- Coal mining in Northeast China
- SGZI has mining rights at the coal mine known as
Tong Gong Coal Mine, located 175 km 。southwest of
Heihe City of Heilongjiang Province in People's
Republic of China
- With estimated reserves of approximately 4
million tons
- Production
capacity of 150,000 to 200,000 tons per year
- Main product: Long Flame Coal, low in sulfur and
high in calories, resulting in higher pricing
- For the three months ended September 31, 2005
reported
- Revenue of $1,055,529
- Gross margin of $494,014 or 47%
- Operating income of $368,747 or 35%
Coal price per ton averaged $17 for the three
months ended March 30, 2005 and $23 for three months
ended June 30, 2005. Two major factors contributed
to the average price, $21 per ton.
- Portion of the coal production in the first
quarter of 2005 was in the drivage process;
- Rising coal price since the inception of 2005;
At 150,000 tons per
year, dollar capacity at $30 per ton is $4.5 million per
year
- As of October 11, 2005, China’s prevailing coal
price is above $30 per ton.
- Oil and gasoline price hike also forces
consumers to use alternative energy source, like
coal
http://www.jtboyd.com/
This report is
based on a report from John Boyd & Company,
professional mining consultants who have been
serving international mineral producers, consumers,
investors, and advisors for over 60 Years
Address:
20337 Rimview Place, Walnut, CA 91789
Telephone: (909) 468-2840
CEO: Hong Jun Li
Web Site: www.songzaigroup.com
State or other jurisdiction of incorporation
or organization: Nevada
Transfer Agent: Interwest Transfer
Company
Since 2004, the demand and output of coal
consumption industries, such as, power plant, steel,
cement, chemistry and so on have kept a great
increase of coal price. The supply situation is
anticipated to be in tension in the future. In 2004,
some power plants were force to cease production due
to national shortage of coal supply.
Power
Plants
Current
Market Potential - 200,000 tons per year
Cement Factory
Current Market Potential - 100,000 tons per year
Home Use
Current Market Potential - 500,000 tons per year
- The industrial and home use coal is sold at
the mine
- Buyer provides required transportation.
Transportation
The cost of
trucking is eliminated. The railroad is extended and
passes within 500 meter of the mine. A siding was
also installed, which makes steam coal convey more
time-saving and convenient.
From the date
of inception to June 30, 2005, the total production
was 98,758 tons, with. 40,054 tons in the six months
ended June 30, 2005 and . 58,704 tons in 2004
2005………….Q1……….Q2………Q3………..Q4*
Coal
(tons)….10,145….29,908…..42,000…….50,000*
- Production in 2005: 132,053 tons
- Decreasing coal production cost per ton due to
economics of scale. Cost of coal per ton is
anticipated to decrease by 30% in Q3 and Q4 compared
to Q2 in 2005.
- SGZI is seeking to expand its operations and
coal reserves in the regions in which we operate
through acquisitions of businesses and assets,
including leases of coal reserves. Acquisition
transactions involve some inherent risks.
The
Provincial Geology and Mineral Bureau of the
Peoples’ Republic of China reports that
- The Coal-bearing strata in the mine area of
Tong Gong is in Jiufengshan Group (K1j)
- Which is divided into four sections in
ascending order: I (K1j1), II (K1j2), III (K1j3) and
IV (K1j4).
Coal-bearing zones of interest lie in Sections II and
III, described below.
Section
II (K1j2)
contains the
No. 2 coal seam, and is the major coal-bearing zone.
- Stratigraphy above the No. 2 coal seam consists
primarily of siltstones and mixed medium and
fine-grained sandstones.
- Under the No. 2 coal seam, tuff breccia forms
the majority of the lithology with slight amounts of
siltstone and packsand.
- These strata contain coal seams of IIupper1,
IIupper2, IIupper3, II and IIlower, etc.
- This zone thickens from west to east from 80 m
to 156 m with little change in the direction of dip.
Section III (Klj3)
contains the
No. 1 coal seam, in the upper part
- Strata consist primarily of packsand and
siltstone, but also include medium- and fine-grained
sandstones
- A thin layer composed of pebbled sandstones is
located near the No. 1 coal seam and the No. 1 lower
coal horizon.
