Hunnu Coal to acquire 60% of Unst Khudag coal mine

Hunnu Coal (ASX: HUN) has reported that it is acquiring a 60% interest in the Unst Khudag Coal Mine and surrounding licenses, which are located in the Dundgobi Province of Mongolia.

The Unst Khudag Coal Mine is strategically located 200km from an operational multi party coal loading facility on a major rail line.

It consists of two Exploration Licenses and one Mining License covering over 59,000 hectares. It has an approved Mining Plan and Feasibility Study for the mining of 98.7Mt of coal.

Hunnu said it is targeting first production from the Unst Khudag Coal Mine in the latter half of 2010. Off-take agreements are currently being discussed with Mongolian and Chinese coal users.

The mine has an exploration target of 250Mt to 500Mt. Past trial production of approximately 30,000t for bulk test work with potential off-take partners and local utilities.

There is a single coal seam with average thickness of 20 metres dipping at 0 to 5 degrees. Coal is at less than 4 metres from the surface and there is low strip ratio at less than 1:1 from startup.

Coal analysis has revealed high quality thermal coal with quality parameters on average Qdaf = 6460 kCal/kg, Ash = 13.9% and Moisture content = 23.9%.

Exploration programmes undertaken at Unst Khudag have included mapping at various scales, trenching, geophysical surveys and drilling. A total of 39 drill holes have been completed to depths less than 100 metres deep.

The company expects to be able to release additional information on the Unst Khudag Coal Mine acquisition in the coming months as a review process nears completion.

The company said this is a major transaction for Hunnu Coal that will quickly move the company from explorer to near term producer.

The company is continuing to assess a number of additional acquisition opportunities and news on these should be available in the coming months.

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