9th Jun 2015 08:43
LONDON (Alliance News) - Kibo Mining PLC Tuesday said the SEPCO III board has approved the proposed joint development agreement between the two companies for the Mbeya coal-to-power project in Tanzania which was announced in April.
"This marks a crucial milestone in the implementation process of the joint development agreement, and I am delighted to confirm to our shareholders that the material conditions precedent to the JDA, are now satisfied," said Chief Executive Louis Coetzee.
The Mbeya coal-to-power project was re-named in April when the agreement was proposed, and was previously called the Rukwa coal-to-power project.
Under the agreement, SEPCO III and Kibo will jointly develop the Mbeya project and SEPCO will make an equity investment for no more than a 15% stake in a special purpose vehicle which will hold the Mbeya asset. The investment by SEPCO will be put toward the definitive feasibility study and related activities and Kibo will hold a minimum 85% stake in the vehicle.
SEPCO will have specific responsibility to lead the power generation component of the study and Kibo will lead the mining component. It is expected that the DFS will be completed by October. Whilst that is being completed, both companies will look into financing for the project and securing a power purchase agreement, implementation agreement and environmental impact assessment.
Kibo is expecting to finance the Mbeya project at around a 70% debt and 30% equity gearing ratio, but said the final figures will not been known until December.
Fellow AIM-listed Metal Tiger PLC holds a 3.67% interest in Kibo following a deal in November 2014.
Kibo shares were up 6.3% to 5.05 pence per share on Tuesday morning, whilst Metal Tiger shares rose 4.4% to 0.887 pence.
By Joshua Warner; [email protected]; @JoshAlliance
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