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Aspire Mining receives favourable study results for railway

Aspire is the largest coal tenement holder in Mongolia’s Northern provinces.
Aspire Mining receives favourable study results for railway
Aspire is the largest coal tenement holder in Mongolia’s Northern provinces.

Aspire Mining (ASX:AKM) has received the first stage feasibility study results for the Erdenet to Ovoot railway in Mongolia, which conclude the project to be financially feasible.

The capital cost to construct the railway is estimated at US$1.25 billion plus contingency for a 20 million tonnes per annum capacity single line.

Aspire owns the Ovoot Coking Coal Project and its development is dependent on the construction of the Erdenet to Ovoot railway.

Aspire’s subsidiary Northern Railways now has the opportunity to continue its review of the study prior to commitment to the final stage feasibility study, which will take an estimated six months,

The study will be used by China Development Bank and other Chinese policy banks in assessing an investment in the Erdenet to Ovoot Railway.


Study details

The study commenced in September 2016 and provides an interim review of the Erdenet to Ovoot railway including sufficient design engineering to provide a +\- 10% capital estimate, a construction schedule, a bill of quantities and financial analysis including the capital and operating cost estimates.

The construction timeframe for the entire line is programmed out at 60 months from commencement to commissioning.

The financial model gives a before tax net present value of US$665 million and hence the project has been deemed financially feasible, necessary and it is recommended that it be implemented as soon as possible.


Background

Aspire is the largest coal tenement holder in Mongolia’s Northern provinces and is focused on identifying, exploring and developing quality coking coal assets.

Aspire is the 100% owner of the world class 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 LLC.

Production from the Ovoot Project can coincide with the commissioning of the Erdenet to Ovoot Railway.


Analysis

The results from the first stage feasibility study are an important step in acceptance of the merits of the Erdenet to Ovoot Railway.

The study reduces the risk for investors to invest in the project now to fund the second and final stage of the feasibility study and other predevelopment works and permitting.

Importantly, it will also now enable China Development Bank and other Chinese policy banks to conduct commercial due diligence on investment for the construction contract. 

The study has shown the railway to be consistent with Mongolia’s mineral resource development strategy to be supported by growth in rail infrastructure.

It will play a significant role in the promotion of regional and social development and is recommended to be implemented as soon as possible. 
Aspire has a 45% interest in the Nuurstei Coking Coal Project which has a 12.85 million tonne JORC resource.

Nuurstei is well placed to be an early user of the proposed Northern Railway Project which will service Aspire’s Ovoot Coking Coal Project.

While tonnages at Nuurstei are modest, the project presents as a commercial scale pilot project for logistics and market development.

Shares in Aspire are up 350% over the past 12 months.

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