TIDMKIBO
RNS Number : 6679K
Kibo Mining Plc
20 April 2015
Kibo Mining Plc (Incorporated in Ireland)
(Registration Number: 451931)
(External registration number: 2011/007371/10)
Share code on the JSE Limited:KBO
Share code on the AIM: KIBO
ISIN: IE00B97C0C31
("Kibo" or "the Company")
Dated: 20 April 2015
Rukwa Coal to Power Project - Joint Development Agreement
Signed
Kibo Mining Plc ("Kibo" or the "Company") (AIM:KIBO; JSE AltX:
KBO), the Tanzania focused mineral exploration and development
company, is pleased to announce that the Company has now signed a
Joint Development Agreement ("JDA") in respect of the Rukwa Coal to
Power Project ("RCPP").
Highlights
-- Joint Development Agreement signed for the Rukwa Coal to Power Project;
-- Development partner confirmed as SEPCO III of QingDao, China,
one of the world's largest and technically most experienced EPC
(Engineering, Procurement and Construction) organisations;
-- SEPCO III to contribute up to US$3million towards completing
remaining Definitive Feasibility Study work by October 2015;
-- Upon successful completion of the Definitive Feasibility
Study, the RCPP will be transferred into a Special Purpose Vehicle
in which Kibo Mining will hold a minimum equity position of 85%,
protecting and retaining maximum shareholder value in the RCPP as
it develops;
-- Under the agreement Kibo is also able to further release
value in the SPV by part disposal of its interest. This will
generate cash which can, if required, be used to fund any ongoing
RCPP cost contribution, allowing the project to be operationally
self-financing for Kibo;
-- Financial Close for RCPP expected by December 2015, with
construction mobilisation commencing during Quarter 1 of 2016
-- Construction work expected to commence in Quarter 2 of 2016,
with completion and first power delivered into the grid, expected
by Quarter 1 2019.
Louis Coetzee, Chief Executive Officer of Kibo Mining plc,
commented: "Kibo Mining is delighted to confirm that we have
concluded a Joint Development Agreement with Sepco III one of the
world's largest, most technically capable and financially robust
EPC providers.
This agreement aligns the Kibo team with the technical
capability of Sepco III, ensuring the finalisation of feasibility
work and the ultimate design, construction and delivery of the RCPP
will be undertaken in accordance with world class standards.
We are also extremely pleased that Sepco III is contributing
funding that is required to complete the remaining RCPP feasibility
study work, which defrays costs for Kibo and demonstrates a strong
belief in the commercial viability of the RCPP.
The structure of this transaction means the original cost of
acquisition of the Rukwa Project and all Kibo's expenditure
thereafter will be fully recognised in the Special Purpose Vehicle
that will ultimately hold the RCPP asset. Kibo will get full
recognition for the value that has been created in the RCPP to
date, as opposed to a mere recognition of direct expenditure. As a
consequence the RCPP will generate optimal returns for Kibo from
any value created going forward. This is the very reason why the
Company held out for so long before it signed a Joint Development
Agreement, since we had to make sure that a Joint Development
Agreement on the RCPP rewards shareholders appropriately for
current value, but most importantly secures shareholders' position
for maximum returns on the RCPP's future value.
Kibo and its shareholders will therefore retain a significant
interest in the RCPP throughout all stages of development and
thereafter during power revenue generation, providing exposure to
the substantial project valuation upside. The additional
optionality in the JDA means that Kibo can transact over its
remaining holding interest to release value in the project,
including to cover feasibility costs or to provide a commercial
return for the Company and shareholders.
Engaging with a highly respected EPC partner adds technical
capability for project delivery, providing considerable reassurance
for all stakeholders. It also initiates the Company's
commercialisation of the RCPP for shareholders and marks a key
point in the RCPP development for the Tanzanian government and
local communities, who will benefit from the life-changing
enhancement of living standards and opportunity this project will
provide.
We look forward to working with Sepco III who we have found to
be a highly capable, practical and proficient team."
Joint Development Agreement Overview
A JDA has been signed between Kibo Mining and SEPCO III ("the
parties") wherein the parties have agreed to jointly develop the
Rukwa Coal to Power Project. Further information in respect of the
RCPP is provided separately below. (NOTE: Please follow the
following link for extensive background information on SEPCO III:
http://www.sepco3.com/profile/columnsId=1.html )
The JDA is subject to finalisation of Due Diligence, including a
site visit which is scheduled for week commencing 20(th) April
2015.
