Coal Mining in Mongolia

AGH University science and technology Faculty of Mining and geo-engineering, Department of open pit mining

Internship report Sharyn gol open pit thermal coal mine 18/07/2011 to 09/09/2011

Jargalan Chuluunkhuu 9/16/2011

Table of Contents 1. Reference (in Mongolia )............................................................................................ 3

2. Translation of reference ............................................................................................ 4

3. Coal mining in Mongolia ............................................................................................ 5

4. Company overview .................................................................................................... 5

Coal Quality ................................................................................................................... 6

Production..................................................................................................................... 6

Sharyn Gol’s Customers ................................................................................................. 8

5. Mining processes of Sharyn gol mine ........................................................................ 8

6. Machines and equipments ......................................................................................... 9

Technical aging of Sharyn Gol mine: ............................................................................ 10

Technical specifications of Electrical draglines ............................................................. 11

Technical specifications of drilling rig ........................................................................... 11

Equipment's time effectiveness ................................................................................... 12

7. Major coal mines in Mongolia .................................................................................. 14

Erdenes Tavan Tolgoi ................................................................................................... 14

Mongolian Mining Corporation .................................................................................... 14

MAK ............................................................................................................................ 14

Prophecy Resource Corp .............................................................................................. 16

Xanadu Mines.............................................................................................................. 16

Hunnu Coal .................................................................................................................. 17

Shivee Ovoo JSC .......................................................................................................... 17

Baganuur JSC ............................................................................................................... 17

Mogoin Gol JSC ............................................................................................................ 18

Aduunchuluun JSC ....................................................................................................... 18

1. Reference (in Mongolia )

2. Translation of reference

3. Coal mining in Mongolia

In Mongolia there are dozens of coal mines in the exploration, development and production stages with a combined estimated coal resource of over 150bn tonnes with varying quality from low-grade coal- lignite to high-quality bituminous coking coal. The country possesses over 100 coal deposits and about 300 occurrences. Most of them are proven but have not been developed due to a lack of infrastructure and capital to date.

In addition to its large resources, Mongolia has very good mining conditions usually suited for surface mining. Due to typically low strip ratios, extraction costs are usually low, giving mining operations a major competitive advantage compared to peer operations in Russia, China and the rest of the world.

Mongolia’s proximity to China and Russia is another factor making its coal industry attractive.

Given its undeveloped world class resources, cost advantages and relatively easy access to large consumers like China and Russia, Mongolia is a candidate for being one of world’s largest coal exporters to driving forces of the global economy.

4. Company overview

Sharyn Gol is a Mongolian thermal coal producer with 374 million tonnes of JORC compliant resources, listed on the Mongolian Stock Exchange. In 1995 the company was partially privatized and in 2005 it became a 100% private company. The mine is one of the oldest coal mines in Mongolia, dating back 46 years to first production in 1965. During peak production, coal extraction reached 2.5mn tonnes annually. However, in recent years, due to deterioration of equipment and an increased strip ratio, its production dropped to around 0.5mn tonnes per year and 80% of its coal supplied to Darkhan and Erdenet Thermal Power Plants (TPP). The Sharyn Gol mine also has a competitive advantage in that it is

connected to the Trans-Mongolian railway by a dedicated railspur. This railspur

enables the Company to deliver coal to its customers directly via rail, without having

any infrastructure related difficulties, common to other mining operations in Mongolia.

0

10

20

30

40

50

60

2005 2006 2007 2008 2009 2010 2011

Coal Production (mln tons)

Sharyn Gol Mine

The Sharyn Gol coal deposit is located 50km south of Darkhan city and 240km north of the

capital city Ulaanbaatar. It was discovered in the 1930’s and initially explored by a joint

venture of Mongolia and Russia efforts in the 1940s and 50’s. The Sharyn Gol coal mining

license area covers 16,060 hectares.

Coal seam length 1000m, width 1900 m, thickness from 15 to 30 m, angle of dip 8 12 ,

overburden thickness 140~200 m.

