In late 2008, Erdene optioned the Galshar property to a private Mongolian company for cash consideration, to be paid over the first two years of the option agreement, and a royalty interest from any coal mined from the property in the future.
The Galshar coal project is located on the border of Dornogovi and Khentii provinces 300km southeast of Ulaanbaatar and 63km from rail. The property consists of three exploration licenses covering a major part of the Galshar coal deposit in the southeast part of the Choir-Nyalga coal basin. The Galshar deposit consists of a thick, folded anticline and anticline limb package of locally thermal grade, Lower Cretaceous coal in a topographic and structural depression.
Geological correlations of the coal beds at Galshar have been made on the basis of diamond drilling completed by a 1970s joint Mongolia-Russian exploration team and more recently by the Corporation. As presently defined, Galshar extends northeast-southwest over a 4.7 km by 1.8 km area and from surface to a depth of 134m. Recent drilling by the Corporation in 2006 confirmed the coal deposit extends at least 3.6 km to the northeast of the Corporation’s 2005 drill hole CDD-01 that returned a 21.8m section of 10,076 BTU/lb coal with low ash (6%) and low sulfur (0.4%).
Although Mongolian-Russian and the Corporation’s drilling have identified the substantial coal deposit at Galshar, additional drilling is required to define the full lateral extent of the deposit and make accurate quantity and quality determinations.
A more detailed summary of the project is included in the Corporation’s Annual Information Form for the fiscal year ending December 31, 2007 which is available on SEDAR. To view a copy of the section relating to the Galshar project please click here.
