Rame Energy PLC MOU to provide power to Cerro Bayo mine, Chile (9958K)
July 01 2014 - 1:00AM
UK Regulatory
TIDMRAME
RNS Number : 9958K
Rame Energy PLC
01 July 2014
Rame Energy / Index: AIM / Epic: RAME / ISIN: JE00BBD8GG53 /
Sector: Energy
1 July 2014
Rame Energy plc ("Rame" or the "Company")
MOU to provide power to Cerro Bayo Gold and Silver mine,
Chile
Rame Energy plc, the international energy consultant, engineer
and power generator, is pleased to announce that its wholly owned
subsidiary, Seawind Holdings SpA, has signed a memorandum of
understanding including indicative terms ("MOU") with CompaƱia
Minera Cerro Bayo Limitada ("Cerro Bayo") to supply power to the
isolated electrical grid system of the Cerro Bayo mining project in
Chile owned by TSX listed Mandalay Resources Limited. This MOU
builds on Rame's established international energy consultancy
business, which supplies power generation solutions to the
industrial, mining and utility sectors and is in line with the
Company's strategy to become an independent power producer ("IPP")
in Chile.
Under the terms of the MOU, which is to be converted into a
power supply contract within a maximum of 90 days from signing,
Rame will provide power at an agreed price per MWh to Cerro Bayo
for a minimum of five years from commencement of commercial
operations and thereafter on a rolling one year contract at Cerro
Bayo's option. Commercial operations are expected to start by April
2015.
Rame will provide the power from its own wind farm with an
installed capacity of up to 1.8MW, to be located, at no charge to
Rame, on the Cerro Bayo property. Rame has been undertaking wind
and feasibility studies at the site for the last 12 months and
completed its initial technical analysis in Q2 2014, which led to a
power supply proposal to Cerro Bayo and subsequently the agreement
on terms for the MOU. It is expected that the wind farm will
contribute approximately 6,250 MWh of electricity per year to the
power supply of the mine (albeit that Rame does not guarantee any
minimum power delivery) and the project will work in parallel with
Cerro Bayo's existing diesel generating system, located a few
hundred metres away from the proposed site for the turbines. The
capital costs for the wind farm are expected to be c.US$4m. The
project requires no environmental permitting studies and Rame will
carry out the entire construction of the project to minimise build
costs and execution risk.
The Cerro Bayo gold and silver mine is located in Southern
Chile, 130km south of Coyhaique, the capital of Region XI. It is
owned by Mandalay Resources Limited, which is listed on the TSX
with a market capitalisation of C$323m. Mining restarted in
September 2010 and it produces c.1,400 tonnes of ore per day. No
grid power is available at the site and to date power has been
generated on site by diesel generators. The addition of the wind
farm is expected to deliver significant cost savings to the mine
whilst reducing the environmental impact and logistical challenges
to maintain a secure diesel supply to the mine.
Tim Adams, Rame CEO, commented: "This MOU with Cerro Bayo will,
when converted to a formal contract, mark another milestone in our
move towards becoming an independent power producer in our own
right and we are delighted to now be progressing towards adding a
clean, cost effective energy solution to the isolated diesel power
generation at Cerro Bayo. This project is the first of a number of
off grid IPP opportunities in wind and solar power we expect to
develop, using our previous off grid experience and expertise. Our
power supply proposals to off grid industrial customers offer
environmental, logistical and economic benefits to these remote
sites and, in doing so, lock-in Rame's revenues from the power
supply contracts for the life of the mines, providing good
visibility on our expected returns and payback. We will look to
secure and execute additional power supply contracts in tandem with
the rollout of our wind power projects in Chile, the first two of
which are due to commence operations by the end of 2014."
**ENDS**
Enquiries
Rame Energy plc Tel: +44 (0) 1752 565638
Tim Adams (Chief Executive)
Jan Gawel (Finance Director)
Northland Capital Partners Limited Tel: +44 (0) 20 7382
1100
Nominated Adviser and Broker
Matthew Johnson / Louis Castro / Lauren
Kettle
(Nominated Adviser)
John Howes / Mark Simpson
(Corporate Broking)
St Brides Media & Finance Ltd Tel: +44 (0) 20 7236
1177
Elisabeth Cowell / Frank Buhagiar
Notes
Rame is an established revenue generative global supplier of
cost effective, technically optimised and reliable power generation
solutions including wind, solar and diesel to blue chip clients
such as Akzo Nobel, Anglo American, Barrick Gold and Codelco. The
Company has executed its first joint venture agreement with
Santander Investment Chile Limitada to co-finance its first two
wind projects totalling 15 MW, in which Rame will have a 20% equity
participation. The debt package for the two projects is being
provided by Chilean bank, Banco BICE.
Rame aims to become a niche Independent Power Producer ("IPP")
targeting an operational portfolio of 300MW in Latin America within
three years. The Company plans to build on its proven track record
of delivering power in South America where it has been involved in
the development of approximately 23% of Chile's installed wind
power capacity (as at 31 December 2013).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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