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ASX listed Aspire Mining Limited’s (ASX:AKM) current market value is now supported by the cash it holds. The market cap of AKM is A$44million at the closing value of A$0.087 per share as on 28 Feb 2019. Where, as of 31 December 2019 the Company had A$42.2 million cash on its book with no borrowing. This essentially means that the current investor would be getting the Company’s assets such as its Ovoot Development Project for free, a classic example of a “cash bargain”. A concept popularised by Benjamin Graham- the father of value investing.
Investors stand to benefit as the market currently is not valuing the growth potential of the Company nor the inground value of the world class Ovoot development Project.
Furthermore, recently Mr Tserenpuntsag a significant investor in the Company invested an additional A$33.5 million via share placement at a price of A$21 cents and A$2.75 million through option exercise at A$18 cents, more than double the present trading value.
Interested in Coking Coal Market? Please Click Here to Read More
Let us now gauge through the fundamentals of the “Ben-Graham” for stock AKM to comprehend the significance of the Company.
OEDP – Funding Process Underway
Ovoot Coking Coal Project in Mongolia is wholly owned by Aspire Mining which is currently working toward approvals and development of Ovoot Early Development Project (OEDP). OEDP include the development of Ovoot open pit project and trucking of up to 4Mtpa of washed coking coal to customers in China and Russia via 560-kilometre special-purpose road from Murun to Erdenet rail terminal and then from rail to the end market.
Good Read: Aspire Mining’s Progress on Rail And Road Links For Ovoot Early Development Plan
Ovoot Coking Coal Project – Overview of Expenses and Funding
Upfront Capex of Project
The OEDP development has a price tag of approximately US$94million- for waste removal (US$31million), on-site and other on-site and Offsite terminals and blending facility (US$26million), and 5Mtpa coal handling and preparation plant (US$37million). Further, around US$165million capital expenditure is anticipated for road construction to deliver the coking coal via truck to the railway facility at Erdenet.
LOM Operation Expenses
The 12.5 years life of mine will see total coal mined of around 53.8Mt. The annual average operating cost is forecast to be ~US$76/tonne to the China border.
The Company reported net present value pre-tax of US$878 million in November 2019 through its updated OEDP Pre-Feasibility Study (PFS) report revealing 49.4% of pre-tax IRR and 26 months of payback.
Also, it is worth mentioning that the monthly return of stock was around 8.3% in November 2019.
To Know More About OEDP Extended PFS, Please Click: Aspire Mining Announces Further Updates to the Re-Stated OEDP PFS Extended Case; Stock up 16.7%
Funding Option
In the milieu of the continuous funding plan, the Company with the approval from shareholders completed the Placement of A$33.5million, i.e. 1,595.9 million shares issued at A$21 cents each to Mr Tserenpuntsag. Further with the separate exercise of 15.3 million options at A$18 cents per share worth A$2.75 million secured Mr Tserenpuntsag a 52.5% shareholding in the Company.
Also, Mr Tserenpuntsag has shown interest in supporting OEDP future funding in his Letter of Intent (LOI). His commitments include the corporate guarantee of up to A$100 million to support future debt and about half of the equity financing in connection with the OEDP. Also, he intended to maintain the shareholding in the Aspire via providing half of required OEDP equity funding going forward on the same basis as that offered to all other Aspire shareholders.
Aspire Mining – Way Ahead
The Company has over the years established itself and the Ovoot Project as an attractive investment proposition in Mongolia to a range of policy, multi-lateral and private project debt providers. Now with the support of Mr Tserenpuntsag additional funding options are available.
Presently, the Aspire is moving ahead with OEDP Definitive Environmental Impact Assessment (DEIA) which is being advanced following all ten World Bank's International Finance Corporation's "Equator Principles" for responsible and sustainable resource developments. This will satisfy funding conditions from international commercial and multi-lateral banks.
For the same, AKM is looking forward to DEIA approval which will aid the commencement of site works and the completion of technical studies for the Definitive Feasibility Study (DFS). The Company anticipates DEIA completion by June 2020 Quarter.
Hence permitting and pending approvals are quintessential for reporting a full funding plan for the market, assisting the advancement of the project.
Stock Price Information
The stock closed at A$0.087 on 28 February 2020. Its 52 weeks high and 52 weeks low stand at A$0.3 and A$0.087, respectively.
