Elixir's acquisition of Mongolia-based Golden Horde seems to be progressing well after the deadline for a third party superior offer expired two days ago, providing the CSG-focused company the right to acquire all the shares of Golden Horde once it exercises its exclusive option to do so. 

 

The junior has now hired a technical adviser for its desktop study of the area, which will determine high grade explorations areas for the 2018 and 2019 drilling campaigns, with plans for two wells at a cost of $500,000. 

 

These detailed exploration studies will also serve to complete a higher level of technical due diligence required by Elixir before it exercises its exclusive option to buy Golden Horde, which was formed six years ago with one purpose: to acquire Mongolian CSG rights. 

 

It has been working on a PSC with the Mongolian government, with its holdings in the South Gobi Desert in what is considered to be one of the most prospective basins in the country which surrounds one of the world's largest producing thermal coal deposits. 

 

Tavan Tolgoi has an estimated resource of 6 billion tonnes of thermal coal and produced 14 million tonnes last year at depths of 467m which is "a good indication that surrounding areas are likely to contain similar gas content levels," Elixir has previously said. 

 

The gas will be sent to the hungry North China markets via the Northern China gas transmission and distribution network, though there is also domestic political will to move from coal-fired power to gas but this will first need local gas processing facilities. 

 

Meanwhile Golden Horde managing director Neil Young will travel to Ulaanbaatar next week to update relevant authorities on both the acquisition and discussions of next year's drilling exploration program and award of the PSC, which is expected but not guaranteed for next year. 

 

The uncertainties of the political approvals process have been previously noted, with Elixir saying that the PSC could be grated either before or after the cut-off date, with domestic politics and a recent cabinet reshuffle a general determinant along with the lengthy red tape common to the region. 

 

Elixir says an interview with local Mongolian Bloomberg television was a sign of the business community's interest in the transaction. 

 

Golden Horde managing director Neil Young will join the Elixir board as executive director and CEO upon the transaction's completion. 

 

Elixir was trading at 7.1c this morning.