Aspire has appointed Snowy Mountains Engineering Corporation to advance the extension of the rail from the current terminus at Erdenet to the company’s Ovoot project.

The deal, through Aspire’s subsidiary Northern Railways, has been valued at $9.8 million.

SMEC has been contracted to complete a full re-optimisation of the extension’s rail alignment including site visits, risk and constraint analysis, permitting, and government approvals.

The work has been broken up into phases with a number of performance milestones before the next phase of work commences.

“We have been working with SMEC for six months on addressing critical rail project risks and it makes sense, with their in country expertise and experience, for SMEC to become our rail engineering partner for what will be a large and important project for Mongolia,” Aspire Mining managing director David Paull said in a statement.

The rail will connect the northern Mongolian Khuvsgul, Bulgan and Orkhon provinces to the existing network and, in accordance with Mongolian national rail policy, will be available for the transport of passengers, general freight, bulk materials and agriculture.

Aspire said the cost will be funded from the $5 million Noble Group loan facility the company announced in April and cash resources.

North Railways also retains an option to appoint SMEC as engineering, procurement and construction contract manager on behalf of the subsidiary.

The Ovoot coking coal project is in northern Mongolia and is 100% owned by Aspire.

The company completed a prefeasibility study for the project last year and is targeting a large scale open pit mine with production of upto 12Mtpa over a 20 year mine life.

First production is targeted for 2016 after the company successfully receiving a mining licence for the project last year.