Coal Quality

Total moisture,% 14,4 Ash (dry basis),% 19 Volatile Matter(dry basis), % 33-35 Sulfur(dry basis),% 0,46 Calorific value, Kcal/Kg 4000-7300 Size 0-300mm Ash Melting Point 1240°C-1280°C

Production

The company is planning to increase production volume to 1mn tonne per annum in the

near term and increase to 2.5mn tonnes per year in the medium term. Sharyn gol is

assuming that most of the new coal production will come from the new coal seam

discovered as a result of 17,000 meters drilling in 2010. The following is our Sharyn Gol

production assumption by coal seams:

Production breakdown, mn tonnes

2011 2012 2013 2014 2015

From old coal seam 0.55 0.55 0.55 0.55 0.55 From new coal seam 0.50 0.70 0.90 1.00 Total 0.55 1.05 1.25 1.45 1.55

Coal production 2005-2010:

Sharyn Gol’s production cost is approximately US$15 per tonne. The following figure shows

breakdown of cash cost:

Direct Operating Costs, US$/t 2011 2012 2013 2014 2015 Overburden removing 10.2 8.6 8.7 8.8 9.1 Coal Mining 1.7 1.9 2.0 2.1 2.2 Processing (CHP) 0.3 0.3 0.4 0.4 0.4 Wash Plant - 0.8 1.0 1.2 1.3 Site Infrastructure 0.5 0.5 0.6 0.6 0.6 Transport cost 1.2 24.1 29.8 34.8 38.1 Total Direct Cash Operating Costs 14.9 37.3 43.5 49.0 52.8 Total Direct Cash Operating Costs (real)

14.9 35.6 39.5 42.3 43.5

8.26 7.89 8.81

9.69

13.16

16.4

0.71 0.51 0.54 0.55 0.42 0.45

2005 2006 2007 2008 2009 2010

Sharyn Gol Production (mln tons)

Mongolia Sharyn Gol

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

1965-1980 1981-1990 1991-2000 2001-2009

Coal production vs Overburden removing (by thousand m3)

Coal production Overburden removing

Sharyn Gol’s Customers

5. Mining processes of Sharyn gol mine

Simpleprocess. Coal is crushed to 300 mm or less, then classified into lump and fines

hoppers, where upon it is loaded onto waiting rail wagons. No washing or other

beneficiation processes are presently undertaken.

Receiving bunker capacity 180tn

Jaw Crusher SMD-60A and Screen GISL-72 productivity 360tn/hour

Erdenet Power Plant 43% Darkhan Power

Plant 36%

Erdenet Copper Mine 11%

Erel Cement 4%

Sharyn Gol heating

2%

Others 4%

Dewatering Drilling Blasting

Overburden removing

•by dragline

Coal exploitation

Transporting coal

Receiving Crushing Classifying

Loadin onto rail wagons

In 2008 put into production 700m of Conveyor system for coal transportation.

6. Machines and equipments

Machines and Equipments

Model Task Quantity

Excavators

Electric dragline ЭШ1-10/70

Overburden removing 2

Electric dragline ЭШ-6/45

Overburden removing 1

Electric face shovel ЭКГ2-8И

Overburden removing 1

Electric face shovel ЭКГ-4У

Mining coal and Overburden removing

3

Electric face shovel ЭКГ-5А

Overburden removing 2

Hydraulic excavator Hyundai LC-290

Engineering work 1

Hydraulic excavator Hyundai LC-450

Engineering work 1

Drilling rigs

СБР-160 Coal drilling 2

3СБШ3-200 Overburden drilling 2

5СБШ-200 Overburden drilling 1

Dumptracks

CAT-769D Transporting mass 5

TEREX-3307 Transporting mass 3

БелАЗ-548 Transporting mass 2

Bulldozers Komatsu D155A Road and dump 2

Grader CAT-16G Road 1

Locomotive ТЭМ-2 Shunting 2

1 Walking excavator (Экскаватор Шагающий) 2 Dredge career caterpillar (Экскаватор Карьерный Гусеничный)

3 Roller cone drill machine (Станок Буровой Шарошечный)

Technical aging of Sharyn Gol mine:

