OVOOT COKING COAL PROJECT 

Aspire’s wholly owned Ovoot Project comprises one mining and three contiguous exploration licences which span across over 430 square kilometres.

The Ovoot Project area is located in north-western Mongolia and includes the JORC Compliant Coal Resource and Coal Reserve area, and the Hurimt and Zuun Del prospects. The majority of work conducted by Aspire to date has been largely focussed on the western section of the Ovoot Basin which hosts open pit and underground Coal Reserves. Exploration potential to find additional coal remains open to the east of the existing mining licence.


Ovoot Basin Tenement Outline and Mining Licence with magnetics

 

Exploration

The Company last completed an exploration programme at the Ovoot Basin in the December 2012 Quarter, as it turned its focus to commercialisation activities in 2013.

A gravity survey completed in December 2014 has identified three grabens, each striking in a northwest direction and two major gravity anomalies to the southwest and northwest of the Ovoot project area (refer figure above). These anomalies leaves exploration potential that may be extended towards the south and north of the existing Coal Resource area, and central area of the Basin.

There are over 25 kilometres of the Ovoot Basin between hole DH335 and holes ZD001 and ZD002 that intersected coal. This central area of the Ovoot Basin was drill tested but while drill holes between the Ovoot Resource and Zuun Del did intersect potentially coal bearing Jurassic sediments, due to either difficult drilling conditions or the Jurassic sediments being particularly thick, drilling to basement had not been successful. The Ovoot Lower Seam sits just above basement rock. As the potential to identify further occurrences of Lower Seam remains, the potential to find significant additional coal resources in the Ovoot Basin remains high.

Future exploration programmes will be considered and dependant on available funding.

Ovoot Coal Reserve

Ovoot Coal Resource


Click here for the full JORC 2012 Compliance Coal Resource and Reserve Statement.
* For the Competent Persons Statement, please scroll to end of page.

Marketing Activities

Coke oven testwork completed by Aspire in early 2013 on an indicative sample of Ovoot Project coking coal indicated that the type of coking coal which will be produced from the Ovoot Project is a premium blending coal primarily due to its high fluidity and rank.

Initial marketing activities have resulted in a significant amount of interest from potential:

  • Chinese customers (who classify Ovoot Project coking coal as “FM Premium Fat Coal”),
  • Russian customers (who classify Ovoot Project coking coal as “Zh Fat Coking Coal”),
  • Eastern European and other north Asian customers.

Non-binding Memoranda of Understanding have been signed for potential offtake sales of up to 7.4 Mtpa (or 148% of initial production) with Chinese and Russian companies. Additional interest is being followed up.


Air dried basin

In 2014 Aspire conducted a number of blending tests with various coals (including non-coking coals from the Tavan Tolgoi Mine) that demonstrated the capacity to blend with Ovoot Coking Coal and upgrade the coking ability of other coals. The test work showeded that blending relatively low proportions of Ovoot Coking Coal (as low as 25% in the blend) resulted in a blended primary coking coal product under the Chinese system. In June 2016 Aspire entered into a Memorandum of Understanding with Erdenes Tavan Tolgoi JSC, a Mongolian Government controlled entity that owns the Tavan Tolgoi Coal Mine, detailing cooperation on further technical and commercial assessments regarding the blending of Aspire's Ovoot Coking Coal with various coals from the Tavan Tolgoi deposit.

Development of the Ovoot Coking Coal Project

Following the completion of two Pre-Feasibility Studies completed in 2012, the Company has adopted a plan to develop the Ovoot Project in line with the commissioning of the Erdenet to Ovoot Project Railway. This project is now a key link in the Northern Rail Corridor connecting China, Russia and Mongolia, which forms a significant part of China's One Belt Road Policy.

Ovoot will initially produce 5 Mtpa of saleable high quality coking coal (according to the Ovoot Development Plan "ODP"), which will be loaded directly onto rail for delivery to markets including China, Russia, Eastern Europe, and north Asian countries. As demand increases for Ovoot Project coking coal, Aspire would look to increase production at the Ovoot Project up to 10 Mtpa.

