Aspire Mining Ltd (ASX:AKM) has completed preliminary pit optimisation work that indicates a large proportion of the current Nuurstei Coking Coal deposit could report to an economic open pit.
Aspire has a 45% ownership in Nuurstei located in Mongolia through its 50/50 Ekhgoviin Chuluu Joint Venture (ECJV) with Noble Group (SGX:N21), which currently has a 90% interest in Nuurstei.
Planning is underway to complete additional drilling to convert deposit tonnes from the Inferred to Indicated categories and to test deposit extensions.
The process is underway to convert exploration license to a mining license.
Background
Aspire is the largest coal tenement holder in Mongolia’s Northern provinces and is the 100% owner of the Ovoot Coking Coal Project which is the second largest coking coal project by reserves in Mongolia.
The Ovoot project development is dependent on the construction of the Erdenet to Ovoot railway which is being progressed by Aspire’s subsidiary Northern Railways.
Production from the Ovoot project can coincide with the commissioning of the Erdenet to Ovoot railway.
Aspire also currently owns a 50% interest in and is the operator of the Ekhgoviin Chuluu Joint Venture (ECJV), and has an option to increase its ownership to 100% of the ECJV.
The ECJV owns a 90% interest in the Nuurstei Coking Coal Project which has a 12.85 million tonne JORC resource.
Aspire has an option expiring in March 2017 to increase its beneficial ownership in the Nuurstei project from 45% to 90% for US$1 million and a royalty.
Northern Rail Corridor
Nuurstei is well placed to be an early user of the proposed Northern Railway Project which will service Aspire’s Ovoot Coking Coal Project.
Aspire recently commenced the first stage of the rail feasibility study to extend Mongolia’s national rail network from the city of Erdenet to its flagship Ovoot Coking Coal Project in Mongolia.
The 547 kilometre extension has recently been included in a new Northern Rail Economic Corridor connecting China and Russia through Mongolia as part of China’s One Belt One Road Policy.
Northern Railways has formed a consortium with two subsidiaries of China Railways Corporation to progress the development of the Erdenet to Ovoot railway – China Railways 20 Bureau Group Corporation (CR20G) and China Railway First Design Survey and Design Institute (FSDI).
CR20G is the nominated engineering, procurement and construction contractor and FSDI has been contracted to undertake the bankable feasibility study.
FSDI has commenced the first stage of a bankable feasibility study, which is due for completion by 31 December 2016.
Analysis
Nuurstei is viewed as a low capital cost starter project which could assist with the development of the much larger Ovoot Coking Coal Project which is 160 kilometres further to the west.
While tonnages at Nuurstei are modest, the project presents as a commercial scale pilot project for logistics and market development.
It could also provide commercial scale rail freight cargo’s onto the Northern Rail Line to iron out logistical teething problems before the much larger volumes from the Ovoot Coking Coal Project need to be dealt with.
Subject to the completion of a feasibility study, the Erdenet to Ovoot railway may receive priority funding from China’s Policy Banks, Sinosure, Asian Infrastructure Investment Bank (AIIB) and funds such as the Silk Road Fund.
The stock is up 400% or 5x year to date trading at $0.04.
Aspire’s inclusion in the Economic Corridor in late June has been a key price catalyst for the stock.