Khangad Exploration LLC (KEX) holds the mining license MV-014493 for Baruun Naran area and operates Baruun Naran coking coal mine.
On 21 February 2024, Baruun Naran S.a.r.l (“BNS”) (an indirect wholly-owned subsidiary of the Mongolian Mining Corp.) and Mongolian Mining Corp. (MMC) and entered into a share purchase agreement with Jiayou International Logistics Co., Ltd. (JIL) to sell its 20% equity interest in KEX for a total consideration of USD88,810,000. Upon closing of the KEX Share Purchase Agreement, on 3 June 2024, MMC and the JIL held 80% and 20% equity interest in KEX respectively and KEX remains as a subsidiary of MMC.
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Summary:
The Baruun Naran coal deposit occurs within an Upper Permian clastic sedimentary unit known as the Tavan Tolgoi Formation. This same formation also hosts the large Tavan Tolgoi coking and thermal coal deposit, located approximately 20 km northeast of Baruun Naran. An ENE-trending belt of Tavan Tolgoi Formation crops out in the Baruun Naran valley representing the western continuation of the Ulaan Nuur coal basin.
The Ulaan Nuur basin is an asymmetric fault-bounded, ENE-trending syncline, with a very steep northern limb (overturned in part) and a more gently-dipping southern limb. In addition to this folding of coal-bearing strata, seams are truncated by faults in the north, west and south-west. Deformation of Permian sediments occurred during the early Mesozoic Era. Basement rocks are of Carboniferous age on the northern margin of the valley and Devonian on the southern limb. The earliest deposited coal seams are less extensive and onlap onto the older basement rocks.
Khangad Exploration LLC drilling at the northeast end of the Baruun Naran valley has shown that the coal-bearing sequence is unconformably overlain by a 10 to 30 meter sequence of tuffaceous siltstones and mudstones of unknown age that are interpreted by to be reworked volcanic rocks. The basal contact of this unit appears to be an angular unconformity and the unit clearly post-dates folding of the Tavan Tolgoi Formation. Bedrock within the Baruun Naran valley is covered by up to 5m of unconsolidated Quaternary deposits. Weathering of the underlying Permian strata is variable and in early modelling was set at 30m below natural surface levels.
In November 2008 an oxidation drilling program targeted T500 and H500 seams along subcrop to determine the limit of oxidation (LOX) for thermal and coking coals. Visual estimates of weathering were made, and samples of coal collected every metre were sent to the laboratory to test both calorific value and coking properties. This work indicated that H500 and T500 seams have a calorific value of 32 MJ/kg (daf) at 1-3m below visual base of weathering recorded in drill chip logging, while fresh coal with full coking properties was found 1-3m below this thermal oxidation depth for the H500 seam, and 1-5m deeper for T500 seam.
For T500 seam the thermal LOX depth averaged 19.5m (range 16m-26m) while the LOX for coking properties averaged 23m depth (ranging 18m-29m). In the east H500 had an average thermal LOX of 31m depth (range 24m-38m) and average depth for coking properties of 33m (range 25m-41m) following the trend of deeper weathering towards the east of the deposit. In the Minex geological model the base of weathering grid used for resource estimation was set at the depth where 32 MJ/kg (daf) was achieved in the oxidation boreholes, and elsewhere recorded visual oxidation plus 2m. No igneous intrusions have been identified within coal bearing strata.
Coal Seams
The coal-bearing Tavan Tolgoi Formation within the Baruun Naran valley has a stratigraphic thickness of approximately 1000m. Drilling to date has defined twenty two major coal seams ranging from 0.6m to 16.9m in average true thickness. Determining true thickness of coal seams in this deposit is difficult due to the steeply dipping strata and the mix of vertical and inclined boreholes, all of which deviated to some degree, during drilling. Intersected seam thickness was converted to true thickness by applying a thickness correction factor determined from the angle of the borehole, and the estimated seam dip at the point of drill penetration.
In addition to major seam groups, a number of thin laterally discontinuous coal beds occur in the area as well as fault repetitions of major known seams. Many of these thin seams are highly banded and may be localised discontinuous coal lenses, as often correlation between more than a few holes is difficult.
Coal seams at Baruun Naran have been labelled alpha numerically from oldest to youngest. The major seam in any alphabetic group is designated the “500” seam (e.g., “T500”); Subordinate seams (riders or splits) are numerically greater than “500” if stratigraphically higher in the sequence (e.g., “T510”), or less than “500” if stratigraphically lower in the sequence (e.g., “G400”). The current model includes 132 coal plies, from V seam (top ply V506) to the basal E seam (ply E504).
Structure
Coal seams at Baruun Naran are folded into an asymmetrical syncline which plunges west at approximately 24º. Coal seams subcrop from east to west and can be traced from the southern to the northern limb, around the syncline nose. The north limb is very steep and borehole data indicates it progressively overturns toward the west , before the coal seams are no longer present. The south limb has a gentler dip of about 40º near the syncline nose (east) but progressively steepens to 75º dip towards the west. The coal sequence is terminated on the north limb by a fault and by a fault or unconformity against Devonian sediments on the southern limb. The western end appears faulted against another sedimentary unit with no economic coal seams. Slickensided surfaces commonly occur within drill core and, as well as major bounding faults, numerous minor faults would be expected within the highly deformed sedimentary sequence at Baruun Naran.