The study by Absolute Mining has identified the potential for a 136.9 million tonne mine producing up to 4.9Mt of raw coal per annum and 500,000 tonnes of dried coal briquettes by year 4.
This will have a mine life of about 30 years while the low production costs reflect the low overall mining ROM strip ratio of 2.4:1.
"The results from the Mongolian feasibility study provides further confidence in the viability of developing the Nuurst Coal Project into a low cost producing mine," managing director Rick Dalton said.
"This study will also be used as a basis for completing the more detailed feasibility work required to secure financing for the development of the Project."
Modun is also working through the requirements to produce an internationally recognised Bankable Feasibility Report, subject to raising appropriate finance.
Key to the success of the Nuurst Project is its strategic location just 6 kilometres away from existing railway infrastructure.
Other major infrastructure in the vicinity includes a 35kV power supply within 6 kilometres of the project, and a 220kV powerline runs around 22 kilometres from the licence boundary.
Nuurst has a JORC Resource of 478Mt and is located 120 kilometres south of the Mongolian capital, Ulaanbaatar, and 600 kilometres by rail from the Chinese border.
Notably, the company had last month received a strong endorsement from the Mongolian government, which signed a Memorandum of Understanding to buy coal briquettes from the project.
The briquettes will provide a higher energy coal supply to meet Mongolian power generation demand that will also reduce pollution.
Mongolia had paid about US$130 per tonne for semi-coking briquettes last year.
The country currently has 865 megawatts of power generation capacity in Ulaanbaatar and forecasts point to a further 300MW required in 10 years.
Modun continues to progress its Nuurst thermal coal project towards development with the Mongolian Feasibility Study highlighting the low US$11.50 per tonne cost to produce raw coal which would provide a significant operating profit margin even at current thermal coal prices.
Besides representing a key step in securing its mining permits, the study also provides the basis for a Bankable Feasibility Study that will allow the company to secure financing for the project.
To top it off, Nuurst has many advantages over other coal projects in the country, including proximity to infrastructure and an agreement to supply coal briquettes to the Mongolian Government.
Mongolia's recent adoption of foreign investment friendly legislation should also open the door for financing by introducing incentives and increasing the confidence for investors to commit to projects or move existing projects into construction and production phases.
These include protection from future tax changes that might negatively impact projects; the formation of a specially appointed Council of non-salaried members; relaxation of the percentage of foreign workforce employed; and provisions protecting against nationalisation of investors' assets.
In summary, Modun has ticked off a large number of boxes required for development and toward gaining project financing at Nuurst including:
- It would provide regular coal supply to existing power stations to tap increased power demand
- Provide a new coal supply for new power stations
- Prime location for a new environmentally friendly power supply, via dried coal binderless briquettes
- Located close to Mongolia's capital Ulaanbaatar and six kilometres from existing infrastructure
- Proven coal reserves
- Low start-up costs
With this, Proactive Investors believes Modun Resources is still flying under the radar for most investors and that there is considerable room for the company's shares to grow beyond $0.006 and its market cap of $5.48 million. There are significant milestones and catalysts ahead.
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