Modun Resources signs MoU to sell coal briquettes to Mongolian Govt.

Modun Resources (ASX: MOU) has received a strong endorsement from the Mongolian government, signing an Memorandum of Understanding to supply with coal briquettes.
Modun shares should open stronger on this news.
Under the terms of the memorandum, Modun is responsible for developing a coal mine and constructing a coal briquette plant at its Nuurst project, subject to raising the appropriate finance.

Modun is also responsible for delivering the quantity of coal briquettes as detailed in the terms and conditions of the off-take agreement currently under negotiation with the Mongolian Government.

Rick Dalton, managing director for Modun, commented: “The signing of the Memorandum is an important and final precursor to endorse the formal Off-take Agreement for the supply of the coal briquettes to the Mongolian Government.

"The Memorandum clearly outlines the responsibilities of the Government departments and ensures each parties’ interests are aligned and focused on delivering the project.
“The negotiations for the Off-take Agreement continue to progress well and have now moved into the final stage of discussions.”


Mongolian Feasibility Study

The independent consultants appointed by Modun have completed the Feasibility Study required by Mongolian Law, subsequent to attaining the Mining License.

Modun is undertaking a final review of the Feasibility Study with the consultants prior to submitting it to the Mineral-Resources Authority of Mongolia.


Infrastructure is the key

Nuurst is strategically located near key infrastructure which not only helps move product from the project to the end user, but is in close proximity to reduce operating costs.

Nuurst is located 6 kilometres from existing railway infrastructure, 120 kilometres south of the Mongolian capital, Ulaanbaatar, and is 600 kilometres by rail from the Chinese border.

Other major infrastructure in the vicinity includes a 35kV power supply within 6 kilometres of the project, and a 220kV powerline runs around 22 kilometres from the licence boundary.


Analysis

This is about as strong an endorsement of a mineral project that a company can get, with the government of Mongolia to buy coal briquettes from the Nuurst project.

Proactive Investors estimates this agreement to add 20-30% of value to the current market cap. of $5 million in the short to medium term.

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