Gobi Coal & Energy expanding into other energy resources
Gobi Coal & Energy (Gobi Coal) has announced its ongoing strategic initiative to expand across the energy resources value chain into hard coking coal, coking coal mine consolidation, and graphite and uranium development and mining both inside and outside of Mongolia.
During 2015, Gobi Coal successfully completed a drilling programme at its primary coking coal mine at Shinejinst, which consisted of a total of 637.3 m of drilling comprised of 8 diamond core boreholes that enlarged the deposit area to the southeast with average coal thickness of 9.3 m.
One hole returned an exceptional coal seam of 44 m in thickness with low volatile materials. 76 coal quality samples were obtained in 2015 and submitted to a laboratory for testing with subsequent results confirming hard coking coal properties and the potential for a new sub-basin at Shinejinst.
Successful water testing confirmed that the area has significant water potential, which is important for future mine development.
During 2014 and 2015, Gobi Coal engaged in detailed analyses of, and negotiations with, several coking coal companies throughout Mongolia as part of a broader consolidation strategy. The aim is to build economies of scale and pricing power for the export of coking coal into China from southwest Mongolia at Ceke where pricing is significantly below international benchmarks. Negotiations are ongoing and will continue during 2016 in relation to Gobi Coal’s mine at Shinejinst.
At the start of 2015, Gobi Coal analysed numerous uranium acquisition opportunities with a focus on the China market. China has a reported 30 reactors in operation, with 24 new reactors under construction, another 40 planned, and 136 proposed which will result in a three-fold increase in its nuclear capacity by 2020 – 2021. Reactors in operation worldwide are already consuming in excess of 10 000 tpy of uranium more than current global mine production capacity. This supply-demand imbalance is expected to grow sharply as China reactors enter operation with each new reactor requiring this amount to commence operation and sustain the plant operation for the first few years of use. Gobi Coal is currently in negotiations regarding a potential stock acquisition of a promising uranium property in Mongolia.
In addition, Gobi Coal has reviewed several high grade graphite mining investment and acquisition opportunities worldwide. The graphite market offers an opportunity for Gobi Coal to diversify into ‘new energy’ mining resources that are experiencing robust and increasing demand in the market as a result of growing lithium battery use globally, and specialised electronic and industrial products. Demand for jumbo flake size graphite is expected to experience the majority of growth in market demand and pricing. Gobi Coal is now in the process of negotiating strategic equity investments into pre-production stage graphite mining companies in Africa.
Over the past two years, Gobi Coal has successfully preserved its coal assets during an unusually weak metallurgical coal market, while aggressively working to expand across the energy resources value chain inside and outside of Mongolia. The company has maintained negligible debt and was recently awarded US$11.5 million, plus costs and continuing interest and damages, by the Hong Kong International Arbitration Centre for defaulted loans due to the company.
Gobi Coal Chairman Mohammed Munshi stated: “We are excited about the progress our company has achieved since 2014 towards expanding into other energy resources in a weak coal price environment. Strong balance sheet management and highly diligent analysis of expansion opportunities across energy resources will create significant value for Gobi Coal and its shareholders in the coming years. We are thankful for the patience and exceptional strategic support and involvement of our major sovereign fund shareholder since 2014 towards expanding our business. We anticipate that the 2016 calendar year will be very busy with many new milestones to be achieved.”
Edited from press release by Harleigh Hobbs