The Asia Miner

SEP-OCT 2014

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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16 | ASIA Miner | September/October 2014 ASPIRE Mining has entered into a non-binding Memorandum of Un- derstanding (MoU) with New Asia Group, owner of the Zavkhan Power Station, to potentially supply oxidized coal from the Ovoot Coking Coal Project in northern Mongolia. The MoU covers a possible commitment of New Asia to annually purchase up to 250,000 tonnes. It also involves Aspire cooperating with New Asia to develop necessary transmission infrastructure connecting the Ovoot project directly with the power station and the supply of 35MW of power annually to the project. Zavkhan Power Station is about 70km to the south of the Ovoot project. New Asia has received a concession to build, own and operate the power station to supply northern Mongolia with power. It is currently constructing the plant which is expected to be commissioned in late 2015. The Ovoot project will produce small quantities of oxidized (non-cok- ing) coal as part of its mine plan, which would otherwise have been considered waste material. This coal is not included in the project's 255 million tonne JORC 2012 probable coal reserves. Meanwhile, following Aspire's acquisition of a 50% interest in the Ekh- goviin Chuluu Joint Venture (ECJV) in June and a re-evaluation of his- torical exploration work, the ECJV has agreed to initiate an exploration drilling program at Nuurstei Coal Project in northern Mongolia. ECJV is a partnership between Aspire and Singapore-listed Noble Group, and holds 60% of the Nuurstei project which could be in- creased to 90% upon achievement of development milestones. Drilling will target the northern part of the tenement area and will initially consist of 20 holes at an average 100 metre depth. An 11 hole drilling program was completed over the area in 2011 with most drilling focused on the northern region. After reviewing available data, the ECJV approved the new drilling program with a budget of $500,000. It is designed to confrm resource continuity to enable pre- liminary economic assessment and to provide samples for test work. Drilling is expected to be completed by the end of September with lab- oratory analysis expected in the December quarter. Results will be used to prepare a pre-feasibility study, which will allow for the grant of a mining licence and for completion of a general environmental impact assessment. After a further review of the geology and the 2011 drilling program, the ECJV believes that Nuurstei presents a possible opportunity for a small-scale road-based operation due to the potential for near-surface quality coking coal. It is about 10km southwest of Moron, capital of Khuvsgul province. A paved road is being constructed between Moron and Erdenet, where existing rail infrastructure terminates. VIKING Mines plans to undertake a capital rais- ing in September to help fund its operations with emphasis on the Berkh Uul bituminous coal project in northern Mongolia. The mini- mum amount is expected to complete internal Mongolian coal-focused production feasibility studies and to enable development decisions. The capital raising is the only unfulflled con- dition of Viking's off market takeover of unlisted Sydney-based emerging Mongolian coal pro- ducer Auminco Mines. As at early July Viking had received more than 97% acceptances from Auminco shareholders. As well as Berkh Uul, further upside potential exists through Auminco's portfolio of additional coal and base metals projects in Mongolia, including the Khongor Zag anthracitic coal project which is on a granted 30-year mining lease close to the Chinese bor- der with only 1.2km of the 4km strike explored by drilling. Berkh Uul is 400km north of Ulaanbaatar within the Ork- hon-Selenge coal district and within 20km of the Russian bor- der. The project is within 40km of rail access into Russian offtake markets, in close proximity to water, infrastructure and trans- port. The deposit consists of shallow, consistent coal seams of high quality bituminous coal amenable to open pit mining. Auminco's discussions with nearby cement works and power stations confrm a local industrial demand for unwashed Berkh Uul coal, due to its low ash and relatively high calorifc value. This has been evidenced by the signing of three non-binding MoUs with government entities: • Darkhan Thermal Power Plant - a ma- jor supplier of electricity to Mongolia's second largest city Darkhan and the northern region of Mongolia. This plant is being upgraded with annual coal consumption to increase from about 400,000 tonnes to 600,000; • Erdenet Power Plant - a major suppli- er of electricity to Erdenet copper mine, 180km west of Darkhan. The plant an- nually consumes about 250,000 tonnes of coal; • Darkhan Metallurgical Plant - located close to Darkhan, it is expanding its an- nual 100,000 tonnes steel milling capac- ity. The expansion is due for completion in 2015. In mid-August the company also signed an MoU with Mongolia's largest cement manu- facturer, Khutul Cement and Lime, relating to future potential coal supply. Khutul, a semi-privatized State-owned industrial com- pany located 6omkm west of Darkhan, has plans to substantially increase cement pro- duction to meet growing domestic demand. This would result in annual coal demand increasing from 250,000 tonnes to around 400,000 tonnes. Berkh Uul has a JORC 2012 coal re- source of 38.3 million tonnes with 21.4 million tonnes classified as indicated and 16.9 million tonnes as inferred. The coal is bituminous in rank with average in situ quality as follows: total moisture 19.8%, calorific value 5323 kcal/kg (air dried ba- sis, adb), ash 15.5% (adb) and total sulphur 0.37% (adb). Ovoot coal for new power station Viking Mines' acquisition of Auminco will give it a number of coal and base metals projects around Mongolia. Viking Mines plans fundraising

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