MEC and Xinwen Mining Group join forces

The agreement includes provision of consultancy services on MEC’s Khushuut operation to increase operational efficiency.

Mongolia Energy Corporation Limited (“MEC”) is pleased to announce that it has entered into a cooperation agreement Monday with Shandong Energy Xinwen Mining Group Co., Ltd. (“Xinwen Mining Group” or "Xinwen"). Under the agreement, Xinwen has agreed to provide technical consultancy services to MEC for a proposed coal washing plant project in Xinjiang, the People’s Republic of China (“PRC”) and its operation in Mongolia.

MEC plans to build a coal washing plant in Xinjiang before a permanent washing plant is set up in the Khushuut mine site. The proposed washing plant will have an initial annual coal washing capacity of 1,500,000 tons in phase one. It will enable the Company to better control its coal quality and enhance the value of its coal products. MEC is pleased to have the Xinwen Mining Group to provide one-stop assistance in this project from initial planning up to construction completion. Thereafter, the Xinwen Mining Group will provide management services for the operation of the washing plant.

The Xinwen Mining Group has also agreed to provide consultancy services on MEC’s Khushuut operation with a view to increasing operational efficiency. It will provide its findings and costs saving proposals to MEC after a thorough study, including site visit, of the Khushuut coal mine. MEC will discuss with the Xinwen Mining Group for further collaboration then.

MEC currently has over 330,000 hectares of concession areas in Mongolia comprises coal and other precious metals resources. Other than the Khushuut project, Xinwen will work with MEC to explore development opportunities of these potential resources concessions in Mongolia. The Xinwen Mining Group will utilize its own exploration professionals and will also invest in related exploration efforts. MEC will further discuss with the Xinwen Mining Group for the foundation of a joint venture once a development target is identified, according to a Mongolia Energy Corporation report.

Xinwen was one of the top 50 coal producers in the PRC in 2011 and possesses an extensive and mature coal sales network in the PRC. The two companies have agreed to collaborate and leverage Xinwen sales coverage to expand the market development activities in these coming years.

“MEC has made significant progress in building up its business in western Mongolia in the last four years. We are keen to establish a cooperation relationship with MEC to leverage our expertise and experience for its expansion plans,” Mr. Li Xi Yong, Chairman of the Xinwen Mining Group said.

“The assistance of and cooperation with the Xinwen Mining Group provide a strong operational and development support to MEC, and with the expertise, experience and coal sales network of the Xinwen Mining Group, we look forward to a synergistic effect on MEC’s coming operation both in Mongolia and the PRC,” Mr. Simon Lo, Chairman of MEC said.