15th Oct 2015 08:53
LONDON (Alliance News) - Kibo Mining PLC Thursday said it has completed the first phase of work on the definitive feasibility study for the mine aspect of the Mbeya coal-to-power project in Tanzania.
The first phase of work for the mine element of the project is a "critical work stream" of the final stage of the broader mining feasibility study for the entire project, which aims to produce coal to feed into a power plant to supply energy to the domestic market.
Under the first phase, Kibo completed 820.0 metres of drilling aimed at confirming how steep the slopes would be at the open pit. It has also completed a metallurgical sampling programme which will define the quality of coal to determine how the coal will work with the power plant.
Kibo plans to update the coal resource at the project during the second phase of work.
"Understanding the context of this announcement as well as the [results announcement] of October 12 is of critical importance. The Mbeya coal-to-power project is totally dependent on the reliability and sustainability of its fuel source - ie, the Mbeya coal mine," said Chief Executive Louis Coetzee.
"The results announced on October 12 not only confirmed that the mine is technically, operationally and financially robust, but that the MCPP power component has, as a direct result thereof, a solid foundation on which it can be developed," he added.
The financial optimisation study for the coal mine released on Monday showed the mine had the potential to generate earnings before interest and tax of around USD23.5 million per year with a 28-year lifespan, producing 1.5 million tonnes of coal per year to generate annual revenue of around USD48.4 million.
The best estimated net present value of the mine stands between USD214 to USD219 million with an internal rate of return of 54%.
That study was based on funding the project 70% by debt financing and 30% through equity with a peak funding requirement of just over USD37.9 million, which will be spent all within the first year of development, comprising USD26.5 million in loans and 11.4 million in equity.
Kibo shares were up 0.7% to 5.41 pence per share on Thursday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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