Study outlines robust case for Aspire Mining’s Ovoot coking coal project

Aspire Mining ASX AKM Ovoot coking coal pre feasibility study
Aspire Mining is on track to start construction of its Ovoot project later this year.

Emerging coal developer Aspire Mining (ASX: AKM) says it is confident of reaching first production at its Ovoot coking coal project in northern Mongolia by 2021 following the release of a pre-feasibility study (PFS).

Revealing the study for the Ovoot Early Development Project (OEDP) to the market, the Perth-based company said it had a robust case to mine relatively low ash, low strip ratio and high yielding coking coal from a starter pit within the existing 255 million tonnes reserve.

Under the base case scenario, which involves a start pit utilising a 36.8Mt reserve, Aspire will realise an initial 9.2-year mine life from the operation, with development of the planned Erdenet to Ovoot rail connection continuing in parallel.

Run of mine will be 4Mt per annum, with operations set to be supported by a haul road which will connect into the existing Mongolian rail network to China and other key end markets.

Aspire executive chairman David Paull said the OEDP base case would “transform” Aspire into a significant pure play coking coal producer positioned in the second quartile of the global cost curve.

“The PFS confirms the 100%-owned Ovoot coking coal project is one of the most attractive coking coal development projects globally in terms of high investment returns, low capital intensity and quality of product that is located on the doorstep of the major consumer, China,” he said.

“The board and the company’s major shareholders are committed to advancing the OEDP to first production as quickly as possible.”

On the financial front, the base case would realise a pre-tax net present value of US$586 million with an internal rate of return of 43.7%. Mine and logistics capital of US$63 million will be required, while a US$47 million outlay will be needed for pre-stripping through to commercial production.

Funding discussions occurring alongside DFS

Following the completion of the PFS, Aspire is now moving ahead with a definitive feasibility study (DFS).

Given the significant amount of work already undertaken by Aspire and lead PFS consultant, FMS and GT Global, it expects to be able to fast-track the DFS towards completion by the end of Q3 2019.

In line with the PFS schedule, road construction is set to kick off towards the end of the year, followed by commissioning in Q1 2021. First coal production is earmarked in Q2 2021.

Aspire said it had engaged Argonaut and Patersons Securities to lead equity financing initiatives, while Argonaut Securities and Mongolian International Capital Corporation will continue jointly working to arrange project financing.

Noble Group has also confirmed its interest in assisting the company in sourcing debt and equity funding as well as providing working capital facilities.

“Aspire will also engage with engineering, procurement and contract providers with respect to the road and wash plant opportunities to access associated funding together with exploring additional coal product and offtake linked financing,” the company said.

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