Hunnu has paid $23 million cash on signing the acquisition, while the Rio subsidiary will receive another $17 million in deferred payments.
Located in the Gobi Altai province, the project consists of four mining licences covering 202 hectares along with six exploration licences totalling 46,212ha.
The project is about 250 kilometres by road to the Burgasti border crossing point into neighbouring China and is around 550km from China’s northern rail network.
A total of 19,437 metres of drilling has been completed over 107 reverse circulation and core drill holes, while two bulk samples have been taken from existing pits.
Testwork to date indicated the Alatai Nuurs coking coal hosts a crucible swelling number of 8.5 and energy content of 7460 kilocalories per kilogram.
The coal also had ash content of 10.7%, moisture of 1.6% and total sulphur content of just 0.48%, all on an air-dried basis.
Apart from a higher ash content, the early results generally indicated this Mongolian coal was almost as good as the premium hard coking coal from BHP Billiton’s Peak Downs mine in Queensland.
Hunnu said the preliminary testwork also indicated coking coal yields of 23.2% at 10.2% ash, while there is also the opportunity to make a 22% ash premium thermal coal product.
Planning is underway for a major drilling program this year and Hunnu anticipates open cut mining could potentially be at a strip ratio of just 3.5:1.
Hunnu managing director George Tumur said this major project acquisition represented a clear future growth path.
“The company intends to continue its aggressive exploration and acquisition efforts and, with the support and expertise of its strategic partner Banpu, move from exploration to mine development and then into production all within this year,” he said.
Thai energy giant Banpu became a 12.39% stakeholder of Hunnu in March and made a $2 billion acquisition of New South Wales-based Centennial Coal last year.
Hunnu has more than 400Mt of resources across its thermal and coking coal project portfolio in the Middle and South Gobi provinces.
Shares in the explorer were up 2 cents to $1.485 by midday (AEST).
