MONGOLIA ENERGY: MoEnCo signs an engineering general contracting agreement with Tangshan Shenzhou Machinery Group, along with a non-compete agreement.
MONGOLIA ENERGY has signed an engineering, procurement, and construction (EPC) contract with Tangshan Shenzhou Machinery Group for the construction and installation of a new dry coal processing plant at the Husuotu coal mine site. The contract amount is RMB 99.85 million. According to the non-compete agreement, the contractor is not allowed to invest, sell, or operate any coal washing and processing business within the territory of the Khovd Province in Mongolia for 8 years after signing the contract, and has received a compensation of 4.9 million yuan. MONGOLIA ENERGY plans to build a new dry coal processing plant with an annual capacity of 5 million tons of raw coal, expected to start operation in the second half of 2025. In addition, MoEnCo also plans to carry out mining activities between 2025 and 2026, requiring the relocation of existing office and ancillary facilities to a new area within the mine site, and the construction of new office buildings, industrial office buildings, and a series of ancillary facilities. Failure to relocate in a timely manner will affect the company's coal production schedule.
Zhitong App news: MONGOLIA ENERGY (00276) announced that on March 6, 2024, its indirect wholly-owned subsidiary MoEnCo entered into an engineering general contracting agreement with Tangshan Shenzhou Machinery Group Co., Ltd. (contractor). The contractor will be responsible for the construction and installation of the new dry coal processing plant at the Hushuotu coal mine site, with a total contract amount of RMB 99.85 million. According to the non-compete agreement, the contractor also agreed not to invest, sell, or operate any coal washing and processing business in the Khuvsgul Province of Mongolia within 8 years from the date of signing the engineering general contracting agreement. They are also not allowed to design, construct, supply equipment, and install or undertake general contracting projects for any coal dry selection projects in any other coal mining, washing, and processing enterprises in the Khuvsgul Province of Mongolia, in exchange for a compensation of RMB 4.9 million (approximately 5% of the construction cost), subject to approval by the shareholders at a special general meeting.
The announcement stated that the group currently operates a dry coal processing plant located at its own mine site, which officially started production at the end of 2014. The existing dry coal processing plant processes raw coal to remove unwanted rocks and other materials, improving the quality of the company's exported coking coal and reducing transportation costs. The existing dry coal processing plant has a maximum annual processing capacity of 2 million tons of raw coal.
Since the start of commercial coal production in 2015, coal production and processing capacity have increased significantly. To cope with the increased production, enhance competitiveness, and develop the mine site, the company's management plans to build a new dry coal processing plant with an annual processing capacity of 5 million tons of raw coal at the mine site to replace the current facilities. The new dry selection plant is expected to start operations in the second half of 2025.
In addition, according to the company's mining plan at the Hushuotu coal mine, MoEnCo will carry out mining work in the current office and administrative area from 2025 to 2026 or around that time. Therefore, by the end of 2025, MoEnCo must relocate the existing office and supporting facilities to a new area within the mine site and construct new office buildings, industrial office buildings, and a range of supporting facilities, including a new dry coal processing plant in the new area. Failure to relocate in a timely manner will affect and restrict the company's coal production plans.
