Modun Resources ups the ante in Mongolia, further coal acquisition
Modun Resources (ASX: MOU) has been reinstated to the ASX on the news that the company will acquire a large, pre-production coal project in the South Gobi Coking Coal District, Mongolia.
The company already owns the Nuurst thermal coal project in Central Mongolia, which already hosts a coal JORC Resource of 489 million tonnes.
The latest acquisition of the advanced mining Ha (Tsaagan Tolgoi) project with mining license and JORC resource of 45.4 million tonnes is a very neat fit with Nuurst, adding further upside for Modun Resources.
There is also an Exploration Target of 150 million to 250 million tonnes of high quality thermal coal and potential coking coal in the South Gobi Coking Coal District.
Even more compelling for Modun Resources shareholders is that there is planned production from an open pit on the Tsaagan Tolgoi mining licence from December 2012.
The Tsagaan Tolgoi Project is located on an existing mining licence (expiring 2038) 95 kilometres north of the Chinese border, 80 km south of Mongolia’s renowned 6 billion tonne coking coal project, Tavan Tolgoi, and 100 km west of the existing paved road and planned rail link into China.
To fund the purchase, Modun will place 187.5 million shares at $0.04 to raise $7.5 million, comprising of two tranches. Tranche one is 105 million shares, with tranche two subject to shareholder approval.
The vendor SouthGobi Resources Ltd. (TSX: SGQ, HK: 1878) will become a 14.9% shareholder of Modun Resources upon approvals.
The acquisition includes two mining licenses. The first known as Tsagaan Tolgoi, is 10,500 hectares which already hosts an exploration target of 150 million to 250 million tonne (grading Qadb 5300 kcal/kg to Qadb 6500 kcal/kg) of high quality thermal coal and potential coking coal.
Tsaagan Tolgoi currently has a 45.4 million tonne coal JORC Resource which has been defined from just 5% of the mining license area.
Significant resource extension work has already been planned at Tsaagan Tolgoi for the 2012 drilling season, with a planned open pit coal production from December 2012.
The second part of the acquisition is the 26,700 hectare exploration licence known as Ajlyn Talbai, located in the South Gobi Coking Coal District.
Highlighting one of the defining factors of the acquisition is the strategic location, being close to existing and planned infrastructure, and near the Chinese border.
Consideration for the deal
For 100% of the Tsagaa Tolgoi project and the Ailyn Talbai exploration licence, the consideration is:
- US$7.5 million in cash;
- US$12.5 million worth of Modun shares calculated at the lesser of A$0.06 per share or the price of any capital raising of more than $2 million prior to completion;
- Options to acquire US$5 million of Modun shares to be issued to SouthGobi after the expiration of 12 months and prior to 60 months;
- Options to acquire, within 12 months from commercial shipment of first coal sales, US$5 million of Modun shares to be issued to SouthGobi; and
- Right to nominate a person to the board of Modun provided SouthGobi retains minimum 14.99% shareholding in Modun.
Mongolian exposure through the Nuurst Project
Other coal exposure for Modun in the country includes the Nuurst project in Central Mongolia, which already hosts a coal JORC Resource of 489 million tonnes.
The company is looking to progress the project in 2012 by completing Scoping Studies, along with the progression of the current exploration licence to a mining licence.
More potential acquisitions in pipeline
Adding some extra interest to the Modun story is that the company is continuing a project review with the aim of expanding its portfolio of licenses in the South Gobi region, with the company currently assessing multiple opportunities.
Modun said, "Whilst acquisition negotiations are continuing on a number of projects, such negotiations are incomplete and may not eventuate in agreed terms."
The company already owns the Nuurst thermal coal project in Central Mongolia, which already hosts a coal JORC Resource of 489 million tonnes.
The latest acquisition of the advanced mining Ha (Tsaagan Tolgoi) project with mining license and JORC resource of 45.4 million tonnes is a very neat fit with Nuurst, adding further upside for Modun Resources.
There is also an Exploration Target of 150 million to 250 million tonnes of high quality thermal coal and potential coking coal in the South Gobi Coking Coal District.
Even more compelling for Modun Resources shareholders is that there is planned production from an open pit on the Tsaagan Tolgoi mining licence from December 2012.
The Tsagaan Tolgoi Project is located on an existing mining licence (expiring 2038) 95 kilometres north of the Chinese border, 80 km south of Mongolia’s renowned 6 billion tonne coking coal project, Tavan Tolgoi, and 100 km west of the existing paved road and planned rail link into China.
To fund the purchase, Modun will place 187.5 million shares at $0.04 to raise $7.5 million, comprising of two tranches. Tranche one is 105 million shares, with tranche two subject to shareholder approval.
The vendor SouthGobi Resources Ltd. (TSX: SGQ, HK: 1878) will become a 14.9% shareholder of Modun Resources upon approvals.
The acquisition includes two mining licenses. The first known as Tsagaan Tolgoi, is 10,500 hectares which already hosts an exploration target of 150 million to 250 million tonne (grading Qadb 5300 kcal/kg to Qadb 6500 kcal/kg) of high quality thermal coal and potential coking coal.
Tsaagan Tolgoi currently has a 45.4 million tonne coal JORC Resource which has been defined from just 5% of the mining license area.
Significant resource extension work has already been planned at Tsaagan Tolgoi for the 2012 drilling season, with a planned open pit coal production from December 2012.
The second part of the acquisition is the 26,700 hectare exploration licence known as Ajlyn Talbai, located in the South Gobi Coking Coal District.
Highlighting one of the defining factors of the acquisition is the strategic location, being close to existing and planned infrastructure, and near the Chinese border.
Consideration for the deal
For 100% of the Tsagaa Tolgoi project and the Ailyn Talbai exploration licence, the consideration is:
- US$7.5 million in cash;
- US$12.5 million worth of Modun shares calculated at the lesser of A$0.06 per share or the price of any capital raising of more than $2 million prior to completion;
- Options to acquire US$5 million of Modun shares to be issued to SouthGobi after the expiration of 12 months and prior to 60 months;
- Options to acquire, within 12 months from commercial shipment of first coal sales, US$5 million of Modun shares to be issued to SouthGobi; and
- Right to nominate a person to the board of Modun provided SouthGobi retains minimum 14.99% shareholding in Modun.
Mongolian exposure through the Nuurst Project
Other coal exposure for Modun in the country includes the Nuurst project in Central Mongolia, which already hosts a coal JORC Resource of 489 million tonnes.
The company is looking to progress the project in 2012 by completing Scoping Studies, along with the progression of the current exploration licence to a mining licence.
More potential acquisitions in pipeline
Adding some extra interest to the Modun story is that the company is continuing a project review with the aim of expanding its portfolio of licenses in the South Gobi region, with the company currently assessing multiple opportunities.
Modun said, "Whilst acquisition negotiations are continuing on a number of projects, such negotiations are incomplete and may not eventuate in agreed terms."
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