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Aspire Mining’s major shareholder confirms future financial support

Published: 16:39 16 Sep 2019 AEST

Aspire Mining Ltd - Aspire Mining’s major shareholder confirms future financial support
The letter follows the proposed $33.5 million placement to Mr Tserenpuntsag

Aspire Mining Ltd’s (ASX:AKM) major shareholder Tserenpuntsag Tserendamba has confirmed his commitment to provide future financial support for early development of the Ovoot Coking Coal Project in Mongolia.

The successful Mongolian entrepreneur has provided the company with this commitment through a Letter of Intent.

This letter follows the announcement of a proposed $33.5 million placement of Aspire ordinary shares to Mr Tserenpuntsag.

Ownership will increase to 51%

Upon completion, this placement will result in Mr Tserenpuntsag’s ownership of Aspire increasing to 51% from 27.5%, on an undiluted basis.

The Letter of Intent outlines the provision of a corporate guarantee for up to $100 million on arm’s length commercial terms to support future debt and/or project financing for the Ovoot Early Development Plan (OEDP).

Secondly, upon successful completion of the placement, Mr Tserenpuntsag has confirmed his intention to maintain the 51% shareholding through to the OEDP entering production via pro-rata participation in future equity raisings alongside other shareholders.

Participation in future raisings

In this regard, Mr Tserenpuntsag has confirmed his intention that his participation in future equity raisings will be on the same basis as that offered to all other Aspire shareholders.

Aspire’s executive chairman David Paull said, “Aspire appreciates this added level of clarity regarding Mr Tserenpuntsag’s intentions for Aspire and level of his support.

“We are both aligned with the view that the best way to realise material increased value for all shareholders is to get into profitable production.

“This Letter of Intent from Mr Tserenpuntsag reinforces his commitment to work with the company and its shareholders to achieve this aim.”

The placement reinforces the commitment of the Aspire Board and Mr Tserenpuntsag to transform Aspire into a significant pure-play coking coal producer positioned in the second quartile of the global cost curve.

Placement conditions

The placement is subject to an independent expert opining that the terms are reasonable and in the best interests of shareholders and to shareholders subsequently approving the proposed placement.

Aspire directors, other than directors nominated by Mr Tserenpunstag, unanimously recommend that shareholders vote in favour of the placement, and intend to vote the shares they own in favour of the placement, in the absence of a superior alternative proposal and subject to an independent expert opining that the terms are reasonable and in the best interests of shareholders.

Funds raised will be used to meet the costs associated with early mine construction activities, some of which can be undertaken prior to completion of the DFS, and for general working capital purposes.

Aspire will emerge post-placement in its strongest ever financial position with an estimated cash backing in excess of $40 million and nil borrowings.

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