Operations - Coal Projects
Polo Resources LLC (“Polo
Mongolia”),
a wholly owned subsidiary of Polo, holds nine coal
licences covering 94,477 ha in
Mongolia.
In addition, a further five licences are in the
process of being transferred to Polo
Mongolia
and the company is also a party to an option
agreement on an additional coal exploration licence
in
Mongolia.
Mongolia
is estimated to have potential coal reserves of some 100
Bt, the majority of which is proven but to date has not
been developed due to a lack of infrastructure. Annual
coal production in
Mongolia
is approximately 5 Mt which is primarily used for steam
and electricity generation. Currently,
China
is the only export market for Mongolian coal, with
exports in 2005 totalling 2.53 Mt, and forecast to grow
in excess of 15 Mtpa by 2010.
Polo has targeted major coal
resources that are near the necessary infrastructure to
export coal into the growing energy markets of adjacent
China
and
Russia.
The Company has focused on the acquisition of licences
found in the following three zones:
1)
Erdenetsogt
Basin
(Doshin Coal Project,
Altanshiree
Coal Project and
Khashaat Coal Project):
This area is within truckable distance to
China.
Resources occur at shallow depths in open cut formation
in seams up to 100 m in thickness. Resources defined in
C1 category total more than 100 Mt of coal and the
Directors believe that the coal product would be in high
demand for the Chinese thermal industry;
2)
Ereen
Basin
(Ereen Coal Project): A small basin of
high quality coal occurring in a 10 m thick near surface
seam with low strip ratios. The 6,000 kcal plus coal
found in this basin can be used in the domestic market
(there are requirements of 2 Mtpa within 150 km of the
Ereen project site) or transported to loading facilities
122 km from the project site; and
3)
Tsaidam Basin (Union
Coal Project): Polo Mongolia will hold the only
two mining licences within this basin (pending transfer
confirmation by the Minerals and Petroleum Resources
Authority of Mongolia) which are ideally located to rail
and the capital city of Ulaanbaatar in the northern
region of the large Tsaidam Basin (3.5 Bt of coal in C1
category). The Union Coal Project area is 14 km from a
rail loading facility.
Polo’s strategy in
Mongolia
is to fast track into development the Union Coal Project
and the Ereen Coal Project in 2008. Polo is
targeting total production of 1 Mt of coal per annum
commencing in the fourth quarter of 2008 from the Ereen
Coal Project and the Union Coal Project. Coal production
is targeted at 6,000 kcal/kg direct transported coal to
China
with plans to expand production after two to three years
of operation. Polo has also targeted 1 Bt of high
quality coal defined in resources over the next two
years in the
Erdenetsogt
Basin,
the
Ereen
Basin
and the
Tsaidam
Basin.
Polo also recently signed
agreements to purchase 100% of a portfolio of 15
exploration licences in
Mongolia.
The total area covered by these new licences is 2,274
square km and consists of one iron ore project, seven
coal projects and seven uranium projects.
Within the new portfolio acquired
two cornerstone projects have been identified as
follows:
-
Ers Project is a significant
coal project ideally located in the
East
Gobi
Coal
Basin
within 100 km from
China
and 80 km from the Trans-Siberian railway. Results
from 6 drill holes indicate a flat lying coal seam
occurs with an average thickness of 63 m but
extending up to 108.3 m in thickness and lies within
220 m of the surface. The seam remains open in all
directions. Polo has two rigs commencing to define
international standard resources on this property.
-
Bol Iron Ore Project is
located 24 km from a railway loading station and 105
km southeast from the capital
Ulaanbaatar
in the
Tov
Province.
The project has Russian defined resources that are
currently being validated which highlight a P
category resource of 195 Mt of iron ore grading 46%
Fe (P Category resource is based on limited
geophysical data, mapping, trenching and four drill
holes only and is not compliant with JORC standard
resources). This iron ore is distributed along a 6
km belt of sedimentary iron ore formation held
within the new portfolio area. Polo plans to
commence a resource definition programme during the
second and third quarters of 2008.
