The ECJV owns a 90% interest in the Nuurstei project. Non-core drilling has now been completed with PQ diamond holes continuing to provide coal for sampling identified seams of potential economic interest.
Drilling at Nuurstei commenced in July 2015 and to date 24 non-core drill holes and 19 PQ diamond core hole have been completed, including those reported to the market on 21 August 2015. The drilling results continue to indicate steeply dipping and banded (coal and non-coal) seams.
There are a large number of seams identified in the 150 – 180m deep holes. Basement rock has not been intersected in any of the
holes and historical drilling at Nuurstei noted that coal in multiple thin seams continue to be intersected well below the current depth of drilling.
A best reported intersection of 6.94 metres of coal is in hole NURH1039 from 61.2m and hole NURH1032 also intersected 5.6m of coal from 34.7m. Twelve other seams identified in this hole provided a total of 26.39 metres of coal from surface down to 108 metres illustrating the existence of multiple, albeit relatively thin stacked seams. The strike length of correlated seams has now been identified over 1.6 kilometres, up from 1.2 kilometres that was previously reported following the completion of the 2014 exploration program.
The 2015 Nuurstei drilling program was prepared with the aim of increasing confidence levels in coal seam correlation and establishing a coal resource that can be reported in accordance to the 2012 JORC Code.
The data from the infill-drilling is now being compiled by McElroy Bryan Geological Services (MBGS) with the view to establish a maiden coal resource at Nuurstei by the end of 2015. Following the 2014 exploration program, MBGS defined an Exploration Target at Nuurstei which could contain between approximately 15mt (at 0.5m coal thickness cutoff, rounded) to approximately 25mt (at 0.1m coal thickness cutoff, rounded), down to 160m depth (refer ASX Announcement dated 20 March 2015).
Nuurstei is located only 10 kilometres from the existing Moron town, the capital of the Khusvgul province and sits along the path of the planned Erdenet to Ovoot railway. Nuurstei could be initially developed as a road based operation, trucking coal to Erdenet and become one of the first users of the Erdenet to Ovoot railway once the first section is completed.
The Company has positioned itself as a Mongolian focussed metallurgical coal explorer building up its coal property portfolio during the last 12 months which has included the purchase of a 50% stake in the Ekhgoviin Chuluu Joint Venture (ECJV) with Singapore listed Noble Group, followed by the ECJV acquiring a further 30% interest in the Nuurstei project. Further, applications for new exploration licences in Mongolia have been successful with the Company and the ECJV awarded new licences in south and
northwest Mongolia.
Although the current metallurgical coal market is depressed, the Company continues to take a medium and long term view of the metallurgical coal market and continues to believe that there is significant upside to be achieved. The Company’s focus is to continue to achieve the infrastructure and commercial related milestones necessary to realise the future development and production from its coking coal assets including the world class 100% owned Ovoot Coking Coal Project (Ovoot).
Due to current very poor market conditions, sustaining capital in operating mines is being deferred and there are no new large coal mines expected to come on line in the next few years. Meanwhile, existing coal mines are coming to the end of their lives. BHP Billiton announced recently that their Crinum/Gregory mining complex will close early 2016, removing up to 6 Mtpa of high quality coking coal out of the supplychain. Given the long lead times required to bring any new production online, market commentary has moved to an expectation of improving prices over the medium term.
The market dynamics in coking coal are very different to iron ore even though the demand for both are driven by the steel industry. The iron ore industry is concentrated in three very large companies who make good margins at current prices with new supply still to enter the market. However, for coking coal, most of the participants are losing money at current pricing and rather than new supply,mine closures continue.
Aspire is working to secure both the Nuurstei and Ovoot projects as new low cost production sources that can enter the market in the medium term to meet supply side gaps that are expected to materialise over time.
