ASX-listed Xanadu Mines has finalized a farm-in agreement on the Nuurstei Coking Coal Project as part of its strategic alliance with Noble Group Limited. The project is in northern Mongolia, west of Erdenet city.1

The earn-in agreement will be undertaken via Ekhgovin Chuluu LLC, an entity established to seek out and develop new coking coal opportunities as part of the alliance.

Ekhgovin Chuluu can earn up to 80% of the Nuurstei licences by meeting various spending commitments over four years. These include up to US$1.5 million on drilling to earn the first 60%, followed by a commitment to complete a JORC resource to earn a further 20%.

A comprehensive reconnaissance drill program has already started at Nuurstei with one multi-purpose rig operating on a double shift basis. It is anticipated that the first phase will include 3500 metres of diamond and mud rotary drilling and will take at least two months to complete. Preliminary coal quality results will be available in early July.

The Nuurstei deal represents the first major coking coal acquisition for the Xanadu-Noble alliance which was create in March 2011. The deal underpins the core strategy of Ekhgovin Chuluu which aims to identify and develop significant coking coal opportunities close to existing infrastructure that will meet current and future demands from China and North Asian markets.

Xanadu’s chairman Brian Thornton says, “Nuurstei demonstrates the determination by the alliance to become the principal mid-tier coking coal group operating in Mongolia, now commonly referred to as an emerging energy and metals powerhouse.”

Xanadu recently completed a detailed 74-hole drilling program at its Galshar Thermal Coal Project as part of its strategy to convert the resource to JORC classification. This wok is expected to be completed in August.