14th Sep 2016 10:17
LONDON (Alliance News) - Oracle Coalfields PLC on Wednesday said it is racing to reach financial closure at the mine mouth power plant located in the Thar desert in the south-eastern Sindh Province of Pakistan before the end of this year in order to secure an decent internal rate of return from the government.
Oracle shares were trading down 4.5% to 3.20 pence per share on Wednesday.
The company has been notified by the Sindh government that all coal mining projects on the indigenous Thar coalfields that reach financial closure before the end of 2016 will be awarded a dollar-based 20% internal rate of return.
Oracle has signed a shareholder framework agreement, which still needs to be formalised, whereby a consortium of new and existing Chinese partners will take 70% equity in the company's subsidiaries in Pakistan, in order to advance the development of the project.
If it can reach financial closure in time, the Sindh government will ensure the project is allowed a coal price and electricity tariff that give developers an IRR of 20%. A determination has already bee made on the coal price based on the company's mine feasibility study, at USD60.23 per tonne.
In addition to the various government incentives, the China-Pakistan Economic Corridor has been set up with the aim of Chinese banks providing finance along with Chinese governmental support in approved energy and infrastructure projects.
"We understand the total financing to be made available is in the order of USD46.00 billion across a number of projects; our Thar Block VI project is included on the list of approved projects. This will assist in expediting both Pakistani and Chinese government approvals that are required for our project," said Oracle.
"We are now working towards finalising a shareholder agreement and details of engineering, procurement and construction contracts for both the mine and the power plant. Our Chinese partners are taking the lead in discussions on debt financing with Sinosure, the Chinese Export and Credit Insurance Corp," the company added.
Oracle reported a pretax loss of GBP448,139 in the first six months of 2016, narrower than the GBP528,476 loss a year earlier after administrative costs declined.
Cash at the end of June stood at GBP1.1 million, declining from GBP1.5 million a year ago and GBP1.9 million at the end of 2015.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.
Related Shares:
Oracle Power