ERDENES - TAVAN TOLGOI PROJECT

Erdenes MGL LLC
September 2010

B.Enebish, Executive Director of Erdenes MGL LLC, introduces the recently formed Erdenes Tavantolgoi Company.

ABOUT ERDENES MGL

• Established in 2007
• Represents government interests in development of strategically important deposits
• Participates in the Government Working Group’s work and in preparing investment agreements and contracts and conducting studies of deposits in collaboration with international advisers/consultants

TAVAN TOLGOI COKING COAL DEPOSIT

Tavan Tolgoi is one of the largest undeveloped coking coal
deposits in the world

ТAVAN TOLGOI DEPOSIT OVERVIEW

Reserves* 

6.4 billion tons of coal, out of which:
1.8 billion tons of coking coal
4.6 billion tons of thermal coal

Location 

Gobi Region in southern part of Mongolia
540 km south of Ulaanbaatar, capital city
270 km from the Chinese border

Infrastructure 

All infrastructures (electricity supply, railroads, roads, water, supply etc.) need to be developed


*- Conversion of coal resource into JORC standard increases coal resource, in particular, coking coal

TAVAN TOLGOI COAL DEPOSIT

• Tavan Tolgoi deposit consists of Tsankhi, Ukhaa khudag, Bor tolgoi, Borteeg, and Southwest and Eastern coalfields
• Tsankhi is the main coalfield and contains most of its coking coal resources
• Bor tolgoi and Southwest and Eastern coalfields need to be studied more.

WATER SUPPLY

Construction of the integrated water supply system to support mine operations

Balgasiin Ulaan Nuur underground water deposit:

• 70 km from Tavan Tolgoi deposit
• Resources of 465 l/sec
• Additional water exploration in the region

ERDENES-TAVAN TOLGOI PROJECT MILESTONES

Decision

• Parliament and Cabinet level discussions and approval:

* Announcement of the Bidding for Contractor/Contract Miner (prequalification)
* Announcement of the CEO post of “Erdenes Tavan Tolgoi” LLC, subsidiary of Erdenes MGL
* Establishment of subsidiary “Erdenes Tavan Tolgoi” LLC (September, 2010)

Actions

• Preparation and overburden stripping of the Erdenes-Tavan Tolgoi project have commenced
• Feasibility Study
• Selection of the Contract Miner
• Selection of the CEO of “Erdenes Tavan Tolgoi” LLC
• Preparation of IPO for “Erdenes Tavan Tolgoi” LLC
• Distribution of shares to Mongolian citizens and national corporate entities

COAL HANDLING & PROCESSING PLANT

Construction of the Coal Handling and Processing Plant

Coal processing plant:

• Three 900 ton/hour modules
• 15 Mtpy capacity

Coal handling and blending

• 5000 ton/hour
• Refuse handling
• Loadout conveyer facilities

Production:

• At least 7 million tons of clean coking coal
• 4 million tons of thermal coal
• 1 million tons of middling

POWER SUPPLY FOR ERDENES - TAVAN TOLGOI PROJECT

75-100 MW installed capacity power plant:

Mine operations

• Coal Handling & Processing Plant
• Camp and local miners’ town
• Water supply system
• Support infrastructures
• Other local users

SHIVEE OVOO DEPOSIT OVERVIEW

Reserves

• Shine-Us coafield: 564 million tons of brown coal
• Shivee-Ovoo basin: over 2 billion tons

Location

• 260 km south of Ulaanbaatar
• 20 km from the nearest city of Choir

Infrastructure

• Located right on the rail line
• Paved road access to Ulaanbaatar
• Access to electricity

* The current mine “Shivee-ovoo” was established in 1990.

• Production of mine: up to 2 million tons per year (1.45 million mined in 2008)
• Connected to main power grid system and railway
• Currently operating on 901 A mining license, 91 hectare field
• Supplies coal used by power plants No 3 and 4 of Ulaanbaatar city

* Ministry of Mineral Resources and Energy of Mongolia, Erdenes MGL and State Grid Corporation of China are under negotiation on integrated project that comprises a large mine-mouth coal-power complex and an electricity transmission line to export electricity to northern China.

• Shivee-ovoo coal mine: 20 million tons of coal per year
• Power plant: 8x600 MW
• Transmission line: 660 KV
• Project Investment required: approximately 5 billion USD