21

16

32

22 21 21

26

30

22

Excavator aging by year

17

14

4

2

Drill СБР160 №29 Drill 3СБШ-200 №31 Drill 3СБШ-200 №32 Drill 5СБШ-200 №36

Drilling rig aging by year

13 13

6 6

10 10

Cat №18 Cat №20 Cat №34 Cat №35 Terex №24 Terex №25

Truck aging by year

Technical specifications of Electrical draglines

Electric dragline ЭШ-6/45 Electric dragline ЭШ-10/70

Bucket capacity, m3 6 10

Boom length,m 45 70

Average pressure on soil, kPa When operating During walking

58.5 107.8

95.7 153.9

Travel speed, m/s 0.133 0.055

Theoretical productivity, m3/h 557 686

Maximum range of digging and unloading, m

43.5 66.5

Maximum unloading height, m 22 27.5

Maximum digging depth, m 19.5 35

Operating mass, t 278 688

Technical specifications of drilling rig

Drilling rig 3СБШ-200 Drilling rig СБР-160

Rock strength , f: 6-14 3-6

Operating weight, t 62 29

Diameter of hole, mm 200 160

Drilling depth, m: 60 24

Number of rods, pcs - 3

Rod length, m - 8

Angle of blast hole incline, deg 0; 7,5; 15; 22,5; 30 0; 15; 30

Feed force, kN 300 0-80

Travel speed, k m/h 0.75 0.9

Total power, kW 386 184

Dimensions (working position), mm 12100х 5400x17320

7495х4900х12993

Dimensions ( transport position), mm 17500х 5400x5300 12640х4800х4698

Drilling rig 3СБШ-200 crawler mounted drilling machines are designed for roller bit drilling of

vertical and inclined blast holes . Preferably the drill is used for drilling rocks with hardness

of 6-14 units according to Prof. Protodyakonov scale.

Equipment's time effectiveness

productive 38%

estimated waiting 19%

technical damage

28%

out of spare parts 0%

in accordance with operation

15%

Excavators

productive 46%

estimated waiting 9%

technical damage

38%

out of spare parts 5%

in accordance with operation

2%

Trucks

Electric face shovel ЭКГ-5А Electric face shovel ЭКГ-4У Electric face shovel ЭКГ-8И

Dipper capacity, m3 5.2 4 8

Maximum digging radius, m 14.5 23.70 18.4

Maximum digging height, m 10.3 22.16 13.5

Maximum dumping radius, m 12.65 22.14 16.3

Maximum dumping height, m 6.7 17.52 6.1

Line–fed motor power kW 250 520 520

Travel speed, km/hour 0.55 0.42-0.45 0.42

Voltage, V 6000 6000/3000 6000

Operating mass, t 196 369 325

EKG mining shovels are designed for excavating and loading of minerals and overburden into conveyance means during open-pit operations as well as for stacking and loading operations at storage facilities and for continuous flow process technology operations. The mining shovel is intended for operation in temperate climate. Working temperature range from -40С to +45С.

7. Major coal mines in Mongolia

Erdenes Tavan Tolgoi

Erdenes Tavan Tolgoi LLC incorporated as an associated company of the Erdenes MGL LLC.

The company's functions are to carry out exploration and exploitation on the strategically

important Tavan Tolgoi coal mine by holding special licenses, to centralize benefits of the

Tavan Tolgoi mine and transfer them to the state budget, and to collect investments for

building extraction and processing factories based on the deposit and for developing

infrastructure. The Tavan Tolgoi deposit is the biggest undeveloped coking coal deposit in

the world with 6.4bn tonnes of coking and thermal coal. It has good quality thermal coal

with 4,900kcal/kg and coking coal with 6,500-7,500kcal/kg. The coal has low sulfur content

of less than 0.8% for all seams, low ash content of 10 to 33.3%, moisture 8.5% and content

of volatile matter 22.0-34.1%. Combination of high quality, low cost, proximity to key end

market in China, Russia, Japan and Korea and experienced management team with strong

international partners is giving the mine the best-in-class coal opportunity from Mongolia in

our view.

Mongolian Mining Corporation

MMC owns a 2,960ha mining license on Ukhaa Khudag deposit in 6.4b tonnes Tavan Tolgoi

Coking Coal complex in the South Gobi of Mongolia. MMC commenced mining at the Ukhaa

Khudag in April 2009. The deposit holds 286m tonnes of JORC-compliant proven and

probable reserves and 499.9m tonnes of measured and indicated resources, where the

majority of reserves and resources are hard coking coal. In September 2010, the Company

completed its IPO on the Hong Kong Stock Exchange selling a 20% offering of new shares and

raised $650m. MMC produced about 4mt in 2010 and plans to increase to 15mt by 2013.

MMC is finalizing the construction of a paved road to transport its coal to China and the

initial 5mtpa coal washing plant of a planned 15mtpa (3x5mtpa) and a 18MW power plant.

