BERKH UUL COAL PROJECT
The deposit consists of shallow, consistent coal seams of high-quality bituminous coal amenable to open-pit mining. Viking had confirmed a local industrial demand for unwashed Berkh Uul coal, due to its low ash and relatively high calorific value. Four MOU’s have been signed with the following government entities.
- Darkhan Thermal Power Plant – a major supplier of electricity to Mongolia’s second largest city, the commercial and industrial centre of Darkhan, and the northern region of Mongolia. This plant is being upgraded with coal consumption to increase from approximately 400,000t per year to approximately 600,000t per year
- Erdenet Power Plant – a major supplier of electricity to the Erdenet copper mine, located 180km west of Darkhan City. The plant consumes approximately 250,000t of coal per year Darkhan Metallurgical Plant – located close to Darkhan City, it is expanding its current 100,000 tpa steel milling capacity.
- Khutul Cement and Lime Plant, Mongolia’s largest cement manufacturer, located approximately 60km west of Darkhan City, has plans to expand its coal consumption from the current 250,000 t per year to around 400,000t to 500,000 t per year to meet growing domestic demand for its cement products.
The MOU’s state the government entities intent to enter into future purchase agreements for Berkh Uul project coal, and establishes testing of a bulk sample as a basis for technical evaluation of the coal.
In 2015 the Mongolian Government review review of the Law on Prohibiting Mineral Exploration and Extraction near Water Sources, Protected Areas and Forests (commonly referred to as the “Long Name Law”) resulted in many local and foreign exploration and mining lease tenements falling within this newly created exclusion zone under the Long Name Law. Viking Berkh Uul Coal Project was one of the affected projects with approximately 53% of the prospecting licence falls within this exclusion zone, which impacts upon the Company’s current coal resource.
Many of the prospecting and mining licenses which were affected by the Long Name Law, including Viking’s, are currently being reviewed by the Mineral Resource Authority of Mongolia (MRAM) and the Ministry of Tourism, Green Development and Environment are under review.
The Berkh Uul deposit has a JORC (2012) coal resource of 38.3 Mt. Of this, 21.4Mt is classified as Indicated and 16.9Mt classified as Inferred. The coal is bituminous in rank (ASTM classification) with average in situ quality as follows: Total Moisture 19.8%, Calorific Value 5,323 kcal/kg (air dried basis, adb), Ash 15.5% (adb), and Total Sulphur 0.37% (adb).
The Company is in the process of evaluating its options for this project.