Australia's Modun signs offtake agreement for Nuurst coal project in Mongolia
Australia-listed Modun Resources said Thursday it had signed a heads of agreement with Australian trader Tennant Metals for thermal coal sales from its wholly owned Nuurst coal project in central Mongolia.
Under the terms of the agreement, Tennant will have exclusive rights for 15 years to purchase 100% of the thermal coal produced at Nuurst for export and a minimum 50% of the thermal coal produced for sale in the domestic market. All sales will be at prevailing market rates, Modun said.
Nuurst has an estimated coal resource of 489 million mt, of which 417 million mt is indicated and 72 million mt inferred, the company said.
The project is located 6 kilometers from existing rail infrastructure that connects directly to the Chinese border, it added.
Tennant will begin to market Nuurst coal after an updated estimate of its resource is completed in early November. This will clarify and re-state coal quality parameters, including inherent moisture levels.
Modun said bulk samples will be supplied to prospective customers to determine final pricing and demand, and that further work is also being undertaken on various upgrade methods to determine the optimal product mix for export and domestic markets.
Modun said Nuurst coal was suitable for power production and likely to fall within similar quality parameters as Indonesian sub-bituminous thermal coal, which it described as a high-growth sector for Chinese import demand.
The company said it has a plan to mine 90 million mt at a rate of 3 million mt/year.
"The signing of a heads of agreement with Tennant is, in our view, a substantial achievement in terms of progressing the Nuurst project through to production," Nuurst managing director Rick Dalton said in a statement.
Tennant has "significant experience in the key Chinese coal market, especially from their Beijing and Sydney offices," he added.
Tennant also has offices in Taiwan, Vietnam and India.
--Cecilia Quiambao,deepa_vijiyasingam@platts.com --Edited by Wendy Wells, wendy_wells@platts.com
Under the terms of the agreement, Tennant will have exclusive rights for 15 years to purchase 100% of the thermal coal produced at Nuurst for export and a minimum 50% of the thermal coal produced for sale in the domestic market. All sales will be at prevailing market rates, Modun said.
Nuurst has an estimated coal resource of 489 million mt, of which 417 million mt is indicated and 72 million mt inferred, the company said.
The project is located 6 kilometers from existing rail infrastructure that connects directly to the Chinese border, it added.
Tennant will begin to market Nuurst coal after an updated estimate of its resource is completed in early November. This will clarify and re-state coal quality parameters, including inherent moisture levels.
Modun said bulk samples will be supplied to prospective customers to determine final pricing and demand, and that further work is also being undertaken on various upgrade methods to determine the optimal product mix for export and domestic markets.
Modun said Nuurst coal was suitable for power production and likely to fall within similar quality parameters as Indonesian sub-bituminous thermal coal, which it described as a high-growth sector for Chinese import demand.
The company said it has a plan to mine 90 million mt at a rate of 3 million mt/year.
"The signing of a heads of agreement with Tennant is, in our view, a substantial achievement in terms of progressing the Nuurst project through to production," Nuurst managing director Rick Dalton said in a statement.
Tennant has "significant experience in the key Chinese coal market, especially from their Beijing and Sydney offices," he added.
Tennant also has offices in Taiwan, Vietnam and India.
--Cecilia Quiambao,deepa_vijiyasingam@platts.com --Edited by Wendy Wells, wendy_wells@platts.com
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