Aspire Mining intends to use funds raised from a A$16.5 million renounceable Rights Issue to expedite development of its Nuurstei Coking Coal Project in Northern Mongolia. The company hopes the funds will enable it to fast track Nuurstei into production within 18 months.

Patersons Securities has been appointed lead manager to fully underwrite the six for five Rights Issue. Noble Group has committed to take up its entitlement in full and to sub-underwrite the issue, which will take its interest in Aspire to 19.9%.

Aspire’s Board members have also agreed to take up entitlements to a combined total minimum of A$500,000.

Through Noble’s participation in the Rights Issue and other agreed to arrangements, the current outstanding debt facility to Noble is reduced from US$6.65 million to US$1.8 million with the balance to be repaid in instalments so that the facility is fully repaid by August 2019.

Aspire says the proposed capital raising when combined with the debt reduction will transform the company so that it can actively pursue a near-term production opportunity at its 980%-owned Nuurstei project while continuing to pursue early development options for the larger Ovoot Coking Coal Project, also in Mongolia’s north.

The Rights Issue will be made under a prospectus which is expected to be distributed to all shareholders from the end of this week.

Subject to successful completion of the Rights Issue, a proposed A$2 million drilling and exploration program will be undertaken at Nuurstei with the aim of increasing resources and establishing a reserve, including the conversion of inferred resources to the indicated category. A new resource model for Nuurstei is planned to be completed in the first quarter of 2018.

Capital costs for development of Nuurstei have been further refined, with the current estimate of US$13 million to US$14 million to be confirmed in the feasibility study process.

The end objective of these studies is to confirm an economically viable mining operation commencing within 18 months. This is dependent on the analysis of the results of the drilling program, future positive economic studies, the grant of necessary approvals and licences, and any further required funding in addition to but not limited to that provided by other possible sources, such as coal pre-sales, contractor funding and exercise of options.

While the Nuurstei project can commence as a road-based production operation, access to the proposed Erdenet to Ovoot Railway provides the potential for further reduced transport costs for the project.