Sinosteel MECC is a subsidiary of the CNY5.7 billion market cap Sinosteel Jilin Carbon Co. Ltd (SHE:000928)
The MoU with Sinosteel MECC covers potential Engineering, Procurement and Construction (EPC) and trade-based funding opportunities for the Ovoot Early Development Project (OEDP).
Sinosteel MECC and Aspire will enter into talks regarding the following EPC-based funding as well as trade-based finance solutions:
The OEDP pre-feasibility study (PFS) includes the construction of a 5Mtpa Coal Handling and Preparation Plant (CHPP) at the Ovoot Mine Site at an anticipated cost of US$37 million. The parties will discuss a possible Engineering, Procurement and Construction contract and funding opportunities.
The parties will discuss trade-based financings including future metallurgical coal sale prepayments and/or a streaming funding facility whereby development capital can be raised on a basis that is non-dilutive to existing equity holders to assist in funding the required mine development.
Sinosteel MECC will also support Aspire to access its Coal Trading Platform, which can be used to sell coal on a spot basis in China.
Aspire executive chairman David Paull said: “Aspire recognises the importance of having a strong partnership with companies like Sinosteel MECC that play such a major role in the Chinese steel industry, the main market for Ovoot’s high-quality coking coal product.
“We look forward to working alongside Sinosteel MECC as one of our key partners in bringing the Ovoot Early Development Project into production and delivering value for all shareholders.”
$33.5 million placement completed
The signing of the MoU with Sinosteel MECC comes after Aspire completed a $33.5 million placement on December 3, 2019 with major shareholder Mr Tserenpuntsag, whose stake in the company is now 51%.
Tserenpuntsag has provided commitments to Aspire to provide loan guarantees of up to $100 million on a commercial arms-length basis and half of the future equity requirements to complete OEDP’s construction and development.
Aspire is completing a definitive feasibility study, scheduled to be finalised around May 2020 subject to receiving permits and approvals to complete drilling.
Assuming finance is secured and all permits received by Q1 2020, Aspire expects to commence pre-stripping of waste at Ovoot from Q3 2020.