Aspire Mining has entered into a Binding Term Sheet with the Noble Group which extends the due date for repayment of the US$5 million loan provided to Aspire in 2013 by 12 months to March 15, 2016. This is to be secured by Aspire’s 50% interest in the Ekhgoviin Chuluu Joint Venture (ECJV).
The agreement also includes Noble granting Aspire a 12-month option to acquire its 50% interest in the ECJV which currently owns a 60% interest, with the option to earn up to 90%, of the Nuurstei Coking Coal Project in northern Mongolia. The exercise price of the option comprises a cash component payable by Aspire to Noble of US$1 million plus a capped royalty on future production from Nuurstei. Noble has agreed to supply all marketing and logistics services to the Nuurstei project.
Aspire and Noble will look to fund a US$2 million exploration and development plan for Nuurstei in 2015 with the aim of establishing a JORC 2012 coal resource sufficient to support permitting and a development decision in early 2016. The Nuurstei project is within close proximity of a newly completed sealed road that will allow for the transport of Nuurstei coal to existing rail services at Erdenet.
The Nuurstei project would also be an early user of rail along the planned Erdenet-Ovoot-Arts Suuri Railway being promoted by Aspire’s rail subsidiary Northern Railways LLC.
Noble will provide marketing and logistics services for all production from Nuurstei as well as exclusive fuel supply for the Nuurstei project. Noble supplies multiple commodities direct to customers globally from Mongolia and in particular its supply chain network will enable the company to deliver coking coal from suppliers in Mongolia directly to end customers in China, resulting in greater pricing power.
Through 2015, the ECJV will continue to be active in applying for new exploration licences prospective for coking coal near existing or planned transport infrastructure in Mongolia and Noble will retain marketing, logistics and the right to supply fuel for any new projects acquired by the ECJV.
Noble will consider providing working capital funding support for the Nuurstei project subject to the project meeting Noble’s internal financing criteria.
Aspire’s managing director David Paull says, “This is an important transaction for Aspire as the Nuurstei project presents as a potential early production opportunity while we pursue the development of the Erdenet-Ovoot Railway to open up export opportunities for Ovoot and also add substantial value to the Nuurstei project. The Nuurstei Coking Coal Project will benefit greatly from leveraging Noble’s established marketing capability and logistics capacity and experience in Mongolia and China.”