Nova Resources (NOVA.LN) the AIM quoted Anglo-Mongolian investment company, recently released details to the market of a lucrative logistics contract secured between ZHCH, Nova's 100% owned Mongolian logistics company and Energy Resources Group (ERG) the operators of the large scale Ukhaa Khudag coal mine, located in Mongolia's South Gobi coal mining region.
Under the broad terms of the agreement, ZHCH will swiftly deploy 32 double trailer side tippers, capable of carrying up to 200,000 tonnes of coking coal each, in order to transport ERG's coal for export to a transhipment point for onward delivery to Chinese steel mills.
Each truck is likely to yield considerable cash and profits over the short term, where it is expected turnover for ZHCH could reach a staggering 20 million USD after just three years and turnover nearly 5 million USD this year alone.
With over 20 new world class mines entering production in Mongolia's South Gobi coal mining district over the coming years and coal exports from Mongolia to China set to double by 2017, ZHCH with its Mongolian and Korean led executive team, command significant "gatekeeping roles in country" that are likely to lead to a massive scaling up of this much sought after coal trucking logistics service by the cluster of Mongolian mining companies, operating in the South Gobi region.
Nova is expected to come to the market for some fundraising in order to fast track the purchasing of a state of the art trucking fleet for ZHCH. With the commencement of the contract scheduled to begin in May 2012, Nova is likely to return some outstanding numbers over the next 12 months. Currently trading at just over 7p, the addition of up to 5 million USD in turnover over the near term, and with a rapid ramp up of income over the next three years. Each truck can earn up to 950,000 USD annually with profit margins of around 25% after tax. ZHCH earnings are likely to reflect positively in Nova's share price moving forward.
