Aspire Mining (ASX:AKM) has entered into a binding memorandum of understanding (MOU) to advance the Erdenet to Ovoot Railway Project located in Mongolia.
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 MOU was signed with China Gezhouba Group International Company Limited (CGGC) and commits CGGC to completing the second stage of the bankable feasibility study.
David Paull, managing director, commented: “Aspire is very pleased to be able to add a very large and experienced sponsor for the Erdenet to Ovoot Railway Project.
“Being able to attract a large and significant engineering and construction company such as Gezhouba provides clear affirmation of the importance and role of the Ovoot to Erdenet Railway in fulfilling Mongolia’s potential to become a transit corridor for China-Europe Trade.”
This MOU follows on from a June 2017 non-binding agreement between the parties to cooperate on developing the Erdenet to Ovoot Railway.
Under the current MOU, CGGC has agreed to complete the second and final stage of the Rail bankable feasibility study by 31 March 2018.
The MOU also sets out a pathway for the development of the Erdenet to Ovoot Railway Project as well as the potential extension of that project from Ovoot through to the Mongolian-Russian border.
Door is open for equity investment
The MOU also provides the framework by which CGGC can provide additional equity investment in Northern Railways, Aspire’s subsidiary.
The investment would be to fund the company through to meeting the outstanding conditions precedent for the Erdenet to Ovoot Rail Concession and for EPC funding.
Such an additional equity investment is proposed to be made on or before 15 February 2018.
Rail unlocks coking coal project
The Erdenet to Ovoot Railway is required for the development of Aspire’s 100% owned Ovoot Coking Coal Project.
Erdenet to Ovoot is 547 kilometres of rail that forms part of the Northern Rail Economic Corridor connecting China and Russia through Mongolia as part of China’s One Belt One Road Policy.
The more advanced this railway becomes the more value is realisable from Aspire’s 100% owned Ovoot Coking Coal Project.
While this longer-term project continues to progress, Aspire remains leveraged to nearer term coal production through its Nuurstei Coking Coal Project.