Subject to the two companies' required internal approvals as
well any required governmental approvals, SEPCO III will invest in
equity in respect of the RCPP to a maximum of 17% of total equity
in the SPV which will ultimately hold the RCPP asset as detailed
below. This investment will take the form of a contribution toward
the completion of the Definitive Feasibility Study and all related
activities leading in effect to the point of financial close.
Subject to reasonable conditions with regard to the selection of
any additional operational or financing partners, this JDA enables
the introduction of new parties to fund, amongst other items,
feasibility study work. Both companies will also be able to dispose
of an additional proportion of its project holding in the SPV in
order to raise capital.
SEPCO III will retain specfic responsibility to lead the Power
Generation component of the Definitive Feasibility Study and Kibo
Mining will lead the Mining component. It is expected that the
Definitive Feasibility Study across both Mining and Power
Generation compents will be completed by October 2015.
During completion of the Definitive Feasibility Study the
partners will collaborate with regard to identification and review
of construction providers and power plant operators to identify
suitable organisations to build and operate the completed RCPP. The
partners will also collaborate to identify, review and confirm the
appropriate financing structure for the RCPP construction process
and relevant financing partners. In addition, the Definitive
Feasibility work will also include negotiation and agreement of a
Power Purchase Agreement, Implementation Agreement and
Environmental Impact Assessment.
After successful completion of Definitive Feasibility Studies,
and assuming the project is deemed feasible, a Special Purpose
Vehicle will be established into which the RCPP will be
transferred. Kibo Mining will hold at least 85% of this SPV and
SEPCO III up to 15% of total equity.
SEPCO III will be the sole EPC contractor for the RCPP, subject
to the submission by SEPCO III of an EPC proposal at financial
close, which, when independently evaluated, complies with the
following:
-- The EPC proposal must be price competitive against
international benchmarks for similar EPC contracts; and
-- The EPC proposal must demonstrate international industry best practice standards.
It is anticipated that financing for the RCPP will be available
at a 70% debt to 30% equity gearing ratio. The specific providers
of both debt and equity capital will be identified during the
course of 2015 but only confirmed during financial close in
December 2015. Standard Bank, financial advisors for the RCPP, will
play an integral role in the financing discussions and process.
RCPP Background
Through the RCPPKibo Mining is seeking to mine a 109Mt NI 43-101
compliant thermal coal resource, utilising this coal for a mine
mouth 250MW to 300MW thermal power station. This project is in the
development stage, with Definitive Feasibility work ongoing.
Various reports have been released on this project in the last
quarter of 2014, as detailed below. The project has the support of
the Tanzanian government at all levels as well as the local
community, and is a key component of the Tanzanian National
Strategic Energy Plan which is looking to resolve the shortage of
power in the country, notably in the region where the project is
located.
RCPP Technical Findings to Date
During Q4 2014 and following the extensive review and analysis
of the RCPP by third party advisors, Competent Persons' Reports
were prepared in respect of both Mining and Power Generation
components of the RCPP. These technical findings are summarised
below:
Mining Component
Completion of Concept Study Report (Stage 1, Phase 1 of the
Definitive Mining Feasibility Study) for the Rukwa Mineral Resource
by Minxcon Projects (Pty) Ltd. Report findings were announced on 9
December 2014, with highlights including:
-- Four alternative options identified for project development
with the project financially feasible for all four alternative
options evaluated;
-- Capital Investment of between US$46 million and US$89 million;
-- Annual coal sale revenues estimated between US$37 million and
US$44 million depending on the selected option;
-- All-in in Cost Margin estimates of 38% to 45% (equates to an
indicative annual margin of US$14.8 million to US$19.4
million);
-- NPV of US$116 million to US$141 million at 5.7% discount rate
with payback period 3.9 to 4.7 years
Thermal Power Station Component
Completion of Power Pre-Feasibility Report by Aurecon. Report
findings were announced on 18 December 2014, with highlights
including:
-- Four thermal plant configurations were assessed with
recommendation for 2 X 150 megawatt Circulating Fluidised Bed
option to be evaluated at Feasibility Study stage;
-- Total capital cost estimated at between US$640 million to
US$760 million depending on plant configuration;
-- Indicative annual power generated (dependent on plant option
selected) between 1,841 gigawatt hours per annum and 1,877 gigawatt
hours per annum;
-- High level environmental risk analyses identified no major obstacles to development;
-- Additional Rukwa Mineral Resource sufficiently large enough
to potentially double the current design size to 600 megawatts or
to be used in alternate energy conversion technologies.
