TIDMKIBO
RNS Number : 5273Q
Kibo Mining Plc
06 June 2018
Kibo Mining Plc (Incorporated in Ireland) (Registration Number:
451931)
(External registration number: 2011/007371/10) Share code on the
JSE Limited: KBO
Share code on the AIM: KIBO ISIN: IE00B97C0C31
("Kibo" or "the Company")
Dated: 06 June 2017
Kibo Mining Plc ('Kibo' or the 'Company')
Power Joint Venture in Mozambique Delivers Further on Strategy
to Develop Regional Energy Group
Kibo Mining Plc (AIM: KIBO; AltX: KBO), the multi-asset Africa
focused energy and resource company, is pleased to announce that it
has signed a Joint Venture Agreement (the 'Benga Power Joint
Venture' or 'JV') with Mozambique energy company Termoeléctrica de
Benga S.A. ('Termoeléctrica') to participate in the further
assessment and potential development of the Benga Independent Power
Project ('BIPP'), including the right to construct and operate a
150-300MW coal fired power station. Kibo and Termoeléctrica shall
hold initial Participation Interests in the unincorporated joint
venture of 65% and 35% respectively.
The Benga Power Joint Venture is another step in advancing
Kibo's strategy to position the Company as a leading regional
energy player. Subject to the successful outcomes of further and
more detailed studies on the BIPP, the Company envisages being able
to develop the BIPP in an expedited manner alongside its Mbeya Coal
to Power Project ('MCPP') in Tanzania and the recently acquired
Mabesekwa Coal Independent Power Project ('Mabesekwa') in Botswana.
The Benga Power Joint Venture shall utilise Kibo's experience in
the advancement and development of power projects in the East
African region and its strategic relationships with international
development partners such as Sepco III and General Electric. As the
BIPP has similarities with the MCPP and Mabesekwa, it is envisaged
that considerable benefits could be realised in any potential power
station development, including economies of scale in equipment,
execution and project finance.
Summary of Principal Terms of JV
-- The assets the subject of the JV will be transferred
unencumbered and unfunded into a clean, "sole purpose" vehicle
("Newco") in which Kibo and Termoeléctrica shall hold initial
interests of 65% and 35% respectively;
-- Kibo will be granted an initial 65% Participation Interest in
the Benga Power Joint Venture to exploit the assets of Newco for no
upfront consideration, and must maintain this interest by funding a
maximum amount of GBP1m towards the completion of a Definitive
Feasibility Study ('DFS');
-- Pursuant to a positive outcome of the DFS and the
construction of a coal fired power plant (the 'Project'), both Kibo
and Termoeléctrica will contribute to the project cost on a
pro-rata basis;
-- In the event that the JV is terminated before Kibo meets its
earn-in threshold, Kibo will be entitled to become a creditor of
Newco for an amount of between 50% and 175% of its JV expenses
contribution, payable within 30 days of financial close in respect
of project financing for construction of the BIPP ("Financial
Close");
-- In the event that the JV is terminated after Kibo meets its
earn-in threshold, Kibo shall retain a residual interest in the
Project calculated as a percentage relative to total Project
expenditure by Kibo, and subject to a minimum retained interest of
15%;
-- Typical joint venture dilution clauses and formulas apply to
each party allowing one party to dilute the other's Participation
Interest should it not be able to contribute to an agreed sum
within the set time period, and subject to a minimum retained
interest of 15%;
-- Upon delivering a positive DFS in respect of the BIPP, Kibo
will have the option, for a period of 365 days from the delivery of
the DFS, to increase its interest in the Project up to 85%, at a
price determined by an independent third party (and payable within
30 days of such determination);
-- Kibo will have majority representation on the JV management
committee, including the ability to appoint the Chair of the
management committee;
-- Kibo and Termoeléctrica to refrain from participating, to the
exclusion of each other, in any new project (subject to agreed
exclusions) involving the generation of coal-fired electricity in
the Republic of Mozambique until the earlier of:
o the fifth anniversary of the signature date of the JV; or
o Financial Close;
-- Reciprocal Right of First Refusals over disposal of either
party's Participation Interest in whole or part on terms typical of
such an agreement;
-- Typical termination clauses, including but not limited to,
lack of commercial viability, material breach, and mutual consent;
and
-- The JV is inter alia conditional upon both Parties obtaining all approvals in their relevant jurisdictions to enter into the JV
Summary of the BIPP
The BIPP consists of a suite of authorisations and agreements in
addition to lease title over land in the Tete province, Mozambique,
on which a potential coal fired power station may be built, in
close proximity to various thermal coal producers which could be a
source of feedstock. The authorizations and agreements referred to
above include the following:
-- Authorisation by the Mozambique Ministry of Mineral Resources
and Energy to proceed with the final feasibility on the BIPP;
-- An MoU with Electricidade de Moçambique ("EDM"), the major
public company in Mozambique for the generation, transmission and
distribution of electricity, to collaborate in the development of a
coal-fired power plant;
-- In-principle confirmation by ARA Zambeze (the public
authority for the water management in the Zambezi river basin) that
sufficient water will be available for the power plant. Definitive
authorisation is dependent on the outcomes of the final technical
studies;
-- Lease title over 59 hectares of unimproved land under a
Direito do Uso e Aproveitamento da Terra ("DUAT") located close to
the two producing coal mines in Mozambique's Tete province:
o Lease title is preliminary for five years;
o Title would be expected to be become a definitive for 50 years
once a power plant had commenced construction;
-- Pre-feasibility study required by authorities well advanced,
with over GBP230,000 spent to date, obtaining the DUAT/project land
title and studies on concept of constructing a 165 MW coal-fired
power plant on the leased land using relocated assets from Europe,
including the first phase of an environmental impact assessment and
first phase grid integration study;
-- Discussions with and formal letters of comfort received from:
o Various power supply off-takers - indicating initial demand
for up to approximately 150MW; and
o Thermal coal producers stating willingness and intent to
discuss terms and conditions for the supply of thermal coal as a
feedstock for the planned power plant.
