5th Sep 2019 12:54
(Alliance News) - Africa-focused energy company Kibo Energy PLC said Thursday it has signed two term sheet with Vale Mozambique SA, a subsidiary of Brazilian mining giant Vale SA, over the Benga power plant project in Mozambique.
The first agreement is a non-binding power purchase term sheet signed with Vale for 37% of power from phase one generation at the project.
The signing of a power purchase agreement has been targeted for finalisation in the fourth quarter of 2019, and is expected to enhance Benga's economic feasibility and fundability.
The second agreement is for a coal supply term sheet, which is for the total coal requirement of the project over its modelled 25-year life.
Through the term sheet, Kibo has negotiated a "competitive" coal price mechanism with Vale, which includes the benefits of removed a substantial part of the coal transport and handling costs by having the coal source be located within the Benga project site.
"Finalisation of both a power purchase term sheet and a coal supply term sheet in such a short span of time after the completion of a base case definitive feasibility study and independent financial model clearly reflects the commercial robustness of the project, both representing key milestones in the development of our first pure energy project," said Chief Executive Louis Coetzee.
"Ultimately, this demonstrates the urgent need and fast-growing demand for electricity in a mineral and resource rich region, which will remain unexploited without access to reliable and affordable electricity," Coetzee added.
Shares in Kibo Energy were up 6.7% at 0.80 pence in London, while its Johannesburg shares remained untraded at ZAR0.27 on Thursday.
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