The Asia Miner

SEP-OCT 2014

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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22 | ASIA Miner | September/October 2014 ERDENE Resource Development Corp is preparing for the next ex- ploration phase at the Altan Nar (Golden Sun) project. The program is expected to begin during the third quarter and will include delineation and exploration drilling, trenching and expanded geotechnical surveys. Erdene's technical group has compiled, reviewed and interpreted re- sults of the second quarter 2014 program which have been incorpo- rated in the design of the next exploration phase. The company hopes the next phase during the remainder of 2014 will enable it to establish a maiden NI43-101 compliant resource and to identify further gold, silver, lead and zinc mineralization amenable to open pit development. During the second quarter, the company reported its best results to date from drilling at Altan Nar. These included the highest grade gold interval drilled at the project with 17.7 grams/tonne gold over 5 metres, within 19 metres @ 5.8 grams/tonne gold, 37 grams/tonne silver and 2.49% combined lead and zinc, intersected in the Discovery Zone (DZ), and up to 24 metres exceeding 2 grams/tonne gold at the Union North target, more than 1km north of the DZ. These near-surface mineralized zones have also been exposed at surface through trenching. The DZ strike length was extended to 450 metres and is still open to the northeast and at depth where drilling re- turned 6 metres @ 4.8 grams/tonne gold from 235 metres. Union North has been tested over a 150 metre strike length through trenching and drilling, and remains open in all directions. During the second quarter Erdene also completed an expanded sur- face exploration program, an induced polarization (IP) geophysical survey, close-spaced infll geochemical soil sampling and rock chip sampling. Results from this program support the continued expansion of the gold-polymetallic mineralization within the 5.6km by 1.5km target area at Altan Nar and has resulted in improved defnition of 12 highly pro- spective targets. Two of these targets, DZ and Union North, have been shown to host signifcant near-surface mineralization while the remain- ing 10 targets are relatively untested by trenching and drilling. 2014 exploration at the Khuvyn Khar copper project, 40km east of Altan Nar, has included feld evaluation of the seven porphyry copper drill targets identifed during the 2013 program and geophysical charac- terization studies of drill core to provide further defnition and confdence in the modelling of potential mineralization. Geochemical rock chip sampling, vein density mapping and geo- physical modelling has resulted in the identifcation of new, partially buried targets in the western and central portion of the Khuvyn Khar target area. Plans are being developed for additional work. The ongoing exploration program continues to confrm the potential for copper-rich porphyry-style mineralization. TURQUOISE Hill Resources has entered into a share purchase agree- ment to sell a 29.95% stake in SouthGobi Resources to National United Resources Holdings Ltd (NUR), a Hong Kong-based public company listed on the main board of the Stock Exchange of Hong Kong Limited. After the sale Turquoise Hill will continue to hold more than 48 million shares of SouthGobi, representing a 26% holding. Under the proposed transaction, approximately Can$12.8 million in cash will be received by Turquoise Hill at closing and deferred consid- eration of approximately Can$12.8 million will be payable to Turquoise Hill one year after the closing of the transaction. SouthGobi is listed on the Toronto and Hong Kong stock exchang- es, in which Turquoise Hill Resources, also publicly listed in Toronto and New York. Turquoise Hill took management control of SouthGobi in September 2012 and made changes to the board and senior manage- ment. Rio Tinto has a majority shareholding in Turquoise Hill. SouthGobi is focused on exploration and development of its metallur- gical and thermal coal deposits in Mongolia's South Gobi region. It has a 100% shareholding in SouthGobi Sands LLC, a Mongolian registered company that holds the mining and exploration licences in Mongolia and operates the fagship Ovoot Tolgoi coal mine. Ovoot Tolgoi produc- es and sells coal to customers in China. In its second quarter report SouthGobi stated that it continues to op- erate under diffcult market conditions with coal prices in China declin- ing further in the quarter in response to excess seaborne and Chinese domestic supply. It says the decline in prices has been partially offset by an increase in sale volumes. Production from Ovoot Tolgoi decreased to 550,000 tonnes of raw coal in the second quarter of 2014 compared to production of 640,000 tonnes in the previous quarter. However, during the second quarter the company shipped 910,000 tonnes. Revenue was recognized in respect of 630,000 tonnes with the remaining 280,000 tonnes expected to meet all revenue recognition requirements in the second half of 2014. In light of the current market, the company continues to pace its produc- tion with current demand. As a result, SouthGobi operated signifcantly be- low its operating capacity in the second quarter. In June following a review of operations, it further reduced its production and placed about half of its workforce in furlough. This furlough was anticipated to remain in place until at least the end of August subject to market conditions. On June 26, the Ovoot Tolgoi mine site experienced torrential rain and fooding which temporarily interrupted mining operations. The region was subject to further rainfall in July but the impact on the company's operations is not expected to be material. Turquoise Hill sells SouthGobi stake Mineralized core samples from Erdene's exploration projects in southwest Mongolia Erdene continues Altan Nar exploration

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