Aspire Mining Limited has entered into a funding arrangement with Northern Railways LLC rail funding adviser, Signum Resources Corporation, to ensure that the Erdenet to Ovoot railway continues to meet the development timetable set by the Rail Concession Agreement recently executed with the Government of Mongolia.
The rail project is part of an extension of Mongolia’s national rail network from Erdenet to Aspire’s Ovoot Coking Coal Project, which represents the first stage of a new rail connection linking Mongolia to Russia. The total rail project construction capital cost is estimated at US$1.2 billion.
The Rail Concession Agreement provides Northern Railways with the exclusive right to build and operate the 547km rail project for a period of 30 years. An 18 month timeframe has been set for the achievement of the concession agreement conditions precedent, which include the completion of a bankable feasibility study (BFS).
Signum has agreed to provide a US$600,000 loan to Northern Railways and a placement of US$200,000 at Aus$0.02 per share in Aspire to fund the completion of the first stage of the BFS. Signum will assist Northern Railways in sourcing the funding for the balance of the BFS costs and to identify strategic partners and new funding sources for Northern Railways.
Northern Railways will work exclusively with China Railway Construction Corporation subsidiaries, China Railway 20 Bureau Group Corporation (CR20G) and China Railway First Survey & Design Institute (FSDI), to complete the BFS and negotiate the terms of the EPC contract to be awarded to CR20G.
China Railways is a Fortune 500 listed company, and China’s largest rail construction organization. Through its various subsidiary companies China Railways are involved in the development of a number of rail projects along the planned economic corridor spanning between Russia, Mongolia and China, including the Erdenet to Ovoot railway and the construction of the Kuragino to Kyzyl railway which will eventually connect with the Erdenet to Ovoot railway.
Aspire Mining is listed on the ASX, is the largest coal tenement holder in Mongolia’s northern provinces and is focused on identifying, exploring and developing quality coking coal assets. Aspire owns a 50% interest in and is the operator of the Ekhgoviin Chuluu Joint Venture (ECJV), and has an option to increase its ownership to 100% of the ECJV. The ECJV owns a 90% interest in the Nuurstei Coking Coal Project and following a successful 2014 exploration program is conducting additional exploration work through 2015 with the aim of identifying a JORC 2012 coal resource and defining coal quality across the deposit.
Depending on the results of the 2015 program, future positive economic studies, funding and the grant of necessary approvals and licences, Nuurstei could commence a road-based production operation as early as 2016, and access the new Erdenet to Ovoot railway as early as two years from commencement of its construction.
Aspire is also the owner of the world class Ovoot Coking Coal Project, which is the second largest coking coal project by reserves in Mongolia. Ovoot project development is dependent on the construction of the Erdenet to Ovoot railway.