Aspire Mining has commenced the first stage of the Rail Feasibility Study for the Erdenet to Ovoot Railway in northern Mongolia. The rail line will form part of the new Northern Rail Economic Corridor linking China with Russia through Mongolia.
The first stage of the study is expected to be completed by the end of the year.
With inclusion in the corridor the Erdenet to Ovoot Railway becomes a priority funding project for China’s banks and other funding institutions established to support the infrastructure build-out for China’s One Belt One Road policy.
While the first stage progresses Aspire and its rail subsidiary Northern Railways LLC will be working to complete funding arrangements for both the final feasibility study work and EPC funding for construction of the Erdenet to Ovoot Railway.
Quam Capital Ltd, the corporate finance arm of Hong Kong Stock Exchange listed financial service group Quam Limited, has secured interim short-term funding of US$2 million from a group of investors, including large shareholders in Aspire, to progress time critical rail pre-development activities on the ground in Mongolia. Funding will enable Northern Railways to complete the first stage study and environmental surveys.
Northern Railways has activated an environmental consulting team in Mongolia to complete the collection of flora and fauna date across the alignment by October 2016. This work is important for completion of the detailed Environmental Impact Assessment in early 2017.
From the loan proceeds Northern Railways will make a US$800,000 payment to China Rail Construction Corporation subsidiary, First Survey & Design Institute Group (FSDI), towards the first stage study. China Railways Construction Corporation Bureau 20 Group will also provide FSDI with a US$1.05 million contribution to complete the first stage study.
Among other things, the study’s first stage will provide a confirmed construction schedule, Bill of Quantities and a capex estimate of between minus 10% to plus 20%. This will provide the basis for discussions to continue with Chinese banks for funding of the rail project.
Aspire’s managing director David Paull said, “The rail corridor is designed to facilitate growing trade between Asia and Europe and given Aspire’s strategic location along this corridor, the value for Aspire’s rail and metallurgical coal assets have been significantly enhanced.”