JOHANNESBURG (miningweekly.com) – Aim- and AltX-listed Kibo Mining has signed a new deal with a Chinese firm to jointly develop its Rukwa coal-to-power project (RCPP) in Tanzania.
The Joint Development Agreement (JDA) with China-headquartered engineering, procurement and construction (EPC) group Sepco III would see the project transferred into a special purpose vehicle (SPV), after the conclusion of the definitive feasibility study (DFS) in October.
“This agreement aligns the Kibo team with the technical capability of Sepco, ensuring the finalisation of feasibility work and the ultimate design, construction and delivery of the RCPP will be undertaken in accordance with world-class standards,” Kibo CEO Louis Coetzee said on Monday.
Kibo would hold a minimum equity position of 85% of the SPV, while Sepco would hold 15%, earning its equity through the contribution of up to $3-million toward the DFS and all related activities to the point of financial close in December.
“We are extremely pleased that Sepco is contributing [some of the] funding that is required to complete the remaining RCPP feasibility study work, which defrays costs for Kibo and demonstrates a strong belief in the commercial viability of the RCPP,” he commented.
Coetzee told Mining Weekly Online that the conclusion of the months-long negotiations with its new technical partner, following months of multiple discussions with earlier potential partners, showed the merit of the RCPP, and demonstrated the company's ability to execute projects.
The parties had a "healthy" relationship in terms of their respective expertise, with a joint management committee formed to bring the capabilities of both companies seamlessly together.
Sepco, the sole EPC contractor for the project, would be responsible for leading the power generation component of the DFS, while Kibo focused on the mining component.
Following the DFS completion, the parties would identify and review suitable construction providers and power plant operators to build and operate the RCPP.
Sepco and Kibo would also collaborate to identify, review and confirm the appropriate financing structure for the RCPP construction process and relevant financing partners.
The JDA enabled the introduction of new parties to fund feasibility study work, besides others. It also allowed both companies to dispose part of their respective shares in the SPV to raise capital.
The agreement remained subject to the finalisation of due diligence, including a site visit this week, and any required internal and governmental approvals.