Xanadu Mines acquires Mongolian coking coal assets as part of Noble JV

Friday, 17 Jun 2011

Xanadu Mines has finalized a farm in agreement on the Nuurstei coking coal project in Northern Mongolia as part of its strategic alliance with Noble Group, Asia's largest diversified commodities trading company.

The deal represents the first major coking coal acquisition for the newly formed Xanadu Noble alliance which was created in March 2011. The earn in agreement will be undertaken via Ekhgoviin Chuluu LLC a vehicle established to seek out and develop new coking coal opportunities as part of the strategic alliance.

EC can earn up to 80% of the Nuurstei coking coal licenses by meeting various spending commitments over 4 years, under the terms of the agreement. These include up to USD 1.5 million on drilling to earn the first 60% followed by a commitment to complete a JORC resource to earn a further 20% taking EC interest to 80% of the Project.

Mr Brian Thornton Xanadu chairman said “Nuurstei demonstrates the determination by the alliance to become the principal mid-tier coking coal group operating in Mongolia, now commonly referred to as an emerging energy and metals powerhouse.”

A reconnaissance drill program has already commenced at Nuurstei with one multipurpose drill rig operating on a double shift basis. The company expects the first phase will include 3,500 metres of diamond and mud rotary drilling and will take at least two months to complete. Preliminary coal quality results will be available in early July 2011.

The Nuurstei joint venture underpins the core strategy of EC which aims to identify and develop significant coking coal opportunities, close to existing infrastructure that will meet anticipated current and future demands from China and North Asian markets.

Xanadu recently completed a detailed 74 hole diamond drilling program at its 100% owned Galshar thermal coal project as part of its strategy to convert the resource to JORC code classification.

The company expects this work to be completed in August 2011 by Xanadu technical consultants McElroy Bryan Geological Services. The company other main asset in Mongolia is the Khar Tarvaga coal project which contains a large JORC compliant coal resource of 327 million tonnes.