The Baganuur coal mine in Mongolia is seeking to expand its operations and capacity. It has proven coal reserves of over 700 million tons. The mine currently produces around 3 million tons annually but needs to increase production to 6 million tons by 2020 to meet growing demand from power plants in the central region. To do this, the mine plans to invest over $130 million USD to modernize equipment, transition to more efficient surface mining, and expand conveyor transport systems. This investment is expected to lower production costs, increase reserves, and have a positive net present value and internal rate of return that would justify the funds. The mine aims to partially finance this expansion through an initial public offering on the domestic stock exchange while maintaining majority
2. Content
• Introduction
• Resources and reserves
• Coal production
• Market outlook
• Mine expansion plan
• Research and development
• Investment issues
3. Introduction
• ESTABLISHED IN1978.
• SE 130 KM FROM ULAANBAATAR.
CONNECTED TO PAVED ROAD AND
RAILWAY NETWORK.
• GOVERNMENT OWNS 75%, OTHERS 25%
OF SHARES RESPECTIVELY.
• EMPLOYEES 1100
• EXTRACTS 50% OF COAL CONSUMPTION
FOR PRODUCING ENERGY OF
MONGOLIA, 60% FOR CENTRAL REGION.
4. Coal quality standart
MNS 3818-2001
Type of coal
size
Ash
content /%/
<Aã
Moisture
/%/
<Wã
Sulfur
content
/%/ Sd
t
Volatile
matter
/%/V
Calorific value
<Qã
t
Kkal/kg KJ/kg
Brown coal
type -B2
17.5 37.5 0.5 45 3360 13.0
5. Main consumers
# Thermal power plants
Annual supply
/thous.tn/
Shares to total
consumption
1 TPP-4 1600.0 60%
2 TPP-3 1100.0 100%
3 TPP-2 210.0 100%
4 Darkhan TPP 250.0 60%
5 Erdenet TPP 120.0 50%
6. Resource and reserve
Proved in 1978 with 600.0 million tons.
Updated in 1998 with 708.2 million tons as a result of detailed survey.
In total, 88.4 million tons of coal has been extracted since 1978.
Norvest migrated the reserve model of 1978 into Minex in 3D.
8. Quality of survey results
Laboratory analysis:
In total samples from drilled boreholes
Ash analysis 47%
Caloric value analysis 24%
Sulphur content analysis 47%
Volatile analysis 29%
Core recovery – (60-70%)
Insufficient
quality of survey
to prepare a
Feasilibility
study for a bank
Requires detailed survey to choose proper mine technology for the mine.
Potentiality of resource increase up to 1.0 billion tones by conducting
additional geological survey in accordance with international standards.
11. CHALLENGES
• Overdue overburden
• Water drainage issues
• Higher unit production cost than selling price
• Coal price set by government
• Outdated equipments and facilities - 90%, requires technical
renovation.
• Movement in internal stock piling
• Unreachable reserves due to geological conditions
• Increase in transport distance
• HR risks- lower salary
• Financial issues
Requires technical renovation and decrease in production cost
12. PROJECTED COAL CONSUMPTION
IN CENTRAL REGION
5,2 5,3 5,9 7,1
10,6 11,7 13,0
15,0
6,5 6,8 7,5
8,8
12,5
13,7
15,7
18,1
-
2,0
4,0
6,0
8,0
10,0
12,0
14,0
16,0
18,0
20,0
Milliontones
ТЭХС-ийн хэрэглээ Тєвийн бүсийн нийт хэрэглээ
2012 20172016201520142013 2018 2025
Central energy
system’s consumption
Total consumption
in central region
Coal consumption of central region projected to be 6.5 million tones in 2012
while it will reach 15.7 million tones in 2018, 18.1 million tones in 2025 respectively.
Regarding the consumption projection, Baganuur mine needs to expand the mine
capacity.
13. Capacity expansion
3,30 3,57 3,52
4,30
5,51 5,51 5,51 5,64 6,05 6,00 6,13
5,2 5,3
5,9
7,1
10,6
11,7 12,2 12,5
13,0
13,5
14,0
-
2,00
4,00
6,00
8,00
10,00
12,00
14,00
16,00
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Багануурын
нийлүүлэлт
ТЭХС-ийн эрэлтDemand from CES
30% of coal consumption to TPP-5 which will be built with 820 MW capacity in 2012-2016.
100% of coal consumption to Baganuur power plant which will be built with 270MW in 2013-2016.
projected coal production of the mine is 6 million tons by 2020.
Supply from
Baganuur
14. Technological developments
To entry Surface mining technology for Coal production
and overburden
To build conveyor systems for both coal and waste
transport
To start using underground mine technologies in some
coal seams.
To reduce overburden volume and optimize mine earth
movements
15. COAL PRICE AND MINEABLE RESERVEs
140 186
392
683 717 731 749
1,98
2,16
2,43
2,72 2,74 2,75 2,80
1,00
1,20
1,40
1,60
1,80
2,00
2,20
2,40
2,60
2,80
3,00
-
500
1 000
1 500
2 000
2 500
3 000
0,7 0,8 0,9 1 1,1 1,2 1,3
Millions
Хөрс, м3
Нүүрс, тн
Кхх, м3/тн
Main option- Coal price
20500 tugriks/ton
Technology: Surface mining + Conveyor systems
Mineable reserve can be elevated to 749
million tones if selling price increased by
30% after technological renovation.
Minimum coal
thickness seam-
0.4 m
Waste, m3
Coal, ton
Strip ratio, m3/t
19. Preparation to stock exchange (2012)
- Geophysical survey
- Detailed survey drilling
- Geotechnical survey
- Drainage survey
- Resource report in accordance with JORC
- Have the resource report in accordance with Mongolian standard approved by
Mineral Resource Authority.
- Have the feasibility study in accordance with Mongolian standard approved by
Mineral Resource Authority.
- Feasibility study for a bank
- Prepare documents for stock exchange
- Баяжуулах үйлдвэрийн туршилт судалгаа ТЭЗҮ боловсруулах
Additional shares to be sold at domestic stock exchange to raise the
necessary fund while keeping state owned shares at 51% in 2012.
20. Investment plan
14
71,6
1,5
4,1
11,1
3,9 2,9
9,4
2,9 1,5
7,1
1,5
(10)
-
10
20
30
40
50
60
70
80
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Хөрөнгийн биржд
гарах бэлтгэл
ажлын зардал
Уурхайн тоног
төхөөрөмж
Preparation
cost to stock
exchange
Mine
equipments
and facilities
(/in accordance with Feasibility study done by Glogex LLC)
Total investment of 131.4 million USD required between 2012 and 2022
21. ECONOMIC PARAMETERS
• Investment
– Facilities
• CAPEX 2012: USD85.5 million
• OPEX (2013-2015): USD16.7 million
• OPEX (2016-2022): USD29.2 million
• Total: USD117.5 million
– Preparation cost to stock exchange USD 13.9 million
– Total USD131.4 million
• Coal price/ton: 20500 tugriks in 2012, 22500 tugriks in 2013-2022
• Unit cost/ ton of coal
– in 2012: 23100 tugriks
– in 2014: 20300 tugriks
– in 2018: 15300 tugriks
– in 2022: 13900 tugriks
• Net present value (when NPV @ 10%): 35.6 billion tugriks
• Internal rate of return (IRR) - 13.4 %,
• Payback period – 7.91years or in 2018.
22. Thank you for your attention
We welcome any kind of cooperation