Aspire changes strategy for Ovoot development

ASPIRE Mining’s new development and funding plan for its Ovoot coking coal project in Mongolia will see capital expenditure for it cut from $US459 million to $144 million.
Aspire changes strategy for Ovoot development Aspire changes strategy for Ovoot development Aspire changes strategy for Ovoot development Aspire changes strategy for Ovoot development Aspire changes strategy for Ovoot development

The Ovoot coking coal project

Staff Reporter

Aspire said it was the result of a fundamental shift in Aspire’s development strategy, with the company switching from an owner-operator model to a strategy that relied on contractors to be used where possible.

The company’s December prefeasibility study was based on an owner-operator model and assumed a two-stage development plan – whereby stage one would initially produce up to 6Mtpa of saleable coal from 2016, and stage 2 would ramp up production to 12Mtpa from 2018.

The capital required for stage one of this model’s necessary mine infrastructure and washing plants was initially estimated at $459 million plus contingencies, with an additional $264 million for the mining fleet.

The new plan, based on internal company calculations, drops this spend to $144 million.

“The ODP is an appropriate response to find a capital-efficient path to development,” Aspire managing director David Paull said.

“This lower capital spend, when combined with the potential sources of capital identified to fund the ODP, removes mine financing risk and will provide confidence to future investors in Northern Railways that the Ovoot mine will be operational when required.”

The plan accounts for mine pre-strip, mobilization, site infrastructure, a coal-handling and preparation plan and other buildings, along with general working capital and a $14 million contingency.

Aspire said it relied on extensive use of contractors to supply mining, camp, aviation and communication services, and construction of a railway from Erdenet to the mine site in one phase with completion by 2017.

“This alleviates the need to build a sealed coal haul road and reduces the capital expenditure estimate by $98 million,” Aspire said.

Aspire will use “off-the-shelf” modular washplants that cater for 5Mtpa production. Additional capital investment in wash plant capacity and onsite materials-handling capabilities will be added at a later stage to lift production to as much as 12Mtpa as the market requires.

Development of the Ovoot Project will take about 12 months and be timed to meet the commissioning of the Erdenet-Ovoot Railway in 2017, with mine construction anticipated to start in December 2015.

The rail line is being progressed by Aspire’s wholly owned subsidiary, Northern Railways.

Aspire said it was in preliminary discussions with two large international mining contractors regarding a five-year mining contract for the movement of coal and waste.

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