A new railway route to connect Erdenet and Murun cities to Ovoot Project in Khuvsgul aimag
The Cabinet of Ministers' regular meeting took place on July 04, 2012, where below issues have been discussed and resolved accordingly.
Firstly, at the meeting the Cabinet was introduced with the structure plan for extending the Trans-Mongolian railway system
from Erdenet (Orkhon aimag) to Murun city (Khuvsgul aimag) and then to reach the Ovoot Project which is located in the territory of Khuvsgul aimag, where it has been resolved to formulate the initiation on executing the construction work of the railway through the concession agreement and submit it to affiliated officials of the Government. Approximately 2.2 billion USD is needed for constructing the new railroad.
According to the plan, the new railroad will go from Ovoot coal mine in Tsetserleg sum of Khuvsgul aimag
through the territories of Murun, Tsagaan-Uul, Burentogtokh, Khatgal, Tosontsengel, Tumurbulag, Rashaant, Ikh-Uul and Tarialan sums of Khuvsgul aimag, Khutag-Undur and Bugat sums of Bulgan aimag
and Bayan-Undur sum of Orkhon aimag
respectively with the last destination of Erdenet city of Orkhon aimag. The new railroad will transport
13.5 million tons of coal from Ovoot to Murun, and 22.2 million tons of coal from Murun to Erdenet per year.
Secondly, at the meeting the Cabinet was introduced with the evaluation on the tender to grant concession for the “Thermal Power Station-V” project. The Cabinet laid duties upon the State Property Committee to hurriedly start negotiations on reducing the tariffs, minimizing the cost of the project, heightening the standard requirements for equipments and on terms of contract with the tender participants, who have received the highest evaluation and who is offering the best conditions.
Ovoot Coking Coal Project
The Ovoot Coking Coal Project is developed by Aspire Mining Limited
(Australia). Aspire’s wholly owned Ovoot Coking Coal Project (Ovoot Project) comprises of three contiguous exploration licences which span across over 500 square kilometres and is made up of the western area which includes the JORC Compliant Coal Resource and Coal Reserve area, the new coal discovery area, and the Khurimt and Zuun Del prospects. Together, the entire Ovoot Project covers the majority of a large interpreted basin and the Company targets production by 2012. The other two projects are also being explored. The Company’s directors own 38% of the Company, SouthGobi Resources 19.9%, Mongolian Vendors 14.1% and 27.6% is held by other shareholders, in the fully diluted basis.
A Pre-Feasibility Study for the Ovoot Project (“Ovoot PFS”) was completed in May 2012 which confirmed the technical and commercial viability of a large scale open pit mining operation at the Ovoot Project. For the purposes of the Ovoot PFS it was assumed that 50% of Ovoot coking coal will be sold at the Chinese border, and 50% through Far East Russian ports, by accessing the Russian rail system.