ASX listed and Mongolia focussed coal developer, Aspire Mining, has wrapped up a $15m financing package for its Ovoot coking coal project in the northwest of the country.
The company is now debt free and fully funded through to the completion of all required feasibility studies to fast track development of the deposit which contains a high-grade, premium, metallurgical coking coal JORC-compliant ore reserve of 255 million tonnes.
Aspire management said it had appointed two experienced consultants to deliver the Ovoot pre-feasibility studies on an expediated basis, with results expected in January 2019.
This work will focus on a high quality, low ash, low strip ratio carve out from the existing Ovoot ore reserve, concentrating on extraction and processing of the premium Ovoot upper seam.
Specifically, the feasibility studies will be underpinned by open pit optimisation studies and coal handling preparation plant design work for a starter pit on this section of the Ovoot ore body.
Other feasibility work will be undertaken into the construction of a haul road and associated infrastructure from the Ovoot deposit to a rail head at Erdenet, about 550km to the east.
Aspire has secured a 12 month option to acquire a terminal area at Erdenet to handle coal deliveries after operational start-up at Ovoot.
The company expects that the initial early development plan for Ovoot will substantially reduce the CAPEX costs and shorten project scheduling to achieve first cashflows from the asset much sooner.
Forecast logistic capacities are currently limited by the existing Mongolian rail network in the region, with production from Ovoot expected to top out in a range of 3 million to 4 million tonnes per annum.
Aspire raised the funds through the issue of $10m worth of ordinary Aspire shares to Mongolian businessman Mr Tserenpuntsag at 2.1c, who is now the company’s largest shareholder with about 27% of the issued stock.
Mongolian shareholders now account for about 33% of Aspire’s register and this will no doubt help to provide strategic and financial support, which will materially de-risk delivery of the project.
In addition, Aspire issued shares at 2.1c to the Noble Group to the value of $2.4m, which is a debt to equity arrangement aimed at repaying debt and accrued interest to the Hong Kong-based commodities trader.
A further $1.7m is being raised at 2.1c to other investors, with the company saying that it had already received binding pre-commitments for about $1m.
Aspire Executive Chairman Mr David Paull said: “It is very pleasing that Aspire is now in a strong financial position with no borrowings … I thank our strategic shareholders, Mr Tserenpuntsag and Noble Group, for their support in achieving this financing outcome.”
“Their ongoing support, together with that of our broader shareholder base, reflects the attractiveness of the OEDP. We look forward to delivering the OEDP feasibility details in early 2019 and quickly progressing towards first coking coal production.”
There are bigger plans afoot for Aspire too in northern Mongolia, where it also owns a smaller 12.9 million tonne coal resource at Nuurstei, located 160km east of Ovoot and closer to the rail head at Erdenet.
In June, the Chinese and Russian Governments reached an agreement allowing Mongolian-sourced freight to enjoy a tariff discount on the Russian rail system for its exports to and via Russia for 25 years.
Under the arrangement, Mongolian coal exports will receive a 66.4% discount on the Russian rail system to the north of Mongolia, which provides an alternative route to seaborne markets to that offered by China.
Aspire has been watching these developments closely, which are likely to be very positive when factored into its larger game plan in Mongolia.
The proposed hefty tariff reductions on coal transported via rail through Russia will place the Russian option on a much more even economic keel with the proposed transportation into China to the south.
On the face of it, the new spirit of cooperation between Mongolia and Russia and indirectly China, comes at a significant time for Aspire and almost by default, is enhancing the potential viability of its coking coal projects.
