(EnergyAsia, November 3 2011, Thursday) — Australia’s C@Limited said it will acquire eight highly prospective Mongolian coal licences for US$7.8 million after signing a conditional agreement with Peabody‐Winsway Resources to purchase the entire issued capital in its subsidiary BDBL.

C@Limited said the eight coal licences cover 625 square kilometres in a major emerging coal province. The region is characterised by a number of recent major black coal discoveries on the doorstep of the expanding Chinese steel and energy markets.

The Perth-based company said a number of the licences are close to existing producing assets and infrastructure with close proximity to major energy markets like China and Russia, which make the economics of this project very favourable.

Four of the licences are located in the Ongi River Basin in the Ovorhangay province while the other four are located in the South Gobi Basin in the South Gobi province.

As part of its technical due diligence on these licences, C@Limited said it undertook an exploration drilling programme which intersected three coal seams on the Ovorhangay licences.

Initial raw coal quality tests at both Mongolian and Australian laboratories have confirmed high quality coking properties both near surface at moderate depth, likely to be enhanced by washing.

C@Limited said it will undertake a capital raising of up to A$28 million, including a A$3 million priority issue to eligible shareholders. (US$1=A$0.95).

Upon completion of the acquisition, the company plans to immediately undertake Phase II of its exploration programme which will include geophysics and a substantial drilling program.

To support the mining industry, the Mongolian government has approved plans for an approximately 5,700-km long railway to be built in three stages.

The first stage will see 1,530 km of track built from Nariin Sukhait in the South Gobi province through the cities of Sainshand and Choybalsan into Russia, connecting to the existing Russian railway line system that extends to the Russian Pacific ports of Zarubino, Vanino and Vladivostok.

Construction on the first stage of the railway is expected to begin in 2012 and work on stage two is expected to start in 2015.