looking good so far. the money is coming in
i am running over their coal assets, which they acquired via the takeover of a private company.
while coal is not the flavor of the month (or year), the coal assets do look very good
the impression is they were an astute acquisition by the VKA mgt.
1. Berkh Uul Coal Project (Mongolia, VKA 100%), bituminous coal project, within 40km of rail access into Russian off-take markets, in close proximity to water, infrastructure and transport. Five supply MOU’s have now been signed for unwashed Berkh Uul coal, due to its low ash and relatively high calorific value. Overall results typically show: ash content <14%; total moisture <15%; sulphur <0.7%, and CV’s in the range 6,000-7,000 kcal/kg on an air dried basis. Defined resource is 38MT and 2014 drilling extended the deposit 1.5km to the south of previous drilling. Coal was intersected at shallow depths of less than 80 metres in 17 of the 18 holes drilled. The Company has been advised by the Ministry of Tourism, Green Development and Environment that approximately 53% of the Berkh Uul prospecting licence falls within a headwaters of rivers zone. This government determination impacts upon the Company’s current coal resource and Viking continues to engage in discussions on this matter with the Mineral Resource Authority of Mongolia (MRAM) and the Ministry of Tourism, Green Development and Environment.
2. Khonkhor Zag Coal Project (Mongolia, VKA 100%) is an anthracitic coal project located within 40km of China’s Burgastai border port with an existing haul road adjoining the tenement. The current mining licence was granted in April, 2013, for a period of 30 years. A total of 42 historical drill holes over 2 strike km have been completed on the tenement. This drilling, combined with historical mining on the outcropping coal seams, indicates clear potential for open pit mining. The Company was advised in June 2015 by the Ministry of Tourism, Green Development and Environment that the Khonkhor Zag Environmental Impact Assessment, prepared by Mongolian environmental consultants Sustainable Environmental Consulting LLC has been approved. This, combined with the Khonkhor Zag Feasibility Study report which has previously been approved by the Mining Ministry, provides a clear pathway for any future mining, coal production and export at Khonkhor Zag.
my opinion
1. the thermal coal looks OK. the energy value is at the lowish end but, importantly, the ash content is low, thus it does not require washing. it is 'DSO' coal; dig & ship
2. they could have 50MT of thermal coal, with 50% in a possible new nature reserve. so maybe 15MT is mineable as a mining reserve. it could be worth US$5M to $10M? if it makes $10/t and requires $20M in capex, it could make $80M in after tax profit for a buyer
3. anthracitic coal is always supply constrained. per ATU 16/9/15 announcement, high-grade anthracite currently priced between $150/t-$175/t, a 100% premium to hard coking coal
imo, these two coal assets looks pretty good