Completion of preliminary base case financial model for RCPP by
the Company as announced on 18 December 2014 with highlights
including:
-- Estimated indicative Life of Plant revenues of approximately US$7.8 billion to US$8.4 billion;
-- Indicative project NPV of between US$230 million and US280 million (at a 15% discount rate);
-- Indicative pre-tax equity IRR > 23%; and
-- Indicative post-tax payback of 8 to 9 years
Contacts
+27 (0) 83 2606126 Kibo Mining Chief Executive Officer
Louis Coetzee plc
------------------ ------------------- -------------------- ------------------------
Andreas Lianos +27 (0) 83 4408365 River Group Corporate Adviser
and Designated Adviser
on JSE
------------------ ------------------- -------------------- ------------------------
Elliot Hance +44 (0) 207 382 Beaufort Securities Broker
8300 Limited
------------------ ------------------- -------------------- ------------------------
Oliver Morse +61 8 9480 2500 RFC Ambrian Nominated Adviser
Limited on AIM
------------------ ------------------- -------------------- ------------------------
Daniel Thöle +44 (0) 203 772 Bell Pottinger Investor and Media
Lucinda Alderson 2500 Relations
------------------ ------------------- -------------------- ------------------------
Kibo Mining - Notes to editors
Kibo Mining is listed on the AIM market in London and the AltX
in Johannesburg. The Company is focused on exploration and
development of mineral projects in Tanzania, and controls one of
Tanzania's largest mineral right portfolios. Tanzania provides a
secure and stable operating environment for the mineral resource
industry and Kibo Mining therein.
Kibo Mining holds a thermal coal deposit at Rukwa, which has a
significant JORC compliant defined resource (See Table 1 below),
and is developing a 250-350MW mouth-of-mine thermal power station
with an established management team that includes Standard Bank as
Financial Advisor. Kibo is undertaking a Coal Mining Definitive
Feasibility Study and a Power Pre-Feasibility Study for Rukwa.
The Company also has extensive gold focused interests including
Lake Victoria Goldfields and Morogoro projects. At Lake Victoria,
the Company has projects with a 550,000oz JORC compliant gold
Mineral Resource at Imweru Project (See Table 2 below) and a
168,000oz NI 43-101 compliant gold Mineral Resource at the Lubando
Project (See Table 3 below) in which the Company holds a 90%
attributable interest. The Company is currently undertaking a
Definitive Feasibility Study on its Imweru Project.
Kibo also holds the Haneti Project on which the latest technical
report confirms prospectivity for nickel, PGMs, gold and strategic
metals including Lithium.
Kibo Mining further holds the Pinewood (coal & uranium)
project where the company has signed a MOU to enter into a 50/50
Exploration Joint Venture with Metal Tiger plc.
Finally the Company also holds the Morogoro (gold) project where
the company has signed a MOU to enter into a 50/50 Exploration
joint Venture with Metal Tiger plc.
The Company's projects are located in the established and gold
prolific Lake Victoria Goldfields, the emerging goldfields of
eastern Tanzania and the Mtwara Corridor in southern Tanzania where
the Government has prioritised infrastructural development
attracting significant recent investment in coal and uranium. The
Company has a positive working relationship with the Tanzanian
government at local, regional and national levels and works hard to
maintain positive relationships with all communities where company
interests are held. The Company recognises the potential to enhance
the quality of life and opportunity for Tanzanian citizens through
careful development of its projects.
Updates on the Company's activities are regularly posted on its
website www.kibomining.com
Technical data
Rukwa Mineral Resource
Table 1 below presents a table showing the Mineral Resource
estimate for the Rukwa Coal Project. The table is taken from an NI
43 101-Compliant Report by GEMECS (Pty) Ltd dated April 2012.
Table 1
RUKWA COAL RESOURCE SUMMARY- GEMECS (Pty) Ltd
--------------------------------------------------------
SEAM NI 43-101 IN SITU
---------- ----------------- ---------- -------------
SEAM THICKNESS CLASS MILLION TONS
---------- ----------------- ---------- -------------
S4 1.14 Indicated 2.17
---------- ----------------- ---------- -------------
S3U 2.04 Indicated 6.92
---------- ----------------- ---------- -------------
S3L 2.3 Indicated 12.63
---------- ----------------- ---------- -------------
S2 3.45 Indicated 23.43
---------- ----------------- ---------- -------------
S1U 2.48 Indicated 7.34
---------- ----------------- ---------- -------------
S1L 2.92 Indicated 17.4
---------- ----------------- ---------- -------------
S0 1.08 Indicated 1.44
---------- ----------------- ---------- -------------
Total Indicated Resources 71.34
----------------------------- ---------- -------------
S4 1.31 Inferred 1.38
---------- ----------------- ---------- -------------
S3U 2.24 Inferred 2.94
---------- ----------------- ---------- -------------
S3L 2.27 Inferred 3.86
---------- ----------------- ---------- -------------
S2 3.42 Inferred 7.94
---------- ----------------- ---------- -------------
S1U 2.05 Inferred 6.5
---------- ----------------- ---------- -------------
S1L 3.15 Inferred 12.83
---------- ----------------- ---------- -------------
S0 1.06 Inferred 2.6
---------- ----------------- ---------- -------------
Total Inferred Resources 38.05
----------------------------- ---------- -------------
TOTAL RESOURCES *109.39
----------------------------- ---------- -------------
*Kibo holds 100% of the Rukwa Mineral Resource
Imweru Mineral Resource
Table 2 below presents a table showing the Mineral Resource
estimate for the Imweru Project at a base case economic cut-off
grade for the reporting of the resource of 0.4 g/t. The table is
taken from a JORC-Compliant Report by Tetra Tech EBA dated February
2014.
