1st Jun 2007 10:15
IPSA Group PLC01 June 2007 IPSA Group PLC ("IPSA" or "the Company") 1 June 2007 Update: Further expansion in Eastern Cape IPSA is making good progress in expanding its portfolio of power generationprojects in the Eastern Cape province of South Africa. Two important additionsto capacity are now planned at the Elitheni Clean Coal Project ("Elitheni CleanCoal") and at the combined heat and power ("CHP") project for da Gama Textiles("da Gama"). Elitheni Clean Coal is an existing project under development where IPSA intendsto build and operate a mine-mouth coal-fired plant at Indwe to the north of PortElizabeth and East London. IPSA had originally intended to develop 400 MW ofcapacity on a site adjacent to Elitheni's Guba coal reserves at Indwe.Following further investment in recent months by the owners of the Elitheni coalmine in proving up the coal deposits at the site, IPSA believes that there issufficient commercial reserves of coal in place to increase the Elitheni CleanCoal power plant from 400 MW to 500 MW based on two generating blocks of 250 MWeach. This change will provide extra generation capacity in a part of SouthAfrica which needs new local capacity. IPSA is now in discussions regarding a joint venture at Elitheni Clean Coal withlocal Black Economic Empowerment groups which will allow for the rapiddevelopment of the power plant in parallel with development of the coal reserve. In a further development, IPSA now intends to increase the size of its CHPproject at da Gama Textiles in East London from 7 MW to 80 MW. This increasefollows on from discussions with da Gama to permit an enlarged plant footprinton its site. The da Gama plant is one of the largest textile plants in thesouthern hemisphere. The enlarged da Gama CHP facility will provide steam forthe textile plant as well as additional electrical capacity for industrial usersin East London, Eastern Cape. IPSA is in final negotiations with its potential Black Economic Empowermentpartners regarding the refinancing of its 18 MW Newcastle power plant and thefinancing of the 1,600 MW Coega Fast Track CCGT project. The Board of IPSAintends to announce the final agreement in the near future. In the meantime,Newcastle has achieved its first revenues and has successfully completed itscommissioning. In South Africa the aggregate electricity demand situation in the countrycontinues to work in the Company's favour. In the week ended 25 May 2007 anumber of South African power-system demand records were broken. These includedthe morning peak, evening peak, the maximum night minimum demand and the dailyenergy usage levels. The individual record for peak demand was broken threetimes during the course of that week. On 24 May 2007Eskom issued a warning thatfurther load-shedding (i.e., power cuts) would be "inevitable" if users ofelectricity did not reduce their consumption during peak periods. The Directors of IPSA believe that the growth of the South African economy willresult in ever-increasing extra demand for electricity, which the Company iswell-placed to help fulfil. According to the South African Reserve Bank, theannualised rate of real economic growth accelerated from 4.5 per cent in thethird quarter of 2006 to 5.5 per cent in the final quarter on account of animprovement in growth in all the main sectors of the economy. Growth is forecastto continue at a rapid rate in 2007 and beyond. Peter Earl, CEO of the Company, said: 'We are very pleased to be expanding our portfolio of power projects in theCape. Last week saw South Africa break all records for the peak demand forelectricity with national power cuts yet again from shortages of generationcapacity. IPSA intends to bring its new capacity on stream as fast as possibleto meet the desperate need for power in South Africa.' For further information contact: Peter Earl, CEO, IPSA Group Plc 020 7793 7676 Liz Shaw, COO, IPSA Group Plc 020 7793 7676 John Llewellyn-Lloyd, Noble & Company Limited 020 7763 2200 Sean Lunn, Hichens, Harrison (South Africa) Ltd +2721 950 2711 Allan Piper, First City Financial 020 7242 2666 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
IPSA.L