Guildford Coal hits milestone with 63.1Mt maiden coking coal resource in Mongolia

Guildford Coal (ASX: GUF) has confirmed an initial JORC Resource of 63.1 million tonnes of coal with coking potential at its South Gobi project in Mongolia.

The maiden resource comprises 38.2 million tonnes in the Indicated category and 24.9 million tonnes in the Inferred category.

A boost to the South Gobi project, which comprises five exploration licences, is that it is located approximately 60 kilometres from the Chinese border station town of Ceke, where coal from Mongolia is currently transported through to China.

The maiden resource underpins the potential start-up of a 1 to 2 million tonnes per annum open cut mining operation.

Guildford Coal has lodged mining licence applications for EL13780X and EL5262X and both are expected to be granted prior to the end of 2011.

The company is also in the process of completing Scoping Studies for the start-up operation with the goal of beginning mining from the North Pit (EL13780X) by the June quarter of 2012.

Drilling will continue on the other key tenements in the South Gobi Project to define a JORC Resource for the Central, West and East Pits.

South Gobi Coal Project

The South Gobi Project is located approximately 50 kilometres east of two operating mines and one large coal project which have a total coal resource estimated to be approximately 750 million tonnes.

These current mines produce in excess of 5 million tonnes per annum of high volatile bituminous coals which are marketed as separate thermal coal and coking coal products.

Significantly, the geology of the South Gobi region and competitive labour rates allow for low-cost production, with average run of mine cash costs estimated at US$20 per tonne.

Selling prices for unwashed run of mine coal are estimated at between $40 per tonne and $50 per tonne purchased at mine gate.

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