Went to the Melbourne roadshow yesterday.
Had a chat to Neil and he is a very astute and knowledgeable individual.
He has spent 8 years in Mongolia and knows the country inside and out.
The Mongolian government are very supportive of any projects which can lead to new sources of power generation for the country.
They are still aiming to start the drilling programme late Sept/early Oct.
The contractor/drilling company they have gone with needs to get special equipment from the USA. That will need to be shipped to Mongolia.
2 wells to be drilled which will take 15 to 20 days per well. They have an option to drill a 3rd well if they choose too.
Following that they will test the cores for gas content and absorption process. This may take a few weeks.
They also drop a tool (don't know what you call it!), down the hole to measure the gas flow etc.
The one thing that has been mentioned on the forum was about how much gas we need to make it viable and the pipeline to China.
Neil mentioned Rio Tinto operated Oyu Tolgoi mine, imports electricity from China, as there is not enough electricity available on the Mongolian grid. The infrastructure is already there and Rio pay roughly a $100m a year for power.
Rio have a duty to find or create power generation in Mongolia, so they could be very interested if we have a resource (maybe even a JV partnership is my idea)
Neil said if we have a small resource (50 to 200bcf), we can still have a profitable and viable business.
The other key factor was that the power lines ran straight over the land and we could connect into this.
There are a couple of options depending on the size of the resource:
Small resource:
Hire or build a small generation plant to turn gas into electricity. Then feed the Mongolian electricity grid using the power lines overhead.
Mongolia needs more electricity so they would a 100% behind the project as it would help the country.
Also create LNG (there is a process
@Michaeljob can explain better) and supply all the trucks / vehicles ( circa 7,000) between Mongolia and China.
Medium:
As above, but also feed Rio Tinto operated Oyu Tolgoi mine with electricity
Large scale:
Both of the above and build a pipeline to china to send the gas (or some other combination)
If all goes to plan, a small scale generation plant could be set up late next year.
Neil and his corporate adviser are in Sydney today and tomorrow meeting private clients and brokers.
They will be in Perth next week at the Good Oil Conference and meeting brokers etc.
Richard is travelling to the UK and will not be around however when he is back, Neil and Richard will be on the road and may catch up with investors.
From all the data and analysis that has been done over the years, its just a question of how much gas is sitting in the coal beds and not if there is any gas there.
Hope this helps your investment decision.
From me its a buy, with so many options to make money through selling gas or electricity.
As always please do your own research and this is my view only.
