An appendix to the State Great Khural Decree No.27 of 2007 refers to 39 deposits which might qualify to be classified as strategically important deposits if they fulfil certain criteria. These are known as candidate deposits. Our July issue gave general information on 13 of them, and this month we cover another 13 deposits. We do not give comprehensive details, but mention present ownership of the mines and give an idea of how these are working at the moment.
14. Zeegt brown coal mineThe exploration work on this mine in Chandmanisoum, Gobi-Altai aimag was done with State funds during the Soviet regime. Gobi Coal and Energy Company now runs the mine which earlier supplied coal to nearby soums.
The present owner is a foreign invested company registered in the Virgin Islands. It obtained Licence 905A for 25 hectares of land on Zeegt deposit in 1997. It later obtained two more licences -- 11965A and 14217A -- for Sharkhooloi site of the deposit in 2006. Soil removal at Zeegt was done in 2010 and 5,900 tons of coal extracted and sold locally in the aimag. The technical and economic feasibility study of the Zeegt mine was approved this year. Of the 93 million tons estimated by Joint Ore Reserves Committee (JORC), 64 million tons of reserve is confirmed. The company also has exploration licence 009761 for 663.49 hectares at a site called Zeegt Bosom which is valid until next year. The company hopes to begin the project in 2014, and plans to offernew shares on the Toronto Stock Market to gain additional finance in the second half of this year.
A few other companies also have exploration licences on the Zeegt deposit. Gobi Consolidated LLC has exploration licence XV-016740 for 857.49 hectares at Zeegt Bosom. Tephys Mining LLC has four exploration licences that are valid until 2014: XV-009422 for 5058.6 hectares at Zeegt-2, XV-009422 for 2683.92 hectares at Zeegt-2-3, XV-013804 for 2117.23 hectares at Zeegt-2-2, and XV-013805 for 4489.72 hectares at Zeegt-2-1.
The coal layer is 16 m thick on average and additional coal reserves have been detected near Zeegt. Drilling work is planned to begin this year.
15. Mogoingol coal mineThis mine in Tsesterleg soum, Khuvsgul aimag, 223km to the west of Murun, was discovered by the Geological Exploration Unit of Khuvsgul aimag in 1967-1970. Geological Expedition Unit IX from Ulaanbaatar estimated 15,508,600 tons of coal reserve for Russian “J” standard in 1976-1978. The detailed calculation of the reserve amount is 16 million tons of A+B-1, 2.89 million tons of C1 and 4.06 million tons of A+B+C1. This is the actual reserve amount which can be extracted. The estimated reserve left for further exploration was calculated as 11.44 million tons of C2. The area was re-explored in 1992 and a new coal reserve found at the east continuation of Mogoingol mine along the layer strip.
The mine was put into operation in 1971. The deposit area covers 66,000 hectares. Mine life was estimated at 30 years. The mine supplies coal to Zavkhan and Khuvsgul aimags. It is 51 percent locally owned and operates seasonally using 10 percent of the output capacity, selling over 10,000 tons of coal annually. The operation licence MV-000384 covers 89.73 hectares and exploration licence XV-013841 covers 85.21 hectares. It was estimated at the beginning of 2009 that 2.207 million tons of coal had so far been produced and 11.441 million tons were still left.
Chinese-invested Shine Asia Mining Group has started building a 60-MW thermal power station based on the deposit. The company obtained all the necessary permits after signing a build-use-carry over concession agreement with the State Property Committee.
All over Mongolia deposits, particularly of coal, have been divided and licensed out in parts. Several of the 39 candidates hold such licences, including at Mogoingol deposit. The core deposit was discovered during the Soviet days and now new deposits with huge reserves are being found around it. One of them is Ovoot project of Aspire Mining Company registered on the Australian Stock Market where it trades as ASX:AKM. It has 11 licences in Mongolia. Ovoot is the only one among them to have announced exploration results.It is located 160 km to the west of Murun and has 3 licences covering over 500 sq km. There is 275.7 million tons of coking coal as confirmed reserve while JORC estimates put the total reserve at 330.7 million tons. Some 75 percent of the coal goes down to a depth of 250 m. This means large-scale open mining can be done and the deposit is being prepared for production.
State funds were used for exploration work on the part of the Mogoingol basin which is now the Ovoot deposit. Several locally owned companies feel the Ovoot deposit should therefore be considered part of the Mogoingol mine.
16. Saikhan-Ovoo coal mineThis is located 22km to the northwest of Saikhan soum, Bulgan aimag. Geogical structure is composed of middle Yuri age moraine. Geological assessment and drilling work were done in the central areas of the deposit in 1987-1999 and 34.7 million tons of coal was estimated with layers under solid rocks in a stretched shape. Saikhan-Ovoo coal is of J catergory and has 21.7% ashflow, 10-46% volatile substance, 0.6% sulphur and 5000-6000cal/kg calorific value.
Exploration work was done with State funds before 1990 and an underground mine covering 14 hectareswas built at the north side of Mt. Saikhan to produce coal to meet local needs. The coal was supplied to soums in Arkhangai, Khuvsgul and Bulganaimags.
