1st Jul 2014 08:35
LONDON (Alliance News) - Rame Energy PLC Tuesday said its subsidiary Seawind Holdings SpA has signed an agreement with Compania Minera Cerro Bayo Ltd to supply power to the isolated electrical grid system of the Cerro Bayo mining project in Chile.
The Chile-focused energy consultant, engineer and power generator said that under the signed memorandum of understanding, which should be converted to a power supply contract within 90 days, Rame will provide power to the Mandalay Resources Ltd-owned site at an agreed price per megawatt hour for a minimum of five years with commercial operations expected to start by April 2015.
The company said the deal builds on its plan to become an independent power producer in Chile, develops its assets in the country towards achieving its target of 300 megawatts of operational assets in Latin America within the next three years, and adds to its established international energy consultancy business, which supplies power generation solutions to the industrial, mining and utility sectors.
Rame said it will provide power to the site from its own planned wind farm at the site, which will have an installed capacity of up to 1.8 megawatts. The firm said it anticipates contributing roughly 6,250 megawatt hours of electricity per year to the power supply of the mine.
The company said the capital costs for the wind farm are expected to be around USD4 million, and the project requires no environmental permitting studies to go ahead.
Cerro Bayo produces roughly 1,400 tonnes of ore per day and to date its power has come from diesel generators.
"We will look to secure and execute additional power supply contracts in tandem with the rollout of our wind power projects in Chile, the first two of which are due to commence operations by the end of 2014," Chief Executive Officer Tim Adams said in a statement.
Rame, which listed on AIM in April, started building the separate 15 megawatt Raki/Huajache wind projects in Chile in May. It expects to start putting up the wind turbines in October, and the sites should be operational in the fourth quarter. EKA Chile SA will buy all of the energy they produce for ten years.
After market close on Monday, the company had said it swung to a pretax loss of USD1.5 million in 2013 from a pretax profit of USD1.0 million the previous year, as revenues fell due to a change to its business model and an increase in administrative expenses.
Rame Energy shares were untraded at 14.625 pence on Tuesday.
By Tom McIvor; [email protected]; @TomMcIvor1
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