- The lower part of the layer is composed of
variegated conglomerate of composite components and
pebbled sandstone with typical grain diameter of 5
cm to 6 cm.
- Conglomerate in this layer, also called the
"Intermediate Conglomerate," is a reliable marker
for correlation of coal seams ranging in thickness
from 10 m to 80 m with typical thickness of 40 m.
K1j3 thickens 120 m to 203 m from west to east.
Section IV (KLj4)
Is situated
above the No. 1 Seam
- It's a sandy conglomerate zone consisting
mainly of sandy conglomerates with
- Hard coarse-grained sandstone, interbedded with
fine siltstone and thin coal seams.
Coal Basin
- The mine area of Tong Gong is located in the
middle of the Heibaoshan-Muer gas coal basin, a
secondary sedimentary basin.
- The basin floor is a northeast trending, broad
synclinal structure with an axial direction of
north-northeast and eastward plunge.
- The mine area is defined by several faults
with throws ranging from 20 m to 270 m, the mine
field is located on the north wing of the syncline
in the form of a monoclinal structure that outcrops
along the strike of NE35º; the dip ranges from 16º
to 19º, and averages 18º.
- Fault F7 and the seam outcrop define the
western and northwestern reserve boundary.
- Fault F8 defines the eastern and northeastern
reserve boundary.
- Seam thinning cuts off the reserve on the
southern edge of the coal property.
Eight drill holes define the boundaries
- Tong Gong coal mine reserve base is defined by
eight drill holes within the mine property boundary.
- Based on these drill holes, the No. 1 Seam
varies in thickness in the mine area from less than
3 meters to nearly 5 meters
- The seam consists of 2 to 4 plies separated by
bands of rock partings with a combined thickness
ranging from 0.4 m to 1.4 m.
Mine floor
& roof
- The mine floor is composed primarily of
siltstone with areas of carbonaceous mudstone
- The immediate mine roof is composed of
siltstone, fine sandstone and carbonaceous mudstone.
. The main roof is comprised of conglomerate rock
and sandy conglomerate.
- In-place coal reserves are estimated to be
4,417,000 tons. Reserves by sub-area are as follows:
- Assuming a reserve safety factor of 1.4, the
recoverable reserves are estimated at 3,157,000
tons.
- It is anticipated that the coal will be sold
as a raw product from the mine.
- The only processing is screening to produce
sized products.
- To the extent practicable, coal is selectively
separated from the parting bands during the mining
process to minimize product contamination.
- GAS/SPONTANEOUS COMBUSTION
- Gas content of the coal is reported to be
relatively low with a typical content of 40%
methane, 58% nitrogen and 2% carbon monoxide.
- Methane content increases with depth.
- The coal seam is rated as prone to spontaneous
combustion.
- Normal and prudent precautions to handle coal
dust are required as coal dust generated from mining
operations is explosive if ignited by an open flame
source.
Government approval
The mine has
government approval for the 150,000 tons per year
capacity; increasing capacity will most likely
require new government approval.
Mine life & production rate
- Mine service life, based on a recoverable
reserve base of 3.157 Mt, is 20 years.
- Maximum production is estimated by The John
Boyd Company to be 182,000 tons per year, assuming
3.1 m of coal thickness, 80 m coal face length, 1.7
m of face retreat per day, and 93% face recovery
assuming a 150,000 tons per year full production
output capacity.
Recognizing
the mine’s setting and need for environmental
protection, several actions were already taken to
minimize the impact of the mine’s operation on the
surrounding area and to comply with government
standards:
- Installed
water sprays at coal loading and transfer sites to
suppress fugitive dust.
- ·Installed noise reduction boards to minimize
noise level of surface fan operation.
- Installed a dust removal chamber between the
boiler house and chimney house to reduce dust
emissions.
- Constructed settling ponds for mine water
discharge prior to release into the river.
- The mine is expected to generate approximately
20,000 tons of waste rock annually including ash and
boiler slag. During the early years of operation,
present plans are to store the waste rock in a
temporary stockpile near the pit mouth. In time, as
opportunities for disposal are identified, the waste
rock would be transported by truck to alternative
disposal sites such as road paving, industrial site
base material, backfilling low-lying areas for land
reclamation, backfilling surface subsidence
depressions, etc.
