Aspire Mining (ASX:AKM) has proposed a 6:5 renounceable rights issue priced at $0.012 with a 1:4 attaching option to raise A$16.5 million.
Funds raised are to be used to expedite development of Aspire’s 90% owned Nuurstei Coking Coal project in Mongolia with the aim of taking the project into production within 18 months.
The rights issue is fully underwritten subject to the underwriter being satisfied with the upcoming prospectus to be issued.
Significantly, Noble Group (SGX:CGP) has agreed to a series of transactions that will reduce the US$6.65 million owing under the Noble debt facility to US$1.8 million.
The proposed $16.5 million raising, when combined with the debt reduction, will transform the company so that it can actively pursue a near-term production opportunity at Nuurstei.
Rights issue details
Each shareholder on the record date will have a right to acquire six shares for every five shares held at an issue price of $0.012.
For every four shares subscribed for, applicants will be entitled to one option exercisable at $0.018 expiring two years after the date of issue.
In a vote of confidence, Aspire’s board members have agreed to take up entitlements to a combined total minimum of A$500,000.
An indicative timetable for the process of the rights issue is as follows:
- 10 November: Prospectus lodged with ASIC and ASX;
- 14 November: Trading of rights commences;
- 15 November: Record date;
- 17 November: Despatch of notice of meeting to shareholders;
- 20 November: Opening date;
- 27 November: Trading of rights ends;
- 4 December: Offer closing date; and
- 11 December: Allotment of offer shares (including shortfall).
Restructure of Noble debt facility
In a show of support, major shareholder, Noble, has committed to take up its entitlement in full, and to sub-underwrite the rights issue to take its interest in Aspire to 19.9%.
Aspire currently has US$6.65 million owing under a loan facility with Noble that is due to be repaid on or before 17 August 2019.
In order to support Aspire’s recapitalisation and growth path, Noble has entered into a binding terms sheet reducing the amount owing to US$1.8 million through a series of transactions.
These transactions include:
- Noble’s participation and sub-underwriting of the rights issue;
- Noble agreeing to acquire an additional 10% equity interest in Northern Mongolian Railways Limited (NMRL) from Aspire; and
- Noble agreeing to acquire further equity in NMRL if required to maintain a 15% equity interest - or otherwise accept a prepayment of up to US$1 million in the form of Aspire shares.
The balance of US$1.8 million owing under that facility is to be repaid in instalments, with the first instalment of US$600,000 to be paid 6 months after the commencement of commercial production from the Nuurstei.
Next steps at Nuurstei Coking Coal Project
Subject to the successful completion of the rights issue, a proposed A$2 million drilling and exploration program is to be undertaken at the 90% owned Nuurstei Coking Coal Project.
The program aims to increase current resources and establish an Ore Reserve, which will then lead to a new resource model planned to be complete in the first quarter of 2018.
Capital costs for the development of Nuurstei have been further refined, with the current estimate of US$13 to US$14 million to be confirmed in the feasibility study process.
The end objective of these studies is to confirm an economically viable mining operation commencing within an estimated 18 month period.
Erdenet to Ovoot railway unlocks value
Whilst Nuurstei can commence as a road based production operation, access to the proposed Erdenet to Ovoot Railway will reduce transport costs and unlock 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 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.
Last month, Aspire entered into a binding MOU to advance the rail project.