Aspire Mining targets early coking coal production in Mongolia

Aspire Mining ASX AKM targets early coking coal production Mongolia Ovoot project
Aspire Mining is targeting early production of washed coking coal via a truck and rail operation to end markets within 12 to 15 months of financing approval.

Aspiring coal developer Aspire Mining (ASX: AKM) is targeting early production of washed coking coal from its wholly-owned Ovoot project in Mongolia within 12 to 15 months of approval.

The company today announced the Early Development Plan for the coking coal project, along with a $15 million financing package intended to give the project a kick start.

The development plan involves mining a low ash and high-yielding coal from a starter pit that lies within the previously defined Ovoot orebody, plus the construction of a new private haul road to run parallel to the proposed rail path of the Erdenet to Ovoot railway. The road would be used temporarily until the railway is commissioned.

At this early stage, production will be limited by trucking and existing Mongolian rail capacity and is expected to be in the range of 3 to 4 million tonnes per annum, Aspire stated.

However, once the Erdenet to Ovoot railway is connected to the project, Aspire has confirmed it could deliver up to 10Mtpa of washed, high quality “fat” coking coal over a mine life of more than 20 years.

Finance package

Aspire today announced the execution of definitive and binding agreements with existing substantial shareholder Mr Tserenpuntsag Tserendamba to invest $10 million as part of a $15 million strategic funding package.

This investment will boost his shareholding from 16.6% to about 27.4%, increasing the undiluted ownership of Aspire held by Mongolian nationals to 32%.

Mr Tserenpuntsag’s placement is conditional upon the company raising an additional $1.7 million from other investors, of which Aspire said it has already received binding pre-commitments for around $1 million.

In addition, Aspire entered into a deal with major shareholder Noble Resources International to convert up to about US$2.4 million of its existing debt to equity, with the residual balance of the debt to be repaid out of the funds raised from the strategic financing.

These funding arrangements are expected to result in Aspire emerging debt free with an additional $11.7 million in cash to fully fund the completion of feasibility studies for the mine and road components of Ovoot’s early development plan.

“Funds raised from these placements will enable Aspire to capitalise on the strong prevailing coal market fundamentals by seeking to unlock early production from its world-class 100%-owned Ovoot coking coal project within a targeted 12 to 15 months after all approvals are received, funding is committed and a decision to mine is made,” the company stated.

Aspire is targeting a decision to mine in the first half of the 2019 calendar year.

Erdenet to Ovoot Railway

Aspire holds an 80% interest (diluting to 34%) in Northern Railways, the Mongolian registered rail infrastructure company delegated to pursuing the development of the Erdenet to Ovoot railway.

The proposed railway extends 547km between the town of Erdenet to the Ovoot project, linking northern Mongolia to China and international markets including Russia.

The Mongolian government granted Northern Railways an exclusive 30-year concession to build and operate the railway, which is planned to be a multi-user rail line to be available for the transport of bulk materials, agricultural and general freight.

The company is currently negotiating funding for the conditions precedent to the development, which it is targeting for completion in the June 2019 quarter.

A revised feasibility study is also underway, assessing the economics of a four-year construction timeframe and the capacity to carry up to 30 million tonnes per annum of freight.

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