TerraCom looks to increase output at BNU coal mine
TerraCom, a resource company that operates in Mongolia and Australia, revealed that it has the potential to expand production at its Baruun Noyon Uul (BNU) coking coal mine to three million tons annually...
TerraCom, a resource company that operates in Mongolia and Australia, revealed that it has the potential to expand production at its Baruun Noyon Uul (BNU) coking coal mine to three million tons annually.
The company told its shareholders that following an extensive exploration program, the company has compiled a detailed execution plan, which is forecast to deliver targeted yearly production of three-million tons from BNU.
According to TerraCom, the plan would involve the progressive opening of additional multiple pits, which would improve efficiency through spread of costs and overheads over higher volumes, lower the overall unit costs, and improve run-of-mine coking coal quality, providing a higher price point potential.
On Friday, the company held discussions with its existing customer base regarding the sale of the additional coal volumes. The company is targeting early 2019 as the period to begin coal production of three million tons annually. In the second quarter, the BNU project output was 246,408 tons of coal, with the mine currently producing at rates to meet sales obligations under a five-and-a-half-year off take contract to one of the largest private coal companies in China.
Terra Energy owns and operates BNU coking coal mine in Noyon soum, Umnugovi Province. The license is located on 17,432 hectares of land. Production at the mine successfully restarted in late 2014, with all major equipment re-commissioned. The project is strategically located approximately 80 km east of Nariin Sukhait, which includes the strategic South Gobi Resources (SGS) Ovoot Tolgoi coal mine, and the large MAK coking coal mine.
In June, TerraCom announced that it uncovered a new coal deposit within the Noyon coal basin. 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 BNU coking coal mine infrastructure.
“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.
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.
BNU is a coking coal mine producing 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 company has said that the coal sales include trial shipments into the Japan and Korea thermal coal markets. TerraCom’s previous stated goal was to export 1.3 to 1.5 million tons per year to Japan and Korea. With the new plan, the company is likely to increase its planned sales into its core market base of China, Japan, and Korea.