Aspire Mining (ASX: AKM) has been granted a mining licence covering the 5,758 hectare Ovoot Coking Coal Project in Mongolia, with the certainty of tenure set to greatly assist the company as it moves closer to funding the project.
The mining licence covers both the planned open pit and the potential underground mining area to the northeast of the open pit.
Under existing Mongolian Minerals Law, the mining licence has a tenure of 30 years from date of grant with an option to extend for two additional 20 year periods.
David Paull, managing director, commented on the milestone achievement: "The Ovoot Coking Coal Project is one of the most important new coking coal projects in Mongolia and has the potential to significantly enhance economic development in Northern Mongolia.
"Achieving a mining licence is an important step along the path of financing mine development and associated road and rail infrastructure."
Importantly, Aspire is well funded to advance the development of Ovoot with nearly A$20 million cash at the end of the June quarter 2012.
Aspire continues to intersect coal outside of the existing Resource at Ovoot, which has the potential to increase the already large Reserve base.
Recent drilling testing for extensions to mineralisation demonstrates the potential for Aspire to extend the open pit further to the north.
Importantly, there is still plenty of room for Ovoot to grow into a Tier 1 Resource, with only around 20% of the Ovoot Basin explored by Aspire.
Although possessing a large coal reserve provides a high level of confidence.
The further exploration success now potentially brings the Ovoot Project open pit coal Resources and Reserves within around 1 kilometre of the underground Resources to the northeast.
Aspire has previously completed a Pre-Feasibility Study that has delivered positive parameters, including an internal rate of return of 43%.
The PFS confirms that Ovoot is financially robust and technically and commercially feasible based on an open pit Probable Coal Reserve of 178 million tonnes.
What drives the positive economics, in fact the keys to the project, are the LOM 82% average conversion rate of ROM tonnes to product together with a low LOM strip ratio of 7.6 bcm of waste per ROM tonne of coal including pre-strip.
The PFS assumes completion of the multi-user rail line extending the Trans-Mongolian railway at Erdenet through to Moron by 2016. A separate Rail Pre-Feasibility Study for this line has been approved by the Mongolian Rail Authority.
The first stage project would involve production of 6 million tonnes per annum of saleable coal delivered by 191 kilometres over sealed road to the new railhead at Moron before being transported to end markets from 2016.
The staged development will de-risk the production ramp up and enable the first stage operational cashflows to underpin a future Rail Spur Line connection from Ovoot to link up with the multi-user rail line at Moron.
The Rail Spur Line from Ovoot to Moron will facilitate the targeted full scale 12 million tonnes per annum coking coal operation.
Aspire received Ministerial approval in the June quarter of 2012 for the alignment of a sealed road from the Ovoot Project to the regional capital of Moron which would support project development, construction and initial coal haulage.
Work is currently being undertaken on various trucking based coal operations prior to accessing future rail infrastructure required for full development of the Ovoot Project.
Simply, Ovoot is an exceptional deposit that contains high grade coking coal with a 96-97% vitrinite content that identifies it as one of the highest value in-situ coal deposits in the country, and in the world.
With drilling and evaluation of Ovoot only 20% complete, Aspire is in the early stages of developing one of the world's largest undeveloped coal resources.
Aspire is fully funded for exploration and development work through to completion of the Feasibility Study that is due at the end of the year.
Proactive Investors is a market leader in the investment news space, providing ASX "Small and Mid-cap" company news, research reports, StockTube videos and One2One Investor Forums.