Ok, right now it s really is now all about the Mongolia Northern Rail project getting approvals etc in place by August 2018 deadlines ( COUPLE WEEKS AWAY ) and we will need that all important EPC contract with CGGC by November 2018 which will be a no brainer IMO
So in saying all that, we should now have complete understanding of the bureaucracy behind this collaboration of governments from Russia , Mongolia and China and the social impact .... so moving forward lets recap whats necessary for this NR construction project to move forward.
Now, its been said that to achieve 1.25 billion funding for Mongolian Northern Rail we require the following milestones to be confirmed which myself and others have provided documentation on many occasions. Capacity guarantees are required for one ! so i would say funding could be very close now as to secure funding they will require BOA's ( binding off-take agreements ) or another way to put it is Guaranteed SALES !!!! Funding wont be forthcoming until the first 3-4 points below are met IMO
KEY Points 1) The rail feasibility study has been with the Mongolian Ministry of Roads and Transportation for some time now , for its review and approval.-
2) CGGC will look to fund the remaining Erdenet to Ovoot Rail concession agreement pre-development work as per the previous October 2017 MoU.
However, this will be subject to receiving a guarantee that the connecting rail line will have sufficient capacity to carry the additional freight once connected. therefore ...
3) BOA binding Off-take agreements to meet CAPACITY GUARANTEES above.
4) Northern Rail will enter into an EPC contract with CGGC in November 2018 subject to construction funding being available. CGGC MUST secure project funding before November 2018 based on agreement so perhaps its close also???? $$$$$$$$$
5) After the capacity guarantee is provided, that the time period for the pre-development works required to be completed as conditions precedent to the Rail Concession Agreement will be sufficient to complete the tasks. The NR Rail Consortium is currently in discussions with the Mongolian Government for an extension beyond 20 August 2018 for completion of the conditions precedent.
6) CGGC has the option to invest in NR in the event that it funds the completion of the remaining Rail Concession Agreement conditions precedent. As part of the NR MOU, NR has committed to enter into a lump sum turn key EPC contract for the Erdenet to Ovoot Rail Project by the end of November 2018. The EPC Contract will be subject to construction funding being available to NR, which if available, would indicatively allow for first construction to begin in the Mongolian spring of 2019.
So, we need funding before November 2018 to enable us to form EPC contract with CGGC!!!!!!
In terms of ( CGGC ) Noble and Aspire holding for the Northern Rail network project , post CGGP electing to earn 51% - Nobles 20% will reduce to 15% and Aspire will reduce to 34% holding.
7) World class Ovoot coking coal deposit -Mining licences granted ( MV 017098) Ovoot
The much larger world-class Ovoot project is tied to the development of rail infrastructure that represents a strategic priority for the government of Mongolia as part of the Northern Rail Corridor, on top of Russia and China’s interests in the One Belt One Road Strategy.
-Partnerships being forged with Chinese SOE's, China Railway Construction Corp and China Gezhouba Group
-China Development Bank provided an EOI back in 2016 to fund up to 75% of the rail funding
-EPC Funding: in addition to debt and equity markets EOI received from German ODDOF BHF Private German Bank and German government backed export credit agency - also off-take coal pre sale funding also an option
-Aspire coking coal project 2nd largest coking coal reserve in Mongolia after govt owned Tavan Tolgoi Mine with initial production at Ovoot could commence at 5 Mtpa mining a high portion of low ash bypass coal and with necessary upgrades can go up to 10Mtpa of high quality coking coal
Drilling
2018 drilling program has been designed to upgrade and extend the resource base
A 58-hole, 10,000-metre infill and resource extension drilling campaign is targeting shallow open pit mineralisation we need feasibility on our current Nuurstei drill results -
Following a large rights issue in December, drilling and a feasibility study should be completed on the Nuurstei project by mid-year 18 -Nuurstei is small in comparison and we only looking to 100 ktpa if we can get that going in 2019 but more importantly and why we need RAIL for the much larger world-class Ovootproject which will give us 5 mtpa from first full year of production
8) Concession agreement -
In August 2015, Northern Railways was granted an exclusive 30 years concession by the Mongolian government to build and operate the Erdenet to Ovoot Railway.
The concession agreement will grant Northern Railways, a subsidiary of Australia's Apsire Mining, exclusive rights to build the railway and operate it for 30 years, after which ownership of the infrastructure will pass to the Mongolian government. The deal gives Northern Railways up to five years to complete construction of the line, which will be built by China Railway Construction Corporation (CRCC) subsidiary China Railway 20th Bureau Group (CR20G).
Following the signing of the concession agreement, Northern Railways will need to meet a number of conditions within 18 months, including completion of EPC contract negotiations with CR20G; the conclusion of a bankable feasibility study by another CRCC subsidiary, China Railway First Survey and Design Institute group (FSDI); and arrange financing for the project.
9) There is also the matter of completion of the DEIA (Definitive Environmental Impact Assessment)
10) Aspire Mining feasibility study review reduces railway construction cost
10:49 04 Jun 2018
The company's Ovoot Coking Coal Project is Mongolia's second largest coking coal reserve.
The Ovoot project is dependent on the construction of the Erdenet to Ovoot Railway Aspire Mining Ltd (ASX:AKM) has completed its review of the 547.7-kilometre Erdenet to Ovoot rail feasibility study.
Notably, the total construction cost in Chinese renminbi before contingencies is 11% less than the primary feasibility study estimate completed in January 2017.
Given movements in the exchange rate, the total cost in US dollars remains at US$1.25 billion. Feasibility study work continues
While Aspire’s wholly owned rail subsidiary, Northern Railways LLC (NR) has completed its review of the rail study, work continues.
NR, China Gezhouba International Ltd (CGGC) and its engineers continue to address a number of matters and opportunities.
The rail feasibility study will now be provided to the Mongolian Ministry of Roads and Transportation for its review and approval. READ: Aspire Mining welcomes growing support for rail for its coal mine
The rail feasibility study sets a minimum 8% after tax rate rail project rate of return with a minimum 12% equity after tax rate of return.
Applying a below rail or sometimes described as a capacity tariff, of US3.4 cents per tonne per kilometre to use the railway, provides the following financial outcomes.
This tariff both meets the minimum financial return hurdles and provides for a competitive transport cost for Ovoot Project and Nuurstei Project coking coal into end markets
DYOR - Disclaimer: the above is not investment advice to buy , hold or sell AKM /AKMOA therefore seek registered financial professional advise as there are associated risks with investing
AKM Price at posting:
3.1¢ Sentiment: Buy Disclosure: Held
(20min delay)