Aspire Mining Ltd (ASX:AKM) is an exploration and development company focused on discovering and developing world class premium coal deposits in Mongolia. Its Northern Railways subsidiary is developing the Erdenet to Ovoot rail project.
Metallurgical coal company Aspire Mining (ASX:AKM) has realised a significant milestone in the development of its massive Mongolian infrastructure ambitions after obtaining final approval for a rail connection point and alignment path.
This progress follows only about month after the company confirmed that its local subsidiary Northern Railways received its construction license for the Erdenet to Ovoot Railway.
The approval in turn followed a string of other recent milestones, including a Scoping Study which indicated there were no technical obstacles to building a rail connection from Ovoot to the Russian city of Kyzyl.
The Erdenet to Ovoot railway project that spans 547 kilometres and forms part of a national policy aimed at connecting the northern provinces with Russia.
At full operation, the project will have capacity to move 30 million tonnes per annum of bulk commodities, agricultural, general and passenger freight including transit freight between Russia and China.
New negotiations with the Mongolian government have helped establish the project's most recent approvals, which include some redesign and re-engineering by Northern Railways to accommodate Aspire operations.
As a result, a rail route into the city of Erdenet will now be able to avoid significant relocation of established infrastructure and competing land uses.
Also, the rail alignment will take account of the road and power line requirements of the Egin Golin hydro power project, which was also recently approved by government.
The paths for both the Erdenet to Ovoot railway and Egin Golin both require access through a 40-kilometre long valley system to the west of Erdenet.
Advancement of Aspire's rail plans for the company's proposed coal operations has coincided with new enhancements of the mining assets themselves.
Last month, Aspire confirmed that its Nuurstei project will be able to produce a low to mid volatile, top tier hard coking coal that would be attractive to end-users in the market for cleaner coal properties.
Proximate analysis from 31 core holes drilling during the 2015 exploration program at the project have shown the coal to have moderate to high ash, mid to low volatility, low sulphur and high free swelling index.
This development is particularly relevant in the context of Chinese political initiatives to curb the effects of its older and less efficient coal-fired power plants.
A maiden coal resource at Nuurstei is expected to be established in the near term, with an exploration target contemplating a resource of up to 25 million tonnes (at 0.1 metres coal thickness cut-off, rounded), down to 160 metres depth.
By comparison, Ovoot has a total coal resource of 281 million tonnes that will initially drive a production rate of 5 million tonnes per annum, increasing to 10mtpa over 21 years of saleable high-quality coking coal.
This milestone is significant to Aspire’s investment case since it brings the crucial Erdenet to Ovoot railway to the point where all the necessary approvals are in place to prepare the way for the Bankable Feasibility Study, environmental surveys and permitting.
The final approvals allow for important revisions to the rail connections and alignments plan, which will help streamline the logistics of Aspire’s metallurgical coal operations.
Further potential catalysts for Aspire are evident in the company’s ongoing efforts to secure funding sources that would complete both the Rail Bankable Feasibility Studies and other environmental permitting activities.
Negotiations on this point have included Chinese and Russian contractors and potential investors.
The fact that Aspire’s rail plan is a government plan across three nations puts the company in an enviable position to realise the project.
This will allow for the exploitation of a massive resource which would otherwise be considered stranded by most junior developers.
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