ASPIRE Mining and its subsidiary Northern Railways LLC have entered into a binding Memorandum of Understanding with China Gezhouba Group International Company Limited (CGGC) to advance the Erdenet-Ovoot Railway Project as part of the Northern Rail Corridor. CGGC has agreed to complete the second and final stage of a bankable feasibility study by March 31, 2018.
|The proposed Northern Rail Corridor extends west from Erdenet in Mongolia’s north.|
In return, Northern Railways has agreed to seek to include CGGC along with China Railways Construction Bureau 20 Group to jointly work on the design, procurement and construction of the project. If CGGC is not included in this process, Northern Railways has agreed to compensate CGGC for work performed on the feasibility study.
The MoU also sets out a pathway for development of the project as well as the potential extension from Ovoot to the Mongolian/Russian border.
To this end, CGGC have expressed a willingness to assist Northern Railways seek investors to fund the corridor. It also intends to support Northern Railways’ efforts to extend the corridor to eventually connect to Russia at the Arts Suuri border and to assist Aspire source investment to fund development of the Ovoot Coking Coal Project.
The Erdenet-Ovoot Railway is a Public Private Partnership with the Mongolian Government. Northern Railways as concessionaire has the right to build, operate and then transfer 100% ownership of the railway to the government. Under the concession agreement at least 30% of the sub-contract work needs to be allocated to Mongolian construction companies and suppliers.
Meantime, Noble Group has bought an additional 10% stake in Northern Mongolian Railways Limited (NMRL), a subsidiary of Aspire, for US$1.4 million. NMRL owns a concession to build, operate and transfer the railway through its subsidiary Northern Railway LLC.
The consideration was satisfied through the conversion of debt owed to Noble’s wholly owned subsidiary Noble Resources International Pte Ltd (NRIPL) by Ovoot Coking Coal Pte Ltd, a subsidiary of Aspire. NRIPL’s shareholding is raised to 20% and NMRL becomes an associated company of Noble.