https://www.miningweekly.com

Kibo, Sepco3 wind up Mbeya project deal; to advance development

21st July 2015

By: Natalie Greve

Creamer Media Contributing Editor Online

  

Font size: - +

JOHANNESBURG (miningweekly.com) – All conditions precedent related to the agreement between Tanzania-focused mineral explorer Kibo Mining and the Shandong Electric Power Construction Corporation III (Sepco3) to develop the Mbeya coal-to-power project (MCPP), in Tanzania, have been met, allowing the parties to now advance development of the 109-million-ton resource and up to 300 MW thermal power station.

Kibo outlined on Tuesday that the conclusion of the joint development agreement (JDA) would allow the partners to conduct and complete the project’s bankable feasibility study (BFS) “at pace”.

“Kibo Mining is delighted to confirm that the JDA with Sepco3 is now unconditional, funded until completion of BFS and fully operational. This marks another crucial progressive milestone in the development of the MCPP. The execution of the JDA will, henceforth, be Kibo's first priority in the further development of the project.

“With all the most important strategic MCPP enablers now firmly in place, we can resolutely focus our entire effort on the delivery of this robust world-class project,” commented Kibo Mining CEO Louis Coetzee.

According to the terms of the deal, Sepco3’s funding contribution to the MCPP would be made as an equity investment to a maximum of 15% of total equity in a special purpose vehicle (SPV), which would ultimately hold the MCPP asset.

Kibo Mining would hold at least 85% of this SPV and Sepco3 up to 15% of total equity.

Sepco3’s investment would take the form of a contribution towards the completion of the definitive feasibility study (DFS) and all related activities leading, in effect, to the point of financial close.

“The specific providers of both debt and equity capital will be identified during the course of the year but only confirmed during financial close in December. Standard Bank – the financial advisers for the MCPP – would play an integral role in the financing discussions and process,” Coetzee held.

FEASIBILITY DRIVE
The Chinese power plant construction and engineering company would retain specific responsibility to lead the power generation component of the DFS, while Kibo would lead the mining component.

“It is expected that the DFS across both mining and power generation components will be completed by October,” said the parties.

During completion of the DFS, the partners would collaborate to identifiy suitable construction providers and power plant operators to build and operate the completed MCPP.

The partners would also collaborate to identify, review and confirm the appropriate financing structure for the MCPP construction  process.

“In addition, the DFS work will also include negotiation and agreement of  the terms of a power purchase agreement, implementation agreement and environmental-impact assessment with the appropriate Tanzanian government bodies,” said Kibo.

Sepco3 would be the sole engineering, procurement and construction (EPC) contractor for the MCPP, subject to its submission of an EPC proposal at financial close, which, when independently evaluated, was price-competitive against international benchmarks for similar EPC contracts.

The EPC proposal would also be required to demonstrate international industry best practice standards.

PROVEN PROJECT
A 2014 technical review of the MCPP’s mining component had identified four alternative options for project development, with the project financially feasible for all four alternative options evaluated.

It further estimated required capital investment of between $46-million and $89-million and yearly coal sale revenues of between $37-million and $44-million, depending on the selected option.

The study put the estimated all-in cost margin at between 38% and 45%, equating to an indicative yearly margin of between $14.8-million and $19.4-million and net present value (NPV) of between $116-million and $141-million with a payback period of 3.9 to 4.7 years. 

A prefeasibility report on the project’s thermal power station component  recommended the installation of two 150 MW units at an estimated total capital cost of between $640-million and $760-million, depending on the plant configuration.

It further indicated yearly power generation of between 1 841 GWh and 1 877 GWh and an additional mineral resource sufficiently large enough to potentially double the current design size to 600 MW or to be used in alternate energy conversion  technologies.

A 2014 preliminary base-case financial model had further estimated indicative life-of-plant revenues of between $7.8-billion and $8.4-billion, an indicative project NPV of between $230-million and $280-million and an indicative post-tax payback of up to nine years.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

Comments

Showroom

SABAT
SABAT

From batteries for boats and jet skis, to batteries for cars and quad bikes, SABAT Batteries has positioned itself as the lifestyle battery of...

VISIT SHOWROOM 
Weir Minerals Africa and Middle East
Weir Minerals Africa and Middle East

Weir Minerals Europe, Middle East and Africa is a global supplier of excellent minerals solutions, including pumps, valves, hydrocyclones,...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Hyphen, Eva mine, ferrochrome price make headlines
Hyphen, Eva mine, ferrochrome price make headlines
27th March 2024
Resources Watch
Resources Watch
27th March 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.162 0.205s - 106pq - 2rq
Subscribe Now