Aspire secures $100m guarantee from major shareholder
Mongolia focussed coal developer, Aspire Mining, has received a show of support from its major shareholder, businessman Tserenpuntsag Tserendamba, who has committed to arrange a corporate guarantee of up to $100 million to support future debt or project financing for its Ovoot Early Development project, or “OEDP”.
This follows the proposed placement of more than 1.5 billion Aspire share priced at 2.1 cents each to Mr Tserenpuntsag to raise $33.5 million.
The placement will increase his stake in the company from 27.5% to 51%.
Mr Tserenpuntsag, a prominent Mongolian entrepreneur, has also confirmed his intention to maintain his 51% shareholding in the company through to the OEDP entering commercial coal production.
Chairman David Paull said: “Aspire appreciates this added level of clarity regarding Mr Tserenpuntsag’s intentions for Aspire and level of his support.”
“We are both aligned with the view that the best way to realise material increased value for all shareholders is to get into profitable production and this letter of intent from Mr Tserenpuntsag reinforces his commitment to work with the company and its shareholders to achieve this aim.”
The OEDP is a single open-pit mining operation that is expected to pump out annual earnings before interest, tax, depreciation and amortisation of $240 million from the production of 4 million tonnes a year of sought-after “fat” coking coal for delivery into China, according to the pre-feasibility study.
It will have an initial mine life over nine years and churn out an impressive pre-tax net present value of $820 million and internal rate of return of 43.7%, which is inclusive of all mine, logistics, waste pre-stripping and haul road construction capital costs, totalling $385 million.
The low strip ratio of 4.6 to 1 is expected to deliver exceptional margins of about $96 per tonne with payback expected in just two years.
There is also an extended case option, which could take the operation out to a mine life of 12.5 years through future cutbacks of the initial pit design.
Ovoot has a current ore reserve of 255 million tonnes, of which only 36.8 million tonnes will be carved out for the OEDP phase of mining production.
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