The South Gobi project has increased its exploration target maximum from 582Mt to 700Mt while drilling at the Middle Gobi project increased its exploration target to 680Mt.

The positive results further cement Guildford’s hopes of becoming a Mongolian thermal and coking coal producer by 2012, the company says.

Drilling at the flagship South Gobi project has put Guildford in a position to define a maiden JORC resource at the project by next month.

The company said it was also preparing a mining licence for the project, which has the potential to produce up to 2Mt per annum of coal.

The South Gobi project located in the South Gobi Basin consists of five exploration licences and covers large thermal and coking coal prospects.

Guildford’s Middle Gobi project consists of two exploration licences located in the coal bearing Ongi Gol Basin.

Guildford said the project had massive potential for a large scale open cut operation which would supply thermal coal to Mongolian and Chinese electricity generators.

Guildford’s coal tenements in Mongolia were acquired via the company’s 70% stake in Terra Energy.

Terra Energy recently acquired a 100% stake in Mongolia-based company Alag Tevsh LLC for $US3.5 million.

Following the acquisition Guildford obtained Alag Tevsh’s exploration licence 5262X in Mongolia’s South Gobi coal basin, which adjoins Guildford’s existing South Gobi project tenements.