TIDMNCCL
RNS Number : 5611R
Ncondezi Energy Limited
09 March 2021
News Release
Appointment of Project Advisors
9 March 2021: Ncondezi Energy Limited ("Ncondezi" or the
"Company") (AIM: NCCL) has signed a Master Services Agreement
("MSA") with Synergy Consulting ("Synergy") to provide financial
and transaction advisory services (the "Services") to the Group for
the integrated Ncondezi 300MW coal fired power project and coal
mine in Tete, Mozambique (the "Project").
Highlights :
-- MSA covers potential advisory services to the Project up to Financial Close, including:
o finalisation of Project power tariff with Electricidade de
Moçambique ("EDM");
o negotiations with China Machinery and Engineering Corporation
("CMEC") on Project subscription price;
o negotiations with Project lenders for debt financing; and
o capital raising for Ncondezi's equity contribution towards the
Project at Financial Close.
-- Synergy has significant Project experience, having assisted
the Company in achieving major milestones to date, including
negotiation of the Joint Development Agreement ("JDA") with CMEC
and the tariff submission to EDM.
-- Services also include potential support for capital raising
for the Company's renewable energy strategy in the high growth
African Commercial and Industrial ("C&I") sector.
Ncondezi Chief Executive Officer, Hanno Pengilly said: "Synergy
has provided Project advisory services since 2016 and brings a
wealth of expertise to our development team. Today's announcement
highlights the Company's clearly laid out plan to achieve Financial
Close and importantly ensures that sufficient resources are
available to deliver on future key value enhancing Project
milestones. Services provided will require approval by the Company
on a workstream by workstream basis allowing the Company to
efficiently manage cashflows."
Project Financial Advisor
Synergy is a leading international project finance advisory firm
specialising in the power sector with over US$50bn worth of
transactions closed across the globe. In Mozambique, Synergy has
extensive experience advising on a number of projects. This
includes advisory services to Ncondezi, where Synergy has acted as
financial advisor to the Project on various mandates since
2016.
Having delivered the required Project studies and proposals to
EDM during December 2020, the next steps include the negotiation
and finalisation of key Project de-risking milestones. The Company
has entered into a Master Services Agreement with Synergy which
includes a list of financial and transaction advisory workstreams
it will provide to the Group that covers the full scope of
potential services required to achieve Project Financial Close. The
Services will be agreed on a per workstream basis with success fees
agreed that are linked to achieving set milestones. The Company is
not obliged to use Synergy for any specific workstream and total
fees have been capped.
Synergy's key potential responsibilities include:
-- Updating of key Project studies;
-- Ongoing optimisation and updating of the Project financial model;
-- Finalisation of tariff negotiations with EDM;
-- Finalisation of key Project agreements - Power Purchase
Agreement, Power Concession Agreement, EPC and O&M
agreements;
-- Discussions with Lenders and Finalization of Finance Documents;
-- Subscription price negotiations and agreements with CMEC; and
-- Raising capital for Ncondezi's equity contribution for the Project at Financial Close.
In addition to the main Project, the Master Services Agreement
also includes the provision of capital raising services for the
Company's C&I renewable energy business. With the Company's
first C&I project targeting commercial operations in June 2021.
Ncondezi's strategy is to build scale quickly through the
development and financing of its pipeline of C&I projects. The
Company's wholly owned subsidiary, Ncondezi Green Power ("NGP"),
has a pipeline of US$5.5m in C&I projects with ambitions to
grow this aggressively over the next 3 years. NGP has identified a
number of potential opportunities which could significantly
increase the C&I project pipeline.
Fee structure:
The Company has agreed a capped fee structure for any financial
and transaction advisory Services for the Project under the MSA.
The capped fees have been balanced between an hourly charge out
rate up to a maximum US$410,000 for any Services approved by
Ncondezi and a success fee of US$500,000 payable only when
Financial Close is achieved.
In addition, a 2.0% success fee on any equity raised for the
Project capped at US$1,000,000 if Synergy introduces investors that
fund any portion of Ncondezi's equity investment in the Ncondezi
Project at Financial Close.
For any capital that is raised from a Synergy introduced
investor for the Company's C&I business, a scaled fee structure
has been agreed as set out below:
-- 3.125% success fee on any funds raised for working capital for the C&I business;
-- 4.5% success fee on any additional funds raised to fund the C&I development pipeline; and
-- 2.5% success fee on any additional funds from those investors
which are received within 2 years of the date of the MSA.
Related Party Transaction
By virtue of the fact that Aman Sachdeva, a director of the
Company, is also a director, founder and majority shareholder of
Synergy, the MSA constitutes a related party transaction for the
purposes of AIM Rule 13. Accordingly, the Company's Directors, with
the exception of Aman Sachdeva, consider, having consulted with
Liberum Capital Limited, the Company's Nominated Adviser, the terms
of the MSA to be fair and reasonable insofar as the Company's
shareholders are concerned.
E nqu iries
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
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014 which is part of UK law
by virtue of the European Union (Withdrawal) Act 2018. Upon
publication of this Announcement and such information is now
considered to be in the public domain. The person who arranged for
the release of this announcement on behalf of the Company was Hanno
Pengilly, CEO.
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 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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END
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