Coal miner TerraCom (ASX: TER) has announced the discovery of a thick coal deposit close to its Baruun Noyon Uul (BNU) coking coal mine in Mongolia.

The new Permian coal deposit, now being referred to as BNU South as it is situated about 12km south of the mine’s infrastructure, was uncovered during an exploration program targeting shallow open cut mineable coal within the company’s Mongolian mining licences.

Multi-stage ground geophysics initially defined 5km of Permian target strike for exploration and a phase one drilling program completed 42 polycrystalline diamond (PCD) holes for 6803m.

Reporting to the market today, TerraCom said multiple coal intersections occurred along the 5km of strike, including very thick intersections of up to 122m of total gross coal.

A phase two exploration drilling program has already begun with the thick intersections being considered a “high priority area”. The programme will include both PCD drilling and diamond core drilling.

In addition, TerraCom said work streams have been activated to fast-track the start of mining the BNU South deposit on the assumption that further exploration will confirm the target.

Located in Mongolia’s South Gobi province, the BNU mine produces an estimated 1.5 million tonnes per annum of coal which is then exported to China.