Guildford Coal has received a mining licence for the South Gobi project located in Mongolia and plans to begin first production by the first half of 2012.

The company now plans to complete the scoping study in early February and an agreement with a mining contractor and an off take agreements by end March.

Guildford is evaluating between 2Mtpa and 4Mtpa production from the North pit, with initial test work results confirming the presence of raw coking coal and a raw higher ash product.

The results also indicate the presence of hard coking coal towards the eastern end of strike.

Guildford said the licence offer the potential start-up of an open cut mine operating halfway through the year, while its JORC resource has also been upgraded to 70.4 million tonnes of coking coal, up from 63.1 million tonnes.

The South Gobi project has the ability to support near-term development with the potential to be a 4 million mt/year coking coal operation. Production costs are expected to reach around $20/mt ROM and forecasts selling prices are set at around $60/mt for raw semi-soft coking coal.

The coal projects are located in the South Gobi and Middle Gobi coal bearing basins which contain thermal and coking coals. Guildford also has coal tenements in Bowen Basin in Queensland, Australia.