Mozambique relies predominantly on hydropower despite being
heavily affected by droughts which result in inconsistent power
supply. It is estimated that less than 30% of the population
currently have access to electricity and the power consumption has
grown consistently between 6-8% over the last 10 years. The
developing industrial and commercial sectors are expected to
further increase demand in the near future creating an urgent need
for reliable alternatives to hydropower.
The Company is focused on building a geographically diversified
portfolio of strategically located energy production assets
spanning the entire spectrum of electricity generation across
Africa that can solve the increasing acute energy shortages on the
continent. With the signing of this joint venture agreement with
Termoeléctrica, Kibo will solidify its position as a key
participant seeking to contribute in a meaningful way to the energy
demand across three countries in southern Africa - Tanzania,
Botswana and Mozambique. Its flagship asset is the MCPP in
Tanzania, which comprises the development of the Mbeya Coal Mine, a
1.5Mt p/a mining operation and the Mbeya Power Plant, a 300MW
mine-mouth thermal power station anticipated to be in production in
36 months from the date of achieving financial close. It also holds
an 85% interest in the Mabesekwa Coal Independent Power Project in
Botswana on which feasibility studies are well advanced.
Kibo's CEO, Louis Coetzee, said: "This JV is expected to add
considerable value to Kibo's portfolio of late stage energy
projects and aligns perfectly with our proactive investment
strategy of becoming a significant regional power player. Due to
our experience of the development of the MCPP and Mabesekwa in
addition to our relationships with international development
partners General Electric and SEPCO III, we have been recognized as
the preferred development partner for strategic power projects in
the region. Now we strive to utilize our contacts and industry
experience, delivering value to the shareholders through three
different projects."
**S**
For further information please visit www.kibomining.com or
contact:
Louis Coetzee louisc@kibomining.com Kibo Mining Plc Chief Executive Officer
Andreas Lianos +27 (0) 83 4408365 River Group Corporate Adviser
and Designated Adviser
on JSE
Ben Tadd / Tom +44 (0) 20 3700 0093 SVS Securities Joint Broker
Curran Limited
Jon Belliss +44 (0) 20 7399 9400 Novum Securities Joint Broker
Ltd
Andrew Thomson +61 8 9480 2500 RFC Ambrian Limited NOMAD on AIM
Isabel de Salis +44 (0) 20 7236 1177 St Brides Partners Investor and Media
/ Priit Piip Ltd Relations Adviser
This announcement contains inside information as stipulated
under the Market Abuse Regulations (EU) no. 596/2014 ("MAR").
Notes to editors
Kibo is a multi-asset resource development and energy company
with a long-term goal of becoming a leading power producer in
Sub-Saharan Africa. The Company aims to tackle the acute power
deficit which is severely hindering economic development in the
region.
Kibo's flagship asset is the Mbeya Coal to Power Project
('MCPP') in Tanzania, which comprises the Mbeya Coal Mine, a 1.5Mt
p/a mining operation, and the Mbeya Power Plant, a 300MW mine-mouth
thermal power station. The Mbeya Coal Mine has a defined 120.8 Mt
NI 43 101 thermal coal resource. A Definitive Feasibility Study has
been conducted on the project which underpinned its value and
confirmed an initial rate of return of 69.2%. The 300MW
mouth-of-mine thermal power station has long term scalability with
the potential to become a 1000MW plant. The completed full Power
Feasibility Study highlighted a power output target of 1,800 GWh/a
based on annual average coal consumption of 1.5Mt. An Integrated
Bankable Feasibility Study report for the entire project indicated
total potential revenues of US$ 7.5-8.5 billion over an initial
25-year mine life, post tax equity IRR between 21-22%, debt
pay-back period of 11-12 years and a construction period of 36
months.
To assist in the execution of this critical power project of the
MCPP, Kibo has assembled an international team of advisors and
partners including Engineering Procurement and Construction ('EPC')
contractors and financial teams that are assisting in the
advancement and development of the MCPP. These include
ABSA/Barclays as Financial Advisor, China based EPC contractor
SEPCO III, General Electric, Tractebel Engineering (Power), Minxcon
Consulting (Mining) and legal advisors Norton Rose Fulbright.
Kibo also has an 85% interest in the Mabesekwa Coal Independent
Power Project ('MCIPP'), a nearly identical power project in
Botswana. The project consists of 300Mt subset of the current
in-situ 777Mt Coal Resource and has water and land use permits and
environmental certification in place. A Pre-Feasibility Study on
the coal mine has been completed, as has a Scoping Study, which
highlight the power plant having a maximum capacity of 600MW
(4x150MW) based on a coal delivery rate of 3.2Mtpa and a Life of
Mine of over 30 years.
Johannesburg
06 June 2018
Corporate and Designated Adviser
River Group
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END
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