Vancouver — Investors took a shine to Gulfside Minerals’ (GMG-V, GMGLF-O) plan to acquire the Monster coal project in southwestern Mongolia and boosted the company’s share price by 26% in recent trading.
Gulfside has inked a letter of intent with a private Mongolian company to buy up to a 66% interest in the lease and take over as operator.
Initial work on the Monster property, so named because the coal seams are up to 100 metres thick in sections, dates back to Russian exploration in the early 1960s with additional work in the mid-1980s.
Last year, the current leaseholder drilled holes on the property and identified four coal seams with a cumulative thickness ranging from 41.5 to 94.9 metres. Further drilling discovered even thicker seams of up to 129 metres.
Local historical estimates (not compliant with National Instrument 43-101) peg the amount of “Mongolian C” category coal (i.e. having a moderate level of geological confidence and comparable to the CIM class of indicated resources) on the property at upwards of 500 million tonnes. That falls within a larger block that could contain up to 2.5 billion tonnes of coal under “P-1 Class” and Russian “P Class, which can be deemed comparable to CIM inferred resources.
Gulfside plans drilling this summer to allow for an NI 43-101-compliant resource estimate on Monster.
Thermal coal being mined from the area reportedly sells at $20-$40 per tonne.
Gulfside likes the infrastructure potential of the project being about 200 km from the Chinese border, within 82 km of a railway and only 6 km from power lines.
Terms of Gulfside’s acquisition agreement include a 3-5% sliding scale production royalty.
Shares of the company closed up 24 on the news at $1.16 apiece.
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