you that any of these assumptions will prove to be correct.
Numerous factors could cause Prophecy’s actual results to differ materially from those expressed or implied in the forward looking statements, including the following risks and uncertainties, which are discussed in greater detail under the heading “Risk Factors” in Prophecy’s most recent Management Discussion and Analysis and Annual Information Form as filed on SEDAR and posted on Prophecy’s website: Prophecy’s history of net losses and lack of foreseeable cash flow; exploration, development and production risks, including risks related to the development of Prophecy’s Ulaan Ovoo coal property; Prophecy not having a history of profitable mineral production; the uncertainty of mineral resource and mineral reserve estimates; the capital and operating costs required to bring Prophecy’s projects into production and the resulting economic returns from its projects; foreign operations and political conditions, including the legal and political risks of operating in Mongolia, which is a developing jurisdiction; title to Prophecy’s mineral properties; environmental risks; the competitive nature of the mining business; lack of infrastructure; Prophecy’s reliance on key personnel; uninsured risks; commodity price fluctuations; reliance on contractors; Prophecy’s minority interest in Prophecy Platinum Ltd.; Prophecy’s need for substantial additional funding and the risk of not securing such funding on reasonable terms or at all; foreign exchange risks; anti-corruption legislation; recent global financial conditions; the payment of dividends; and conflicts of interest.
These factors should be considered carefully, and readers should not place undue reliance on the Prophecy’s forward-looking statements. Prophecy believes that the expectations reflected in the forward-looking statements contained in this news release and the documents incorporated by reference herein are reasonable, but no assurance can be given that these expectations will prove to be correct. In addition, although Prophecy has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Prophecy undertakes no obligation to release publicly any future revisions to forward-looking statements to reflect events or circumstances after the date of this news or to reflect the occurrence of unanticipated events, except as expressly required by law.
Prophecy Coal ramps up Mongolian activities(0)
TORONTO (miningweekly.com) – Mongolia-focused thermal coal producer and power plant project developer Prophecy Coal on Monday reported that it had successfully restarted mining at its flagship Ulaan Ovoo coal mine last November, and had recorded continual sales and deliveries to its customers during the fourth quarter ended December 31.
During the period, Prophecy had sold 69 296 t of thermal coal.
In July of 2012, Prophecy temporarily suspended Ulaan Ovoo coal mining operations owing to the coal stockpile at the time, of 187 000 t, being sufficient to meet contractual supply obligations through the balance of the year.
Prophecy said it was focused on securing across-the-border Russian customers, having sold and delivered one such coal shipment this year.
“Management recently visited a number of Russian coal end-users with the goal of establishing continuous shipments to Russia in 2014,” it said.
The Ulaan Ovoo thermal coal mine is strategically located 17 km from the Russian border and 120 km from both Mongolian and Russian rail links. The mine has a Canadian National Instrument 43-101-compliant resource of 174-million tons in the measured category and 34-million tons of coal in the indicated category.
The coal is bituminous with an energy content of 5 040 kcal/kg, has a low ash content at 11.3%, low sulphur at 0.40% and is suitable for export. The mine features a single massive coal seam that is 45 m to 80 m thick with an average strip ratio of 1.8:1. The first eight years of mining requires no coal washing.
Ulaan Ovoo coal mining operations were temporarily suspended owing to the stockpile of coal at the time (187 000 t) being sufficient to meet contractual supply obligations through the balance of 2012 and 2013.
Prophecy in October said it had added a third offtake partner for its Ulaan Ovoo mine, after it had struck an accord with a new customer with “substantial presence” in the region to buy 30 000 t/m.
The company’s asset would also supply more than 30 000 t/m of coal to cement plants, a metallurgical plant, a heat plant, chemical plants and Russian traders, all of which signed binding agreements over the past two months.
The company had also recently executed a coal sales contract of significant quantity with a buyer in Russia, which is contingent on the ability to transport coal through the Zeltura border. Prophecy said a Mongolian government resolution had listed the border as being “under renovation”, meaning it was neither open, nor closed.
Despite the company having offered to assist in renovating the associated Zeltura infrastructure, including the customs clearing facility at the mine, and road improvement from the mine to Zeltura, it could not give a definitive timeframe to start transporting coal through the border post.
Prophecy on Monday said that the Mongolia Ministry of Road and Transportation had recently issued the terms of reference (TOR) for the Zeltura Road feasibility study. After the TOR was issued, Prophecy started the feasibility study on upgrading the road from Ulaan Ovoo mine, to the Zeltura border crossing.
Given that the mine is just 17 km from the Zeltura border, as opposed to 120 km from the mine to Sukhbaatar, re-opening the Zeltura border would reduce the transport costs and potentially further lift coal sales to Russia.
