Aspire Mining has received an Expression of Interest from China Development Bank (CDB) to fund up to 75% of the engineering, procurement and construction (EPC) contract cost to build the Erdenet to Ovoot Railway in northern Mongolia.

The Expression of Interest comes after the Erdenet to Ovoot Railway was included in the new Northern Rail Corridor which will connect China and Russia through Mongolia.

CDB is a Chinese Government owned policy financial institution that provides medium to long term financing facilities that serve China’s long term economic and social development strategies. CDB is the world’s largest development finance institution and the largest Chinese bank for foreign investment and financing cooperation, long term lending and bond issuance. It was ranked 87th on the Fortune Global 500 in 2015.

The Erdenet to Ovoot Railway represents a section of the planned Northern Rail Corridor announced in June 2016. This is a trilateral agreement between China, Russia and Mongolia to extend a rail link from China through Mongolia and connect with the Russian rail system.

A 30-year concession was granted to Aspire’s rail subsidiary Northern Railways LLC in August 2015 by the Mongolian Government to progress development of the Erdenet to Ovoot Railway.

Northern Railways has formed a consortium with two subsidiaries of China Railways Corporation, China Railways 20 Bureau Group Corporation (CR20G) and China Railway First Design Survey and Design Institute (FSDI), to progress development of the Erdenet to Ovoot section.

CR20G is the nominated EPC contractor and FSDI has been contracted to undertake the bankable feasibility study (BFS). FSDI has commenced the first stage of this study, which is due for completion by December 31, 2016.

The CDB Expression of Interest confirms that subject to CBD being satisfied with the first stage of the BFS for the Erdenet to Ovoot Railway, CDB intends to provide a non-binding term sheet in relation to the provision of a long term debt facility to Northern Railways to fund up to 75% of the EPC contract cost of that project.

Any such non-binding term sheet is expected to outline the conditions that CDB requires to be satisfied before it will provide a binding debt facility to Northern Railways, including conditions relating to the raising of sufficient equity capital by Northern Railways, the provision of a suitable security package, obtaining any further approvals required from the Mongolian Government and meeting the conditions precedent in the Erdenet to Ovoot Concession Agreement.

ASX-listed Aspire has the world-class Ovoot Coking Coal Project which would benefit from the rail project. Production from the project can coincide with the commissioning of the Erdenet to Ovoot Railway.

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