QGX Ltd.

QGX Ltd.

August 03, 2005 08:00 ET

Thick Seams of Metallurgical '"Coking"' Coal at QGX'S Baruun Naran Project

WATERDOWN, ONTARIO--(CCNMatthews - Aug. 3, 2005) - QGX Ltd. (TSX:QGX) is pleased to announce that laboratory results from the first three holes have confirmed the presence of metallurgical ("coking") coal in thick seams at its Baruun Naran coal project in southern Mongolia. The metallurgical coal was intersected in the first two holes (BN05001C and -002C). Test results from the third hole (BN05003C) indicate the presence of thermal ("steaming") coal. The coals range in rank from high volatile A to B bituminous (hvAb-hvBb) based on ASTM classification standards. For a summary of the test results for these coals, please see Tables 1 and 2 below.

David Anderson, CEO of QGX, commented as follows:

"We are delighted with the outcomes of the laboratory tests thus far indicating the presence of coking coal at Baruun Naran. These findings are consistent with the significant quantities of known coking coal occurring only 22 km away at the Tavan Tolgoi coal deposit. Our coal occurs on trend with Tavan Tolgoi and within the same belt of Permian sedimentary rocks.

The confirmation of coking coal should have a significant impact on the potential value of Baruun Naran. Spot prices for coking coal in China, the natural market for our coal, are currently about US$95/mt (FOB port).

Mongolia is rapidly emerging as a coal exporting country. It is now the third largest exporter of coking coal to China after Australia and Canada. We believe today's announcement places QGX in a better position to augment Mongolia's coking and thermal coal exports and will ultimately contribute to the growth of Mongolia's economy."

Coal Characteristics

The coal seams contained in the first two holes (BN05001C and -002C) are of the most interest, being relatively clean and thick (estimated true thickness for the coal seams are 14.5 and 17.3 m, respectively). Both these seams are high volatile A bituminous (hvAb) based on the ASTM standards (see Table 1). High-volatile coals are common in the export market and are often blended with low- or mid-volatile coals depending on specific customer requirements.

Highlights Include:

1) The washability results (Table 1) indicate favourable cumulative recoveries of the coal contained in BN05001C and -002C at 71.9 and 86.9 percent, respectively.

2) The ash and sulphur contents (Table 1) for coal in BN05002C contain levels that approach, but remain within, the upper limits deemed acceptable for metallurgical coal. Coal from BN05001C slightly exceeds these limits; however selective mining may improve these values. Phosphorous values for all coal were low and therefore favourable.

3) The Btu/lb values (MAF) exceed 15,000 (Table 1), indicating high heat contents for these coals.

4) The results of key metallurgical tests (Table 2) establishes that the coals in BN05001C and -002C display favorable metallurgical characteristics, similar to a number of high-volatile coking coals exported from the United States.

5) The two seams tested in Hole BN05003C have excessively high ash content rendering them unsuitable for commercial metallurgical coal. The high ash content is related to in-seam partings and zones of impure coal that were not improved by washing in the laboratory tests. The metallurgical tests on the top seam split in this hole were positive indicating this coal may become viable metallurgical coal through selective mining or along strike where there may be fewer impurities. The coal contained in BN05003C is classified as thermal ("steaming") coal based on its high volatile B bituminous rank, low sulfur content and moderately low ash content. QGX believes that there is a strong market in China for thermal coal given the acute electrical shortages plaguing China. Approximately three-fourths of the power generated in China originates from coal-fired generating stations. The spot price for thermal coal in the Chinese markets has averaged slightly over US$50/mt (FOB port) year-to-date.