MMC has a license to build rail road and plans to build a 240km rail road from the deposit to

the Chinese border in 2011-2012. MCS Holding, Petrovis, Kerry, Casafina/Ancora, Shunklai,

and EBRD own 44.0%, 11.4%, 8.1%, 6.2%, 4.9% and 3.1%, respectively, and the free float is

22.3%.

MAK

MAK, one of the largest business groups in Mongolia, has three coal mining operations –

Eldev, Naryn Sukhait and Qinhua-МАК-Naryn Sukhait JV – and, also, holds mining licenses in

the Aduunchuluun deposit. The Eldev coal deposit is located 330km south of Ulaanbaatar

and 21km from the Trans-Mongolian railway. MAK produces 500ktpa from the Eldev deposit

which has 30m tonnes of reserve and supplies to domestic buyers – Erdenet Mining Corp,

Khutul Cement-Limestone Plant, etc. The Naryn Sukhait deposit is located 50km north of the

Chinese border in the South Gobi and its geological reserve is 220m tonnes of coking coal

with 6,500-7,800kcal/kg. MAK commenced the operation at the deposit in Dec 2007 and

begun exports in May 2008. Installed capacity is 3mtpa and plans to increase it to 5-8mtpa

after the completion of the railway to connect with the border crossing that is being built by

MAK. In 2002, MAK launched a JV with Qinhua Corp of China in the Naryn Sukhait deposit,

and started coal exports in April 2003. The JV has been exporting 1.5mtpa from the deposit.

In 2010, MAK exploited a historical record 5.1m tonnes.

SouthGobi Resources

SouthGobi owns three coal projects in Mongolia - Ovoot Tolgoi Mine (producing) and two

development projects, the Soumber Deposit and the Ovoot Tolgoi Underground Deposit.

The Ovoot Tolgoi deposit is next to MAK’s Naryn Sukhait deposit and 40km from the Chinese

border. The Ovoot Tolgoi’s open cut mine proven and probable reserves are 114m tonnes

and open cut and underground total measured and indicated resources are 260m tonnes of

high-volatile B to A bituminous with over 7,212kcal/kg. SouthGobi commenced production in

April 2008 and exporting it to China. In the first 9 months of 2010, it produced 1.4m tonnes,

below the targeted 4m tonnes in 2010, and sold at an average $39 per tonne. SouthGobi is

planning to build a 45km paved road to the border expected to cost $48m by 2012, and to

build a dry ash separation plant which will cost $45m by the end-2011. In Oct 2010, the

Company agreed to buy 19.9% of Aspire Mining for A$20.1m. Ivanhoe Mines and China

Investment Corp own 57.0% and 13.3%, respectively and the free float is 29.7%.

Tavan Tolgoi JSC

Tavan Tolgoi JSC has two coal mining licenses within basin of 6.4b tonnes Tavan Tolgoi

Coking Coal deposit in South Gobi of Mongolia, covering 169 hectares with a total resource

of 40mn tonnes of coking coal with a calorific value of 6,500-7,500kcal/kg, 20% ash and 8.5%

moisture. The South Gobi provincial government owns 51% of the Company and the rest is

privately held by retail investors on the MSE. From 2004, the Company started selling coal to

China. The company sells its coal to dealer companies which further sell to China. In 2010, it

exploited 5mn tonnes, most of it went to China. Although in Gansu and Inner Mongolia

coking coal prices are around $100/t, the company is still selling the coal at $6.5/t to the

local market due to the state-regulated sale prices and is exporting at around $25-35/t.

Mongolia Energy Corporation

MEC acquired several projects or licenses for coal, ferrous and non-ferrous metal resources

in Western Mongolia since 2007. MEC’s main asset is Khushuut Coal Mine, which is located

in Khovd Aimag (Province) of Mongolia. MEC conducted a drilling programme at the deposit

in 2007 and discovered JORC compliant resources of 149m tonnes of coking coal. MEC has

been constructing a paved road to the Chinese border which was planned to cost RMB866m

and expected to be complete by the end of 2010. In January 2010, MEC entered a long term

coal supply agreement with Baosteel Bayi in China for supplying at least 9.6m tonnes of

coking coal through years 2010 to 2020. In June 2010, MEC contracted Leighton Asia for a

A$273m 6-year contract to develop and operate the Khushuut mine. Initially, 3mtpa will be

produced from the mine and production will increase further to 5-6mtpa. The mining

commenced in July 2010 and the initial production was expected by the end-2010. 70% of

the company is held by the public and 18% by Lo Lin Shing, Simon, 12.0% by Liu Cheng Lin,

and 0.11% by other directors.