After the study is complete, expected by May, and if accepted by the Ministry of Road and Transportation, the road upgrade would start and is expected to take up to four months based on preliminary tenders received.
Concurrently, the company said it was working with the Finance Ministry on creating a customs-clearing zone at Ulaan Ovoo for Russian exports.
While the Prohpecy said that it was pleased with the overall progress and appreciated the support from the Mongolian and Russian authorities, it could offer certainty or a definitive time frame to start transporting coal through Zeltura.
Meanwhile, Prophecy announced that the Mongolian Cabinet had last month approved the 600 MW Chandgana mine mouth power project as a concession project.
The company had applied for the concession from the Economic Development Ministry in July.
Subject to negotiations, a concession project may be entitled to stable tax rates, favourable value-added tax and customs duties, as well as other forms of government subsidies, endorsement and support; all of which can enhance bankability and lead to better financing options for the project.
The advanced green-field project designed to supply much needed electricity to a rapidly growing domestic Mongolia market, already held a power plant land use right, construction license, and coal mining licence..
Guildford Coal edges closer to coal sales from Mongolia mine(0)
Guildford Coal (ASX: GUF) is close to starting coal sales from its Baruun Noyon Uul mine in Mongolia after it was successfully and formally commissioned for operations and sales by the government.
This enables the company to extract coal in readiness for first sale and it is now waiting on final permitting of the coal transport company that will deliver the coal to the coal distribution hub at Ceke, on the China border.
Guildford had in December completed a key 98 kilometre current haul road connecting the Baruun Noyon Uul mine with the coal distribution hub at Ceke, at the China border.
The project consists of five tenements located in the South Gobi Province (Umnigovi Aimag) of the country, which are located around 1,000 kilometres south-west of the Mongolian capital of Ulaanbaatar.
The licenses are well situated to tap the end user market, due to being just 60 kilometres from the Chinese border station of Ceke, where coal from Mongolia is currently transported through to China.
Baruun Noyon Uul – formerly North Pit – has the potential to ramp up to produce in excess of 3 million tonne per annual from an open-cut coking coal operation.
The project is also strategically located 50 kilometres east of Nariin Sukhait which includes South Gobi Resources’ Ovoot Tolgoi mine and the MAK mine, which produce and export coking and thermal coal to customers in China.
Sharyn Gol mine to produce clean fuel briquettes for Mongolians(0)
New efforts to improve environmental conditions in Ulaanbaatar are currently underway, with the European Bank for Reconstruction and Development (EBRD) set to lend 10 million USD to Mongolian coal producers Sharyn Gol JSC for the development of plants to supply washed coal and smokeless fuel briquettes to Ulaanbaatar. The loan will allow for the acquisition and installation of a de-stoning plant and the upgrade and expansion of a coal enrichment and briquetting plant, with view to ‘cleaner coal’ being used to lessen the effects of harmful air pollution.
The washed coal and coal briquettes from these facilities will go to industrial consumers for use in processes such as smelting and cement production, and to households for domestic heating. The expanded facilities following completion of the first phase of the project are expected to produce over 75 thousand tons of semi-coke and briquetting products per annum.
Short URL: http://ubpost.mongolnews.mn/?p=7463
SouthGobi 2013 Coal Output More Than Doubles as Mine Restarts(0)
Production rose to 3.06 million metric tons last year, from 1.33 million tons in 2012, Vancouver-based SouthGobi said in a statement to the Hong Kongstock exchange today.
The increase may signal a turnaround for SouthGobi, whose shares plunged 56 percent last year in Hong Kong. The company has been dogged by issues including a failed takeover bid by Aluminum Corp. of China Ltd. that was blocked by Mongolia, as well as a halt in production and a corruption probe.
“The rate of production in the first quarter of 2014 will be paced to meet contracted sales tonnages,” SouthGobi said in the statement. “The company expects sales volume in the first quarter of 2014 to decrease compared to the fourth quarter of 2013,” it added, citing national holidays for the slowdown.
Operations at its Ovoot Tolgoi mine were halted in June 2012 on uncertainty caused by the takeover bid and deteriorating market conditions. The company restarted production in March last year and said at the time that it planned to produce 3.2 million tons of semi-soft coking coal in the remainder of 2013.
Shipments of coal, Mongolia’s biggest earner, declined 41 percent by value last year, leading to a 2.6 percent drop in export income, the National Statistics Office said this week.
SouthGobi is 56 percent-owned by Turquoise Hill Resources Ltd. (TRQ), according to data compiled by Bloomberg. Vancouver-based Turquoise Hill operates the Oyu Tolgoi copper mine in Mongolia, which is forecast to account for about a third of the country’s economy when in full operation.
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