Aspire Mining Limited (ASX:AKM) is an Australian metallurgical coal and infrastructure company exploring and developing its world class metallurgical coal assets and related rail & road infrastructure projects in Mongolia. It aims to deliver long-term returns to shareholders and contribute towards social and economic betterment of the surrounding local communities.
Aspire Mining’s Project Portfolio –
- Ovoot Coking Coal Project (100%-owned)
- Nuurstei Coking Coal Project (90%-owned)
The company is presently focussed on advancing development of the large scale Ovoot deposit with a current Probable Reserve of 255Mt (JORC 2012 compliant). The work is currently deferred at the Nuurstei Project, which is smaller compared to Ovoot but is a potentially attractive addition to the product mix of Aspire Mining.
Aspire Mining is pursuing early production of washed coking coal under the Ovoot Early Development Plan (OEDP), which is first-stage of the Ovoot Project. The company has so far borne an expenditure of USD 50 million on this project including completion of a Pre-Feasibility Study (PFS) in February 2019, in collaboration with FMS LLC.
With the operational and board approvals being finalised, a truck and rail operation is being developed under the OEDP to deliver 4Mtpa to end markets within 12 to 15 months. With the completion of Erdenet-to-Ovoot Railway link, that is being supervised by Aspire Mining’s subsidiary, Northern Railways LLC, the company would expand the operations on a larger level.
The fully-funded Definitive Feasibility Study (DFS) is underway for OEDP and expected to be completed by May 2020 due to pending approvals for the Ovoot Mine and the Ovoot-to-Erdenet Road.
In parallel, Aspire Mining was also actively progressing with project financing discussions with strong interest from significant shareholder Mr Tserenpuntsag. In addition, few specialist financiers had also expressed preliminary interest to offer debt funding for the mine, wash plant and/or road.
Placement to Major Shareholder Mr. Tserenpuntsag
On 6 September 2019, Aspire Mining announced to have executed a Share Subscription Deed with its major shareholder Mr. Tserenpuntsag Tserendamba, to raise around $33.5 million (before costs) to expedite the delivery of the OEDP. Following the completion of the placement, Mr. Tserenpuntsag’s ownership in Aspire Mining would largely increase from 27.5% to 51.0% (on an undiluted basis). The placement is subject to IER and Shareholders voting in favour.
Capital raising includes issue of 1,595,900,000 ordinary fully paid shares at a price of $0.021 per Aspire Mining share. The issue price represents a significant premium of 40% to the closing price of $0.015 on 4 September 2019 and 27.7% to the 30-day (until 4 September 2019) VWAP of $0.01645 per share.
The funds raised have been indicated to be directed towards meeting the costs related to the early mine construction activities and for general working capital purposes.
Mr. Tserenpuntsag also confirmed that he would provide assistance of up to $100 million in debt and/ or project financing related to the OEDP. Mr. Tserenpuntsag was also a cornerstone investor in the company’s $15-million financing package closed last year in December 2018.
Aspire Mining is repositioning itself as a Mongolian led development company as it moves ahead with obtaining community approvals in parallel with the OEDP DFS and associated road engineering study.
Most importantly, post Placement, Aspire Mining would be standing in the most robust financial position with an estimated cash backing of over AUD 40.0 million (based on cash in hand of AUD 10.2 million as at 30 August 2019) and zero borrowings, and the company is on a path of transforming into a key pure play coking coal producer positioned in the 2nd quartile of the global cost curve.
Leadership Changes and Share consolidation
In conjunction with the placement, Aspire Mining also informed that its Board and key executive team would be restructured to reflect the company’s strategic repositioning as a Mongolian majority-owned and led development company.
The key changes announced by the company include –
- Reduction of the Board size to 5 members including resignation of Executive Director Mr. Gan-Ochir Zunduisuren and Non-Executive Director Mr. Alex Passmore, post which the Board will have three Non-Aligned Directors- Ms. Hannah Badenach, Mr. Neil Lithgow, and Mr. David Paull; and the nominees of Mr Achit-Erdene Darambazar, Mr Tserenpuntsag and Mr. Boldbaatar Bat-Amgalan. Also, Mr. Zunduisuren would continue with the provision of his support in a senior management technical role at AKM;
- After the placement settlement, Executive Chairman Mr. David Paull would transition to Non-Executive Chairman over a span of four months;
- MD -elect Mr. Achit-Erdene Darambazar, based in Ulaanbaatar, would be leading the new Executive team, with assistance from Mr. Paull related to corporate and funding issues through the transition period.
The company has also proposed a 10 to 1 share consolidation to reduce the its outstanding shares post the completion of the Placement.
Aspire Mining Limited’s market cap stands at around $ 39.92 million and the AKM stock settled the day’s trading on 18 October 2019 at $ 0.013.
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