Aspire Mining Ltd’s (ASX:AKM) rail subsidiary Northern Railways LLC has been granted an 18-month extension to complete conditions relating to the Erdenet to Ovoot rail concession in northern Mongolia.
The concession agreement amendment extends the date for completion of the conditions precedent from to February 20, 2020, from August 20, 2018.
READ: Aspire Mining feasibility study review reduces railway construction cost
This 547.7-kilometre railway will extend Mongolia’s network from Erdenet west to Ovoot where Aspire has coal properties, including the world-class Ovoot Coking Coal Project.
It will form the first part of the Northern Rail Corridor extending from Erdenet to Kyzyl in Russia.
Remaining conditions
While the recently completed rail feasibility study is an important milestone other important remaining conditions include:
Northern Railways is targeting the June quarter of 2019 to complete these conditions.
The amendment has been executed by parties to the agreement - the Government of Mongolia represented by its National Development Agency, Northern Railways and the Chinese participants.
These are China Gezhouba Group International Engineering Co Ltd, China Railway 20 Bureau Group Corporation and China Railway First Survey & Design Institute Group Co Ltd.
Translation of the rail feasibility study into Mongolian is underway.
Following a request from the Mongolian Government, modifications have been made to the railway design to ensure compliance with Mongolian Class II rail standards.
This will result in the line being capable of annually delivering up to 30 million tonnes and reflects an expectation of strong transit freight demand.
The change will result in a marginal increase in construction cost but this sits well within the 10% contingency range.
READ: Aspire Mining welcomes new Russia-Mongolia agreement lowering rail transit costs
While engineered to carry up to 30 million tonnes, the study has not assumed any benefit from transit freight volumes.
Aspire’s Ovoot project is the second largest coking coal project by reserves in Mongolia and is dependent on the construction of the first stage of the railway.
The company also has a 90% interest in the Nuurstei Coking Coal Project which would also benefit from the railway but can commence as a road-based operation.