Table 1. Coal Rank and Washability Data for BN05001C - BN05003C,
Baruun Naran
Seam Interval Unwashed Composite
Btu/lb Volatiles
Drill-Hole Number From To (Moist, mmf) (MAF) Rank
(m) (m) (ASTM) (ASTM) (ASTM)
Parameter Range(1):
Min - Max Min 13,000 20-35 hvBb-lvb

BN05001C 34.40 57.00 14,581 31.2 hvAb
BN05002C 18.70 42.30 14,001 34.5 hvAb
BN05003C 45.34 51.90 13,454 34.8 hvBb
BN05003C 97.10 106.60 13,361 32.9 hvBb

Washability at 1.4 g/cc Float
Cumulative %
Recovery % Ash Sulphur Btu/lb
Drill-Hole Number (%) (Dry)(2) (Dry) (MAF)
Parameter Range(1): 12,600-
Min - Max Max-12 Max-1.0 15,500

BN05001C 71.9 13.7 1.03 15,331
BN05002C 86.9 9.1 0.85 15,091
BN05003C 52.0 17.0 0.66 15,216
BN05003C 54.7 11.2 0.71 15,192
Abbreviations: mmf = Mineral matter free; MAF = Moisture-ash free;
ASTM = American Society for Testing and Materials; Btu/lb = British
thermal unit per pound; Min = Minimum; Max = Maximum
Abbreviations for Coal Rank: hvCb = High volatile C bituminous;
hvBb = High volatile B bituminous; hvAb = High volatile A bituminous;
mvb = Medium volatile bituminous; lvb = Low volatile bituminous
Footnote 1: General range of values for metallurgical coals as estimated
by Norwest Corporation
Footnote 2: Ash content may be improved through selective mining and the
removal of inferior quality horizons

Table 2. Metallurgical Properties for BN05001C - BN05003C, Baruun Naran
Seam Interval Metallurgical Properties
Fluidity Dilatometer Mean-Max Phos-
Drill-Hole From To Gieseler Dilation Reflectance Phorous
Number (m) (m) FSI (DDPM) (% Max) (% in Oil) (% Dry)
Min - Max 4-9 5-10,000 10-200 0.7-1.8 Max 0.2

BN05001C 34.40 57.00 5.0 1,589 +45 1.02 0.09
BN05002C 18.70 42.30 6.0 1,383 -10 0.96 0.05
BN05003C 45.34 51.90 7.0 1,059 +51 0.95 0.00
BN05003C 97.10 106.60 3.5 329 -21 1.10 0.02
Abbreviations: FSI = Free Swelling Index; DDPM = Dial Divisions Per
Minute; Min = Minimum; Max = Maximum
Footnote 1: Range of values for metallurgical coals as estimated by
Norwest Corporation

Mr. Kirk Weber, Vice President of Norwest Corporation and a Qualified Person as defined by NI 43-101, has reviewed and approved the information contained in this release. QGX has engaged Norwest to provide consulting services regarding the exploration and evaluation of the Baruun Naran coal deposit. Norwest has extensive coal experience in Mongolia including completing a feasibility study of the Tavan Tolgoi coal deposit for the Mongolian Ministry of Infrastructure and Development, providing advisory services to the operating coal mines at Shivee Ovoo and Bagaa Nuur, and overseeing coal exploration programs in Mongolia for other multi-national mining and exploration companies.

The Mineral Services Division of SGS North America, Inc. (Denver, Colorado) performed all of the laboratory analyses presented in Tables 1 and 2.

About QGX

QGX is a Canadian-based company that has been exploring for mineral deposits in Mongolia since 1994. The Company holds a large area of exploration licenses throughout Mongolia. The Company's most advanced property is the Golden Hills prospect in western Mongolia. QGX has filed an independent NI 43-101 report outlining a resource containing approximately 3.3 million gold-equivalent ounces at the Central Valley Zone of Golden Hills (measured, indicated and inferred). Barrick Gold Corp. holds a 9.5% equity interest in QGX as part of a strategic relationship between the companies.

The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • QGX Ltd.
    David Anderson
    (905) 689-9442
    QGX Ltd.
    Paul Zweng
    (925) 855-0505
    Website: www.qgxgold.com