QGX rides coal-powered surge (July 13, 2005)

Drilling by QGX (QGX-T) has turned up 35 coal seams on the Baruun Naran project in the Gobi desert, 500 km south of the Mongolian capital of Ulaanbaatar.

In all, the eight holes yielded an estimated net true thickness of 195 metres worth of coal in multiple seams, based on a coal seam cutoff of 2 metres. QGX says the holes confirm the presence of multiple coal seams over at least 8 km of strike length. Four of the holes cut six intervals exceeding 12 metres in estimated true thickness.

Two holes designed to test the down-dip extension of a 24.5-metre (apparent thickness) coal seam intercepted in May cut three seams measuring between 12.1 and 18.2 metres. Drilling on coal seams exposed in a 2-km-long trench intercepted 15.4 metres of net coal plus two smaller seams lower in the hole.

Drill testing on the down-dip extension of several previously cut coal seams encountered nine seams totalling 63.2 metres in thickness, including three exceeding 9 metres, with the widest measuring 20 metres. The drilling confirmed down-dip continuity of up to 150 metres.

Meanwhile two holes aimed at seams cut by previous Russian operators (measuring 9.9 metres and 8.8 metres in apparent thickness) cut several 2-to-5-metre thick seams aggregating 13 metres and 26.1 metres net coal, respectively. The holes are the western-most drilled by QGX.

QGX currently has two drill rigs running on the eastern end of the coal valley where a 16-metre (apparent thickness) thick coal seam was announced in May. Based on the latest results, the company has moved a second drill on to the property, with another two scheduled to arrive in August. The company has also ordered a third backhoe to help with district-scale exploration. The company has also begun geophysical surveying to test for coal seams and structural features beneath up to 10 metres of cover.

Results form metallurgical quality tests on coal contained in three earlier QGX holes that twinned previous Russian holes are pending. Earlier this year, an independent review concluded that Baruun Naran’s coal appeared to be mid-to-high volatile bituminous. Some of the thicker seams also appeared to contain coking-quality coal.

“The results at Baruun Naran continue to fuel our enthusiasm for the property. We’re finding a lot of coal in just eight holes scattered about the western half of the coal valley," said QGX CEO David Anderson.

Coal deposit at Baruun Naran occur within a northeast-southwest striking basin of Permian sedimentary rocks. The coal is contained in 12 shallow seams, with the four thickest seams each measuring at least 10 metres in width.

QGX acquired a 100% interest in the Baruun Naran license in 2002.

The latest results sent shares in QGX 30, or more than 12%, higher to $2.75 in late afternoon trading in Toronto on July 13.