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Xanadu Mines awarded 30 year mining licence for Mongolian coal project

Last updated: 03:10 02 Dec 2011 GMT, First published: 02:10 02 Dec 2011 GMT

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Xanadu Mines (ASX: XAM) has been granted mining licence MV16871 for the Khar Tarvaga Coal Project by the Mineral Authority of Mongolia, covering a total area of 83.5 square kilometres (8,350 hectares).

The licence is for an initial term of 30 years with an option for two twenty year extensions, providing for a total of 70 years of mining operations. The company intends to further evaluate the development potential for coal to liquids (CNL) and synthetic natural gas (SNG).

Xanadu has completed an extensive technical scoping study as part of its development strategy and to assist in identifying potential developers and end users of this significant, well located coal resource.

The company a 100% interest in the project which is located in the Tov Province in Eastern Mongolia, about 150 kilometres South East of Ulaanbaatar, with access to both rail, road and power infrastructure.

Drilling by Xanadu at the project has identified a significant sub-bituminous coal resource in excess of 327 million tonnes of which more than half is indicated status and described as being amenable to mining by open cut methods.

The coal within the mining licence is a sub-bituminous, high volatile coal suitable for power generation and potentially gasification as part of a CTL or SNG production facility.

There are three principal coal seams at Khar Tarvaga which have defined continuity and significant resources. The deposit is well situated to supply a mine mouth power station and the domestic coal market.

A study by Nexant Inc concluded that the KT coal deposit was ideally suited to the production of liquid hydrocarbon fuels, i.e. clean diesel, petrol and avgas via the proven indirect liquefaction route.

Now with the certainty of a 30 year mining licence and Mongolia’s growing annual fuel deficit of more than US$800 million, Xanadu intends to engage potential technical and equity partners to develop the project.

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