QGX Receives Sizing and Washing Results Suggesting Majority of Coal at Baruun Naran,
Mongolia, is High-Grade Coking Coal
Above Average Washing Yield of 64.7% Produces 53% Coking Coal and 47% Thermal Coal
May 8, 2007 (Waterdown, Ontario). QGX Ltd. (TSX: QGX) is pleased to announce that QGX received the second interim coal-quality update by Mr. Bob Leach of A&B Mylec (Brisbane, Australia). The April update supports the earlier conclusions summarized in the February 21st press release and also provides for the first time the theoretical yields and mix of coking and thermal coal based on float-sink (sizing and washing) laboratory tests.
The key highlights from this report include:
-
Above average overall washing yield of 64.7%
-
Washed coking-to-thermal coal ratio of 53-47
-
Seams H, I, J, T, and U, representing two-thirds of the June 2006 NI 43-101 resource, may likely have 50 percent or more of their product mix realize a primary coking coal specification
-
Applying these yields to the June 2006 NI 43-101 resource estimate implies a hypothetical yield of 100 million mt washed coal of which approximately half (53 million mt) would realize a primary coking coal specification with the other half (47 million mt) realizing a secondary or tertiary thermal coal specification. Regional weighting of core yields as part of future mine planning work will refine the yield estimates (see Table 1 below).
-
The April interim report confirms the February interim report that three washed coal products are capable of being produced at Baruun Naran: (1) a high-quality, 7-9.5% ash, semi-soft to semi-hard coking coal, (2) a low-to-mid ash (12-16%), secondary thermal coal, and (3) a high-ash (16-25%), tertiary thermal coal. The preliminary indicative market specifications for (1) and (2) are highlighted in Table 2 below.
Paul Zweng, President/Chief Executive Officer of QGX Ltd., commented as follows:
"We are pleased that these much anticipated coal-quality results have exceeded our expectations. The 65% overall yield and the 53-47 split of coking coal to thermal coal are highly favorable and critical to the success of this project. In the past, we internally used a washing yield of 55% and a coking-to-thermal coal mix of 25-75 to estimate the financial parameters for the coal project. These assumptions were based on preliminary coal-quality work conducted in 2005 using a "whole-seam" analytical approach. The new approach we adopted in 2006 with A&B Mylec and McElroy Bryan Geological Services is based on a more sophisticated "ply-by-ply" (or sub-seam) analysis. The difference couldn't be more pronounced-now for the first time we have data suggesting that there is potentially twice as much coking coal as we first thought.
We are anticipating receipt of the new "measured & indicated" resource estimate by McElroy Bryan by the end of this month. Once in hand, we will immediately initiate the preliminary economic assessment. The clean-coal quality work should be completed by end June. If so, this will allow us to commence a pre-feasibility study in the third quarter. We are moving as fast as we prudently can to develop this project."
Coal-Quality Program at Baruun Naran
The latest coal-quality report received from Mr. Bob Leach of A&B Mylec (Brisbane, Australia) summarizes coal-quality data for samples analyzed from seams at Baruun Naran, Mongolia. Samples reviewed were obtained from core drilled during the 2006 exploration program. An earlier note and interim report on coal-quality data related to coals from Baruun Naran were issued by Mr. Leach in August 2006 (related to Seam T from drill-hole BN06038) and February 2007 (related to Seams K, N, Q, R, T, and U in nine drill holes), respectively, to QGX which were summarized in a press release dated February 21st. It is recommended that the February press release be read in conjunction with this release.
All samples collected from the 2006 cored holes were analyzed by the ACIRL laboratory in Brisbane, Australia. Mr. Bob Leach provided instructions for coal-quality preparation and analyses for all samples sent to ACIRL. Clean-coal work is now being undertaken and these results are expected by late June.
Summary of Data
Table 1 shows the theoretical washing yields on a seam-by-seam basis for Baruun Naran coal. These data suggest that the overall washing yield is 64.7% and that the ratio of washed coking coal to thermal coal is approximately 53 to 47. Seams H, I, J, T, and U, representing two-thirds of the June 2006 NI 43-101 resource, may likely have 50 percent or more of their product mix realize a primary coking coal specification. Regional weighting of core yields as part of future mine planning work will refine the yield estimates.