Chinese-invested SMI LLC obtained an operation licence for 1,230 hectares in the south of Mt. Saikhan from a Mongolian company. SMI, registered in the British Virgin Islands,holds two licences -- MV-011985 for 1229.15 hectares and MV-002366 for 39.36 hectares. The operation licence was suspended in 2008 because of nonpayment of fees, but it seems the company has got it back. At that time there were protests from the local council of Bulgan aimag that the mine touched their mountain of worship and offering. The local council says 14 licenceshad then been given on Mt Saikhan-Ovoo.
Asian Coal Ltd., registered on the Hong Kong Stock Market, has an operation licence on Saikhan-Ovoo deposit with an estimated JORC reserve of 190 million tons. Their first-half report this year says that no work was done on the project for financial constraints. Some 500,000 tons of coal have so far been produced.
17. Bargilt iron ore mineThe mine is in Darkhan soum, Khentii aimag, 280km from Ulaanbaatar and 18km from Bor-Undur’s concentrate factory. When it was listed in 2007 as one of the 39 candidates, it was not registered in the state mineral reserve. Registration had been refused because its exploration work was incomplete, failing to meet the criteria given for exploration of iron ore, iron and other related elements during the exploration work done by Erel Geophysics Complex Expedition in 1984-1987. That time the reserve amount was estimated to be 31 million tons of C2.
The main parts of the deposit are owned by the Mongol-Russian Joint Venture Mongolrostsvetmet LLC. The deposit’s reserve amount, estimated in 2009-2010, stands at 23 million tons confirmed out of a total of 43 million tons. It is now being prepared for operation after a technical and economic feasibility study. The plan is to produce iron ore using the magnet enrichment method. Production is to start this year. The plan is to produce 2 million tons of iron ore and a million tons of concentrate annually.
Golden Zone International LLC did some exploration on Y-V and YI-C blocks of the east part of the ore area before transferring the licence to Chinese-invested LutChuluu Company. The license was issued in 2007 and sold in 2010. LutChuluu has the right to do 25 years of exploration. The mine annually exports 250 million tons of iron ore got from 84 hectares by the drilling-explosion-excavation-transport-dump method.
TsakhirTsagaanGol Company also has an exploration licence for 1283.75 hectares on this deposit.
18. Tugrugnuur’s coal mineThis deposit of brown coal is in Bayan soum, Tuvaimag, 130km from Ulaanbaatar. Brown coal from the cretaceous age is found from Baganuur to Shivee-Ovoo. This particular deposit is part of the Choir-Nyalga basin, an area that has not been fully explored yet.
The deposit covers 20-30 sq. km. Geologists estimated its reserve amount as 3 billion tons of brown or energy coal of C2+P-3118 million tons during exploration done in the 1980s. The deposit is not registered in the state mineral reserve but is listed in Appendix II of strategically important deposits because of its estimated reserve. Altogether 14 companies own licences on the deposit, including TugrugNuur Energy, Tugrug Gal, TNE, MonrospromUgoli, TegshSaikhan, TsaidamNuur, Tsetsens Mining, Adams Mining and TCL. Area scales and coal reserves for each company are different. There are only two companies doing small scale exploitation and some others are in the process of getting ready. Some other companies havenot done any work at all. Therefore there is no specific information about confirmed reserve estimate inTugrugnuur’s group deposit.
Among the licence-holding companies TugrugNuur Energy is the best known and has licences MV-000228, MV-013533, MV-013553 and MV-015429. The area which the licences cover is called Takhilt and exploration was done in 2005-2008. The company has 1000 hectares from where 68 million tons of coal has been confirmed by the Minerals Professional Council. The State spent MNT113,358 on exploration in Takhilt in 1983 and TugrugNuur Energy repaid the State the required $21,480. The technical and economic feasibility study of a mine in Takhilt area was approved in 2008 and 61 million tons of usable reserve was recorded.
Output from Tugrugnuur group deposit does not meet the standards for thermal coal, and the company is studying how best to use it. They have already built a factory to test produce semi-coked processed coal. They are also doing research on coal gasification, processing and liquefaction. Products from the Tugrugnuur group deposit can be sold at inexpensive prices if energy and transportation issues are solved.
19. Narantolgoi Gold mine This is located in Jargalant soum, Tuv aimag, 120 km from Ulaanbaatar. It is in the middle of a crop field 5 km from the soumcentre and covers 375 hectares of land. Between 1974 and 1980, a German-Mongolian joint expedition did exploration work on the site and estimated the reserve amount at В+С1-3158.5 kg and С2-5219.2 kg.
Boroo Gold LLC bought the licence of the mine from BorooMine in 1997. Since then it has changed hands at least four times and the present holder, Chinese invested Ten Hun LLC.,bought it from VostokErdes LLC in 2005, along with the operation licence. Ten Hun belongs to Zijin Mining Group of China and is listed on the Hong Kong Stock Exchange. Zijin Mining Group is a leading gold refiner in China. As our readers may recall, four years ago, it was convicted of spilling mercury in Ulaanbaatar and its operational licence was suspended temporarily.
The reserve at Narantolgoi amounts to 22 tons and Ten Hun expects to operate the mine for 15 years. It has a processing plant.
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An appendix to the State Great Khural Decree No.27 of 2007 refers to 39 deposits which might qualify to be classified as strategically important deposits if they fulfil certain criteria. These are known as candidate deposits. Our July issue gave general information on 13 of them, and this month we cover another 13 deposits. We do not give comprehensive details, but mention present ownership of the mines and give an idea of how these are working at the moment.