Aspire Mining has 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 according to the news released via companies web-site today. 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 10Mtpa and 12Mtpa. 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.
Potential operating costs savings of $50 million per annum have also been identified. This is due to the redefining of the rail path, shorter total kilometres along more agreeable terrain and the modelling of longer trains has resulted in a 30% reduction in the per kilometre rail operating cost. Global benchmarks were also amended for Mongolian standards, policies and customs.
Aspire added the attractive rail economics across a range of reasonable minimum rail volumes and tariffs supported by the Ovoot Project and four other nearby resource projects. Also it says Government of Mongolia leadership have recognised the need for more economic growth and infrastructure investment in Northern Mongolia and in particular Khuvsgul Province.
The capital savings from the Rail Pre-Feasibility Study lend further support to the Pre-Feasibility Study released in December 2012 that showed the Ovoot Coking Coal Project in Mongolia could become one of the lowest cost producers of coal into China.
While further works remains to be done, the cost savings from the rail line lend further support towards infrastructure investment. Preparation to commence Rail Bankable Feasibility Study is now underway.
Source: Aspire mining
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