Why Aspire Mining Ltd Jumped Higher Today

At the time of writing, shares of Aspire Mining Ltd [ASX:AKM] are up by 25%, now trading for 2.5 cents per share. Aspire Mining owns coal tenements in Mongolia’s Northern provinces. It’s focused on identifying, exploring and developing quality coking coal assets.

Why did Aspire Mining Ltd shares do this?

Aspire Mining announced an early development plan for its Ovoot coking coal project (Ovoot) and related funding commitments.

What now for Aspire Mining Ltd?

The company is targeting production of washed coking coal, via a truck and rail operation within 12 to 15 months of all approvals granted. Following the financing agreement today, Aspire will be debt free and hold around $11.7 million in cash.

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Aspire Mining elaborated on the Ovoot’s early development plan (OEDP):

‘The OEDP involves the early works construction of a new private haul road to follow the existing planned rail path from Ovoot to the existing rail head at Erdenet for final rail transportation to international end customers. Identified in the Erdenet to Ovoot Rail Feasibility Study, this will be a temporary haul road (and future rail service road) designed to preserve local water courses and minimise dust emissions.

‘The Company has identified a low ash high yielding open pit section of the Ovoot orebody which is expected to be well suited to form the basis of the starter pit for the OEDP. The designed production rate at Ovoot under the OEDP will be matched to forecast logistics capacities which are limited by existing Mongolian rail capacity and expected to be in the range of 3 to 4Mtpa from work undertaken during the Nuurstei Feasibility Study. The OEDP will be designed around achieving early production from Ovoot while the Company’s rail infrastructure subsidiary continues to work towards establishing the Erdenet to Ovoot rail connection.

‘Delivery of the road-based OEDP complements the development of the Erdenet to Ovoot Railway (Northern Rail Line). Much of the permitting and approvals required for the road path are also applicable for the future rail development whilst early production and cashflow will materially de-risk the project. Once commissioned, the Northern Rail Line is expected to support up to 10Mtpa of high quality washed coking coal from Ovoot on a low cost, long term basis. The OEDP will not cause any delay to rail development.’

The future sounds exciting for Aspire Mining shareholders. That said, caution is suggested at this time. I have analysed resource companies for 12 years and the amount of times that I’ve read ‘potential early production’ will shock you. Often a company has a supposed ‘bulletproof’ plan to make this happen, and then slacks on the execution for many reasons, such as permitting or lack of adequate funding.

Mining is an extremely tough business and can prove brutal for shareholders.

The bottom line: Aspire Mining offers plenty of share price potential in my view ― it controls a world-class coal project. That said, lots of work remains for the company. It needs to complete feasibility studies and obtain the permits required to move forward, which could take years. Of course, while we doubt it, we could be wrong ― the process might turn out to be straightforward. Such an outcome would prove favourable for shareholders in the medium to long term.

Jason Stevenson,
Resources Analyst, Markets & Money

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Jason Stevenson is Markets & Money’s resource analyst. He shares over a decade’s worth of investing and trading experience across resource stocks and commodity futures and options. He originally studied accounting and finance at Curtin University, where he was awarded a first-class honours degree. His professional background stems across high-net-worth, top tier accounting (corporate finance, tax and auditing), and sell-side equities research. Before joining the team at Markets and Money, Jason worked at boutique firms which advised fund managers and high-net-worth clients on where to invest. Whether it’s gold, crude oil, copper or an obscure metal like vanadium, you can rely on an in-depth analysis in Markets and Money. Jason also brings you extensive macro, political and geopolitical analysis from around the world. He leaves no stone unturned when it comes to telling the truth. Jason is also the lead analyst of Gold Stock Trader, a premium service for investors serious about precious metal stocks. Websites and financial e-letters Jason writes for:

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