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

Highlights

• Aspire Mining has wrapped up Stage 2 of the FEED study for CHPP at its Ovoot Coking Coal Project.
• The study indicates that the plant could function at 2.5Mtpa for a minimum lifespan of 20 years.
• The projected capital cost for the plant construction is nearly US$77 million, while the operating cost is estimated to be US$2.39 per ROM tonne.

Mongolia-focused metallurgical coal player Aspire Mining Limited (ASX:AKM) has hit a major milestone with the completion of a major study concerning its flagship Ovoot Coking Coal Project (OCCP).

The Company has announced the completion of Stage 2 of the Front-End Engineering Design (FEED) study for the Coal Handling and Preparation Plant (CHPP) infrastructure.

Related read: Aspire Mining (ASX:AKM) ends March quarter with major strides at Ovoot project

Overview of CHPP infrastructure FEED study

Aspire has received the final report outlining the design and cost estimate from its consultant Sedgman Pty Ltd, which carried out the FEED study. This is a critical step in the Ovoot project development as a CHPP at the project site will play a key role in ensuring consistent delivery of high-quality coking coal to the market.

Stage 1 of the FEED study was completed in July 2021. An additional Stage 1b program was carried out to validate and optimise costs for the chosen combination of equipment and infrastructure layout.

Stage 2, drawn from conclusions reached in Stages 1 and 1b, refined and optimised the plant layout and design drawings to support the estimation of capital and operating costs with an accuracy of ±15%.  

Related read: Eye on ESG, Aspire Mining (ASX:AKM) vows to plant 10M trees in Mongolia

Key outcomes from Stage 2 of the FEED Study

The concept presented in this FEED Study represents a significantly more sophisticated processing and materials handling solution than that contemplated in the March 2019 Pre-Feasibility Study, as highlighted by the Company.

The FEED study outcomes have indicated that the CHPP design can wash 2.1 Mt of a run of mine (ROM) coal feed annually at a baseline forecast of 6,000 operating hours in a year.

Also, Sedgman’s report highlighted that proper maintenance and good operating practices could increase the operating hours of the plant to more than 7,200 hours annually, allowing the plant to treat 2.5Mt of raw coal with a minimum lifespan of 20 years.

Layout of material handling plant (Image source: Company update, 19 May 2022)

The total capital cost of the CHPP infrastructure is projected at US$77.0 million. The estimate includes the assumed EPC contract margin but excludes the project and owner contingency allowances. A Provisional Sum of US$5.2 million for Aspire is also included for the direct supply of the coal storage building.

The report estimates a 15-month construction timeframe, with a 6-month cushion for detailed engineering. Up to 260 workers will be required during the peak construction phase. 

Stage 2 capital cost estimates are significantly higher than the previous estimate of US$36.8 million in the 2019 Pre-Feasibility Study. Factors that have been attributed for higher estimates are changes in macroeconomic conditions and the design scope.

Related read: Aspire Mining’s (ASX:AKM) Ovoot Project gathers steam with recent developments in Mongolia

Key outcomes of the study (Data source: Company update, 20 May 2022)

The report also provided an estimate for the unit operating cash cost. For estimation purposes, Aspire provided inputs for locally sourced labour and consumables, while Sedgman provided inputs regarding parts, materials and capital provisions. Based on these, the unit operating cash cost for the CHPP is estimated to be around US$2.39 per ROM tonne when the plant is operating at 2.5Mtpa throughput.

Related read: Aspire Mining Charts out Ovoot Development with sustainability commitments

Aspire continues to liaise with the ministry for the review and approval of its Detailed Environmental Impact Assessment (DEIA), which will support completion of the Definitive Feasibility Study of the Ovoot Project.  

AKM shares were trading at AU$0.088 apiece on the ASX during the early hours of trade on 19 May 2022.