Guildford Coal: Terra Energy poised to begin coking coal mining at South Gobi
Guildford Coal’s (ASX: GUF) 75%-owned subsidiary Terra Energy is set to begin mining on the North Pit at its South Gobi Project in Mongolia in the September 2012 quarter, ahead of first coking coal production in November.
Production for the first year at the North Pit is forecast to be in excess of 3 million tonnes, with mining costs estimated to be in the lowest quartile.
Start-up capital expenditure is estimated at just over $10 million, with the operation set to be cashflow positive by the end of 2012.
The North Pit is planned as an open cut coking coal operation ramping up to in excess of 4 million tonnes per annum.
Path to production
A pre-mining agreement has been granted over the North Pit, and experienced Mongolian contractor Grand Power Mining has been appointed as mining contractor to begin mining operations.
The mining operations will be headed by the leadership team that managed the start-up of the Erdenes Tavan Tolgoi Project for McMahon Holdings (ASX: MAH).
The mining contract delivers total mining costs in line with Terra Energy’s expectations for the South Gobi Project and also meets the timelines for mining to begin in September 2012.
Offtake agreement
Terra Energy has secured a long term offtake agreement with the Sojitz/Erdos Joint Venture which is expected to be finalised by the end of September.
The Sojitz Corporation is a diversified Japanese holding company that operates in a variety of industries, including energy and metal resources.
The company reported revenues of ¥4.5 trillion (A$55.6 billion) and net profit of ¥3.6 billion for the financial year ended March 2012.
In June 2012, Sojitz announced its acquisition of a 10% stake in a Chinese resources and coal distributor, Inner Mongolia Zhongmeng Coal Co (Zhongmeng) – a unit of the large Inner Mongolia Erdos Group, to help support and boost sales to China from Mongolia.
The Heads of Agreement executed between Terra and the Sojitz/Erdos Joint Venture provides for direct sales of run of mine coal up to 1 million tonnes per annum at minegate, and transportation service into China.
Strategic location
The South Gobi Project, which hosts a JORC Resource of 70.4 million tonnes of coking coal, is strategically located about 50 kilometres east of Nariin Sukhait that includes SouthGobi Resources’ (SGS) Ovoot Tolgoi mine and the MAK mine, which produce and export coking and thermal coal to customers in China.
The project, which comprises five tenements, is located in the South Gobi Province (Umnigovi Aimag) of Mongolia about 60 kilometres from the Chinese border station of Ceke, where coal from Mongolia is currently transported through to China.
Production for the first year at the North Pit is forecast to be in excess of 3 million tonnes, with mining costs estimated to be in the lowest quartile.
Start-up capital expenditure is estimated at just over $10 million, with the operation set to be cashflow positive by the end of 2012.
The North Pit is planned as an open cut coking coal operation ramping up to in excess of 4 million tonnes per annum.
Path to production
A pre-mining agreement has been granted over the North Pit, and experienced Mongolian contractor Grand Power Mining has been appointed as mining contractor to begin mining operations.
The mining operations will be headed by the leadership team that managed the start-up of the Erdenes Tavan Tolgoi Project for McMahon Holdings (ASX: MAH).
The mining contract delivers total mining costs in line with Terra Energy’s expectations for the South Gobi Project and also meets the timelines for mining to begin in September 2012.
Offtake agreement
Terra Energy has secured a long term offtake agreement with the Sojitz/Erdos Joint Venture which is expected to be finalised by the end of September.
The Sojitz Corporation is a diversified Japanese holding company that operates in a variety of industries, including energy and metal resources.
The company reported revenues of ¥4.5 trillion (A$55.6 billion) and net profit of ¥3.6 billion for the financial year ended March 2012.
In June 2012, Sojitz announced its acquisition of a 10% stake in a Chinese resources and coal distributor, Inner Mongolia Zhongmeng Coal Co (Zhongmeng) – a unit of the large Inner Mongolia Erdos Group, to help support and boost sales to China from Mongolia.
The Heads of Agreement executed between Terra and the Sojitz/Erdos Joint Venture provides for direct sales of run of mine coal up to 1 million tonnes per annum at minegate, and transportation service into China.
Strategic location
The South Gobi Project, which hosts a JORC Resource of 70.4 million tonnes of coking coal, is strategically located about 50 kilometres east of Nariin Sukhait that includes SouthGobi Resources’ (SGS) Ovoot Tolgoi mine and the MAK mine, which produce and export coking and thermal coal to customers in China.
The project, which comprises five tenements, is located in the South Gobi Province (Umnigovi Aimag) of Mongolia about 60 kilometres from the Chinese border station of Ceke, where coal from Mongolia is currently transported through to China.
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