Khangad Exploration LLC, an indirect wholly-owned subsidiary of the Company, is a holder of the mining license MV-14493 for Baruun Naran (“BN”) area and the mining license MV-017336 for Tsaikhar Khudag (“THG”) area, both covering BN coking coal deposit area located in Khankhongor soum of Umnugobi aimag, Mongolia. The BN coal deposit is located about a mere 30 km from the UHG mine.
BN mining license covers a total area of approximately 4,482 hectares in size and contains around 330 Mt of JORC-compliant measured, indicated and inferred coal resources as of 30 June 2015, and 176 Mt of ROM coal reserves as of 1 January 2018 respectively. THG mining license covers a total area of approximately 8,340 hectares and contains about 70 Mt of inferred coal resources according to JORC reporting standards as of 30 June 2015.
The mine infrastructure preparation and overburden pre-stripping work to expose coal seams have commenced under a pre-mining agreement signed with the Mineral Resources Authority of Mongolia in February 2009. The BN mine commissioning took place in January 2012 and commercial coal mining operations started in February 2012.
The estimated sizable coking coal resources and reserves at the BN coking coal mine present the Company’s potential to diversify its coal products and further enhance its sources of revenue. Furthermore, the proximity between the BN and UHG coal mines enables synergies that include the shared use of existing transportation infrastructure and the marketing base.