Aspire was granted a Mining Licence in August 2012 and received approval for its Mongolian Feasibility Study by the Mineral Resource Authority of Mongolia (MRAM) in 2013. The Company is in the process of negotiating land use agreements.

Aspire’s focus is on receiving the outstanding regulatory approvals, gaining access to rail infrastructure, port facilities, and aims to commence a Bankable Feasibility Study once rail development has progressed.

For more information on the Ovoot Project Development Plan, click here view the Ovoot ODP Factsheet.


Proposed Ovoot project sit infrastructure plan, mining licence and adjacent exploration tenement outline

Infrastructure Access

Rail
Aspire’s Ovoot project, will have direct rail access upon the completion of the Erdenet to Ovoot railway. The Erdenet to Ovoot railway is a part of Mongolia’s rail policy aimed at extending the existing rail network through northern Mongolia and up to the Russian border, which is planned to eventually connect with Russia’s rail network.

Following the signing of the Trilateral Programme by Russia, China and Mongolia in June 2016, the Erdenet to Ovoot Railway will play a key role in the creation of an Economic Corridor between the three countries. This initiative includes the establishment of the Northern Rail Corridor, which will work to connect China with Russia via Mongolia, by rail.

Northern Railways, a Mongolian registered rail infrastructure company is progressing the development of the Erdenet to Ovoot railway, and is expecting to complete the Second Stage of the Rail Feasibility Study in mid 2017.

Click here for more information on Northern Railways LLC and its Northern Rail Line project.

Power and Water

The Ovoot project has the benefit of having access to both power and water sources readily accessible to the operation, both integral to any coal mining operation.

Aspire have signed a non-binding MOU with the owners of the Zavkhan Power Plant, located approximately 70 km to the south of the Ovoot project, for the future supply of up to 35 megawatts of power per annum to the project. The MOU also covers the cooperation between the Aspire and the Zavkhan Power Plant owners to cooperate to develop necessary transmission infrastructure to connect with the existing 110kv power grid already running directly through the Ovoot tenement area.

Significant ground water has been intersected during previous exploration drilling conducted at Ovoot and two water bores were established. Preliminary water survey’s have identified numerous water sources both on and adjacent to the Ovoot Project. Further water drilling is required to be conducted to support a submission of a water licence application.

Sainshand Mongolian Coal Blending Facility

A concept study has been completed for a 10 mtpa capacity coal Blending Facility to be constructed at Sainshand in southern Mongolia.

The Blending Facility would look to combine Mongolian coals, including between 25-50% Ovoot coking coal with other non or low coking coals in order to upgrade Mongolian coal brands. Ovoot coking coal would be delivered by the Erdenet – Ovoot railway from northern Mongolia whilst other coals would be delivered by the Trans-Mongolian Railway which is currently undergoing significant capacity upgrades. Blended product can then be railed south to the Mongolian/China border and onto customers in China or to Chinese Ports for export under the recently agreed export protocols.

The Blending Facility is estimated to have a pre-contingency capital cost estimate of €53 million (approximately US$70m), and a two year construction timeline.

Sainshand is strategically located along the Trans-Mongolian railway and approximately 240km from the Mongolian/Chinese border of Zamyn Uud/Erenhot. When completed the Sainshand Industrial Park is expected to house coke and steel plants, blending facilities and other industries.

 

Notes:
A) Production Target Assumptions

The following are key assumptions used to achieve the ODP first year target of 5 Mtpa of marketable coking coal.

  1. In the eight months prior to commencement of first year ODP production, a 23 million BCM waste removal programme to pre-strip overburden to top of coal;
  2. A strip ratio of 7.7:1 (BCM waste: tonne of coal);
  3. Preferentially targeting the Upper Seam with a relatively high proportion of low ash coal;
  4. Mining of 5.2Mt of ROM coal (at a 2% moisture on an as received basis) producing 5Mt of saleable coal. This is made up of 40% of washed coal and 60% of by-pass coal meeting a 13% ash cut-off;
  5. Higher ash coal totalling 2.1Mt will be washed in a 300 tonne per hour wash plant to be constructed at the Ovoot Project;
  6. Overall product yield of 90% to be achieved averaging 9% moisture for a less than 10% ash product;
  7. The mine design is that used to support the announced Coal Resource and Reserve update for the Ovoot Project (refer ASX announcement dated 31 July 2013); and
  8. All capital and operating costs are in 2013 dollars.

