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Mongolian Operations

TerraCom’s international focus currently rests in Mongolia with all interests currently held through a Mongolian subsidiary, Terra Energy. Terra Energy controls both thermal and coking control tenements located in the coal bearing basins of the South and Middle Gobi.

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Production occurs at the Baruun Noyon Uul (BNU) coking coal mine located in the South Gobi. Mining ramp-up is progressing well, and the team has recently achieved a safety milestone of 1 Million man-hours Lost Time Incident (LTI) free. You may read the news releases here.

TerraCom has recently secured offtake agreements with 2 end-users in China, JISCO and Haohai, to sell coking coal produced at the BNU site. You may read the news release here.

The company has also announced the signing of a Memorandum of Understanding (MoU) to acquire an 80% stake in a large thermal coal and associated power station project in central Mongolia. You may read the news release here.

TerraCom’s goal is to become one of the largest and highest quality coking coal producers in Mongolia, providing exceptional value for its steel-producing customers.

Terra Energy owns and operates the Baruun Noyon Uul (BNU) coking coal mine in Noyon Soum, South Gobi province. The license is located on 17,432 hectares of land. Production at the mine successfully restarted in late 2014, with all major equipment re-commissioned. The BNU coking coal mine ramp-up is progressing well, and recently an important safety milestone of 1 Million man-hours Lost Time Incident (LTI) free was reached. The project is strategically located approximately 80km east of Nariin Sukhait, which includes the strategic South Gobi Resources (SGS) Ovoot Tolgoi coal mine, and the large MAK coking coal mine.

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The JORC resource for BNU Mine consists of 15.26Mt Measured, 8.77Mt indicated and 3.04Mt inferred. Also located in the South Gobi Project is the proposed East Pit. Salva Resources has estimated a maiden 41Mt JORC Inferred Resource based on previous East Pit exploration results.

TerraCom recently secured offtake agreements from the BNU site with 2 end-users in China: JISCO and Haohai. You may read the news release here.

Based on the successful trial-use of the BNU coal in the first quarter of 2015, the customers have stated that TerraCom’s coal performs consistently with low sulphur, low ash and a high coking index.

Currently BNU raw coal undergoes analysis and testing at the BNU laboratory, operated by Bureau Veritas. Coal samples are collected from the pit, the ROMPAD, and exploration drilling for detailed analysis. Analysis includes tests for proximates, Calorific Value, Sulphur, Density, Sapzhinokov X and Y, Crucible Swell (CSN) and G index.

The mine has been fully commissioned and the coal is being transported through the Shivee Khuren border crossing in Mongolia, to Ceke in China.

Newest Mongolian License

The newly attained exploration license XV-018111, located 60km east of the BNU mine site, greatly complements the company’s current coking coal assets portfolio in South Gobi. TerraCom plans to quickly develop a potential resource to JORC and MRAM standards. You may read the press release here.

 

The Dund (Mid) Gobi Project consists of two exploration licences: 12929X and 15466X. The Project is located approximately 400km southwest of Ulaanbaatar and just over 200km west of the Mongolian railway grid and logistic route to China via the Erlianhaote border crossing.

The two Mid Gobi Project exploration licenses are situated on approximately 36,000 hectares and are located in the coal bearing Ongi Gol Basin.middlegobi

While a range of mineral deposits exist in the area, the primary target is coal due to the regional geology. The mineralization consists mostly of moderately dipping sedimentary basins that potentially provide multiple hard and low rank surface coal targets. The Project’s location is relatively close to infrastructure, including Mongolian and Chinese electricity generators.

 

Exploration Licence 15466X

15466X is an exploration license with a renewable term until 13 November 2016.

Exploration on the license commenced in 2011 and the plan was to drill a series of open hole lines in a North – South direction to intersect the East – West stratigraphy and ultimately confirm coal sequences and thicknesses. The program in 2011 consisted of six holes with an average depth of 200 meter for a total of 1148 meters drilled. These holes were drilled in the coal bearing Cretaceous Tevshiin Gobi formation in the central part of the license. No coal was intersected. Ground based magnetic geophysical studies were also completed in 2011 on over 8000 square meters of the license.

One hole was drilled targeting the Tsagaan Ovoo coalmine seam, which the license surrounds on three sides. The small program of one hole was attempting to intersect the same coal resource along strike.

 

Exploration Licence 12929X

12929X is an exploration license with a renewable term until 13 November 2016.

Exploration on the license commenced in 2011 and the strategy is to drill a series of open stratigraphic holes across the tenements to confirm sequences and coal thicknesses.

Following prospective coal intersections across six holes, which were used as Points of Observation, MDM completed a JORC inferred and indicated resource report in December 2011. The Inferred Resource of 189.1 million tonnes and an Indicated Resource of 32.3 million tonnes were reported, along with an exploration target of 165.9 million tonnes to 829.4 million tonnes.

Coal quality is available for these six-cored holes with the results showing a medium to high ash thermal product across three seams of potential economic thickness. Limited coking tests have been completed but historically, the target coal within the Jurassic Shahan Ovoo formation, is not known for its coking properties.

 

Fluorite resource

In 2012, fluorite mineralization was discovered outcropping on the license, see map below for location. Preliminary grab results have determined a high-grade fluorite outcrop rated as Ceramic Grade. A magnetic survey has been completed by Logantek LLC and preliminary magnetic (TMI) results are shown. The image shows a magnetic feature in close proximity to the area of outcrop and sampling with an orientation approximately North East to South West.Middle Gobi Project - 12929X - Flourite Exploration Image 2014

Exploration in 2012 targeted the extension of the resource to the East and West. 16 holes with a total of 3000m open and cored were drilled, with one hole intersecting coal. This was documented as inferior coal however, due to poor quality data and issues associated with the quality of geophysical logs the presence of further coal intersections cannot be conclusively proven. An Independent memorandum following exploration in 2012 by MDM states: “In their current state, the geophysical logs cannot be used for accurate identification of coal seams and depth corrections”.

Exploration in 2013 consisted of another four open holes within the resource area. Two of these intersected coal: one had a substantial coal intersection of 9 meters at economic depth of three meters.