ANNUAL%20REPORT%202015%20eng

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Management Discussion and Analysis Table 2. UHG mining license JORC (2012) compliant Coal Resource estimate, by depth and category, as at 30 November 2015 (Note): Total Coal Resource Resource Category (Mt) Depth limit from topographic surface Measured Indicated Inferred Total (M+I) Total (M+I+I) Subcrop to Base Horizon of Weathering Elevation (“BHWE”) 2 3 5 5 10 BHWE to 100m 73 23 17 97 114 From 100m to 200m 94 48 26 141 168 From 200m to 300m 91 64 21 155 176 From 300m to 400m 57 35 15 92 108 Below 400m 40 44 30 84 114 Sub-Total above 300m 260 138 70 398 468 Sub-Total below 300m 97 79 45 177 222 Total 357 217 115 575 689 Total (Rounded) 360 220 120 580 690 Notes: (i) (ii) (iii) Technical information in the UHG Coal Resource estimation report has been compiled by Mr. Lkhagva-Ochir Said, General Manager of Technical Services, Mongolian Mining Corporation. Mr. Said is a member of the Australasian Institute of Mining and Metallurgy (Member #316005) and has over 8 years of experience relevant to the style and type of coal deposit under consideration and to the activity which is being undertaken to qualify as a Competent Person as defined by the Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves, The JORC Code (2012). Mr. Said consents to the inclusion in the release of the matters based on this information in the form and context in which it appears. The estimate of the Coal Resource set out in Table 2 presented in this annual report are considered to be a true reflection of the UHG Coal Resource as at 30 November 2015, and have been carried out in accordance with the principles and guidelines of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. The JORC Code (2012). Mr. Gary Ballantine is employed by the Group as Executive General Manager for Exploration and Geology. Mr. Ballantine is a member of the Australasian Institute of Mining and Metallurgy (Member #109105) and has over 25 years of experience relevant to the style and type of coal deposit under consideration and to the activity which is being undertaken to qualify as a Competent Person as defined by the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, The JORC Code (2012). Due to rounding, discrepancy may exist between sub-totals and totals. Rounding rules refer to Clause 25 of the JORC Code (2012). In 2015, 16 boreholes were drilled within the UHG mining license, comprising 636m of HQ-3 drilling and 368m of 122mm diameter open hole drilling, outside of the northern pit limit. The purpose of this drilling was to improve the geotechnical knowledge related to the boundaries of basement rock on the northern periphery of the UHG deposit. The information obtained allowed the revision to be made to the life-of-mine (“LOM”) pit slope design, subsequently allowing the revision of ex-pit dump design and the facilitation of shorter overburden haulage distances than previously determined during LOM planning. Data obtained from this drilling was not included in the JORC Coal Resource updated as of 30 November 2015, and is unlikely to have any bearing upon future updates. Annual Report 2015 23
Management Discussion and Analysis Baruun Naran (BN) deposit The BN deposit is covered by two mining licenses. Mining License 14493A (“BN mining license”) of 4,482 hectares area was obtained through the acquisition of Baruun Naran Limited, formerly known as QGX Coal Limited on 1 June 2011, and is effective for 30 years from 1 December 2008. Mining License MV-017336 (“THG mining license”) of 8,340 hectares area was granted to the Group on 24 June 2013, effective for 30 years. Both licenses are extendable twice, by 20-year periods. During 2015, the Group’s geological team updated the JORC (2012) Coal Resource estimations as at 30 June 2015 for the BN and THG mining licenses. The estimation process applied more stringent requirements under the Australian Guidelines for the Estimation and Classification of Coal Resources (2014), as compared to the previous JORC (2012) Coal Resource estimates prepared by McElroy Bryan Geological Services Pty Ltd (“MBGS”), stated as of 30 June 2012 and 30 April 2013 for the BN mining license and the THG mining licenses respectively. No further drilling was conducted at the BN deposit in 2015, however the updated JORC (2012) Coal Resource stated as at 30 June 2015 did incorporate additional exploration data gained from the exploration drilling program conducted in 2014. The following information provided the basis for updating the structural and coal quality geological models underpinning the updated JORC (2012) Coal Resource statement: total of 92 exploration boreholes at BN, with a total of 28,540m drilled, of which 14,780m were HQ-3, 9,640m PQ-3 (83.0mm core, 122.6mm hole diameter) and 4,120m were 122mm open hole; total of 32 exploration boreholes at Tsaikhar Khudag (“THG”), with a total of 9,970m drilling at THG, of which 5,900m were HQ-3, 3,610m PQ-3 and 460m were 122mm open hole; total of 8,720 (BN) and 3,824 (THG) coal samples collected and analysed; and total of 75km of 2D seismic survey captured by Polaris over the BN mining license, and analysed by Velseis. Internal peer review was conducted by Mr. Gary Ballantine, Executive General Manager of Exploration and Geology. External peer review was provided by Mr. Todd Sercombe of GasCoal Pty Ltd. Mr. Brett Larkin from Geocheck Pty Ltd was also involved in external peer review, specifically with regard to the geostatistical analysis required to be prepared under the Australian Guidelines for the Estimation and Classification of Coal Resources (2014). These peer reviews confirmed compliance of the Group’s work to update the Coal Resource estimations in compliance with requirements of the JORC Code (2012). Summary of the updated JORC (2012) Coal Resources for BN and THG mining license areas are shown in Table 3 and Table 4. The figures in these tables represent calculation based upon in situ density at an assumed 5% moisture basis. 24 Annual Report 2015
Page 1 and 2: (Incorporated in the Cayman Islands
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