Silver Elephant Leases Ulaan Ovoo Coal Mine in Mongolia to Major Mining and Industrial Conglomerate
Silver Elephant Mining Corp. (ELEF) announced that its wholly owned Mongolian subsidiary has executed a lease agreement with an arms-length major Mongolian mining and industrial conglomerate to extract coal from the Ulaan Ovoo coal mine. Under the terms of the agreement, the Lessee is responsible for operating the Ulaan Ovoo coal mine and associated infrastructure using its own equipment, supplies, housing, and crew. The Lessee will bear all operational costs, including equipment, supplies, and government taxes.
The Lessee paid a US$300,000 non-refundable advance royalty fee upon signing the lease. The royalty structure requires the Lessee to pay US$2 per tonne for the first two years of the lease, increasing to US$3 per tonne effective January 1, 2028. Additionally, an annual advance royalty fee of US$200,000 is payable after the first year, which will be credited against the Lessee's royalty obligations for that corresponding year. The lease expires on December 31, 2031, with potential extension by mutual consent.
Silver Elephant retains full oversight of mining operations, including site access rights and owner-operated weighbridge verification of all coal transport volumes. Based on the Lessee's internal sales forecast, annual coal production from Ulaan Ovoo is expected to range between 300,000 and 1,000,000 tonnes. Historical production from the mine shows low ash (~8%) and sulphur (<1%) content, with an average gross calorific value of approximately 5,000 kcal/kg. Approximately 1,000,000 tonnes of coal have been produced since 2012.
A 2010 NI 43-101 Prefeasibility Study by Wardrop Engineering (Tetra Tech) estimated 174 Mt of Measured Coal Resources and 34 Mt of Indicated Coal Resources. The Ulaan Ovoo coal mine is subject to an underlying royalty in favor of Oracle Commodity Holding Corp. The Lessee intends to blend thermal coal from Ulaan Ovoo with higher-rank coking coal for sale to international and domestic customers, including steel mills in China, cement plants, metallurgical plants, and heat/electric plants.