TIDMNCCL
RNS Number : 2855A
Ncondezi Energy Limited
27 December 2017
News Release
Project Update
27 December 2017: Following the announcements on 20 October 2017
and 9 November 2017, Ncondezi Energy Limited ("Ncondezi" or the
"Company") (AIM: NCCL) is pleased to provide an update on its
process to conclude a binding Joint Development Agreement ("JDA")
for the Company's integrated 300MW power and coal mine project in
Tete Mozambique (the "Project").
Key Highlights:
-- Integrated financial model for power plant and mine prepared for review
-- First draft of the JDA submitted for review
-- Site visit to inspect the Project's proposed development sites completed
-- Due diligence process ongoing with targeted completion end April 2018
-- Extension of submission date for binding engineering,
procurement, and construction ("EPC") and operations and
maintenance ("O&M") contracts from 31 December 2017 to 28
February 2018 agreed in principle
-- Extension of expected binding JDA finalisation date from 30
April 2018 to 31 July 2018 agreed in principle
Ncondezi Non-Executive Chairman, Michael Haworth, commented:
"The Company continues to focus on the necessary investment
conditions to agree and finalise the JDA. The Project remains one
of the most developed coal fired power projects in the region with
an estimated total cost of US$1 billion, and will provide power to
Mozambique over a 25 year period. Since signing the Non-Binding
Offer ("NBO") in November 2017, a number of significant milestones
have been completed, including the updating of the financial model
for an integrated power plant and mine project, which is
demonstrating improved economics and returns. The JDA work program
and timetable has been updated to reflect a more detailed set of
deliverables that have been agreed between the parties and resulted
in an extension to the delivery dates for the EPC and O&M
binding bids as well as the JDA. The Company believes it has
identified the correct partners to deliver the Project and is
focusing all resources on successfully completing the JDA
process."
Enquiries
For further information please visit www.ncondezienergy.com or
contact:
+27 (0) 71 362
Ncondezi Energy: Hanno Pengilly 3566
Liberum Capital
Limited:
NOMAD & Joint Neil Elliot / Richard +44 (0) 20 3100
Broker Crawley 2000
Novum Securities
Limited: +44 (0) 20 7399
Joint Broker Colin Rowbury 9427
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 +27 (0) 71 362 3566.
Ncondezi 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.
Binding EPC and O&M contracts
Binding bids for both the EPC and O&M components of the
Project are now expected by the end of February 2018. The bids will
form a critical part of the Project development process, confirming
the technical specifications, cost and construction time. EPC and
O&M contracting services are being sought for both the power
and mine projects based on a build, own, operate model, whilst EPC
contracting services for the 92 km transmission line to connect the
Ncondezi Project to the Mozambican Grid on a build and transfer
model with national utility company, Electricity de Mozambique
("EDM"). Once verified and accepted by Ncondezi the Project
financial model can be updated to finalise the tariff envelope.
Site visit and government meetings
Technical teams completed site inspections in Tete, Mozambique
during December 2017. The inspections were extensive with visits
to:
-- the planned locations for the power plant, mine and related infrastructure;
-- the Ncondezi River which will supply water to the Project; and
-- the transmission line route and interconnection point with the Mozambican national grid.
The site visit forms an important part of both the due diligence
and EPC and O&M bid processes, and no fatal flaws or material
concerns were identified by the technical teams during the
trip.
Meetings with both Electricity de Mozambique ("EDM") and the
Ministry of Mineral Resources and Energy ("MIREME") in Mozambique
are currently planned during late January/early February 2018 to
formally introduce the Company's potential strategic partners to
the Project and update on progress and timing of the JDA. During
the site visit trip, meetings were also held with provincial
representatives from MIREME, where Government support for the
Project was reiterated.
Due diligence
Detailed due diligence formally kicked off in late November
2017, and has focused on key items for the JDA, including the power
offtake arrangements, Project status and economics, environmental
due diligence and financing. The Company has prepared a detailed
dataroom with required information to complete the due diligence
process. As an advanced stage project, the Company believes that
most of the required information is either complete or in an
advanced form for review.
The Company started receiving more advanced and technical
Q&A from early December 2017, and addressing the questions
raised in the Q&A is a priority for the Company and its
consultants. Ncondezi has also recently updated its financial model
for the move to an integrated power and mine project. This has
resulted in a number of benefits which further enhance the
projected Project economics and returns. The updated financial
model was submitted by Ncondezi for review during December 2017,
and will be finalised once updated costs and assumptions from the
EPC and O&M contract bids are incorporated.
Financing due diligence, which will include a review of lenders'
funding requirements and the Project investment structure, is
expected to start in early Q1 once the other due diligence items
have been further progressed.
Joint Development Agreement
The JDA is targeted to be finalised following successful
completion of the due diligence process and EPC and O&M bid
acceptance from Ncondezi. However the parties have agreed to try
and facilitate the JDA process by starting the drafting and
negotiation process in parallel to the other processes.
Ncondezi submitted a first draft of the JDA for review during
December 2017.
Timetable
Now that the various processes to finalise the JDA have been
started in earnest, the timetable was reviewed with a view of
ensuring timing for delivery of key milestones was realistic.
The review has resulted in a more detailed work program and set
of deliverables, and the Company has received a formal request for
an extension of the delivery date of the JDA by 3 months to end
July 2018. The full updated timetable is outlined below:
-- 28 February 2018 - Submission of EPC and O&M bids
-- 30 April 2018 - Completion of due diligence
-- 31 July 2018 - Execution of JDA
The request has been made on the basis of there being more than
expected information to review and to have some contingency should
there be any unplanned delays. Having reviewed the proposal,
Ncondezi has approved the extension on the basis that all agreed
deliverables be fast tracking where possible and that all work
streams for conclusion of the JDA will continue to run in parallel.
A formal document to record this variation is being prepared for
execution by the parties.
There is no certainty that the transactions contemplated by this
announcement will occur.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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