Yes i do believe that this is the case as i know companies struggle with boarder traffic currently as well as infastructure issues such as roads. Alot of miners use this method of transport and that is why it is so congested. The 0.5 to 1mt is the start from my understanding and will form the basis for possible further output from this operation until the rail line is up and running. It all depends if they decide to drive it straight over the boarder or just to the rail head, the company has mentioned in a recent ann they will look at the rail head as the priority.
See the excerts below
"Stage 1 is a small scale project (0.5 to 1 million tonnes per annum) targeting a Direct Ship Ore(DSO) operation whereby ore would be trucked from site to the nearest rail head at Erdenet and then transported via railto eastern Russian ports or south along the Trans Mongolian Railway to China"
"The aim of Stage 1 is to demonstrate to potential customers the ability of the Company to deliver product consistently along the extended logistics chains and to demonstrate the benefits of blending Ovoot?s quality coking coal."
Pricing is currently high but prices are considerably less from Mongolia. I posted some information regarding pricing comparisons sometime ago but this was before AKM confirmed having a premium product which would fetch higher prices than the comparisons made. Basically you would be looking at a $100 discount per ton if the coal is sold to china. To get a better understanding of the restraints the company is facing i suggest you have a good read of the latest presentation.
Presentation to Coking Coal Industry Chain Summit China
There current resource base is enough to gain financing but further due diligence is required before they could obtain financing options. e.g. (Scoping study,BFS). 330mt with an 80% yeild is a very significant deposit and a large percentage is already in the measured and indicated categories. Drilling costs to finalise required figures would be minimal IMO. The rail link would pay for its self in cost savings, the presentation contains some gaood base figures on costs involved. But all of this will be highlighted in the scoping study for the DSO operation, then we will see what margins can be made.
GL to all holders
GB
AKM Price at posting:
59.0¢ Sentiment: LT Buy Disclosure: Held
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