The Erdenet to Ovoot Railway is required for the development of Aspire’s 100% owned Ovoot Coking Coal Project, which is the second largest coking coal project by reserves in Mongolia.
The combination of Aspire’s subsidiary, Northern Railways LLC and CGGC would create a powerful and compelling consortium to attract funding for this rail project.
David Paull, managing director, commented: “Aspire through its subsidiary, Northern Railways LLC, is directly participating in the One Belt One Road initiative, a vision to enhance trade connectivity with China which will have dramatic and far reaching consequences for global trade.
“This has been recognised by China Gezhouba Group, a very large state owned enterprise which is also one of the preeminent international Chinese contractors with a deep experience base in arranging funding for large projects that they participate in, as well as providing direct investment.”
Cooperation agreement details
The non-binding cooperation agreement between Northern Railways and CGGC is to advance the Erdenet to Ovoot Railways Project as part of the Northern Rail Corridor.
CGGC works in 142 countries and has established 99 overseas branches with 30,000 employees worldwide
Combining the large scale construction and financing expertise of CGGC with the rail technical abilities of the Northern Railways consortium member, China Railway 20 Bureau Group Corporation (CR20BGC), would create a powerful and compelling consortium to attract funding for this rail project which is part of China's One Belt One Road initiative.
Northern Railways will provide CGGC with access to the existing technical database and will work with CGGC to source debt and equity funding for the Rail Feasibility Study and EPC construction funding from Chinese funding institutions.
CGGC and Northern Railways will also work together to promote the Northern Rail Corridor and connectivity with the Russian Rail system.
Northern Rail Corridor gaining momentum
This railway is 410 kilometres long with construction expected to be completed by 2022.
It is being financed through a concession agreement with the owners, at a total cost estimated at 163.5 billion roubles.
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.
Recently, Aspire signed a memorandum of understanding to mine and purchase raw coal from a coal mine adjacent to Nuurstei.
Analysis of the adjacent coal mine has indicated that it has similar hard coking coal qualities to Nuurstei even though the coal is being sold for local thermal consumption.
The strategy is to wash this purchased coal at Nuurstei for delivery of a washed coking coal to customers in China.
The Erdenet to Ovoot 547 kilometre railway segment is a part of the Northern Rail Economic Corridor connecting China and Russia through Mongolia as part of China’s One Belt One Road Policy.
China’s One Belt One Road initiative is set to be the world’s largest infrastructure project costing an estimated $5 trillion and spanning across 60-plus countries in Asia, the Middle East, Europe, and Africa.
Aspire is well positioned to gain from this economic initiative and the combination of CR20BGC and CGGC further demonstrates the strategic regional importance of the Northern Rail Corridor.
The more advanced this railway becomes the more value is realisable from Aspire’s 100% owned Ovoot Coking Coal Project, the second largest coking coal project by reserves in Mongolia.
While this longer term project continues to progress, Aspire remains leveraged to nearer term coal production through its Nuurstei Project.
During April, Aspire received a conceptual mine plan for the Nuurstei Project which confirms its near term potential based on trucking coal to the nearest rail head.
Subject to funding, a US$1.5 million drilling and sampling program is planned to confirm assumptions used in the conceptual mine plan and provide the basis for a development decision.