Market cap: $51m at 2c/share
SOI: 2.52b (listed options AKMOA (exercise price 1.8c expire in Dec 2019)
Cash: $9.5m as at 31 March 2018, currently estimated cash: $8m
Debt: $3m
1) PROFILE
Aspire’s primary focus is on Mongolia, a resource rich country with a rapidly developing coal mining industry emerging as a key future supply source given Mongolia’s close geographical position to some of the largest coking coal consumers worldwide – China, Russia, Japan, and Korea.
The Company is a large coal tenement holder in the Orkhon-Selenge Coal Basin in northern Mongolia. Aspire owns a 100% interest in the large scale, world class Ovoot Coking Coal Project (Ovoot), the second largest coking coal project by reserves in Mongolia, a 90% interest in the Nuurstei Coking Coal Project (Nuurstei) and a 100% interest in the Myangan Coal Project.
Aspire’s flagship Ovoot project is host to 255 Mt JORC Coal Reserves and can sustain full scale production of up to 10 Mtpa of saleable coking coal over a 21 year life of mine. Ovoot is ready to head into a definitive feasibility study having completed two pre-feasibility studies, received a mining licence, and approval by the Mineral Resource Authority of Mongolia for its Mongolian Feasibility Study. Ovoot’s further development is dependent on the construction of the Erdenet – Ovoot railway to link Ovoot with Mongolia’s existing rail system.
The Company has recently purchased a 90% interest in the Nuurstei Coking Coal Project. Nuurstei has JORC Coal Resources of 4.7 Mt of Indicated and 8.1 Mt of inferred. The Company is currently looking at completing a Feasibility Study in 2018 based on a shallow open pit mine supplying a 1 Mtpa wash plant to provide washed hard coking coal to China and seaborne markets.
The Erdenet – Ovoot railway represents one section of a new rail corridor called the Northern Rail Corridor that links China to Russia through Mongolia. This is part of Mongolia’s national rail policy, China’s One Belt One Road Policy and Russia’s Eurasian Economic Development Policy. Northern Railways LLC (Northern Railways), is a Mongolian infrastructure company, owned 80% by Aspire and backed by a consortium including and subsidiaries of Fortune 500 listed China Gezhouba Group Corporation and China Railways Corporation and is currently progressing the development of the Erdenet – Ovoot section under a concession granted by the Government of Mongolia. China Gezhouba Group has undertaken to provide a bankable feasibility study for the Erdenet – Ovoot Railway by 31 March 2018.
2) NORTHERN RAILWAY -
Northern Railways is currently owned 80% by Aspire Mining Limited and 20% by the Noble Group
Northern Railways LLC (Northern Railways) is a Mongolian registered company, a special purpose investment vehicle established by Aspire Mining, which is responsible for the oversight of all aspects of pre-development, construction, and operation of the Erdenet to Ovoot railway.
Northern Railways is currently owned 80% by Aspire Mining Limited and 20% by the Noble Group. In October 2017 Northern Railways and Aspire entered into a binding Memorandum of Understanding with China Gezhouba Group Corporation (CGGC) a large Chinese state owned enterprise and one of the world’s largest construction companies. In the MOU CGGC agreed to complete a Definitive Feasibility Study for the Erdenet to Ovoot Railway by 31 March 2018. There was also agreement on a path for CGGC to acquire a 51% interest in Northern Railways through further investment in order for Northern Railways to complete conditions precedent relating to the Rail Concession Agreement.
The Erdenet to Ovoot Rail Corridor represents a section of the Mongolian Government planned “Northern Rail Corridor”, which extends the national rail network from Erdenet, to Aspire’s Ovoot Coking Coal Project and onto the Russian border at Arts Suuri. The Russian Government has further plans to then link the rail from Arts Suuri to the Trans-Siberian Railway at Kyzyl, thereby creating an international rail link connecting Russia, and northern Mongolia with China.
The Northern Railway will open up significant new opportunity for various industries, small business, the community and local economy in northern Mongolia, as well as providing a direct route to the Chinese market for Russian transit freight. It is estimated that the Northern Railway will reduce the distance travelled for miners in the Elegest Coking Coal field to Chinese markets and freight to/from Kyzl by 40%.
The Northern Railway forms part of a larger regional plan which sees the integration of Russia’s Eurasian Economic Policy planning, China’s Silk Road and Mongolia’s rail policy to create an international Economic Corridor to facilitate increased levels of trade between the three nations and the wider Asia-European economies.
Northern Railways initially partnered with both Noble Group and two subsidiaries of China Railways Corporation to progress the development of the Erdnet to Ovoot railway – China Railways 20 Bureau Group Corporation (CR20G) and China Railway First Design Survey and Design Institute (FSDI).
A 30 year concession was granted to Northern Railways in August 2015 by the Government of Mongolia to progress the development of the Erdenet to Ovoot railway. A consortium, made up of Aspire, CR20G and FSDI are supporting Northern Railways to progress the completion of necessary financing, specialist design and construction for the Erdenet to Ovoot railway. In February 2018 this Consortium was expanded to include CGGC.
In June 2016 the Presidents of China, Russia and Mongolia signed off on a Trilateral Programme to develop an Economic Corridor between the three countries. This programme includes the establishment of the Northern Rail Corridor connecting China with Russia through Mongolia. The Erdenet to Ovoot railway is specifically included in this ‘Northern Rail’ Economic Corridor, which places the Erdenet to Ovoot project as a priority funding project for the development banks and funds established to support the build of China’s One Belt Road Policy. This agreement has created significant value in Northern Rail LLC and Aspire, given the location of its rail and metallurgical coal assets.
3) ASPIRE AND NORTHERN RAILWAYS
CGGC, Aspire and Northern Railways Enter into Memorandum of Understanding to advance Erdenet to Ovoot Rail Project
• During the 8 to 12 April official visit of Mongolian Prime Minister Ukhnaa Khuretsukh to China, a number of memorandums and agreements were signed advancing railway, infrastructure and other bilateral trade and investment.
• China Gezhouba Group International Engineering Co Ltd (CGGC), Aspire and Aspire rail subsidiary, Northern Railways LLC (NR), have entered into a new Memorandum of Understanding regarding participation and investment in the Erdenet to Railway: o Having delivered the draft Erdenet to Ovoot Rail Feasibility Study (Rail Feasibility Study) in March, CGGC and NR have agreed to work quickly to finalise the Feasibility Study within May 2018.
Ovoots 144m capex, is tiny to unlock say 400-800m EBITDA.
Nuurstei 13m capex is minicule to unlock say 30m EBITDA, that unlocks Ovoot.
Courtesy to @stevenjd
Someone started aggressively buying via IB (likely to be Chinese) just about four weeks ago.
Coincidentally During the 8 to 12 April official visit of Mongolian Prime Minister Ukhnaa Khuretsukh to China, a number of memorandums and agreements were signed advancing railway, infrastructure and other bilateral trade and investment.
Net buy 158m shares between 17 April 2018 and 11 May 2018.
Coal stocks are usually not market darlings as they burnt investors in the past.
However, burst cycle eleminated many coal juniors, those are able to survive, should be doing well in the future. The hardest time is passed.
China's anti-pollution policies, and closing down small coal mines, help lifting coal price.
Premium coking coal likes high grade iron ore, which China is short of.
AKM's premium coking coal resources have already been defined, no more exploration costs; supported by three countries, is driving the projects to the production phase.
Obviously, for investors, is siginficantly low valuation to AKM's massive premium resource.
Relatively low risk with potentially high return, imo.
(20min delay)