(MENAFN- ProactiveInvestors)
Aspire Mining () has clocked two key milestones for its proposed Erdenet to Ovoot Railway in Mongolia required to unlock the value of the Ovoot Coking Coal Project.
The company has received a formal invitation to commence negotiations with the Mongolian Government’s multi departmental Working Group for a Rail Concession.
It has also entered into a Consortium Agreement with China Railways 20 Bureau Group Corporation who will provide its subsidiary Northern Railways with exclusive rights to technology required to construct the Erdenet to Ovoot Railway.
CR20G is a wholly owned subsidiary of China Railways Construction Corporation (HKEx:1186) (XSHG;601186) a Fortune-500 company (US$42.0 billion market cap.) and one of the world’s largest international rail engineering construction firms.
“It was an exciting period for the company as it can now formally commence negotiations for the Erdent to Ovoot Rail Concession” managing director David Paull said.
“It is also of great benefit for a junior ASX listed Company such as Aspire to have the full technical and engineering weight of China Railways 20 Bureau Group Corporation behind it to support the negotiations for a rail concession with the Mongolian Government.”
Aspire recently had a strong start to its $6 million capital raising with firm commitments totalling up to $2.1 million already received.
Rail Concession
The Mongolian Government has established a working group to negotiate the rail concession for the Erdenet to Ovoot Railway in accordance with a Cabinet resolution.
The working group comprises representatives from the Ministries of Roads and Transportation Environment Finance and Investment Agency.
In accordance with the Cabinet resolution the working group has invited NR to commence a direct negotiation around the terms and conditions for the Rail Concession Agreement along with a request for draft agreements to consider.
Consortium Agreement
To support the grant of the Concession Agreement the company has entered into a Consortium Agreement with China Railways Construction Corporation (HKEx:1186 XSHG;601186) subsidiaries China Railways 20 Bureau Group Corporation and China Railways First Survey & Design Institute Group Co Ltd.
This provides Northern Railways with an exclusive license to use patented intellectual properties which will be required to design and construct the Erdenet to Ovoot Railway.
Erdenet-Ovoot rail line
The 547 kilometre Erdenet-Ovoot rail line represents the first phase of the Mongolian Government’s planned Northern Rail Line which will extend existing railway from the town of Erdenet through to the Ovoot project and onto the Russian border at Arts Suuri.
It is a key requirement to unlock the value of the Ovoot Coking Coal Project and future earnings from mining and production from the project for Aspire.
This connects the large coking coal basin to China and international markets.
In accordance with Mongolian National Rail Policy the Erdenet – Ovoot Railway will be a multi-user rail line available for the transport of bulk materials agricultural and general freight and passengers from the region to export markets including China Russia and seaborne markets.
Northern Railways had previously entered into an Agreement with China Railways 20 Bureau Group Corporation to complete a Bankable Feasibility Study.
The Rail BFS has been split into two phases with the first phase comprising desktop engineering work to provide additional project definition and has commenced following Northern Railways initial payment of US$250000 and the provision of 1:5000 scale mapping over the entire 547 kilometres alignment.
The total cost for the Rail BFS is US$6.5 million plus value added tax. Further payments and the commencement of the second phase are conditional upon Northern Railways receiving the grant of a Rail Concession and Northern Railways accessing funding to complete the study.
China Railways Construction Corporation (CRCC)
CRCC has significant engineering and construction capabilities working on major projects including roads highway light and heavy rail bridges tunnels housing and other projects both domestically in China and internationally.
Ovoot Coking Coal
The Ovoot Coking Coal Project in northwestern Mongolia has a JORC Resource of 255 million tonnes and is the country’s second largest coking coal reserve behind the government-owned Tavan Tolgoi project.
Initial production is estimated to commence in 2018 producing 5 million tonnes per annum of saleable coking coal and increasing in subsequent years to achieve full scale production of up to 10Mtpa from both the open pit and underground operations.
Capital costs to achieve initial production is estimated at US$144 million with operating costs of between US$76 and US$86 per tonnes Free-On Rail at the Chinese border for the first two years of operation and between US$82 and US S$92/t over the first five years.
Current offtake interest in Ovoot coking coal exceeds targeted production with MoUs signed for up to 7.4 million tonnes per annum or 148% of planned initial production.
Nuurstei Coking Coal Project
The Nuurstei project is being developed by the 50% owned Ekhgoviin Chuluu Joint Venture with Noble Group. ECJV has a 90% interest in the project.
It is located within close proximity of a newly completed sealed road that will allow for the transport of Nuurstei coal to existing rail services at Erdenet.
It would also be an early user of rail along the planned Erdenet-Ovoot-Arts Suuri Railway being promoted by Aspire’s rail subsidiary Northern Railways LLC.
An exploration target of between 15 million and 25 million tonnes has been established for Nuurstei licence 13580X.
Core drilling and coal quality testwork will be carried out as part of the 2015 exploration program.
Analysis
Aspire Mining has taken major steps towards developing the proposed Erdenet to Ovoot Railway in Mongolia that is required to unlock the value of the Ovoot Coking Coal Project.
Not only has the company being invited to commence negotiations with the Mongolian Government for a Rail Concession it has signed a Consortium Agreement with China Railways 20 Bureau Group Corporation that grants access to technology required to construct the railway.
With the full technical and engineering weight of China Railways 20 Bureau Group Corporation behind it to support the negotiations for a rail concession with the Mongolian Government the times are about to get interesting for Aspire Mining.
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