“There will be an extension to the transaction,” Gene Wusaty, president of Ivanhoe’s coal division told MonInfo Wednesday.

However a timeline for the second extension has yet to be announced.

Ivanhoe said in April it would exchange its coal division in Mongolia with Asia Gold for a majority stake in the small explorer, which hinges on the completion of transferring 35 exploration licenses.

“We are currently working through these decisions,” said D. Davaadorj, director of the department of geology, mining and heavy industry.

“If they haven’t contradicted any of Mongolia’s laws we will grant the licenses.”

The deal would increase Ivanhoe's share of Asia Gold to nearly 90 percent from about 47 percent.

Ivanhoe, which had previously said it hoped to be mining coal at Nariin Sukhait before the end of 2006, will have to apply for extraction licenses after the transfer of the exploration licenses are complete and order equipment, a process that company officials said could delay them until at least second quarter 2007.

Previous studies by Ivanhoe projected potential first year production at 1 million tonnes of coal products, increasing to 4 million tonnes within the first five years of production, for export to China only 45 kilometers from the coal deposits.

“The location of Nariin Sukhait to China, and the absolute lack of infrastructure in the region make it economically impracticable to move the coal north or east,” Ivanhoe coal official Denis Lehoux said.

“The only logical marketplace is south to China and we are looking at improving roads or the possibilities of rail links.”

Yet Ivanhoe’s flagship project in development, the massive copper-gold Oyu Tolgoi now being developed with Rio Tinto PLC, will require a domestic power plant when it goes into operation Ivanhoe has said.

The Mongolian Ministry of Industry and Trade has announced plans to build three or more coal burning power plants in the Gobi to produce approximately 10Gw of power to expand Mongolia’s power supply as well as export power to Russia and China.