Table 2
Material Cut- Specific Metric Gold Contained
Area Type Classification off Gravity Tonnes Short Grade Gold Ounces
(g/t) (t) Tons (g/t) (troy)
========= ============= ================== ======== ============ ============ ============ ======== ===============
Laterite Indicated 0.40 2.50 131,000 144,000 1.785 8,000
============= ============================ ======== ============ ============ ============ ======== ===============
Saprolite Indicated 0.40 2.50 706,000 778,000 1.387 32,000
============= ============================ ======== ============ ============ ============ ======== ===============
Bedrock Indicated 0.40 2.89 1,895,000 2,089,000 1.043 64,000
============= ============================ ======== ============ ============ ============ ======== ===============
Central Total Indicated 0.40 2.77 2,732,000 3,012,000 1.168 103,000
========= ============= ================== ======== ============ ============ ============ ======== ===============
Laterite Inferred 0.40 2.50 685,000 755,000 1.317 29,000
============= ============================ ======== ============ ============ ============ ======== ===============
Saprolite Inferred 0.40 2.50 1,047,000 1,154,000 1.040 35,000
============= ============================ ======== ============ ============ ============ ======== ===============
Bedrock Inferred 0.40 2.89 7,838,000 8,640,000 1.029 259,000
============= ============================ ======== ============ ============ ============ ======== ===============
Central Total Inferred 0.40 2.82 9,569,000 10,548,000 1.051 323,000
========= ============= ================== ======== ============ ============ ============ ======== ===============
East Total Inferred 0.40 2.70 2,653,000 2,925,000 1.449 124,000
========= ============= ================== ======== ============ ============ ============ ======== ===============
Indicated 0.4 2.77 2,732,000 3,012,000 1.168 103,000
========================================== ======== ============ ============ ============ ======== ===============
Inferred 0.4 2.79 12,222,000 13,473,000 1.137 447,000
========================================== ======== ============ ============ ============ ======== ===============
Imweru Property Combined
Total (inf+ind) 0.4 2.79 14,954,000 16,485,000 1.143 550,000
======================== ================== ======== ============ ============ ============ ======== ===============
*Kibo holds 90% of the Imweru Mineral Resource
* Total estimates are rounded, based on composites capped at 26
g/t gold at Imweru Centraland 25 g/t at Imweru East, the cut-off
grade isbased on a gold price of US$1,200 and a 90% metallurgical
recovery is assumed in calculation of cut-offgrade. A base case of
0.40 g/t has been selected.
** Classification of MineralResources incorporates the terms and
definitions from the Australian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves (JORC Code) published
bythe Joint Ore Reserve Committee (JORC)
Lubando Mineral Resource
Table 3 below presents a table showing the Mineral Resource
estimate for the Lubando Project at a base case economic cut-off
grade for the reporting of the resource of 0.5 g/t Au. The table is
taken from an NI 43 101-Compliant Report by EBA Engineering
Consultants Limited (now part Tetra Tech EBA) dated August
2009.
