TIDMNCCL
RNS Number : 9471A
Ncondezi Energy Limited
30 March 2017
News Release
Project and Corporate Update
30 March 2017: Ncondezi Energy Limited ("Ncondezi" or the
"Company") (AIM: NCCL) is pleased to provide shareholders with an
update in relation to its 300MW power plant project ("Power
Project"), located near Tete in northern Mozambique and the
previously announced Joint Development Agreement ("JDA") with
Shanghai Electric Power Co., Ltd ("SEP").
Development Agreement with Shanghai Electric Power
On 11 January 2016, the Company announced that it had signed a
binding JDA with SEP to develop the Power Project. Once the JDA
becomes effective, SEP will invest up to US$25.5 million to fund
the balance of the Power Project development costs to Financial
Close ("FC") in return for a 60% shareholding in Ncondezi Power
Holding 2 Ltd ("UAE Co"), a subsidiary which will own and operate
the Power Project.
The JDA becomes effective once all the SEP Investment Conditions
have been satisfied or waived by SEP. A key outstanding SEP
Investment Condition includes the obtaining of a Ministerial Decree
from the Government of Mozambique (the "Decree") approving the
award of the Power Concession Agreement ("PCA"). The Decree is
expected to be issued by the Mozambican Council of Ministers
following completion of key Power Project development work streams,
and will set out the Government's obligations and provide
Government support for the development and operation of the Power
Project. These work streams fall within the current Power Project
development program towards FC.
As part of the discussions regarding the completion of all SEP
Investment Conditions to make the JDA effective, the Company is
currently in advanced negotiations with SEP to finalise a
development funding agreement pursuant to which SEP will provide up
to $3.0 million to fund a development program and budget to obtain
the Decree and finalise the Investment Agreements (Shareholders
Agreement and Subscription Agreement) over the next 12 months (the
"Development Agreement"). The funding is intended as a pre
investment to funding under the JDA and will form part of the total
investment under the JDA.
Key terms of the Development Agreement are expected to be as
follows:
-- Up to $3.0 million over 12 months to fund the completion of
key Power Project joint development work streams and obtain the
Decree.
-- SEP to have the option to extend the term and funding under
the Development Agreement if the Decree is not achieved within the
timeframe.
-- Key principles of SEP's investment in the Power Project
unchanged from the JDA signed in January 2016 and the non-binding
Shareholders Agreement Term Sheet signed in July 2016.
-- Execution of a Share Pledge Agreement pledging up to 17.6% of
the shares in UAE Co to SEP to secure and guarantee the performance
by Ncondezi in relation to its obligations in connection to the
Development Agreement which are expected to include repayment if
the Decree and Investment Agreement are not achieved during the
term of the Development Agreement.
-- The Development Agreement is expected to extend SEP's exclusivity.
Once the Decree has been obtained, SEP and Ncondezi intend to
conclude the JDA based upon the terms and conditions set forth in
the JDA and subsequent Shareholders' Agreement Term Sheet.
The Decree and JDA are targeted for completion in Q1 2018.
Following completion of the JDA, the Power Project development
program will then enter the last development phase, led by SEP, to
finalise funding from lenders and achieve FC which is planned for
Q3 2018.
The Company expects to make an update to shareholders once
binding agreements have been executed.
Financial Position
Due to careful working capital management, the Company now has
adequate cash resources to fund its activities until 10 May 2017,
which is the date on which the Shareholder Loan becomes
repayable.
The Company has an existing $2.32m shareholder loan which is
repayable at a 1.5x return before 10 May 2017, after which the loan
becomes repayable at a 2.0x return.
The Company is engaging with the lenders under the shareholder
loan and evaluating all options with respect to its repayment or
refinancing and a further update will be provided before 10 May
2017.
Once it is signed and becomes effective, the Development
Agreement will cover the bulk of Ncondezi's development costs over
the next 12 months as well as some of SEP's costs. As a
consequence, once the development funding is available, the
Company's working capital requirement for costs not covered by the
Development Agreement is expected to be reduced to approximately
$300,000 per annum, to cover mainly corporate costs.
Negotiations are ongoing with a number of potential funding
partners to cover these reduced working capital costs that will not
be covered by the Development Agreement, including corporate costs
(as detailed above) and additional mine development costs.
The Company is working on finalising a funding solution although
it must be noted that whilst discussions are advanced no certainty
can be given that they will be finalised.
More information will be provided to shareholders as
appropriate.
Power Project Update
SEP, Electricity de Mozambique ("EDM") and Ncondezi continue to
work closely and good progress is being made on the Power Purchase
Agreement ("PPA") and Power Concession Agreement ("PCA"), the two
key commercial agreements for the Power Project Development program
and obtaining the Decree.
During December 2016, Power Project development meetings were
held between SEP, EDM and Ncondezi in Shanghai, China, to update
the pathway to FC, including updating the drafts of the PPA and
PCA. The meetings also included site visits to some of SEP's
reference operating coal fired power plants, as well as
introductions to China Export & Credit Insurance Corporation
("Sinosure") and Chinese commercial banks with respect to the debt
financing and export credit insurance for the Power Project's
financing. Further meetings were held in Maputo, Mozambique, during
March 2017 where discussions on the PPA and PCA continued.
The PPA and PCA are currently targeted for completion during Q4
2017.
Ncondezi expects to conclude a number of other work streams
before then, including the Power Project and transmission line EPC
processes. Work streams relating to the mine development process
are expected to ramp up in H2 2017 alongside the Power Project
development program.
Enquiries
For further information please visit www.ncondezienergy.com or
contact:
+44 (0) 20 7183
Ncondezi Energy: Hanno Pengilly 5402
Liberum Capital
Limited: Neil Elliot / Christopher +44 (0) 20 3100
NOMAD & Broker Britton 2000
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 Development Officer of the Company (responsible for arranging
release of this announcement) on +44 (0) 20 7183 5402.
Ncondezi Energy owns 100% of the Ncondezi Project which is
strategically located in the power generating hub of the country,
the Tete Province in northern Mozambique. The Company is developing
an integrated thermal coal mine and power plant in phases of 300MW
up to 1,800MW. The first 300MW phase is targeting domestic
consumption in Mozambique using reinforced existing transmission
capacity to meet current demand.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCGMGZFNLDGNZM
(END) Dow Jones Newswires
March 30, 2017 02:00 ET (06:00 GMT)
Solgenics (LSE:SGN)
Historical Stock Chart
From Apr 2024 to May 2024
Solgenics (LSE:SGN)
Historical Stock Chart
From May 2023 to May 2024