PERTH (miningweekly.com) – Coal developer Aspire Mining is hoping to raise A$33.5-million through a share placement to shareholder Tserenpuntsag Tserendamba, giving him a controlling stake in the ASX-listed company.
Aspire on Friday told shareholders that that the share subscription agreement, priced at 2.1c a share, would increase Tserendamba’s interest in Aspire from 27.5% to 51%.
The placement price represented a 40% premium to Aspire’s closing price on September 4 and a 27.7% premium to its 30-day volume weighted average share price.
Aspire noted that the placement would reinforce the company’s board, and Tserendamba’s commitment to transform Aspire into a significant pure-play coking coal producer positioned in the second quartile of the global cost curve.
The share placement is expected to provide Aspire with a significant proportion of the estimated equity capital component required for the Ovoot early development plan (OEDP), with Tserendamba expected to support any future fund raising activities to complete the development.
“This funding not only provides important equity capital but also significant in-country support and assistance with future project financing,” said Aspire executive chairperson David Paull.
“It is an important recognition by Tserendamba of the value inherent in the OEDP. The company and Tserendamba have a shared vision on how the project can be financed and brought into production, so that all shareholders can share in the realization of this value.”
The OEDP is expected to deliver four-million tonnes a year of washed saleable coal over an initial 9.2-year period, from a single openpit operation that would make use of only a small portion of the overall Ovoot project reserves.
The base-case development would require a capital investment of $63-million and would deliver a pre-tax net present value of $586-million and an internal rate of return of 43.7%. The OEDP would deliver an average annual earnings before interest, tax, depreciation and amoritsation of $172-million and would have a 24-month pay-back from the start of commercial production.
To reflect Aspire’s strategic repositioning as a Mongolian majority-owned and led development company, the board and key executive team will be restructured, with the board size reducing to five members, and Paull transitioning to a non-executive chairperson role over a four-month period.