Middle Gobi

Guildford Coal has an equity share in a number of tenements contained in two projects in Mongolia through its shareholding in Terra Energy. The Mid Gobi Project is one of these, and consists of two exploration licences (12929X and 15466X) located in the Dundgovi Province. This is approximately 400km southwest of Ulaanbaatar and just over 200km west of the Mongolian railway grid, with a logistic route to China via the Erlianhaote border crossing.

The two Mid Gobi Project exploration licences have an approximate area of 36,000 hectares and are located in the coal bearing Ongi Gol Basin.

While a range of mineral deposits exist in the area, the primary target is coal due to the regional geology. This consists mostly of moderately dipping sedimentary basins that potentially provide multiple hard and low rank surface coal targets. The project location is within relatively close proximity to infrastructure for potential customers, including Mongolian and Chinese electricity generators.

Exploration Licence 15466X

15466X is an exploration licence with a renewable term until 13 November 2016

Exploration on the licence commenced in 2011. The strategy was to drill a series of open hole lines in a North South direction to intersect the East West stratigraphy and confirm coal sequences and thicknesses.

The program in 2011 consisted of six holes with an average depth of 200m for a total of 1148 metres drilled. These holes were drilled in the central part of the licence within the coal bearing Cretaceous Tevshiin Gobi formation. No coal was intersected.

Ground based magnetic geophysical studies were also completed in 2011. This was completed on 8000 sq m of the license.

Drilling commenced in 2013 with one hole targeting the Tsagaan Ovoo coalmine which the license surrounds on three sides. The small program of one hole was attempting to intersect the same coal resource along strike.

Exploration Licence 12929X

12929X is an exploration licence with a renewable term until 13 November 2016

Exploration on the licence commenced in 2011 and the strategy was to drill a series of open stratigraphic holes across the tenements to confirm sequences and confirm coal thicknesses.

Following prospective coal intersections across six holes, which were used as Points of Observation, MDM completed a JORC inferred and indicated resource report in December 2011. The Inferred Resource of 189.1 million tonnes and an Indicated Resource of 32.3 million tonnes were reported along with an exploration target of 165.9 million tonnes to 829.4 million tonnes.

Coal quality is available for these six-cored holes with the results showing a medium to high ash thermal product across three seams of potential economic thickness. Limited coking tests have been completed but historically, the target coal within the Jurassic Shahan Ovoo formation is not known for its coking properties.

Fluorite resource

In 2012, fluorite mineralisation was discovered outcropping on the licence, see map below for location. Preliminary grab results have determined a high-grade fluorite outcrop rated as Ceramic Grade. A magnetic survey has been completed on by Logantek LLC. Preliminary magnetic (TMI) results are shown in the following figure. The image shows a magnetic feature in close proximity to the area of outcrop and sampling with an orientation approximately north east to south west.

Exploration in 2012 targeted the extension of the resource to the East and West. 16 holes with a total of 3000m open and cored were drilled, with one hole having a coal intersection. This was documented as inferior coal. Overall, due to poor quality data and issues associated with the quality of geophysical logs it cannot be conclusive that further coal intersections occurred. An Independent memorandum following exploration in 2012 by MDM states …“In their current state, the geophysical logs cannot be used for accurate identification of coal seams and depth corrections”.

Exploration in 2013 consisted of another four open holes within the resource area, two of these intersected coal. One of the holes had a substantial intersection of 9m of coal at an economic depth of three metres. Exploration from the previous two years has not been used to increase resource size or confidence.