The company is engaged in open pit-mining at Ukhaa Khudag deposit located within the Tavan Tolgoi coal formation in South Gobi, Mongolia. Ukhaa Khudag deposit, measuring 2,960 hectares in size, holds 497 million tons and 283 million tons of JORC-compliant measured and indicated coal resources and proven and probable reserves, respectively as of May 31, 2010. According to Wood Mackenzie, the vast majority of our reserves are high quality hard coking coal, increasingly high in demand at steel, iron mills and chemical plants across the border in China.

The deposit is the closest to Baotou, China: a major railway hub connecting Mongolian coal to the largest steel producing provinces in China. Due to the favorable geological conditions and proximity to its target market in China, the company has lower operational costs than ninety percent of its world-wide competitors.

Since mining started in April 2009, within eight months the company produced over 1.8 million tons of coking coal. The venture became a profitable business in its first year of production.The company produced approximately 3.9 million tons of coking coal in 2010, and plans to increase its production to approximately 14.7 million tons in 2013.  

Mining operations are conducted through two 12 hour shifts, 7 days a week, 365 days a year, subject to weather conditions. The company is working closely with Leighton Asia, a leading global mining contractor, in all aspects of coal mining operations. The mine exploration, geological research, modeling, short to long term planning and related project work is done by Mongolian Mining Corporation in line with the latest international standards.

Coal testing is conducted in compliance with Mongolian and international mining standards such as MNS, ISO and GB at the mine site lab equipped with the most up-to-date technology. As part of the project performance improvement, an on-site workshop for our mining equipment routine repair and maintenance was put into operation in April 2010.