B) Ovoot Development Timeline
Development of the Ovoot Project is dependent on the construction of the Erdenet to Ovoot railway being progressed by Aspire’s subsidiary, Northern Railways LLC (Northern Railways).

Northern Railways is a Mongolian registered rail infrastructure company, mandated to pursue the development of the Erdenet to Ovoot Railway, and is supported by a consortium consisting of Aspire Mining Limited, and subsidiaries of fortune 500 listed China Railway Construction Corporation – China Railway 20 Bureau Group Corporation (CR20G) and China Railway First Survey & Design Institute (FSDI).

The Erdenet to Ovoot Railway extends 547km between the town of Erdenet to the Ovoot Project, which connects northern Mongolia to China and international markets. In accordance with Mongolian National Rail Policy, the Erdenet to Ovoot Railway is a multi-user rail line and will be available for the transport of bulk materials, agricultural and general freight from the region to export markets including China, Russia and seaborne markets. It will take up to 5 years to construct this railway.

The Erdenet to Ovoot Railway will play an important part in the establishment of the Northern Rail Corridor through Mongolia, the subject of a trilateral program agreed by the Presidents of China, Russia and Mongolia. The Northern Rail Corridor is primarily aimed at improving trade by reducing regulation, improving capacity at borders and to improve road and rail infrastructure to meet the increased demand for transport services. The Northern Rail Corridor through Mongolia links closely with Chinese policies to establish a New Silk Road to improve Euro-Asian trade, and Russia’s policy of establishing a Euro-Asian economic zone.

In August 2015, Northern Railways was granted an exclusive 30 years concession by the Mongolian Government to build and operate the Erdenet to Ovoot Railway. Northern Railways is now completing the first stage bankable feasibility study and  progressing negotiations for funding to commence other studies to support applications for licences, permits and approvals;  the EPC contract;  and the  railway construction funding.

*Competent Persons Statement
In accordance with the Australian Securities Exchange requirements, the technical information contained on this website in relation to the JORC Compliant Coal Reserves and JORC Compliant Coal Resource for the Ovoot Coking Coal Project in Mongolia has been reviewed by Mr Ian De Klerk and Mr Kevin John Irving of Xstract Mining Consultants Pty Ltd.

The Coal Resources documented in this release are stated in accordance with the guidelines set out in the JORC Code, 2004. They are based on information compiled and reviewed by Mr Ian de Klerk who is a Member of the Australasian Institute of Mining and Metallurgy (Member #301019) and is a full time employee of Xstract Mining Consultants Pty Ltd. He has more than 20 years’ experience in the evaluation of coal deposits and the estimation of coal resources. Mr de Klerk has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration to qualify him as a Competent Person as defined in the JORC Code, 2004. Neither Mr de Klerk nor Xstract have any material interest or entitlement, direct or indirect, in the securities of Aspire Mining Limited or any companies associated with Aspire Mining Limited. Fees for work undertaken are on a time and materials basis. Mr de Klerk consents to the inclusion of the Coal Resources based on his information in the form and context in which it appears.

The Coal Reserves documented in this release are stated in accordance with the guidelines set out in the JORC Code, 2004. They are based on information compiled and reviewed by Mr Kevin Irving who is a Fellow of the Australasian Institute of Mining and Metallurgy (Member #223116) and is a full time employee of Xstract Mining Consultants Pty Ltd. He has more than 35 years’ experience in the mining of coal deposits and the estimation of Coal Reserves and the assessment of Modifying Factors. Mr Irving has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration to qualify him as a Competent Person as defined in the JORC Code, 2004. Neither Mr Irving nor Xstract have any material interest or entitlement, direct or indirect, in the securities of Aspire Mining Limited or any companies associated with Aspire Mining Limited. Fees for work undertaken are on a time and materials basis. Mr Irving consents to the inclusion of the Coal Reserves based on his information in the form and context in which it appears.