Entree Gold discovers coal in Mongolia

Entre Gold (ETG-T, EGI-X) may be exploring for gold and copper on the resource-rich steppes of Mongolia but as luck would have it the Canadian junior has also stumbled across some coal targets within 5 km of a road used to transport the commodity to China.

The coal was found on the western portion of Entre’s Lookout Hill property, about 70 km southeast of the country’s largest known coal deposit, called Tavan Tolgoi, and about 60 km northwest of Ivanhoe Mines‘ (IVN-T, IVN-Q) massive Oyu Tolgoi copper-gold deposit.

Entree is now evaluating the coal targetknown as Nomkhon Bohr–using geological mapping, magnetic and induced polarization (IP) geophysical surveys, excavator-assisted trenching and core drilling.

So far the target has been traced over a 1,000-metre strike length and remains open along strike to the east and to the west and downdip.

Seven trenches totalling 620 metres and five core holes totalling 467 metres have been completed. Just two of the five holes completely tested the target and the remaining three holes were abandoned due to drilling problems.

Hole EG-08-068 intersected three multi-metre-thick coal-bearing horizons of 13.50 metres, 25.65 metres, and 7.57 metres apparent thickness. Within those horizons are coal seams of variable apparent thickness, the company says.

Hole EG-08-071 intersected two coal-bearing horizons with interbedded mudstones and coal over apparent thicknesses of 21.40 metres and 57.40 metres.

Hole EG-08-072 struck the coal-bearing horizon at 42.05 metres but the hole was abandoned at 66.60 metres.

Entre has yet to determine the coal’s quality and is awaiting results from SGS Tianjin China on samples it submitted for analysis.

The coal target continuity “appears to be predictable from hole to hole, and from trench to trench,” Entree noted in a press release. Entre plans to test the downdip continuity of the horizons through further drilling as well as trenching along strike.

The Vancouver-based company has hired Norwest Corporation, an international natural resource consulting group, to assess the geology and assist in exploration.

Entre’s Lookout Hill property consists of 179,590 hectares and the company holds three exploration licences there.

Lookout Hill surrounds the 8,500-hectare Oyu Tolgoi project and hosts the Hugo North Extension of the Hugo Dummett deposit and the newly discovered Heruga deposit.

In July, Entree set up a joint venture with awholly owned Mongolian subsidiary of Ivanhoe Mines on about 40,000 hectares of the Lookout Hill property.

Under a 2004 earn-in-agreement, Ivanhoe’s subsidiary earned a 70% interest in mineralization above a depth of 560 metres and an 80% interest in mineralization below a depth of 560 metres by spending US$35 million on the joint-venture property.

Ivanhoe Mines and Rio Tinto are major stakeholders in Entree, holding about 15% and 16% respectively of its issued and outstanding shares.

In Toronto Entre is trading at about C$1.90 per share and has a 52-week trading range of C$1.33-C$3.35 per share.

The company has about 94 million shares outstanding and a market capitalization of roughly C$178.7 million.