Aspire and Sinosteel to discuss EPC funding options for Ovoot Early Development Project
PERTH: Aspire Mining Limited has signed a Non-binding Memorandum of Understanding (MoU) with Sinosteel Equipment & Engineering Co., Ltd. in relation to the early development of the world-class Ovoot Coking Coal Project in Mongolia.
The MoU with Sinosteel MECC covers potential Engineering, Procurement and Construction (EPC) and trade-based funding opportunities for the Ovoot Early Development Project (OEDP).
Sinosteel MECC and Aspire will enter into talks regarding EPC-based funding as well as trade-based finance solutions. The OEDP Pre-feasibility Study (PFS) includes the construction of a 5Mtpa Coal Handling and Preparation Plant (CHPP) at the Ovoot Mine Site at an anticipated cost of US$37 million.
The Parties will discuss a possible Engineering, Procurement and Construction contract and funding opportunities. The Parties will discuss trade-based financings including future metallurgical coal sale pre-payments and/or a streaming funding facility whereby development capital can be raised on a basis that is non-dilutive to existing equity holders to assist in funding the required mine development.
Under the MoU, Aspire will share information on OEDP development progress with Sinosteel MECC including but not limited to mine development, permitting and licenses, transport logistics, project financing, cash cost analysis and situational updates.
Sinosteel MECC will also support Aspire to access its Coal Trading Platform, which can be used to sell coal on a spot basis in China. The signing of the non-binding MoU with Sinosteel MECC comes after Aspire completed a $33.5 million placement on 3 December 2019 with major shareholder Mr Tserenpuntsag, whose stake in the Company is now 51%.
Mr Tserenpuntsag has provided commitments to the Company to provide loan guarantees of up to A$100m on a commercial arms-length basis and half of future equity requirements to complete OEDP’s construction and development. An updated OEDP PFS released on 11 November 2019 includes a capital estimate of US$260 million.
Aspire is completing a Definitive Feasibility Study, scheduled to be finalised around May 2020 subject to receiving permits and approvals to complete drilling. Assuming finance is secured and all permits received by Q1 2020, Aspire expects to commence pre-stripping of waste at Ovoot from Q32020.
Aspire Mining’s Executive Chairman, Mr David Paull, noted: “Aspire recognises the importance of having a strong partnership with companies like Sinosteel MECC that play such a major role in the Chinese steel industry, the main market for Ovoot’s high-quality coking coal product. We look forward to working alongside Sinosteel MECC as one of our key partners in bringing the Ovoot Early Development Project into production and delivering value for all Shareholders.”