1. What makes Ovoot special?
2. How does the new Mongolian Foreign Investment Law affect Aspire?
The Mongolian foreign investment legislation (FIL) was implemented by the Mongolian Government in May 2012 to create a process by which to encourage foreign investment, at the same time protecting industry sectors considered by Mongolia as being strategic. Not dissimilar to laws already introduced in Australia and Canada, industry sectors considered strategic to Mongolia include mining, telecommunications, media, rail and defence.
The FIL does not set a cap for foreign investment, but sets a number of approval thresholds depending on the level on investment and whether a foreign State Owned Enterprise (SOE) is involved.Approvals are required for investments:
3. How will the rail line be funded and will Aspire need to find all the funding itself?
The rail line to take Ovoot coking coal to the Trans-Mongolian railway and then to customers has two sections, 1) Erdenet – Moron, and 2) Ovoot – Moron.
The Erdenet – Moron rail line is the responsibility of Northern Railways LLC and requires US$1.1 B plus contingencies, and will be funded by both debt and equity. Although Northern Railways is currently a subsidiary of Aspire, its equity holding in the longer run will be diluted as other parties become involved which could include multi-lateral banks with interest in regional economic development, rail infrastructure investors, and end users of Ovoot coking coal.
The Ovoot – Moron rail line, estimated to cost US$375m plus contingencies, is planned to be solely used by Aspire and thus funded by Aspire through debt and cashflow earned during the initial Stage 1 of production.
4. Where will funds be sourced from to construct the mine and rail?
To reach full production, the Ovoot Project minesite and rail infrastructure (Ovoot – Moron) requires US$1.275B.
Funding will be a mixture of Project debt and equity. The equity could come from investment from a strategic partner/investor and/or end user of the coking coal.
5. Does Aspire need to raise any cash to fund activities in 2012?
No, Aspire is fully funded to continue its exploration activities and complete studies in 2012.
6. How can the current Coal Reserve be increased?
The current Probable Coal Reserve is 178 Mt for Ovoot. Highlighted in the May 2012 Resource and Reserve Announcement were a number of recommendations which could see this Reserve figure increased to over 200 Mt, which Aspire will pursue during the remainder of 2012 and into 2013.
Further exploration over Ovoot will also be conducted at target areas to further grow the Coal Resource and Reserves. At present only 20% of the 500 square kilometre Ovoot Project has been explored.
7. What markets are Aspire planning to sell coking coal into?
The construction of a rail line connecting Ovoot to the Mongolian and Russian rail networks will open up several markets for selling Ovoot coal into, which include China, Russia, Korea, Japan and India.
8. What distinguishes Ovoot Coking Coal from other coking coals?
Ovoot is a high quality coking coal displaying very high levels of vitrinite making it a suitable blending product with lower quality coking coals. Its high quality will see it attract prices similar to hard coking coal prices.
9. When will Aspire commence production?
The recently completed Pre-Feasibility Study for Ovoot is based on a two stage development. Stage 1 production is expected in commence in early 2016 and see production of up to 6 Mtpa coking coal. This initial production is subject to Northern Railways completing the Erdenet to Moron rail line, whereby coal can be hauled by road and placed on rail at Moron.
Stage 2 production is dependent on the rail line between the minesite and Moron being completed, and is planned to commence in 2018 producing of up to 12 Mtpa coking coal. At the minesite, all product will be loaded onto rail.