TerraCom expects to resume mining at Baruun Noyon Uul (BNU) Coking Coal Project in Mongolia’s South Gobi region during the current quarter. Mining will restart after the mine’s coal stockpiles are sufficiently depleted with Pit 2 ready for mining at an annual rate of 1.5 million tonnes.
Coal from BNU continues to be transported, processed and sold to Chinese customers through a newly established supply chain, which has resulted in improved yield results, middlings recovery and ash control, thereby generating additional value. The company’s efforts were boosted by a price increase in hard coking coal for sales in the June quarter.
The new supply chain process included full commissioning of a coal washery in Ceke and integrating a new set of trucking providers.
During February 2016 TerraCom’s Mongolian subsidiary Terra Energy enacted a slowdown of site operations for the Tsaagan Sar traditional holiday period without incident. The slowdown continued in the June quarter while the alternative supply chain delivered significant stockpiles of coal to end users.
TerraCom says that the Chinese hard coking coal market has stabilized and there are initial signs of recovery for premium products such as BNU hard coking coal with prices going from CNY495 per tonne for Q1 sales to CNY505 for Q2 sales, on a Free on Transport basis at Ceke in China.
Terra Energy has also been able to develop new market products at differing ash levels to provide the required coal to regional end users whilst maintaining operating margins through efficient use of the new coal processing plant.
The Terra Energy team completed an exploration strategy review in March 2016 identifying and ranking a number of highly prospective targets across the 50km of identified coal strike within the South Gobi assets.
This program is planned to deliver targets to enable further expansion of the production profile to match demand and capacity in the supply chain. It is planned to commence in the current quarter.
In June Terra Energy was granted an additional licence in the Uvs project region through tender by the Minerals Resource Authority of Mongolia (MRAM). The Uvs project is a strategic project for TerraCom in northwest Mongolia with potential for the discovery and development of multiple commodities.
The new licence compliments the current Uvs licences, bringing Terra Energy’s holding to a total of five exploration licences. It is adjacent to the current licences and has been granted for three years. Following this term, a further three years can be granted in stages, up to 12 years, following approval by MRAM.
The initial exploration strategy is being implemented for the project with first stage work focusing on defining key target areas. The first stage will be defining the 2D structure with insitu mapping using radiometrics to target marker units. The second stage will define the 3D structure using electronic survey and is planned to determine the existence of brines due to their high conductivity.
In the South Gobi continued regional development has included the definition of new coking coal targets within the extensive Terra Energy project area.
Terra Energy has identified a number of new targets, most notably, a new target basin to the north of the existing highly prospective Noyon Basin which includes BNU and Khar Servegen. An additional target was also identified in the Hovgunn mining licence, identifying new coal bearing zones.