SouthGobi Energy Resources has said that a new, independent estimate prepared by Norwest Corporation, of Salt Lake City, Utah, has upgraded measured and indicated coal resources contained at the company's Ovoot Tolgoi Mine in southern Mongolia to the Proven and Probable Mineral Reserve categories.
Total Proven and Probable surface coal reserves calculated at Ovoot Tolgoi as of July 1, 2009, are estimated to be 114.1 million tonnes. Approximately 92% of the reserves are classified in the Proven reliability or assurance category; the remaining 8% are in the Probable category.
Three coal products are presently being mined or are expected to be produced at Ovoot Tolgoi, a hard coking (or metallurgical) coal, a coal with applications for PCI coking coal or a thermal coal, and a thermal coal product for use in power generation.
A block model approach was taken in constructing a geologic model of the deposit using the MineSight software. The software was then used in order to apply a Lerchs-Grossman (LG)-based algorithm to determine the economically feasible portions of the deposit. With a demonstrated economic viability, a portion of the resource base may be classified as proven and probable reserves, the company said.
Alexander Molyneux, president and CEO of SouthGobi Energy Resources, said: “As we had expected, the Norwest study has confirmed the economics of the Ovoot Tolgoi Measured and Indicated surface resources, and upgraded them to Proven and Probable Reserves.
“We have now sold more than one million tonnes of Ovoot Tolgoi coal since we started sales around 12-months ago and the Norwest study reaffirms the mine’s potential to grow substantially.”
The independent surface reserves estimates were prepared by Norwest Corporation and were prepared in conformance with Canadian Institute of Mining (CIM) Standards and the requirements set out in Canada’s National Instrument (NI) 43-101. A NI 43-101 technical report is expected to be filed within 45 days.
SouthGobi said that the company has received an updated independent Nl 43-101 compliant resource estimate for the Ovoot Tolgoi property. Ovoot Tolgoi surface and underground resources contain measured plus indicated coal resources of 249.8 million tonnes, with an additional inferred coal resource of 33.5 million tonnes.
SouthGobi Energy Resources is focused on exploration and development of its Permian-age metallurgical and thermal coal deposits in Mongolia’s South Gobi Region. The company’s Ovoot Tolgoi coal mine is producing and selling coal to customers in China. The company plans to supply coal products and electricity to markets in Asia.