GUILDFORD Coal's Mongolian subsidiary Terra Energy has executed the first sales contract for coal produced from Baruun Noyon Uul (BNU) mine in southern Mongolia. The contract represents the first shipment of 8000 tonnes of coal from the mine to be sent for supply chain and coal wash testing.

Once washed, the coal will be delivered to the company's preferred end users in China who will provide further feedback on the BNU product. The first trucks were scheduled to leave the mine on August 25 with washing expected to begin thereafter. Further deliveries of coal are also anticipated of about 12,000 tonnes.

Guildford Coal's managing director Peter Kane says trucking of the first batch from BNU is a significant milestone. "The Board of Guildford would like to thank all of the project stakeholders for their patience and support leading up to first sale. The Board is excited about the further development of the BNU mine and exploring the company's other mining licences."

Terra Energy controls tenements contained in two projects in Mongolia. The coal projects are in the coal-bearing basins of the South Gobi and Middle Gobi which contain thermal and coking coals.

In early July, 2014, the company announced it had secured a haulage permit from the Mongolian Ministry of Roads and Transport which allows transport of coal from BNU. The 98km haul road was completed in late 2013.

Negotiations for this approval extended over six months and included formal inspections and working committee briefings. The company is confident that the transport can be undertaken in a way that is sensitive to the needs of the local communities in the area and protects the environment.

The permit cleared the way for coal to be transported along the new road, and subsequently through the Shivee Khuren border crossing in Mongolia and onto Ceke in China. Commercial arrangements are in place for a Mongolian company to transport the coal.

Early interest in BNU coal was expressed by a number of Chinese companies, including Shenhua Wuhai, Taixi Wuhai, Jiuquan Iron and Steel Group Gansu, Qunhua Inner Mongolia and Jinda Wuhai.

The BNU North Pit operations began early in the June quarter in a reduced operations phase whereby only limited development work was undertaken while awaiting approval of the haul road. Due to the delays operations were further scaled back to a care and maintenance basis in early May which was considered necessary as the operation had sufficient coal on stockpiles and exposed within mining operations to commence trial shipments at short notice.

At the conclusion of the trial batches completed ramp-up plans for production will begin.

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