(EnergyAsia, June 7 2012, Thursday) —  Australia-listed Aspire Mining Limited said a pre-feasibility study into its proposed Ovoot coking coal project in northern Mongolia has found it to be viable and worthy of a two-stage execution costing a total of A$1.275 billion with production start-up from 2016. (US$1=A$1.03).

According to the study by Xstract Mining Consultants Pty Ltd, the first stage A$565-million investment could enable the mine to start producing six million tonnes of coal from 2016. This will be followed by a further investment of A$710 million to raise production to 12 million tonnes a year from 2018.

Aspire said the study has confirmed that its wholly owned Ovoot project, which sits on 178 million tonnes of probable coal reserves, is “financially robust and technically and commercially feasible.”

The study positively ascertained the economics of a proposed large open pit mine delivering up to 15 million tonnes a year (t/y) of raw coal to coal-handling and preparation plants (CHPP) over a 15-year life span, producing 153 million tonnes of high quality coking coal.

Aspire said it intends to further upgrade the Ovoot basin resource through exploration and infill drilling, having explored just 20% of its reserves. The company has undertaken an expanded exploration drilling programme which will include near surface resource extensions and regional drilling.

Aspire also plans to complete quality analysis and work to progress the development of key infrastructure including access to rail facilities which is required to connect Ovoot to the trans-Mongolian Railway and through that to the global steel industry.

It said the two-stage development would de-risk the production ramp up and enable the Stage 1 operational cash-flows to underpin a future rail to link up Ovoot to the multi-user rail line at Moron that will enable it to deliver 12 million t/y of coking coal.

Aspire said: “Ovoot will generate very substantial cashflows based on its competitive average operating cost of US$118 per tonne. Aspire assumes its coking coal will be sold on a 50/50 basis FOB at Russian Far East Ports and at the Chinese border. Using long term applicable coking coal price estimates of US$200 a tonne, a life-of-mine EBITDA of US$68 per tonne is achieved.”

Aspire managing director David Paull said the study underpins the company’s vision of developing a large scale coking coal mine and associated rail infrastructure in Ovoot which holds the largest coal deposit in northern Mongolia.

He said: “Within a relatively short time period, Aspire has defined a globally significant coal project capable of producing high quality coking coal to meet long term regional consumption requirements. The study results validate our progress to date, but also identify significant operational optimisation and project upside.”

Aspire, which secured a licence to explore the Ovoot project in 2008, was recently registered by the Mongolian Resource Authority. Apart from Ovoot, the company has stakes in three Mongolian coal deposits including Nuramt (100%), Jilchigbulag (100%) and Zavkhan (70%).