Aspire Mining executive chairman David Paull says his company now has “a seat at the table” with regulators and financiers to finally advance development of the world-class Ovoot coking coal project in Mongolia after shareholders signed off on a strategic repositioning of the Perth stock.
Shareholders voted overwhelmingly in favour of all resolutions on the agenda at Aspire’s annual meeting on Friday, headlined by a proposal to place $33.5 million of stock with the company’s largest shareholder, Mongolian businessman Tsedendamba Tserenpuntsag.
The placement, and shareholder approval for Mr Tserenpuntsag to exercise a swag of options, will boost Aspire’s cash coffers to about $44 million and give the debt-free Perth company a significant step-up in its efforts to get the 4Mtpa first phase of Ovoot, known as the Ovoot Early Development Project (OEDP), to the starting line.
Mr Tserenpuntsag’s shareholding in Aspire (ASX: AKM) will rise to between about 51% to 52%, depending on whether other shareholders exercise their 1.8¢ options.
Prior to Aspire’s AGM the company’s shares closed at 1.3¢, a significant discount to the 1.8¢ options strike price and the 2.1c Tserenpuntsag placement price.
At 1.3¢, Aspire’s market capitalisation – prior to the Tserenpuntsag investment – is $43.2 million.
Aspire has long battled to advance Ovoot but believes the support of Mr Tserenpuntsag, who is well regarded by all sides of politics in Mongolia, and its new financial strength will greatly assist with securing necessary approvals and also help the company arrange project finance.
“This is the most important meeting of Aspire shareholders since I became involved with the company some 10 years ago,” Mr Paull told the AGM ahead of voting.
“Like you, I am a long-term, significant and committed shareholder and have been frustrated at the significant delays experienced in being able to take our world-class Ovoot coking coal project into production.
“One of the key benefits (of Mr Tserenpuntsag’s increased investment) is that it will result in Aspire being strategically repositioned as a more ‘Mongolian’ company, which is expected to address many – if not all – of the local and provincial Mongolian government concerns regarding the extent of foreign ownership and control over a significant coking coal resource like Ovoot.”
Ovoot has reserves of 255Mt of premium coking coal. The OEDP foresees exploiting only about 16% of Ovoot’s mineral resource for a production profile of up to 4Mtpa, delivered to steel mill customers in China and Russia.
An updated pre-feasibility study for OEDP confirmed a pre-tax net present value of $US878 million and a pre-tax internal rate of return of 49.4%, based on OEDP running for 12 ½ years.
The capital cost estimate is $US259 million, expected to be repaid on a post-tax basis within 26 months of operations.
Speaking after the AGM, Aspire’s corporate adviser Greg Southee, an executive director at Argonaut, described the Ovoot project as truly world-class and said shareholder approval of Mr Tserenpuntsag’s investment “is a major de-risking of Aspire, both financially and strategically”.
“At a time when a lot of development companies can’t get access to capital, Aspire is now in a very good position,” Mr Southee said.
“This is a relatively small company that now has two very strategic sponsors (trading giant Noble Group is also a substantial shareholder) motivated to develop the world-class Ovoot project.”
Mr Paull told the AGM that subject to the receipt of all approvals the OEDP definitive feasibility study should be completed in the first half of next year, paving the way for first production in the second quarter of 2021.
AKM Price at posting:
1.3¢ Sentiment: Buy Disclosure: Held
(20min delay)