Based on the
strong demand for coal in the Northeast of China,
and the location of SGZI coal mine
- SGZI believes it has a competitive advantage
with respect to transportation capability and costs
- There are some big players in northeastern
China. However, the demand of coal has been rising
since the middle of 2004 and many experts in coal
industry predict that the demand will maintain at a
very stable level. The coal mine sold all its
production to its customers who come to the coal
mine site since the inception of operation.
Hong Jun Li, President
Mr. Li, Hong Jun
studied International Business in Russia for 3
years. His knowledge in business management was
applied to his organization Rui Gen Te Industrial
Resources Co. in the U.S. in 1996. He is the
Registered Agent of the company. At the same time,
Mr. Li, Hong Jun set up Heilongjiang Song Zai Metal
Co., Ltd., which is another Chinese company in the
business of trading metal parts between China and
Russia.
Dan Shen Xing, General Manager
Mr. Dian Sheng
Xing graduated from Liao Ning Engineering Technology
University in 1966 majoring in Mining. Mr. Xing was
dedicated in mining technology management after
graduation. His substantial management experience
and extensive knowledge of on-site mining operation
have become an invaluable asset to the company. In a
technology improvement and reclamation project lead
by him in Northeast Internal Mongolia Coal Union Co.
(Mongolia Coal Union), Mr. Xing successfully helped
Mongolia Coal Union increase its production capacity
by 2.5 million tons annually. Mr. Xing also actively
engaged in the research of coal mining technology
improvement. His paper has been widely quoted by
coal mining research media:
- "The Major Methods for Intensive Mining
Reclamation in Northeast Internal Mongalia Coal
Union Co", Coal Technology, No. 1 in the national
seminar, held by Chinese Coal Institute in 1994
- "Research for how to let the new launching
mining reach the goal" Northeast Coal Technology
- "The Development and prospect of Coal Industry
in Northeast China" Coal Industry Press
Highlights of Mr. Xing’s professional experience also
include his 19-year tenure in Di Dao Coal Mining of Ji
Xi Ming Bureau, where he started as a technician and was
later promoted to general chief engineer; 10 years
experience at the headquarters of Northeast Internal
Mongolia Coal Union Co., where he was awarded Senior
Engineer in 1988, Dean of Department in 1993, and
professor-level senior engineer; Dean of Department and
General Engineer in Heilongjiang Coal Industry
Administrative Bureau in 1994; and the 2000 Team leader
of Expert Team in Heilongjiang Coal Mining Safety
Supervision Bureau.
Feng Shan Chi, Chief General Engineer
Mr. Feng Shan Chi
graduated from Northeast Technology Institute
(changed to Northeast University) where he majored
in Mechanical Engineering. Mr. Chi has accumulated
tremendous experience in various fields within the
coal mining industry. He has engaged in technology
management in Ji Xi Coal Mining Bureau, Hielongjiang
Coal Mining Designing and Research Institute, and
Heilongjiang Province Coal Industry Administrative
Bureau for 22 years. In 1988, Mr. Chi was awarded
professor-level senior engineer. He then worked as
Chief Engineer for China Northeast Internal Mongolia
Coal Union for 11 years, where he was responsible
for technology management of three provinces and the
internal Mongolia coal conglomerate. As a
nationally-recognized expert, he received pension
from the State Council. Mr. Chi also worked as Vice
Deputy Director of Heilongjiang Coal Administration
Bureau for 5 years. He has served on many other
organizations throughout his professional career.
Mr. Chi acted as director of China Coal Industry
Standard committee, Vice Director of China Coal
Industry Equipment Management Committee, and Member
of China Coal Industry Publishing Editing Committee.
Mr. Ch published 23 papers and co-authored 5 books
related to production, safeguard, and mechanical
engineering of coal mining. Currently, Mr. Chi is
also a visiting professor of Liao Ning Technology
University, co-mentoring 2 graduate students.
Some information on this page
is based on a report from John T. Boyd & Company,
professional mining consultants who have been
serving international mineral producers, consumers,
investors, and advisors for over 60 years |
