South Gobi Resources says a record year of exploration in 2011 has led to massive resources and reserves increases at its flagship Ovoot Tolgoi coal complex in southern Mongolia.

The company has updated its NI 43-101 measured and indicated resource by 14% to 302.3 million tonnes and inferred resource to 86 million tonnes, while the proven and probable reserves have jumped by 65% to 175.7 million tonnes. The Soumber deposit measured and indicated resource increased by 124% to 137.3 million tonnes, and the inferred resource by 26% to 83 million tonnes.

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A maiden NI 43-101 compliant resource estimate for the Zag Suuj deposit includes a measured and indicated 17 million tonnes and 66 million tonnes of inferred resources. Zag Suuj lies about 150km east of the Ovoot Tolgoi complex, within the Ovoot Khural basin.

The increased reserve base allows for an increased steady-state annual run-of-mine production rate of about 9 million tonnes, which is expected to be achieved by 2015.

“We are very pleased and excited about the updated resources and reserves,” says SouthGobi’s president Alexander Molyneux. “In addition to operating our flagship Ovoot Tolgoi mine, we continue to be a true exploration company, differentiating us from most Chinese and Mongolian peers. Our significant resources will be the basis for substantial volume growth over the next 5-7 years as we establish their economic viability and subsequently bring these properties into production.”

Resources in the Ovoot Tolgoi coal complex are spread across two separate resource areas known as the Sunrise and Sunset fields, 320km southwest of the provincial capital and about 40km north of the China-Mongolia border, making it the closest Mongolian coal resource to China.

A dry coal handling facility (DCHF) with the capacity to annually process 9 million tonnes of run-of-mine (ROM) coal was commissioned at the mine in February.

www.southgobi.com

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