I'm happy to join you all as a shareholder in Aspire. I've put down some notes as why I've joined you here, but please correct me if you see any factual errors. Thx
The Mongolian Economy and its peopleThis project with it's 1200 jobs will have an immense impact on the Mongolian economy and the quality of people's lives. It will likely lift over 10,000 people out of poverty (the workers, their extended families, suppliers etc), but at a coal price of $250/t and selling 4mt per annum it will add $1b pa to the Mongolian economy. That is 6.6% of the countries current GDP so is a nationally significant project
A committed local as the largest shareholderHaving a prominent Mongolian as the single largest shareholder is a leading indicator of the liklihood of success. Add to this his willingness to underwrite $100m aud in loan guarantees, and it adds another layer of confidence.
Amazing PFS Project Economics PFS Nov 2019 has the following outcomes
a) pre tax NPV of $878m USD and IRR of 49%
b) capex of $262usd
c) Cash operating cost (Erlian border) $97usd
d) met coal sale price of $150 USD assumed
e) at usd $350t met coal spot price gives a pre tax NPV of $4.5b usd - that is a whooping $6.5b AUD!
f) therefore for every $1 above $150t NPV increases by $20m (which is half our current market cap)
Next To the largest steel making area in the worldIn 2020, China designated Mongolia as the preferred source of metcoal. Excellent Asset QualityOvoot is 100% company owned.
Royalties are low at only 6.5% (compared to my metcoal stocks that are subject to the draconian Qld government)
$50m spent to date
247mt in reserves, all open pittable
Selling Fat coal at a premiumTrading at close to EVThe MC is around $36m and at last quarterly there was circa $33m cash, So the company is basically trading at cash value and the asset is free carried.FinancingI'm unsure if there have been any discussions on here around financing but I'd be interested in what people think about the possible scenario that follows. The way I think it could play out is that Chinese firms are likely to get the contracts for the capex items and with the work will come a developmental loan from a Chinese bank secured against the asset/sales of coal. Mr Tserenpuntsag's generous offer to give a loan guarantee of $100m aud ($70m usd) is an amazing asset in itself (compare that to the hoards of Directors in ASX companies with their snouts in the trough).It could be feasible that most of the finance will come as loans. thoughts?
Risk /RewardI'd say an asset trading at an EV of $3m, with a project that has a pre-tax NPV10 of $870m usd, and a pre-tax NPV10 at spot of $4.5b usd, is a great Risk Reward bet. Metcoal is currently essential in steel making and is likely to be so for a generation, and it's consumption will rise as developing countries industrialize. Given the recent update in gaining permits, I think things could be looking up this year. GLTAH
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