Aspire Mining (ASX: AKM) has marked an important milestone in the development of the Erdenet to Ovoot Railway with the appointment of Snowy Mountains Engineering Corporation (SMEC) as its railway engineering partner.
SMEC has considerable rail experience throughout Asia, including Mongolia where they have completed the detailed design for the 225 kilometre coal haul railway for Hong Kong listed Mongolian Mining Corporation.
The global infrastructure engineering company has been operating for over 40 years and employs about 5,000 employees throughout their 55 offices worldwide.
David Paull, managing director of Aspire Mining, commented: "We have been working with SMEC for six months on addressing critical rail project risks and it makes sense, with their in country expertise and experience, for SMEC to become our rail engineering partner for what will be a large and important project for Mongolia."
SMEC has been contracted by Aspire Mining subsidiary Northern Railways to complete a full re-optimisation of the Erdenet to Ovoot rail alignment.
This will comprise site visits, risk and constraint analysis, permitting and Government approvals including a rail concession, engineering and design to allow for EPC tendering and a Bankable Feasibility Study.
The work has been broken up into phases with discrete decision points and performance milestones before the next phase of work commences.
The value of the work to be provided by SMEC is around $9.8 million in total to be expended in two stages over 12 months. Stage 2 is at the option of Northern Railways.
The cost will be funded from the $5 million Noble Group loan facility and cash resources.
Northern Railways also retains an option to appoint SMEC as EPC contract manager on behalf of Northern Railways.
Last month Aspire completed a Rail Pre-Feasibility Study Revision confirming that it could save US$200 million by taking a more direct route further to the south for its proposed Erdenet to Ovoot rail extension in Mongolia.
This reduces capital expenditure for the rail line to US$1.3 billion.
Importantly, further capital expenditure cost savings are possible from a de-rating of haulage capacity from 22 million tonnes per annum to an initial starting capacity of between 10 and 12 million tonnes per annum.
This reflects the Ovoot coal mine and nearby smaller mine requirements. Capacity increases can then be made as additional freight commitments arise
Optimisation of the eastern half of the alignment could also result in additional cost savings.
Aspire has the second largest coking coal reserve in Mongolia at Ovoot and the coal ranks among the highest quality coking coal in the world.
The company will continue to work on advancing the Erdenet to Ovoot railway by providing more engineering definition and progress towards a Bankable Feasibility Study.
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