28.07.2010 khushuut coal project update, dennis price
TRANSCRIPT
ENERGY AND RESOURCES DEVELOPER
Mongolia Energy Corporation(HKSE Stock code: 276)
Khushuut Coal Project Update
June 2010
June 2010
MEC’s business model is to acquire concessions and to put in place a strong in-house team, including industry veterans in the geological, mining and legal areas to lead exploration, development and compliance aspects relating to the concessions. In this sense it is “an energy and resources developer”. MEC’s business model is a focused, professional and realistic one.
MoEnCo LLC is a 100% owned subsidiary of MEC. MoEnCo is the operating company within Mongolia.
Energy Resources Developer
2
Business Model
June 2010 3
Our Businesses
Coal
Oil & Gas Minerals
June 2010 4
MEC Assets
Coal, Minerals, Oil & Gas
MINERALSCOAL OIL & GAS
Weste
rn
Mo
ng
olia
So
uth
ern
Mo
ng
olia
Xin
jian
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PR
C
19% of a wholly foreign owned Chinese corporation with scope to invest in coal, copper and iron resources in Xinjiang and elsewhere in China
20% interest of multi-metals project with 235,600 tonnes of tungsten trioxide and 49,400 tonnes of tin resources (pending completion)
20% consortium member in 1.18 MM hectares oil and gas project, Ergel XII Petroleum Block, at production contract ratification stage
34,000 hectares of coal concessions in Khushuut and Darvi in western Mongolia
2,986 hectares of ferrous metals concessions in Bayan-Olgiy, western Mongolia
32,000 hectares of coal, ferrous and non-ferrous metals concessions in Gants Mod, western Mongolia
263,008 hectares of coal, ferrous and non-ferrous metals resources concessions in Olon Bulag and Gobi Altai, western Mongolia
June 2010 5
MoEnCo
Western Mongolia
MoEnCo has Coal, Ferrous & Non-ferrous Metals Concessions in Western Mongolia
June 2010 6
Continued exploration of resources and planning of North Khushuut.
Exploration program overseen by independent technical advisor John T. Boyd Co.;
600 ha of 330,000 ha of concession developed (Khushuut)
Resources Exploration
Progress to Date
June 2010 7
Khushuut Project Overview
Khovd, Western Mongolia
Khushuut Coking Coal Mine
Darvi Soum District, Khovd Province, Western Mongolia
210 km south of the provincial capital of Khovd
1,350 km west of Ulaanbaatar
310 km northeast of Yarant border crossing between China and Mongolia
Environmental
Eastern flank of the Altay Mountain range
elevation of 2,000 m
rolling hills little vegetation and minimal soil cover
annual rainfall -100-300 mm per year
Temperature 25ºC in Summer,-25ºC in Winter,
-50ºC not uncommon
June 2010
John T. Boyd Company (“Boyd”)Independent Technical Advisor
Over 60 years of expertise in completing reserves audits
and stock listing requirements for coal companies
Conducted more than 2,000 reserves audits, including
audits for some of the largest coal producers in the US
Technical consultant of China Shenhua’s IPO
All exploration is with the input and advice of the
independent technical adviser
The exploration results are analyzed by the independent
technical adviser
The mining plans are developed with the independent
technical adviser
8
Khushuut Project Overview
Professional Partners
June 2010
Resources Exploration (cont’d)
Substantial Established Resource Base
9
Notes
1. Resource estimate for an open-pit mining operation to depth of up to 400 m
2. Includes in-seam partings up to 0.3 m thick
3. Includes mineable coals to a minimum overburden depth of 5 m
4. Includes material mined under the coal seams to allow for a 35º slope
Boyd calculated a Coal Resource estimate in accordance with the international JORC Standards for the two major seams at Khushuut
The Khushuut Mine resources consist of both premium coking coal and weathered coal that are surface minable
Indicated Coal Resources (JORC)(1)
Seam
Avg. True Thickness
(m)
In-Place(2)(3) Coal Seam
(MMt)
Over- burden(4) (Bm3 MM)
Burden Ratio
(Bm3/t)
C 29.1 101.7 657.8 6.5
B 13.8 47.5 78.7 1.7
Total NA 149.2 736.5 4.9
Source: ITR dated Oct 16, 09 issued by Boyd
June 2010
The Boyd ITR plans that the Khushuut Mine would produce coal at a full run rate of 8 MM tonnes per annum as of Year 4 (2013):
Coal Production
Production Schedule
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Note
1. Assumes product sold is Product 1: Blend of 15% coal < 50 m depth, 55% C Seam coal > 50 m depth, 30% B Seam coal > 50 m depth
0.50
3.00
5.00
8.00 8.00 8.00 8.00
0.48
2.85
4.75
5.85 5.85 5.85 5.85
0
3
6
9
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 19
Raw Coal Saleable Coal
Coal Production Schedule MMt
Source: ITR dated Oct 16, 09 issued by Boyd
June 2010 11
Leighton LLC (“Leighton”)International Contract Miner
Has been operating in Mongolia since 2007
A subsidiary of Leighton Asia (part of the Leighton
Group), Leighton Holdings is the world’s largest
contract miner, listed in the Australian Stock
Exchange (stock code: LEI AU)
Leighton Asia has been operating in Asia since
1975, it is Australia’s largest project development
and contracting group with annual revenues
exceeding US$16billion. Area of operations include
Hong Kong, Macau, China, Mongolia, Taiwan,
Philippines, Guam, Thailand, Vietnam, Laos,
Cambodia, Indonesia and Kazakhstan.
Khushuut Project Overview
Professional Partners
June 2010
Conventional open pit operations using diesel-powered equipment
Utilization of hydraulic excavators and large off-highway end-dump trucks will allow multiple mining faces for coal production
Produces a high-quality blended coal product
Maximizes the recoverable coal resource at low cost
Mining Method & Plan
Low-Cost, Open Pit Operations
12
June 2010
Community and
Infrastructure Development
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After MoEnCo
construction
Before MoEnCo
construction
Creation of over 600 direct onsite and over 1000 direct contractor employment positions in the next 6 years
Over 10 x multiplier flow on effect
Local bag level business and development
340km road construction substantially built , scheduled for completion Autumn 2010
Construction of small power plant for mine specific use, to be expanded to supply into the local Western grid
June 2010
Exploration
88,500 m drilled to date, 366 drill holes
200 tonne bulk sample of high-quality coking coal was delivered to Baosteel Group Xinjiang Bayi Iron & Steel Co. Ltd. (“Baosteel Bayi”), in Xinjiang Province for full scale testing
Development
Land Use Agreements have been granted
accepted Mine Feasibility Study of the Khushuut Project on 22 Jul ’09
EIA submitted on 9 Sep ’09, approved on 12 Oct ’09
Mine plan approved May 2010
Leighton Asia Mining contract 1st July 2010
Marketing
In Jan 2010, MoEnCo entered into a long term coal supply agreement with Baosteel Bayi relating to years 2010 to 2020
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Khushuut Project Milestones
Exploration, Development & Marketing
June 2010
THANK YOU
Investor Relations Contact:
40th Floor, New World Tower 1, 16-18 Queen's
Road, Central, Hong Kong
Tel: (852) 2138-8000
Fax: (852) 2138-8111
Email: [email protected]
Website: www.mongolia-energy.com