PPA to provide power to Cerro Bayo mine, Chile

Rame Energy / Index: Aim / Epic: Rame / ISIN: JE00BBD8GG53 / Sector: Energy

17 October 2014

Rame Energy Plc ("Rame" or the '"Company")

PPA signed to provide power to Cerro Bayo Gold and Silver mine, Chile

Rame Energy plc, the international power generator and engineering company, is pleased to announce that its wholly owned subsidiary, Seawind Holdings SpA, has signed a power purchase agreement ("PPA") with Compañia Minera Cerro Bayo Limitada ("Cerro Bayo") to supply power to the isolated electrical grid system of the Cerro Bayo mining project in Chile owned by TSX listed Mandalay Resources Limited. The PPA follows the signing of a Memorandum of Understanding with Cerro Bayo which was announced on 1 July 2014, and builds on Rame's established position as a leading supplier of off and on-grid power generation solutions to the industry, mining and utility sectors.

As previously announced, under the terms of the PPA, Rame will provide power at an agreed price per MWh to Cerro Bayo for a minimum of five years from commencement of commercial operations and thereafter on a rolling one year contract at Cerro Bayo's option. Construction of the project is, subject to financing, due to start in the next few months and commercial operations are expected to start by April 2015.

Rame CEO Tim Adams commented: "The signing of the PPA confirms that Rame is able to provide attractively priced energy to both on and off grid customers and can do so even on comparatively short term contracts. Under the agreement, Rame will provide not just cheaper and cleaner power but also better energy security and reduced price volatility to the Cerro Bayo Mine. Our innovative approach to the selection of the generating equipment for this project demonstrates how Rame is engineering improved project economics and can deliver robust returns and accelerated capital paybacks. We see a range of good opportunities to apply our expertise in renewables to isolated off grid power systems and anticipate that our increasing presence in the growing 'diesel displacement' market will contribute significant income to the business as a whole."

Further Information

Rame will provide the power from its own wind farm with an installed capacity of up to 1.8MW, to be located, at no charge to Rame, on the Cerro Bayo property. Rame has been undertaking wind and feasibility studies at the site for the last 12 months and completed its initial technical analysis in Q2 2014, which led to a power supply proposal to Cerro Bayo and subsequently the agreement on terms for the PPA. It is expected that the wind farm will contribute approximately 6,250 MWh of electricity per year to the power supply of the mine (albeit that Rame does not guarantee any minimum power delivery) and the project will work in parallel with Cerro Bayo's existing diesel generating system, located a few hundred metres away from the proposed site for the turbines. The project requires no environmental permitting studies and Rame will carry out the entire construction of the project to minimise build costs and execution of risk.

The Cerro Bayo gold and silver mine is located in Southern Chile, 130km south of Coyhaique, the capital of Region XI. It is owned by Mandalay Resources Limited which is listed on the TSX. Mining restarted in September 2010 and it produces c.1,400 tonnes of ore per day. No grid power is available at the site and to date power has been generated on site by diesel generators.

** ENDS **

For further information, please call one of the contacts below or visit the Company's website, www.rame-energy.com.