TerraCom makes new coal discovery in Mongolia

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.

“The large shallow coal intersections in this area are by far the thickest thus far discovered within the company’s licenses in Mongolia,” TerraCom stated.

A phase two exploration drilling program has already begun with the thick intersections being considered a “high priority area”. The program 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.

Mining operations

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.

Mining to date has been from the initial three open pits located on the northern side of the Noyon coal basin, although TerraCom has been progressively developing pits along the Noyon basin sub crop.

Given its close proximity to the BNU mine infrastructure, TerraCom believes the BNU South deposit could potentially become part of the BNU operation.

TerraCom also operates the Blair Athol coal mine in Queensland, Australia, which commenced mining operations in August last year and has been forecast to produce 1.9Mt of product in its first full year.

In April, the company completed construction and commissioning of a new train load-out facility, which enabled the cessation of a trucking and is projected to deliver an additional A$20 per tonne improvement in margin.

Showing faith in the company, TerraCom director James Soorley snapped up A$37,000 worth of company shares through an on-market trade last week.

TerraCom shares rose 8.96% to A$0.365 on the BNU South discovery announcement by afternoon trade.