TABLE3: LUBANDO MINERALRESOURCE SUMMARY - BASECASE*
-------------------------------------------------------------------------------------------------------
East Zone East Zone
Category West Zone South East Zone North Total
Mid
--------------------------- -------------- ------------- ------------- ------------- -------------
Measured Resource
--------------------------- -------------- ------------- ------------- ------------- -------------
Measured Resource(t) 107,900 4,880 16,900 54,440 184,150
--------------------------- -------------- ------------- ------------- ------------- -------------
Grade(g/t) 1.69 2.52 1.72 2.48 1.95
--------------------------- -------------- ------------- ------------- ------------- -------------
Total Gold(oz) 5,900 400 950 4,340 11,500
--------------------------- -------------- ------------- ------------- ------------- -------------
Indicated Resource
--------------------------- -------------- ------------- ------------- ------------- -------------
Indicated Resource(t) 280,710 18,330 61,000 149,350 509,420
--------------------------- -------------- ------------- ------------- ------------- -------------
Grade(g/t) 1.61 2.23 1.89 2.73 1.99
--------------------------- -------------- ------------- ------------- ------------- -------------
Total Gold(oz) 14,500 1,300 3,700 13,120 32,600
--------------------------- -------------- ------------- ------------- ------------- -------------
Inferred Resource
--------------------------- -------------- ------------- ------------- ------------- -------------
Total Resource(t) 1,090,000 65,470 209,340 535,330 1,900,140
--------------------------- -------------- ------------- ------------- ------------- -------------
Grade(g/t) 1.27 1.56 3.34 3.13 2.03
--------------------------- -------------- ------------- ------------- ------------- -------------
Total Gold(oz) 44,550 3,300 22,500 53,900 124,200
--------------------------- -------------- ------------- ------------- ------------- -------------
*Kibo holds 90% of the Lubando Mineral Resource
* Numbers are rounded. Composites capped at 10.85g/t gold.
Cut-off grade of 0.5 g/t gold based on a gold price of US$850/oz
and assumed 100% metallurgical recovery.CIM definitions were
followed for Mineral Resources.
Pursuant to the terms of an inherited agreement with Barrick
East Africa Exploration LTD (BEAL), Kibo currently has an effective
90% interest in the Imweru and Lubando Project (and thus a 90%
attributable interest in the Imweru and Lubando Mineral Resources
shown in Table 2 and 3 above), with Barrick having a 10% carried
interest up to a decision to mine at which point they have to
contribute or be diluted to a 2% net smelter royalty. BEAL also has
a first right of refusal pursuant to which they can buy the 90%
interest in the project at an agreed market related value after
completion of a Bankable Feasibility Study. Kibo remains the
operator of the project.
Review by Qualified Persons
The information in this announcement that relates to the Rukwa
Coal Mineral Resource is taken from a report titled "Independent
Technical Report for the Rukwa Coal Project, Mbeya Region, United
Republic of Tanzania" dated 19(th) April 2012 by CD van Niekerk
Director and Principal Geologist with the firm GEMECS (Pty) Ltd. Mr
van Niekerk is a Professional Natural Scientist with the South
African Council for Natural Scientific Professions (SACNASP),
Registration No. 400066/98 and a Fellow Member of the Geological
Society of South Africa. He has relevant experience and technical
qualifications to be a "Qualified Person" for reporting coal
resources to the NI 43-101 Standard
Information in this announcement that relates to the Imweru
Mineral Resource is taken from the report titled "Resource Update
for the Imweru Property Geita Region Northern, Tanzania, JORC
Competent Persons Report" dated February 17(th) 2014 (the
"Report"). The Report states a JORC-compliant Mineral Resource
estimate and was prepared for Kibo Mining plc by James Barr P.Geo.
and Darryn Hitchcock P.Geo. Senior Geologist and Geologist
respectively with TetraTech EBA Ltd. Both Mr. Barr and Mr.
Hitchcock are registered as Certified Professional Geologists with
Association of Professional Engineers and Geoscientists of British
Columbia a recognised professional organisation. Mr Barr as
principal author responsible for the Report has experience in the
evaluation and reporting of Archaean Gold projects and is a
"Qualified Person" for reporting gold resources to the JORC
Standard. He consents to the inclusion in this document of the
matters based on his information in the form and context in which
they appears.
The information in this announcement that relates to the Lubando
Mineral Resources is taken from a report titled "Technical Report
on the Lubando property, Mwanza, Tanzania" dated 31(st) August
2009" (the "Report") The Report is NI 43-101 compliant and was
prepared for Great Basin Gold Rusaf Gold Limited by Nathan Eric
Fier C.P.G., P.Eng. Market Director for EBA Engineering Consultants
Ltd and a Senior Mining Consultant. Mr. Fieris registered as a
Certified Professional Geologist with the American Institute of
Professional Geologists, Registration No 10062, and a professional
Engineer in British Columbia, Canada Registration No. 135165. He
has extensive experience in the evaluation and reporting of
Archaean Gold projects.
The Company's Exploration Director, Noel O'Keeffe has reviewed
the resource reports and the references to them in this
announcement.
Johannesburg
20 April 2015
Corporate and Designated Adviser
River Group
This information is provided by RNS
The company news service from the London Stock Exchange
END
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