Following a review of the prefeasibility study (PFS) of its Ovoot coking coal project, Aspire Mining believes it could be one of the lowest-cost potential sources of coal bound for China. The PFS review confirms the project’s economics, with a net present value of $1.7 billion and a life-of-mine net cash surplus, after taxes and capital of $8.3 billion, based on a medium-term average coking coal price of $200/t.
The revision was based on a large openpit mine delivering up to 14 million tons a year, and a small underground mine delivering some 0.75 million tons a year, over a 20-year life-of-mine. Life-of-mine costs, excluding gate costs, were currently estimated at A$36/t of coking coal, with free-on-rail cost into China forecast at A$91/t for the first five years of full production.
The review included a recently announced increase in the probable coal reserves at Ovoot, making it the second-largest coking coal deposit in Mongolia, by reserves. Aspire has identified an initial capital cost of $723 million to establish a coal handling plant, a wash plant, a mobile fleet, waste pre-stripping, a coal haulage road and all the necessary support infrastructure to produce six-million tons a year of saleable coking coal. A further $482 million, along with contingencies, would be required to increase the project’s capacity to mine and process up to 14 million tons a year of coal, and to produce up to 12 million tons a year of product. The project expects to fund the expansion from the initial six-million tons a year production rate to the full 12-million tons a year, along with all future capital requirements, from internal cash flow and project debt.