Baruun Naran Coal Project

Introduction

There exists great potential for the development of Mongolia’s vast coal resources, particularly in the South Gobi area. QGX is a leader in exploration and development of the South Gobi’s rich coal resources through its Baruun Naran Coal Project.

Coal production from Mongolia’s South Gobi area, is projected to grow to over 15 million tonnes per annum (Mtpa) by 2010, making the South Gobi, Mongolia’s foremost coal production centre (Barlow Jonker – unpublished report, 2006).

QGX’s Baruun Naran Coal Project (BN) is at the forefront of this rapidly expanding coal supply region. With a large, proven, shallow bituminous coal resource, within striking distance of the Chinese market, the BN project is continuing fast along its development path, and is scheduled to be the first large (>10 Mtpa) coal mine in the South Gobi.

Continuing its advanced exploration in 2006, QGX commissioned two significant studies in early 2006, a NI 43-101 compliant geological study and resource statement, and a conceptual mine development study.

International geological consultants McElroy and Bryan Geological Services provided an independent assessment of the exploration and resources at Baruun Naran. A 3D geological model was produced, and a compliant NI 43-101 statement was derived from the study, and released on 7 June 2006.

Concurrent to the geological study, Minarco Asia Pacific were commissioned to undertake a Conceptual Mine Development Study of the deposit at Baruun Naran. This study has not been publicly released.

With the initial geological and engineering studies provide guidance to the potential for the deposit, and the mining project, more in depth geological and mining studies will be undertaken by QGX later this year, and continue into 2007, with a view to initiating a large scale open-cut mine at Baruun Naran in 2008.