Guildford Coal March 2014 quarterly report

Australian miner Guildford Coal operating in Baruun Noyon Uul mine in South Gobi region of Mongolia has released March 2014 quarterly report.

Highlights of the report include BNU North Coal Mine’s formally being commissioned for operations and sales by the Mongolian Government; continuing seeking approval for the haulage road permit to be the main focus of the company; successfully negotiated OCP Asia financing facility of AUD 10 million convertible notes and AUD 55 million amortising notes, in which proceeds used to repay existing debt; finishing due diligence on adjacent Noble Group owned Mongolian exploration lease 12,600 for which Guildford has an option to either operate or acquire; BNU North mine in cash preservation mode until haulage contractor permit approved and current coal market improves; an Asian based Financial Advisor’s appointment to help explore equity and debt financing options.

The report said that Mongolia BNU North coal mine owned by Guildford Coal’s subsidiary Terra Energy LLC has been successfully and formally commissioned for operations and sales by the Mongolian Government during the quarter.

The commissioning of the mine has enabled further overburden removal, whilst minimizing coal extraction to preserve coal quality. Coal via stockpile is ready for first sale.

Since early March, mine development has continued but reduced to one excavator on day shift only in order to conserve cash whilst waiting for the commission of the coal haul road. Considerable resource definition work has also been undertaken to improve the resolution of the coal quantity and quality forecasting.

The report added that every effort is being undertaken to obtain the contractor haulage permit to commence coal exports to the distribution hub located at the Ceke Border Port on the Mongolian–Chinese border.

During the quarter, activity centered on seeking further local government support and resubmission of certain aspects of the Environmental Management Plan and several meetings with the relevant departments of the Central government. Pursuant to an Option Agreement between the company and the Noble Group, the company is finishing due diligence on a Mongolian exploration lease (12,600), to help guide a decision whether to exercise an option to operate or acquire 12,600.

It concluded that this is an exploration license which is adjacent to our BNU North coal mine, which could result in operational synergies and would further reinforce the close working relationship we have with Noble.

Source - Strategic Research Institute