Aspire Mining

Aspire Mining has three coal projects in Northern Mongolia – Ovoot Coking Coal project,

Nuramt Coal project and Jilchilibag Coal project. In the Ovoot project, the Company has six

exploration licenses covering a total area of 509 square km and announced JORC compliant

measured and indicated resources of 276m tonnes of coking coal in October 2010. Only 10%

of the deposit area is explored and the Company expects the resource base to be increased

after 2011 drilling. The most feasible coal transportation option is to build a 552km railroad

from the deposit to Erdenet City of Mongolia, and the Company targets production by 2012.

The other two projects are also being explored. The Company’s directors own 38% of the

Company, SouthGobi Resources 19.9%, Mongolian Vendors 14.1% and 27.6% is held by

other shareholders, in the fully diluted basis.

Prophecy Resource Corp

Prophecy has two thermal coal projects in Mongolia – Ulaan-Ovoo and Chandgana – totaling

1.4b tonnes measured and indicated resources. The Ulaan-Ovoo, located in northern

Mongolia 10 km from the Russian border and 120 km from both Mongolian and Russian rail

links, has 209m tonnes measured and indicated coal resources (proven and probable

reserves are 20m tonnes) (NI 43-101) with a 5,204 kcal/kg calorific value. As a mining

permission was granted for Ulaan-Ovoo in Nov 2010, the Company started supplying coal to

Erdenet and Darkhan cities’ power plants through a contract mining with Leighton

Engineering. The Company targets to produce 0.8m tonnes in 2011 and to reach 2m in 2013.

It is actively negotiating off take agreements with Russian power plants as well as

prospective Asian customers at the Russian east seaports. The Chandgana deposit with

1,211m tonnes of measured & indicated resources with the calorific value of 4,354kcal/kg is

located 290km east of Ulaanbaatar and 160km from the existing railway. The Company

researches to build a 600MW mine mouth power plant with extension to eventual

4,200MW. Institutional and insiders investors hold 35% of the Company.

Xanadu Mines

Xanadu’s major coal projects in Mongolia are Khar Tarvaga and Galshar. The Khar Tarvaga

deposit with a JORC compliant resources of 327m tonnes (172m tonnes are Indicated and

155m tonnes are Inferred) is located 200km south east of Ulaanbaatar and 30km from the

Trans-Mongolian railway. Xanadu works to covert the exploration license on the deposit to a

mining license and discussing with several groups interested in exploiting the potential of

the Khar Tarvaga. One possible option is to implement a coal to liquid project. The Galshar

project with non-JORC compliant resources of 203.6m tonnes (measured 158.1m and

indicated 72.5m) and targeted JORC compliant resources of 175-225m tonnes is located

285km south east of Ulaanbaatar and 65km from the Trans-Mongolian railway. In January

2011, Xanadu commenced the scoping study on the deposit. The exploration will continue at

the deposit this year. From the drilling data of 2005-2010, the coal quality of these two

deposits ranges 4,201-6,424kcal/kg. The Company has other coal, gold and copper

exploration licenses in Mongolia. Xanadu completed its IPO on the ASX in December 2010.

The largest shareholders of the Company are Straits Energy Trading Pte, Eagle Securities,

Bikibi Atoll Investments and Farrington Corporate Securities respectively owning 16.7%,

11.0%, 8.9% and 5.0% of the Company.

Hunnu Coal

Hunnu Coal establish as a premium coal company focused on exploration and development

of its interest in coking and thermal coal deposits in Mongolia. Hunnu Coal has positioned

itself, through a number of joint venture agreements in the premier coking coal basins of

southern and eastern Mongolia, with a focus on infrastructure and access to the Chinese

export coal markets. their all venture agreement projects has JORC resource of over

400.0mn. At the current stage, their major projects are Unst Khudag (Hunnu coal owns 80%

of the project) and Tsant Uul (90-80% in hand of Hunnu). Unst Khudag has JORC resource of

324.25mn tonnes of thermal coal with an average calorific value of 6,784 kcal/kg dry ash

free (daf). Tsant Uul has 90.0nm tonnes of coking coal with an average calorific value of

7,008 to 7,455 kcal/kg, 17.54% to 39.01% ash.

