ASX-listed Guildford Coal was expecting coal production from its Mongolian
operation to start in November this year, after its 75%-held subsidiary Terra
Energy said that mining would start in the September quarter.

The North Pit of the South Gobi operation was expected to deliver some
three-million tons a year of coking coal in the first full year of operation,
ramping up to four-million tons a year during the following year.

Terra Energy said in a statement that the future development of additional
pits would likely increase mine production up to ten-million tons a year from
the multiple pit complex within an anticipated five-year timeframe.

The start-up capital for the North Pit was expected to be in the range of
around A$10-million, the coal developer said.

The South Gobi project consists of five tenements in Mongolia”s South Gobi
province. Terra Energy was planning a conventional opencut strip mine for the
North Pit, using hydraulic excavator and truck combinations.

The project hosts an estimated Joint Ore Reserves Committee-compliant
resource of 704-million tons of coking coal, consisting of an indicated
resource of 39.7-million tons, and an inferred resource of 30.7-million tons.

An exploration target of between 70-million and 892-million tons has also
been estimated, which was in addition to the current mineral resource.

Terra Energy said that negotiations have progressed with short-listed
parties from the offtake tender process, and a non-binding heads of agreement
had been reached with Sojitz and its joint venture partner Erdos, which locked
in key terms that would form the basis for the development of a long-term
offtake agreement.

It was hoped that negotiations would be completed by the end of September
this year.

miningweekly.com