Rinehart jumps on the Mongolian bandwagon

AUSTRALIA’S wealthiest person Gina Rinehart is buying into the Mongolia coal growth story by acquiring stakes worth a total of $3 million in ASX-listed Guildford Coal and Aspire Mining.
Rinehart jumps on the Mongolian bandwagon Rinehart jumps on the Mongolian bandwagon Rinehart jumps on the Mongolian bandwagon Rinehart jumps on the Mongolian bandwagon Rinehart jumps on the Mongolian bandwagon

Billionaire and Hancock Coal chairman Gina Rinehart.

Lou Caruana

Rinehart, who expanded her fortune in September after landing a $US1.26 billion deal to offload stakes in her Galilee Basin thermal coal tenements in Queensland to Indian infrastructure group GVK, acquired the stakes in the junior companies over the last few months.

Guildford Coal’s 70%-owned Terra Energy unit is expected to produce coal in the first half of next year from its South Gobi deposit.

The company had also planned to float off some or all of Terra Energy next year but is now believed to be entertaining bids from large global coal companies and cashed up investors such as Rinehart. The company is also hoping to be re-rated once the Mongolian government gives it a mining licence.

“[The bids are] from global players and we’ve had a lot of interest,” Guildford Coal chairman Craig Ransley told Deal Journal Australia.

“They are being evaluated.”

Ransley said other junior miners had “talked a lot of talk, but they are hundreds or thousands of kilometres away from the [Chinese] border”

“We’re the only ones that are close to actually producing, so I expect that interest will probably ramp up once the mining licenses are granted,” he said.

“We’ll be the only junior in Mongolia that will actually be mining.”

Guildford’s South Gobi project area consists of five exploration licences located in the South Gobi province (Umnigovi Aimag) of Mongolia.

The licences are about 1000km southwest of the Mongolian capital of Ulaanbaatar and approximately 60km from the Chinese border station of Ceke, where coal from Mongolia is transported through to China.

Guildford recently confirmed a maiden JORC-compliant resource of 221 million tonnes of thermal coal for the EL12929X deposit at its Middle Gobi project, increasing the company’s confidence in the tenement.

The maiden resource for the project consisted of 32Mt indicated and 189Mt inferred.

The Middle Gobi update follows a recently announced maiden JORC resource upgrade of 63.1Mt at its South Gobi project, bringing the total JORC-compliant resource for its Mongolian projects to 248Mt of coking and thermal coal.

Earlier this month Aspire Mining inked a logistics deal with its major shareholder Noble Group to deliver coking coal from its flagship Ovoot coal project in Mongolia to north Asian, Chinese and major seaborne coal markets.

As part of the supply chain logistics agreement, Noble will identify strategic partners to assist with access to rail and port and facilitate with funding for the development of the Ovoot coking coal project, including the construction of the rail link from Ovoot to Erdenet.

Under the agreement, Noble will market at least 50% of the first 5Mt of saleable coking coal produced from Ovoot, entitling the company to purchase up to 33% of its marketing allocation as principal.

In return, Aspire will pay a marketing fee and separate logistics management fees to Noble on normal commercial terms.

Noble currently has an 8.3% stake in Aspire, while its major shareholder SouthGobi Resources has a 19.9% shareholding in the company.

Aspire is considering splitting the development of Ovoot into two stages, with the first stage a small scale 0.5-1 million tonne per annum starter open pit.

Stage two development would lift production to as much as 12Mtpa of coking coal.