Ovoot Coking Coal Project

Aspire’s wholly owned Ovoot Project comprises one mining license and two contiguous exploration licences which span across over 130 square kilometres.

The Ovoot Project area is located in north-western Mongolia and is a new discovery made by the company in 2010 to 2013.

In August 2012 the Company was granted a mining license over the Resource area.

Ovoot Basin Tenement Outline and Mining Licences

Ovoot Coal Resources

JORC Resource Ovoot Open Pit Ovoot Underground Total (Mt)
Measured 197.0 0.0 197.0
Indicated 46.9 25.4 72.3
Inferred 9.2 2.6 11.8
Total 253.1 27.9 281.0

Ovoot Coal Reserves

JORC Reserves1 Probable (Mt)

(Arb, 2% moisture)

Total (Mt) Marketable (Mt)

(Arb, 9.5% moisture)

Open Pit 247 247 182
Underground 8 6 6
Total 255 255 188

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

Indicative Product Specification

Indicative Ovoot Washed Coking Coal Specification
Moisture 9%
Ash 9%
Volatiles 25-28%
Sulphur 1.2%
CSN 9
Max Fluidity Log 3.60
Max Dilation +300%
Gray King G11
G Caking Index +95
Y Index mm +26
RoMax 1.2

Ovoot Coking Coal is classified as a “Fat” Coking coal under the Chinese coking coal classification system. This coal category provides high fluidity coals with good plastic and excess caking properties which are used to blend lower quality coking coals.

Ovoot Coal Blending to Upgrade Lower Ranking Coals

Source:
1. AME Group “Coking Coal Market Outlook” presentations to Coaltrans Conference in Brisbane dated August 2011.

2. China coking coal market report provided to Aspire by one of China’s leading coal consultancy firms, dated December 2014.

As an example of Ovoot Coking Coal’s blending capabilities Aspire has 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 has shown 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.

Ovoot Project Summary

Mine CAPEX and OPEX Estimates
Initial Production  up to 5 Mtpa
CAPEX US$144m (incl. contingency and working capital)
Commencement 2017
Production growth potential  up to 12Mtpa (1)
Life of Mine 20 years (1)
OPEX (Avg first 3 years) US$83-93/t (2)
Total Saleable Product 188 Mt (3)
Product Type 100% High Quality Coking Coal
Average Strip Ratio 7.7:1 BCM waste/t (excluding pre-strip) (4)

Note1: Full scale production based on December 2012 PFS Revision (refer ASX Announcement dated 6 December 2013
Note2: Prices are in 2013 real dollars (exclude royalty) and includes all freight and border costs FOR China
Note3: Total marketable coal produced over life of mine
Note4: Refer ASX Announcement dated 31 July 2013

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 will need to negotiate land use agreements and water licenses before mining can commence.

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 site infrastructure plan

Final Pit and Infrastructure Layout – Ovoot Open Pit and Underground

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.