QGX rides coal-powered surge (July 25, 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, eight holes yielded an estimated net true thickness of 195 metres worth of coal in multiple seams, based on a minimum coal seam width 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 about 700 metres to the south 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 of the down-dip extension of several previously cut coal seams some 2.2 km to the west encountered nine seams totalling 63.2 metres in thickness, including three exceeding 9 metres, with the widest measuring 20 metres. Another nearby hole yielded 27.8 net metres of coal in several seams. The drilling confirmed down-dip continuity of up to 150 metres.

Meanwhile, two holes (1.2 km and 2 km to the west, respectively) 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 net metres 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-thick (apparent thickness) coal seam was announced in May.

Encouraged by 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. Geophysical surveying to test for coal seams and structural features beneath up to 10 metres of cover is also ongoing.

Results from 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 deposits 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 licence in 2002.

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