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Aspire Mining signs agreement to advance coal railway

Ovoot is the second largest coking coal project by reserves in Mongolia.
Aspire Mining signs agreement to advance coal railway
Aspire is the 100% owner of the world class Ovoot Coking Coal Project

Aspire Mining (ASX:AKM) has signed a memorandum of understanding with a Mongolian and Russian government joint venture to progress the commercialisation of the Erdenet to Ovoot Railway.

Aspire owns the Ovoot Coking Coal Project and its development is dependent on the construction of the Erdenet to Ovoot railway, which is being progressed by Aspire’s subsidiary Northern Railways LLC.

The 547 kilometre railway segment has 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.

The Mongolian and Russian government joint venture, Ulaanbaartar Railways JSC (UBTZ) manages all railway operations in Mongolia and owns the Trans Mongolian Railway.

David Paull, managing director, commented: “A close working relationship between Northern Railways and UBTZ will be essential for the successful development of the Northern Rail Corridor which will add significant long term demand for UBTZ’s rail services”.


Memorandum of understanding details

The memorandum of understanding (MOU) that has been signed between UBTZ and Northern Railways aims to cooperate and negotiate with relation to:

- Access to the UBTZ rail network from Erdenet;
- Technical specifications of rolling stock required on the UBTZ Rail Network;
- Management of transport operations along the Erdenet to Ovoot Railway and integration into Trans Mongolian Rail traffic;
- Maintenance of the Erdenet to Ovoot Railway post commissioning; and
- Cooperation on the rehabilitation of the Erdenet to Salkhit spur line that connects onto the Trans Mongolian Railway.
The signing occurred during a conference in Ulaanbaater sponsored by UBTZ focusing on developments that will see substantial freight volume growth through to 2030.


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.

Aspire also has a 45% interest in the Nuurstei Coking Coal Project which has a 12.85 million tonne JORC resource.

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


Analysis

The MOU will help progress a number of key commercial agreements required to support construction funding of the Erdenet to Ovoot Railway.

These include the commercial terms upon which the Erdenet to Ovoot Railway users can access the UBTZ line to move freight through to end markets in Mongolia, south to China or north to Russia.

The signing of the MOU continues the recent strong momentum gained from the positive first stage feasibility study results, received in January.

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.

Aspire shares have increased over 4x in the past 12 months and are currently trading at $0.029.

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