Table 1. Theoretical Washing Yields for Baruun Naran Coal
Seam |
Thermal Yield (%) |
Coking Yield (%) |
Total Yield (%) |
Coking Yield / Total Yield (%)
|
Total Resource (Unwashed)
(million mt)1 |
Thermal Coal
(washed)
(million mt) |
Coking Coal
(washed)
(million mt) |
B |
49.1 |
0.0 |
49.1 |
0 |
Unknown |
Unknown |
0 |
D |
61.6 |
0.0 |
61.6 |
0 |
Unknown |
Unknown |
0 |
F |
49.2 |
9.0 |
58.2 |
15.5 |
7.5 |
3.7 |
0.7 |
G |
48.4 |
12.1 |
60.5 |
20.0 |
16.8 |
8.1 |
2.0 |
H |
23.7 |
43.8 |
67.5 |
64.9 |
38.9 |
9.2 |
17.1 |
I |
34.3 |
36.0 |
70.4 |
51.1 |
12.7 |
4.4 |
4.6 |
J |
25.7 |
39.1 |
64.8 |
60.3 |
10.1 |
2.6 |
3.9 |
K |
37.3 |
29.6 |
66.9 |
44.3 |
10.2 |
3.8 |
3.0 |
N |
49.9 |
13.4 |
63.2 |
21.2 |
Unknown |
Unknown |
Unknown |
Q |
48.4 |
10.1 |
58.5 |
17.3 |
Unknown |
Unknown |
Unknown |
R |
45.4 |
9.3 |
54.8 |
17.0 |
8.2 |
3.7 |
0.8 |
T |
22.1 |
44.1 |
66.2 |
66.6 |
39.8 |
8.8 |
17.5 |
U |
26.0 |
32.6 |
58.5 |
55.7 |
10.9 |
2.8 |
3.6 |
V |
39.9 |
17.6 |
57.5 |
30.6 |
Unknown |
Unknown |
Unknown |
Total2 |
30.4 |
34.3 |
64.7 |
53.0 |
155.1 |
47.1 |
53.2 |
Influences from potential regional variations have not been considered. Little is known about Seams B and D; these two seams are not included in the June 2006 NI 43-101 resource estimate. Tonnages for Seams N, Q, and V are expected to be included in the upcoming NI 43-101 resource estimate expected in May 2007. Footnote (1): Total resource as shown by Mr. Bob Leach and includes measured, indicated, and inferred resources as of June 2006 (see press release of June 6th, 2006); (2) Thermal, Coking, Total, and Coking/Total Yields are weighted by seam tonnage shown in the "Total Resource" column.
Table 2 shows the preliminary indicative market specifications for primary coking coal and secondary thermal coal for Baruun Naran. Not shown are the specifications for the tertiary thermal coal. These coking coal properties suggest the primary product would meet a semi-soft to semi-hard coking coal specification with sulphur and phosphorus in the low to moderate range. These thermal properties suggest the secondary product would meet a mid-ash export thermal specification. The adverse properties nitrogen and sulphur were moderate to high, but generally acceptable.
Table 2. Preliminary Indicative Market Specifications
Parameter |
Unit |
Basis |
Primary Coking Coal |
Secondary Thermal Coal |
Coal Top Size |
mm |
|
16 |
32 |
Moisture |
% |
ad |
2.0 |
1.5-2.0 |
Ash |
% |
ad |
7.0-9.5 (avg. 8.0) |
12.0-16.0 |
Sulphur |
% |
ad |
0.5-0.7 |
0.5-1.2 |
Calorific Value |
MJ/kg |
daf |
34.7 |
34.5 |
Calorific Value |
Kcal/kg |
daf |
8,288 |
8,240 |
Calorific Value |
BTU/lb |
daf |
14,918 |
14,830 |
Volatile Matter |
% |
ad |
32.5 |
24-29 |
CSN |
--- |
d |
6.0-8.0 |
|
Gieseler fluidity1 |
Mddm |
d |
1,200-2,500 |
|
Maximum dilatation |
% |
d |
+12 to +42 |
|
Vitrinite Reflectance |
% |
d |
0.85-1.10 |
|
Vitrinite Content |
% |
d |
60-65 |
|
Inertinite Content |
% |
d |
25 (avg.) |
|
Phosphorus |
% |
ad |
0.01-0.03 |
|
Nitrogen |
% |
daf |
|
1.95-2.00 |
Initial Ash Deformation |
oC |
d |
|
1260-1470 |
Flow Temperature |
oC |
d |
|
1360-1590 |
CSN = crucible swelling number; d=dry; ad = air dried; daf = dry, ash free. Footnotes: (1) Gieseler fluidity typically 1,200 to 2,500 Mddm, though results have been reported from 10 Mddm to 20,000 Mddm (e.g., Seam K)
ACIRL in Brisbane, Australia, performed all coal-quality data shown in Tables 1 and 2 based on instructions provided by Mr. Bob Leach of A&B Mylec.
Qualified Person
Mr. John Thompson, VP Project Development of QGX Ltd. and a Qualified Person as defined by NI 43-101, has reviewed and approved the information contained in this release.
About QGX
QGX is a Canadian-based company that has been exploring for mineral deposits in Mongolia since 1994. QGX's two most advanced properties are the Baruun Naran and the Golden Hills projects. QGX announced on June 7th an independent NI 43-101 resource for metallurgical and thermal coal at Baruun Naran comprised of 47.5 Mt of measured, 60.0 Mt of indicated (107.5 Mt contained in measured and indicated) and an addition 48 Mt of inferred resources. QGX filed in October, 2005 an independent NI 43-101 report outlining a polymetallic resource at the Central Valley Zone of Golden Hills. Barrick Gold Corp. holds an approximate 9% equity interest in QGX as part of a strategic relationship between the two companies.
The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
For more information, please contact:
David Anderson, Executive Chairman or Paul Zweng, President/CEO
(905) 689-9442 (925) 855-0505
or visit our website at www.qgxgold.com
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