8th Jul 2016 07:05
LONDON (Alliance News) - Kibo Mining PLC Friday said it has further improved the economics of the Mbeya project in Tanzania after the miner published the eagerly-awaited study covering the mining element of the project.
Mbeya will consist of a coal mine that will feed into a power plant to generate power for the domestic market. Kibo is developing the mining element and the power plant in two separate phases, but they will both form part of the overall project.
The studies for the power plant have been completed and, following the publication of the study covering the mining operation on Friday, Kibo will now integrate the two to form one bankable feasibility study for the Mbeya project, which will mark a significant milestone for the company.
On Friday, the miner published the definitive feasibility study for the mining element of the operation which showed Kibo has managed to improve the return while lowering costs and funding requirements further.
Kibo said the internal rate of return of 69.2% represents a 15% improvement from the IRR of 53.9% that was detailed in the pre-feasibility study for the mining operation and the payback period has also been improved by 7.0%, falling to 2.4 years from the previous 2.6 years.
The peak funding requirement now stands 54% lower than what the pre-feasibility study suggested and is now forecast to hit USD17.0 million.
The all-in cost margin has been declared at 39%, which can be compared to the pre-feasibility study that had a cost margin of 49%. That has been lowered due to greater accuracy in modelling key cost drivers, Kibo said.
Kibo has also reduced the amount of coal that the power plant will need by 23% compared to what was suggested in the pre-feasibility study by adjusting the mining method, which it said will bring about "significant environmental and cost benefits". Kibo stressed the mining method that has been chosen still ensures that all coal seams can be mined accurately, reliably and still be of a consistent quality.
"Although this will result in a linear reduction of revenue for the coal mine, this is more than recovered in cost savings for the power plant which is most sensitive to fuel costs. The most important gain from the efficiencies and effectiveness of the mining method is however in the notably reduced overall environmental impact of both the mine and the power station," said Kibo.
By Joshua Warner; [email protected]; @JoshAlliance
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