The company said the decision was part of a strategy to progressively expand the open pit operation through targeting various areas within the five-tenement project.
Development of the east pit – which Guildford said had potential to deliver an additional 2 million tonnes per annum of coking coal – follows establishment of the north pit, tipped to produce more than 3Mtpa by late November.
Guildford said it was aiming to progress the east pit towards mining before the onset of the Mongolian winter.
The development works will be funded by a $10 million convertible bond arrangement with Australian financial services company Gleneagle Securities.
South Gobi is located 1000km southwest of the Mongolian capital of Ulaanbaatar and 60km from the Chinese border coal station of Ceke, where coal produced in nearby Mongolian mines is currently transported by road to China.
South Gobi has a JORC coking coal resource consisting of an indicated 40Mt and an inferred 31Mt.
