The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region
Issue link: https://asiaminer.epubxp.com/i/632337
26 | ASIA Miner | Volume 13 • Issue 1 | 2016 NORTHERN Railways LLC has received its construction licence from the Mongolian Government for the Erdenet to Ovoot Railway. This is a precondition for start of negotiations with the government for granting of a long-term lease over the land on which the line will be built. The licence also provides for Northern Railways to then enter into land use agreements with the local communities and allows for establishment of a commission comprising Northern Railways, the Ministry of Roads and Transport and Mongolia's national railway operator UBTZ to agree traffc management protocols and the point at which the railway connects to the existing UBTZ network. It follows the signing of a concession agreement with Northern Railways on September 3, 2015. Northern is the Mongolian rail in- frastructure subsidiary of ASX-listed Aspire Mining. The rail project will span 547km and forms part of Mongolia's pol- icy to provide rail access to northern provinces through extension of its existing rail network from Erdenet to the Russian/Mongolian border at Arts Suuri. The project will have capacity to annually move up to 30 million tonnes of bulk commodities, agricultural, general and passenger freight between Russia and China. It will also provide access to Aspire's world-class Ovoot Coking Coal Project, which is the second largest coking coal project by reserves in Mongolia as well as the Nuurstei Coking Coal Project 90% owned by the Ekhgoviin Chuluu Joint Venture (ECJV), in which Aspire owns 50% and is the operator while Noble Group holds the other 50%. Meantime, non-core drilling completed by ECJV at Nuurstei has identifed coal seams to a depth of 180 metres with the basement rock not yet intersected. The program began in July 2015 with 24 non-core drill holes and 19 PQ diamond core holes completed. The diamond holes provided coal for sampling and identifed seams of potential economic interest. Results indicate steeply dipping and banded seams with a large number of seams identifed in the 150-180 metre deep holes. His- torical drilling showed that coal in multiple thin seams was intersect- ed well below the current level of drilling. The best reported intersection was 6.94 metres from 61.2 metres with another strong intersection of 5.6 metres from 34.7 metres. Twelve other seams identifed in the latter provided a total of 26.39 metres of coal from surface to 108 metres. The strike length of correlated seams has been identifed over 1.6km, up from 1.2km reported following completion of the 2014 exploration program. THE ramp-up to annual production of 1.5 million tonnes of coking coal production was expected to be completed by TerraCom Limited by the end of 2015 at Baruun Noyon Uul (BNU) mine in the South Gobi region. Until recently TerraCom was known as Guildford Coal with the name change forming part of a strategic review of the ASX-listed com- pany. During the September quarter stripping of overburden was complet- ed at BNU Pit 2 and mining of the coal in this pit has commenced. The Mongolian team has been focusing on driving down total pro- duction costs with some impressive results. Unit Direct Cost for Total Material Movement achieved for the September quarter was US$1.89 per cubic metre. The direct cash cost positive margin on hard coking coal product from BNU was forecast to be between US$9 and US$11/tonne during the December quarter. Strong operational performance has maintained forecast margins despite continued weakness in coking coal markets. Lower product yield has been reviewed and alterations to the Ceke coal bene- fciation plant confguration and process are being considered to sustain and improve product yield performance. This is critical to sustaining and improving the BNU mine forecast product margin. The Terra Energy team in Mongolia has also managed the conver- sion of the adjoining Khar Servegen exploration licence into a mining licence which is expected to add value and increase the life of BNU operations. Detailed work for the staged development of this proj- ect is being completed including coal quality review, data analysis, model analysis and compliance review. Planning has been put in place to expedite mining. Mining licences have also been sought for three other areas in the South Gobi. As a consequence of continuing weak global market conditions, volatility in the resource market has become the norm, and is pre- senting signifcant economic and funding challenges for TerraCom, which has remained focused on delivering the recommendations of a strategic review completed in early 2015. A critical aspect has been restructuring of fnances to reduce the debt burden and exploring alternative funding options. The review also involved rebranding with the company believing the new name better refects its strategic direction. Other recommendations include a potential listing on an Asian stock exchange while the company's Brisbane corporate offce in Queensland was closed in July 2015 and relocated to Townsville, which resulted in a reduction in staffng levels. Construction licence for Northern Railways Production from the second open pit at TerraCom's BNU Coking Coal Proj- ect in the South Gobi region is under way. BNU maintains forecast coal margins