Aspire Mining (ASX:AKM) wraps up Erdenet Rail Terminal Stage 2 FEED Study - Kalkine Media

Highlights

• O2 Mining Limited has finished Stage 2 FEED Study on the Erdenet Rail Terminal.
• This is the next step toward sourcing the Ovoot coking coal to the market.
• The FEED Study indicates a capital cost of US$17.7 million for the construction of the rail terminal.

Aspire Mining Limited (ASX:AKM) has announced the completion of Stage 2 of the Front End Engineering Design (FEED) study for the Erdenet Rail Terminal infrastructure. A formal report has been released, including the design and cost estimates.

Aspire operates Ovoot Coking Coal Project (OCCP) in Mongolia. The company plans to transport washed coal from the mine to Erdenet Rail Terminal by trucking the coal. From Erdenet, the coal will be further transported to Northern China in rail containers.

Related read: Aspire Mining (ASX:AKM) unlocking high-grade potential of Ovoot coking coal project

The total distance from the mine to market will be around ~1500-1600km, and one-third of the journey will be undertaken by trucks. Since the majority of the route will be covered using train, it will lower the shipping cost significantly.

FEED Study Overview

Last year, Aspire appointed O2 Mining Limited to carry out the FEED study for the Erdenet Rail Terminal. The study was completed in two stages; Stage 1 was completed in July 2021. Stage 1 was focused on a trade-off study, evaluating various concepts and technologies for transloading washed coal from road trucks to rail wagons.

Stage 2 was built upon the learnings and outcomes from Stage 1. The Stage 2 report includes refining the findings of Stage 1 in terms of designing and estimating the most appropriate concepts and technologies identified.

Data source: Company update, 17 June 2022

Related read: Aspire Mining (ASX:AKM) completes CHPP infrastructure FEED study for Ovoot coking coal project

The Erdenet Rail Terminal infrastructure is intended to be built next to the Erdenet-Salkhit railway line, which connects to the Trans Mongolian Railway in Salkhit. The trackwork infrastructure required to connect to this line is not included in the FEED study design or cost estimates.

The capital and operating cost estimates were prepared in accordance with the Association for the Advancement of Cost Engineering's (AACE) Class III estimate requirements. The estimates are considered accurate to -10 to +25%, as at the end of March 2022. The facility's overall capital cost is expected to be around US$17.7 million, of which US$2.3 million will be incurred by EPC (Engineering Procurement & Construction) contract margin and overhead.

Conceptual design of Erdenet Rail Terminal (Image source: Company update, 17 June 2022)

An estimated total time of 15 months is expected to take for the completion of the EPC work. On-the-ground construction and commissioning work is expected to take around seven months whereas pre-construction activities (such as detailed design, obtaining construction permits and regulatory approvals, and equipment procurement) is likely to take eight months.  Around 170 workers are expected to be employed during the on-ground construction works.

Related read: Why Aspire Mining’s (ASX:AKM) Ovoot Coking Coal Project deserves attention?

The terminal will be operating round the clock, throughout the year and will require a total operational workforce of roughly 80 full-time equivalent workers, divided into four panels working in 12-hour shifts as per the Mongolian labour laws.

The company estimates an operating cost of US$1.07 per tonne handled from road truck to rail wagon at maximum initial CHPP output.

AKM shares are trading at AU$0.087 apiece on the ASX with a market cap of AU$45.68 million, as of 17 June 2022.