TORONTO (miningweekly.com) – Canadian coal miner and energy project developer Prophecy Coal on Monday announced that operations at its Ulaan Ovoo mine, in Mongolia, had restarted as scheduled and within budget.

Prophecy said that all the required mining, safety, and transportation staff were rehired and all the company's leased-out mining and transportation equipment had been recalled and had arrived on site.

With a fleet of three operating mining excavators, six dump trucks, and more than 20 owned and leased transportation trucks, the company expected to mine and transport about 30 000 t/m to 50 000 t/m of coal in November and December, if the weather allows it.

Prophecy reported the road condition from the mine to the Sükhbaatar rail siding to be normal and coal was continuously being sold to a number of Prophecy customers.

Since 2010, the company had invested more than $55-million at Ulaan Ovoo to build a road and a bridge, to buy mining vehicles, to build a mining camp, prestripping and other infrastructure and community improvement projects.

The Ulaan Ovoo thermal coal mine is strategically located 17 km from the Russian border and 120 km from both Mongolian and Russian rail links. The mine has a Canadian National Instrument 43-101-compliant resource of 174-million tons in the measured category and 34-million tons of coal in the indicated category.

The coal is bituminous with an energy content of 5 040 kcal/kg, has a low ash content at 11.3%, low sulphur at 0.40% and is suitable for export. The mine features a single massive coal seam that is 45 m to 80 m thick with an average strip ratio of 1.8:1. The first eight years of mining requires no coal washing.

Ulaan Ovoo coal mining operations were temporarily suspended owing to the stockpile of coal at the time (187 000 t) being sufficient to meet contractual supply obligations through the balance of 2012 and 2013.

OFFTAKE AGREEMENTS

Prophecy last month said it had added a third offtake partner for its Ulaan Ovoo mine, after it had struck an accord with a new customer with “substantial presence” in the region to buy 30 000 t/m.

The company’s asset would also supply more than 30 000 t/m of coal to cement plants, a metallurgical plant, a heat plant, chemical plants and Russian traders, all of which signed binding agreements over the past two months.

The company had also recently executed a coal sales contract of significant quantity with a buyer in Russia, which is contingent on the ability to transport coal through the Zeltura border. Prophecy said a Mongolian government resolution had listed the border as being "under renovation", meaning it was neither open, nor closed.

Despite the company having offered to assist in renovating the associated Zeltura infrastructure, including the customs clearing facility at the mine, and road improvement from the mine to Zeltura, it could not give a definitive timeframe to start transporting coal through the border post.

The road improvement, which required a feasibility study and environmental impact assessment studies, were expected to be complete by the end of the year. The road improvement project was expected to take two to four months.