Volume 9 Edition 2 2012 - The ASIA Miner

Mongolia
Positive study for Chandgana power project
PROPHECY Coal Corporation has received a
positive feasibility study for its 600MW
Chandgana Mine-Mouth Power Project and
expects to conclude engineering, procurement
Gathering coal samples from Prophecy Coal’s Chandgana Tal deposit.
and construction (EPC) contract selection during
quarter two. Prophecy intends to build the
plant adjacent to its Chandgana Tal coal deposit
and expects construction to start in April
Survey identifies coal exploration targets
2013 with the first 150MW unit being commissioned
in October 2015.
Capital cost is projected to be US$744 million
or US$1240 per kW and includes the power
plant, overhead transmission lines and administrative
costs but not mine development cost.
This power project has first-mover advantage
to supplying Mongolia much needed
electricity, which currently comes from antiquated
plants totalling about 700MW. The
coal resource is next to a two-lane highway
and 150km from the existing power grid.
Once power and the mine are brought online,
there is good potential to introduce additional
units at lower capital costs.
In the long run, the volume of coal resource
along with the project’s proximity to China,
being about 400km from Chinese border and
1000km from Beijing, offers potential to scale
up capacity and export electricity to China.
Prophecy has had a strong response regarding
EPC contracts, including four Chinese
and a number of international
companies. It has prepared and distributed a
request for proposal and expects to have key
EPC proposals by March 31. As part of any
successful proposal, an EPC firm is expected
to bring in a lender for debt financing.
A GEOPHYSICAL survey completed by Draig
Resources (formerly C @ Limited) on two coal
licences in Ovorhangay Aimag of central
southern Mongolia has assisted in identification
of potential black coal extensions. This
work has also identified target areas for further
exploration drilling this year.
The field work over the Teeg and Nariin Teeg
licences in the Bayanteeg district comprised
32km of geophysical (resistivity) survey work.
A total of 12 lines of geophysical survey work
were carried out on the Teeg licence and 3
lines on the Nariin Teeg licence with the target
depth of penetration being about 250 metres.
The results of the survey are being interpreted
by Dash Meg Engineering and
analysed by Nordic Geological Solutions LLC
(NGS). Draig’s managing director Mark Earley
says, “The survey was carried out referencing
existing drill holes completed during the due
diligence process prior to acquiring the licences
to allow for better correlation of the
coal seams. Preliminary review of the field
data has identified a number of highly potential
drilling targets in both licences.
“I would like to acknowledge the teams
from Dash Meg Engineering and NGS that
undertook the field work in very difficult conditions
with temperatures averaging below
minus 30 degrees.”
Drill core from Draig Resources’ coal properties in
Ovorhangay province.
Draig is planning its drilling program over its
eight coal licences in Ovorhangay and South
Gobi provinces, and aims to define a JORCcompliant
resource during the second quarter
of 2012.
The Ovorhangay licences are about 130km
from the province capital Arvayheer and
520km southwest of Ulaanbaatar. The closest
town to the South Gobi licences is Gurvantes,
about 276km from the province’s capital Dalandzadgad.
The four South Gobi licence
areas are less than 80km from the Chinese
border crossing at Shivee Khuren/Ceke and
are within the South Gobi Basin which is characterized
by the largest concentration of
major black coal deposits in Mongolia.
In late 2011 Draig acquired the highly
prospective coal licences through BDBL LLC,
a subsidiary of Peabody-Winsway.
Draig re-listed on the Australian Securities
Exchange in early January 2012 following
completion of a capital raising and the acquisition
of the Mongolian licences. The company
raised Aus$17 million in the process
and these funds have been used to acquire
BDBL as well as providing sufficient funds for
its 2012 exploration, further possible acquisitions
and necessary working capital.
38 | ASIA Miner | March/April 2012