Ncondezi Energy Limited $1.8m Agreed CMEC Accelerated Development Budget (4229F)
November 16 2020 - 3:37AM
UK Regulatory
TIDMNCCL
RNS Number : 4229F
Ncondezi Energy Limited
16 November 2020
News Release
$1.8m Agreed CMEC Accelerated Development Budget
16 November 2020: Ncondezi Energy Limited ("Ncondezi" or the
"Company") (AIM: NCCL) is pleased to announce that further to the
announcement on 12 November 2020, it has signed a Supplementary
Agreement to the Joint Development Agreement (the "SA") with China
Machinery Engineering Corporation ("CMEC") pursuant to which CMEC
will fund specified accelerated development works at the Ncondezi
300MW coal-fired power project and coal mine in Tete, Mozambique
(the "Project").
JDA Supplementary Agreement
-- The SA sets out the agreed basis for accelerated development
work to be carried out on the Project
-- Provisional budget of US$1.8m approved by the parties and to be funded by CMEC
-- Accelerated development work will focus on a number of milestones, including:
o Additional survey drilling required by CMEC to complete
Chinese Government approvals for their investment in the
Project
o Ensuring key agreements such as the Engineering Procurement
and Construction ("EPC") agreements are compliant with Mozambican
laws
-- The SA is a supplement to the Joint Development Agreement
announced in July 2019. The provisions of the JDA remain in full
force and effect
-- Funds drawn down as part of the SA will be treated as pre
financial close Project development costs, to be reimbursed at
Financial Close along with the Company's approved historical
development costs or by the Company or its affiliates in certain
circumstances including the Company achieving financial close with
a third party, or on the sale or liquidation of the project company
holding the mine project or the power project
-- Ncondezi and CMEC to agree a form of share pledge as security
for funding made by CMEC as part of the SA
o Ncondezi will pledge shares in its wholly owned Mozambican
subsidiary that holds the power project ("PowerCo").
o The number of shares pledged will be equivalent to the amount
funded by CMEC, divided by the nominal value per share of PowerCo's
shares
o The total nominal value of all PowerCo's shares is US$15.7m,
so assuming CMEC funds the full US$1.8m, Ncondezi would need to
pledge approximately 11% of its shares in PowerCo to CMEC
o Pledge will be released upon achievement of Financial Close
with CMEC as strategic partner
Ncondezi Chief Executive Officer, Hanno Pengilly said: "We are
delighted to have signed the Supplementary Agreement with CMEC. The
approved US$1.8m development budget will be funded by CMEC. This
provides the strongest signal to date of CMEC's commitment to the
project, targeting its 60% equity stake, and we look forward to
them leading the debt financing negotiations with Chinese
financiers. Consultants have been instructed and work has
commenced. We look forward to providing further updates in due
course."
Enquiries
For further information please visit www.ncondezienergy.com or
contact:
Ncondezi Energy Hanno Pengilly +27 (0) 71 362 3566
Liberum Capital Limited Scott Mathieson, Edward Thomas, +44 (0) 20 3100
NOMAD & Joint Broker Kane Collings 2000
Novum Securities
Limited +44 (0) 20 7399
Joint Broker Colin Rowbury 9427
Pimlico Advisory
Ltd +44 (0) 777 56 55
Investor Relations Elizabeth Johnson 927
Note:
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation ("MAR"). Upon the publication of this
announcement via Regulatory Information Service ("RIS"), this
inside information is now considered to be in the public domain. If
you have any queries on this, then please contact Hanno Pengilly,
Chief Executive Officer of the Company (responsible for arranging
release of this announcement) on +27 (0) 71 362 3566.
About Ncondezi Energy
Ncondezi is an African power development company with an
advanced staged, integrated 300MW thermal coal power plant and mine
project located in the Tete Province, Northern Mozambique.
The Company is focused on providing reliable, affordable and
accessible baseload energy to Mozambique and secure against the
effects of water drought and intermittency of new renewables. This
project supports Mozambique's energy strategy of universal
electricity access by 2030. According to the World Bank, only 30%
of the Mozambican population had access to energy in 2017. The
Ncondezi Project would provide 300MW of reliable and available
power helping to close the infrastructure gap of the region and
serving as a catalyst for economic development.
The power plant will be designed to be equipped with
state-of-the-art emissions controls technologies that will reduce
local air pollutants, minimizing the plant's impact on the
environment and ensuring its compliance with the most stringent
emission standards
In 2019, the Company entered into the Commercial and Industrial
("C&I") renewable and battery storage sector and in October
2019 announced its first investment in an off grid solar battery
project. The Company has also secured the right to fund a US$5.5m
C&I project development pipeline in Mozambique through a
Relationship Agreement with a C&I developer. The move into the
C&I solar and battery storage sector offers a significant
opportunity for the Company to complement the existing large-scale
baseload power project and access near-term low-risk annuity income
streams which have significant growth potential.
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