The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region
Issue link: https://asiaminer.epubxp.com/i/830355
30 | ASIA Miner | Volume 14 • Issue 2 | 2017 AN updated estimate for SouthGobi Resources' Ovoot Tolgoi Coal Project has resulted in an increase in resources. The deposit now has measured resources of 201.9 million tonnes, indicated re- sources of 100.3 million tonnes and inferred resources of 89 million tonnes. The new estimate, prepared by Dragon Mining Consulting Limited (DMCL), is a consequence of material changes in some key as- sumptions underlying the analysis of resources subsequent to the last detailed review in 2016, particularly those relating to changes in market conditions in China, geologic analysis, optimised mining strategy and processing strategy. The estimate is materially different from the previous estimate due to the following: • Geology Type classification has been re-categorised from 'Se- vere' to 'Complex', which led to a different requirement of spa- tial distribution of geological data and resource categorisation. Resource categories have been re-classified accordingly and this has resulted in re-designation of measured resources in the overall resource portfolio. • In-pit resources have been more conservatively constrained to a depth of 300 metres, compared to 350 metres. • Underground resources have been re-established as resources and considered to be a reasonable prospect for eventual eco- nomic extraction due to recovering coal market conditions in China and the company's long-term plan for a near mine thermal power plant, which is expected to generate substantial demand for thermal coal for electricity generation. • A more conservative approach was adopted compared to the last technical report in 2012 that contemplated potential eco- nomic extraction for the underground portion of the deposit, such that only underground resources to a depth of 500 metres were considered to be of a reasonable prospect for eventual economic extraction. The in-pit estimate now totals 144.3 million tonnes in the mea- sured category, 50.3 million indicated tonnes and 32.1 million in- ferred tonnes. The underground estimate totals 57.6 million mea- sured tonnes, 50 million indicated tonnes and 56.9 million inferred tonnes. The recalculations also resulted in a new reserve estimate of 114.1 million tonnes in the proven and probable categories for the surface deposits, down from 175.5 million tonnes based on the 2012 Technical Report. DMCL engaged in a comprehensive review of all relevant informa- tion including technical data, mining strategy, pit optimisation, mine design, production scheduling, coal processing strategy, sales strategy, coal prices and recovering coal transaction conditions. WITH hard coking coal from TerraCom Limited's Baruun Noyon Uul (BNU) project flowing to China as part of a 5.5 year offtake agree- ment with the Kingho Group, the company is focusing on advanc- ing plans to develop a coal handling and processing plant (CHPP) at the project. Recommissioning of BNU has been completed and the mine is in full production with coal deliveries to Kingho starting on February 10. The first 100% US$ irrevocable letter of credit (LC) received from Kingho for sales of January/February production tonnes from BNU was issued by the Agricultural Bank of China and received by Terra- Com's Mongolian banking counterpart. The tonnage and pricing were agreed by Kingho and TerraCom early in 2017 in line with the agreement, with the price linked to a commercially in confidence mine gate pricing structure that reflects the seaborne market. TerraCom says the CHPP feasibility was approved by the Mineral Professional Council (MPC) in December. The CHPP strategy provides a pivotal asset in controlling the volume and quality of coal supplied from BNU through the Shivee Khuren and Ceke border into China. The CHPP will allow TerraCom to increase the BNU cash operating margin through a freight cost reduction as clean coal will only be transported into China. TerraCom has signed an agreement with Guohua Technology Corporation (GTC), an experienced and competitive CHPP provider from Tangshan, China. GTC has designed and built over 500 wash plants in China and has more than 10 patented technologies that are widely accepted within the China coking coal industry. GTC will incorporate a number of these technologies into the BNU CHPP, including the 'gravity fed three product HM cyclone', 'fine coal HM cyclone', inline analysis and control systems and its pat- ented flotation cell technology. This technology results in lower cap- ital and operating costs compared to conventional dense medium cyclone plants, and also for meaningfully lower water consumption. The plant will produce dry rejects and tailings slime, alleviating the need for a tailings storage facility with associated complex manage- ment systems. General engineering is complete and detailed engineer- ing will advance with manufacture in China of the modular plant and construction activities on site beginning in the second quarter. Start up and commissioning of the plant is expected to be begin mid-year. Increase in Ovoot Tolgoi resources A coking coal sample mined from TerraCom's Baruun Noyon Uul project in southern Mongolia. TerraCom focus on BNU coal handling plant