Ovoot Early Development Plan

On February 28 2019, Aspire Mining announced the findings for the Ovoot Early Development Plan (OEDP) Pre-Feasibility Study – analysing the feasibility of a 4mtpa interim truck and rail mining solution to fast track delivery of Ovoot coal into an emerging ‘fat’ coking coal shortage from 2021, using existing spare rail capacity from Erdenet. To read the full announcement click here

The key findings of the OEDP PFS1 were:

  • Outstanding Base Case economics with unleveraged NPV10 (pre-tax) of US$586m with an IRR of 43.7% (inclusive of mine, logistics, waste pre-stripping and haul road capex).
  • Attractive average LOM net direct C1 Cost of US$81/t delivered to the China border at Erlian which will position Aspire as a second quartile producer on the global cost curve.
  • Average annual EBITDA of US$172m and rapid 24 months payback from commercial production with life of mine EBITDA of US$1.6bn.
  • Single open pit operation with low LOM strip ratio of 4.6:1 Bcm/t.
  • Steady state 4.0Mtpa of washed, saleable “fat” coking coal over an initial 9.2 year mine life (a small proportion of the overall Ovoot Project Reserves).

In addition, a further cutback of the OEDP pit should the company choose it was found would:

  • Increase mine life (at 4.0Mtpa) to 12.5 years.
  • Deliver an unleveraged NPV10 (pre-tax) of US$758m with an IRR of 44.5% (inclusive of mine, logistics, waste pre-stripping and haul road capex).

Other key findings

  • Potential to extend mine life further through future cutbacks with additional mine planning.
  • The Road DFS has commenced
  • Potential for third party funding for road.
  • Mine and logistics capital of US$63m.
  • US$47m in pre-stripping through to commercial production
  • US$165m before contingencies to construct a 560 kilometre surface stabilised haul road between Ovoot and the rail terminal at Erdenet.
  • Strong preliminary interest from a range of specialist financiers to provide debt funding for the mine, wash plant and/or road.
  • Clear pathway for rapid completion of permitting and approvals together with other pre-development works.
  • Strong local community incentive to support road and mine with up to 420 jobs to be created at the mine site and more than 300 drivers required for the trucking operation.
  • On track for start of construction in Q4 2019 and commissioning from Q1 2021.
  • Financing process progressing with strong ongoing support from major shareholders Mr Tserenpuntsag and Noble Group.
  • OEDP Definitive Feasibility Study (DFS) fully funded and underway with expected completion in September 2019 quarter.

1Unless otherwise stated, all financial numbers in this announcement are in US$ and are not subject to inflation or escalation factors. NPV and cashflow numbers quoted exclude contingencies. Mining and process engineering designs for the OEDP PFS were developed to support capital and operating estimates to an accuracy of +\- 25% and +\- 15% respectively. Key assumptions that the PFS is based upon are outlined in the body of the 28 February 2019 announcement. Aspire has concluded it has a reasonable basis for providing the forward looking statements in this announcement