Although exploration is still in its early stages, a recent new coal seam discovery only 4km away from the existing Ovoot resource boosted Aspire’s confidence in the project.

Aspire managing director David Paull told ILN the company was preparing for an aggressive drilling program on the tenement in 2012.

“The discovery of the new area indicates that we are going to be very focused on Ovoot within the next 12-18 months,” he said.

“What this is about is building a case for a 15-20 year open pit mine plus a 20-year mine life after that of an underground mine.”

Paull said the company’s first priority was to expand Ovoot’s 330Mt resource so a feasibility study for the project could be finalised sometime in the second quarter of 2012.

Following this, Aspire will apply for a mining licence.

Located in the northern area of Mongolia, the Ovoot project is situated just 300km to the northwest of the Elegest coking coal province which has over one billion tonnes of coal reserves.

To date, Aspire has drilled approximately 20% of the 500 square kilometre basin.

Paull said Ovoot had the potential to produce 12Mt per annum of coking coal but it could only be realised with the development of a new rail line.

Currently, the distance from Ovoot to the nearest railhead is about 550km, which is why Aspire proposes a railway which would run from Ovoot through to the town of Erdenet.

Paull said the rail line would open up seaborne export opportunities for the company via Russian ports.

Aspire could potentially look at exporting its product to Japan, Korea, Taiwan and even India.

By teaming up with the nearby Burenhaan phosphate and Nuurstei coal projects, Paull believes they could fill a 20Mtpa line.

Railway

At present, the Mongolian government’s main priority is to build the Tavan Tolgoi rail line in the southern part of Mongolia but Paull is hoping the Mongolian rail ministry will consider Aspire’s proposed rail development.

He said he was confident the rail line would be developed because it would even out the country’s exporting destinations.

“Everything’s going to China and what they want to do is have a more balanced economic outlook,” he said.

“So having some exports going through Russia is a very attractive proposition for the Mongolian government.”

Paull said the development of the rail line was necessary not just for the country’s economy but for the people of Mongolia.

“It’s important that this infrastructure is built because it’s one of the few places where there are people,” he said.

“There’s also a burgeoning tourist industry that needs support.

“We do have really good local support for the railway, which is important and now we just need to translate that into government support,” he said.

Aspire has just initiated a pre-feasibility study into the rail connection from Ovoot to Erdenet, which will be completed by next year.

The company is also hoping to submit a rail application sometime in the first quarter of 2012.

While development for the 12Mtpa mine is estimated to take place in 2015, Aspire is currently planning a scoping study for a small-scale mine development as it waits for development of the rail line.

“It’s really a pilot exercise before we get to the real thing,” Paull said.

He said the small-scale mine at Ovoot could happen as early as next year.

Emerging Coal Basin

While Aspire has a lot of work ahead of it, including the development of sufficient infrastructure, Paull admits starting from scratch on a project comes with the territory of being in an emerging coal basin.

“The Bowen Basin has taken 60 years to get where it is today, while the Mongolian coking coal industry has only been around for four years,” Paull said.

He said one of the main advantages of developing coal in an emerging basin was low mining costs but he admitted the downfall of being in a new area was a new jurisdiction process.

“It’s a different jurisdiction and it’s a young jurisdiction, which means there are more negotiations,” he said.

“But the government’s known to be supportive of industry development, particularly foreign investment that’s not Chinese or Russian linked.”

With a handful of Australian companies exploring for coal in Mongolia, Paull said the success of current projects in the country is a strong indicator more coal companies will flock to the country.

“I think there are over a dozen Australian listed companies in Mongolia and there’s continuing exploration in the coal space which is encouraging more interest and more investment,” Paull said.

2012 is looking promising for Aspire and Paull said he was upbeat about progressing with its Ovoot project.

“I’m very excited about what this project might mean for us, I’d love to see what comes to surface,” he added.