1.Mongolia is a country about one fifth the size of Australia with only 2.7 million population. It is politically stable.
2.My understanding for the calculation of exploration target 50 to 100 million: The surface area of coal seam: L 15,000m x W 500m = 7,500,000 sqm 7,500,000 sqm x 8m depth = 60,000,000 cubic meters 60,000,000 cubic meters x 1.3 tonne per cubic meter = 78,000,000 tonne.
3.I found an error in on page 4 of the announcement Acquisition of Mongolian Coal Project. It said that freight costs on the Trans-Mongolian railway line appear to be in the order of US$0.23 /tkm. It should be $0.023/tkm. Because $0.23/tkm would cost $138 per tonne for 600km. I can??t find information to verify the freight cost for Mongolian railway but I was able to find the freight cost on the Chinese side. The Chinese railway charges around $0.02/tkm plus $2 per tonne which translate to $14 per tonne for 600kms. Therefore, I believe that $14 per tonne freight cost stated in the announcement is correct.
4.I checked thermal coal price on a Chinese coal price website. http://www.funuo.com/news/view.asp?id=13434 The price of $60 per tonne on China Mongolia border is correct.
5.The exploration target did not mention the possible depth of the coal seam. I did a quick search on Mongolian coal mine. It appears that almost all Mongolian thermal coal mines are shallow open pitable. They are all like 5 - 20 meters underneath the ground with seam thickness above 10 meters. The announcement said that approx 1600 m of initial drilling required to confirm historical understanding of coal seam. I guess that it will very likely be 30 drill holes with 50m depth each rather than 15 drill holes with 100m. If the coal is shallow as I intend to believe, then the mining cost will more likely be at the low end of the estimation.
TVN Price at posting:
1.7¢ Sentiment: Buy Disclosure: Held
