TerraCom uncovers new coal deposit near Baruun Noyon Uul mine
TerraCom, a resource company that operates in Mongolia and Australia, announced that it uncovered a new coal deposit within the Noyon coal basin in Umnugovi Province.
The company, listed on the Australian Securities Exchange (ASX), announced that its exploration program targeting shallow open cut mineable coal within its Mongolian mine uncovered a new Permian period coal deposit 12 km south of the Baruun Noyon Uul (BNU) coking coal mine infrastructure.
TerraCom’s subsidiary in Mongolia, Terra Energy, has two projects located in the coal bearing regions of the South Gobi and Middle Gobi, the BNU coking coal mine is located in South Gobi. The new deposit is being referred to as BNU South, was initially identified using multi stage ground geophysics to determine target areas. The first phase of drilling saw contractor Universal Drilling LLC utilize three drill rigs to explore 42 holes for 6,803 meters. Full downhole geophysical survey was conducted by Monkarotaj LLC.
“Coal intersections occurred along the five km of strike drilled. Very thick coal intersections, with up to 122 m total gross coal, were determined within what is now considered a ‘high priority area’ for further drilling, approximately 600 m long by 300 m wide. The large shallow coal intersections in this area are by far the thickest thus far discovered within the company’s license in Mongolia,” said TerraCom in a statement. TerraCom said it has already commenced Phase 2 drilling with focus on the high priority area of thick coal intersections, to increase geological confidence.
BNU is a coking coal mine that produces an estimated 1.5 million tons of coal, which is exported to China. The mine has an established infrastructure to support the mining operation which consists of the progressive development of pits along the Noyon coal basin sub crop.
The BNU South deposit is located within the BNU mining license held by Tsagaan Uvuljuu LLC, a wholly owned subsidiary of TerraCom. The license is situated in Umnugovi Province, 940 km south-west of Ulaanbaatar and 145 km from the Shiveekhuren-Ceke border crossing between Mongolia and China. Recently, TerraCom has fully commissioned the BNU coking coal mine. Export shipments under a 5.5 year offtake agreement have commenced on schedule. The company’s stated goal is to become one of the largest and highest quality coking coal producers in Mongolia, providing value for its steel-producing customers.
“Being only approximately 12 km south of the operating BNU coking coal mine infrastructure, the BNU South deposit could potentially become part of the multiple pit operation at BNU. This would allow existing infrastructure to be leveraged in support of rapid development of the deposit pending further information,” the company said.
“This deposit, if proven, has the potential to significantly reduce operating costs and increase output from the BNU mine,” said Chairman of the company Wal King.
The news of the new discovery increased the stock price of TerraCom by 7.4 percent on the Australian Stock Exchange.
The board of TerraCom recently announced that the company has secured buyers for coal sales for the June 2018 quarter totaling 532,000 tons. The average selling price is forecasted to be USD 78 per ton, which will generate 41.5 million USD in revenue for the company. With this selling price, the company estimates that it will be able to achieve a margin of 41 AUD per ton.
The company has said that the coal sales include trial shipments into the Japan and Korea thermal coal markets. TerraCom’s goal is to export 1.3 to 1.5 million tons per year into Japan and Korea.