Aspire Mining secures extension to US$5M loan from Noble Group
Aspire Mining (ASX:AKM) has secured a 12 month extension to a US$5 million loan from Noble Group (SGX:N21) and has also agreed to an option to acquire Noble’s 50% interest in the Ekhgoviin Chuluu Joint Venture.
The ECJV currently owns a 60% interest in the Nuurstei Coking Coal Project in northern Mongolia with an option to earn up to 90%.
Aspire has also granted Noble additional marketing rights over coal sold from the Ovoot Coking Coal Project and options over Aspire shares with a two year expiry to enable Noble to maintain a diluted 13.9% interest in Aspire in the event of additional capital being raised within the next 12 months.
Noble will supply fuel, marketing and supply chain services for the Nuurstei Coking Coal Project supplying coal directly to end users.
It will also consider providing working capital funding support for the Nuurstei project subject to the project meeting Noble’s internal financing criteria.
Both companies have also committed to accelerating future development of the Nuurstei project.
“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,” managing director David Paull said.
“The Nuurstei Coking Coal Project will benefit greatly from leveraging Noble’s established marketing capability and logistics capacity and experience in Mongolia and China.”
Noble Term Sheet
Under the binding term sheet, Noble has extended the due date for repayment of the US$5 million loan by 12 months to 15th March 2016.
This will be secured by Aspire’s 50% interest in the ECJV.
The loan was provided to assist with pre-development expenditures for the Erdenet-Ovoot railway.
Noble has also granted Aspire a 12 month option expiring on 15 March 2016 to acquire Noble’s 50% interest in the ECJV.
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.
Adding to the interest, Noble has agreed to supply all of the marketing and logistics services to the Nuurstei project and increase scope of the coal marketing services to be provided to Aspire’s wholly owned Ovoot Coking Coal Project to 40% of its production.
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.
Nuurstei Coking Coal 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.
Nuurstei project is located within close proximity of a newly completed sealed road that will allow for the transport of Nuurstei coal to existing rail services at Erdenet.
It 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.
Through 2015, the ECJV will continue to be active in applying for new exploration licenses prospective for coking coal near existing or planned transport infrastructure in Mongolia.
Noble will retain marketing, logistics and the right to supply fuel for any new projects acquired by the ECJV. It may also consider providing working capital funding support for the Nuurstei project subject to the project meeting Noble’s internal financing criteria.
Aspire has also agreed to provide Noble with options to subscribe for additional shares in the company as is required to maintain Noble’s current 13.9% shareholding interest in Aspire on a diluted basis in the event that additional capital is raised in the Company during the next 12 months.
Erdenet to Ovoot railway
Aspire and its subsidiary Northern Railways, in which Noble has an option to acquire 10%, continue to make progress in developing a technical, environmental and funding case to support an application for a Rail Concession.
It is expected that the concession for the Erdenet – Ovoot railway will be considered in the next three months.
The 547 kilometre Erdenet-Ovoot rail line is a key requirement to unlock the value of the Ovoot Coking Coal Project and future earnings from mining and production from the project for Aspire.
Aspire Mining now has more time to progress development of the key Erdenet-Ovoot railway after securing a 12 month extension to a US$5 million loan from Noble Group.
It will also benefit from Noble leveraging its established marketing capability and logistics capacity for the Nuurstei project and increasing the scope of coal marketing services to the Ovoot project to 40% of its production.
News flow ahead includes progress in discussions with potential funding partners as well as further advances towards securing the Rail Concession.