Selenge Project

The Company’s flagship Selenge iron ore project is located in Mongolia’s second largest industrial center of Darkhan and Selenge provinces, where the key infrastructure such as railway, electricity and water supply are well developed. The main trans-Mongolian railway, which is a direct access to the two big neighboring nations China and Russia, is connected by local sub-rail spurs.

 

Figure 1. Infrastructure for the Selenge projects

 

Resource

The Company has completed approximately 47,900m of a diamond drilling started at Bayantsogt in 2011 and continued into 2012 to drill Dundbulag and Undur-Ukhaa. During these two consecutive years, an extensive drilling program was successfully completed with total of 47,900 meters drilled.

As a result of this extensive exploration work the Company was able to delineate this new Resource that is now the largest internationally recognized JORC compliant Iron Ore Resource in Mongolia with significant exploration upside. A JORC Code compliant resource* has been defined covering three clustered deposits within the Company’s Selenge iron ore project area in Mongolia. The combined total resource is 254Mt of iron ore at an average in situ grade of 17.2% Fe (for 44Mt of contained iron metal) based on a 12.5% Fe cut-off grade, of which 99.7% is in the Measured and Indicated categories. These are the categories sufficient to use as a basis for estimating Proven and Probable Ore Reserves and undertaking a Feasibility Study.

 

Table 1: Selenge Resource Estimates Split by Deposit (Cut-off grade = 12.5% Fe)

Depostit Measured Indicated Inferred Total
Mt Fe Grade Mt Fe Grade Mt Fe Grade Mt Fe Grade
Dundbulag 96.4 16.6 103.5 16.1     199.9 16.4
Bayantsogt 20.7 23.0 15.0 22.8 0.55 16.6 36.3 22.8
Undur Ukhaa 9.3 15.8 8.9 15.1     18.2 15.4
Total 126.4 17.6 127.4 16.8 0.55 16.7 254.4 17.2

 

The Company commenced Selenge exploration activities in 2011 with extensive geological prospecting and reckon works followed by a full scale geophysical survey.

The ground magnetic survey was carried out covering the entire exploration tenement areas. Following this, the airborne geophysical survey was successfully conducted along the Bayangol magnetite skarn fault zone.

These works resulted in identification of a number of potential Drilling targets including Bayantsogt, Dundbulag and Undur Ukhaa sites.

As a result, the Iron Ore Banded Magnetite System (known as “BMS”) was discovered in Selenge project area which formed three clustered deposits, and the Company was able to delineate ore bodies of each deposit.

The Bayantsogt deposit is composed of 8 individual ore bodies and other small lenses. The ore bodies are parallel to each other and trend NE 40°-50°, dip northwest at 70°-80°. The ore body lies 5-35m of each other. The total width of the deposit is 350m and 820m in length, thickness is 80m.

Reserves for the deposit were estimated to a depth of 575m.

Dundbulag is the largest deposit with a massive banded magnetite structure that strikes about 1.1 kilometers long and over 600 meters wide. Associated with total of 11 ore bodies, the average thickness of the 3 main ore bodies reaches about 200 meters dipping about 60 degrees.

4 ore bodies were outlined for the Undur Ukhaa deposit, which are 220m in width and 450m in length, 100m thickness of iron ore body. The detailed exploration is proposed to be undertaken, which will increase the reserves as well as the width and length of the deposit at depth.

After the completion of the drill data analyses and based on the results of core samples laboratory assays, the company estimated the iron ore resource at these 3 clustered deposits.

The Company is also working on infrastructure, engineering and technical solutions for a mine and processing plant complex at its Selenge project. The water and electricity supply can be provided within only 15km from the mine site. A scoping study to connect the Selenge project to Shariin Gol railway within only 45km distance is also underway.

The Company is planning to reach an export capacity of 3 million tons per annum iron concentrate by year 2016 when Production commences. This is a great opportunity project just next door to the Chinese steel industry demand as Haranga Resources is aiming to become one of the strategic players in Iron Ore Export operations in Mongolia.

The Selenge project is ideally located in the heart of Mongolia’s premier iron ore development region with right geological & structural zone, neighborhood of existing iron ore producing mines, availability of key infrastructure such as electricity, water supply and railway with excellent access to the main trans-Mongolian rail line and nearby rail spurs. The Company has signed an MOU with both the Mongolian Railway Authority and the Ministry for Transportation requesting up to 5Mtpa of rail capacity from 2015 onwards.

In May 2013, the Company announced the Resource of 254.4 million tons of Measured and Indicated categories, which is the largest JORC compliant Iron Ore Resource in Mongolia with a significant further exploration upside.

The Company is planning to reach an export capacity of 3 million tons per annum iron concentrate by year 2016 when Production commences. This is a great opportunity project just next door to the Chinese steel industry demand as Haranga Resources is aiming to become one of the strategic players in Iron Ore Export operations in Mongolia.

The Company is also working on infrastructure, engineering and technical solutions for a mine and processing plant complex at its Selenge project. The water and electricity supply can be provided within only 25km from the mine site. A scoping study to connect the Selenge project to Shariin Gol railway within only 45km distance is also underway.