Shivee Ovoo JSC

Shivee Ovoo supplies 25% of Mongolian domestic coal demand. 80% of Shivee Ovoo coal

production is supplied to TPP-4, the biggest thermal power plant in Mongolia. The

Mongolian Government owns 90% of the Company and 9.0% is held by Firebird Fund.

Designed production capacity of the company is 2mtpa, however, the company produces

1.4mtpa. In 2010, the Parliament of Mongolia established a cooperation contract with the

Chinese government to build a 4800MW thermal power plant relying on the Shivee Ovoo

coal deposit. The deposit, a strategically important deposit, covers 4,293ha and is located

260km southeast of Ulaanbaatar and connected with the Trans-Mongolian rail line. Total

explored reserve is 600mt of brown coal and expected resource is 2.1bn. Out of the explored

reserve, 564mt is economic reserve. Coal contents are 2,963-4,407kcal/kg calorific value,

40% ash content, 8.5% of moisture, 0.5% sulphur and 43% volatile material. Because of

regulated low coal price, MNT13,958 ($11.11) per tonne in 2010, Shivee Ovoo has been

operating with operational losses.

Baganuur JSC

Baganuur supplies over 50% of the coal consumption of the Mongolian Central Energy System. The Baganuur coal deposit, a strategic deposit, is located 139km east of Ulaanbaatar and connected with the city through a railway. The initial estimated economic reserve was 304m tonnes and resource was 296m tonnes with a calorific value of 3,200-3,500kcal/kg, 12.9% ash and 32.9% moisture. Since its inception in 1978, the Company extracted over 80m tonnes from the deposit. Currently the mine extracts 3mtpa due to central-region demand, old equipment and financial constraints. However, because of state regulated coal price, MNT18,190 ($14.5) per tonne in 2010, Baganuur has been operating with operational losses. The deposit’s strip ratio is reaching 6:1.

The State owns 75% of the company and the biggest private shareholder is Firebird

investment fund, holding over 14%, the rest is free float. Baganuur JSC is included in the

2011-2012 privatization plan, approved by the parliament of Mongolia in early 2010. Due to

the plan, 24% of Baganuur will be sold to the public by the offering of additional shares. The

Mongolian Government plans to build TPP-5 in Ulaanbaatar based on Baganuur coal by

2016.

Mogoin Gol JSC

Mogoin Gol mine was established in 1970, and now mainly supplies coal to centers of

Khuvsgul and Zavkhan provinces and eastern soums of Zavkhan province. In 1983, 1989 and

1995 production capacity had been expanded by investing new mining equipments and

machines, increasing to 200,000 tonnes of coal production per annum. In 1995, the company

was partially privatized, floating 49% of the company on the MSE. Then the state owned 51%

was transferred to provincial government ownership. Currently, the company has 74

employees. Mogoin Gol coal deposit is located in Tsetserleg soum of Khuvsgul aimag, 880km

northwestern from UB city and 209km western from Khuvsgul province center. The deposit

covers an area of 89 hectares. Total resource is 11.2mn tonnes of coal with 5,200-

7,100kcal/kg of calorific value, 7.3% ash and 0.9% moisture, of which 3.6mn tonnes are

viable to mine by open pit mining. Mogoin Gol’s average strip ratio is about 5-7.

Aduunchuluun JSC

The Company was established with underground mining operations in 1954 to supply the

Eastern Mongolia Region and Choibalsan city with coal. In 1979, the scope of operations was

expanded and capacity increased to 600ktpa. In later years, the Company has been

producing 300ktpa and selling coal at $6.6 per tonne. Aduunchuluun deposit is located in

5km from Choibalsan city, a centre of the Dornod province, 650 km east of Ulaanbaatar and

100 km from the Mongolian-Chinese border. The total proven reserves and resources of

brown coal are 241.3mt and 423.8mt respectively with gross calorific value of 3,203Kcal/kg,

9.9% ash content, 38.7% moisture, 1% sulphur and 45.8% volatile matter. The deposit is

connected with Russia through railway, and it is able to export the coal to Russia and China.

The Company plans to increase its production to 1.5-2mtpa as Dornod Power Plant’s coal

demand is expected to increase significantly in the coming years.