TIDMKIBO
RNS Number : 0539I
Kibo Mining Plc
25 August 2016
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")
25 August 2016
Kibo Signs New Agreement with SEPCO III on the Mbeya Coal to
Power Project Securing Cash Payment and Avoiding Equity
Dilution
Kibo Mining plc ("Kibo" or the "Company") (AIM: KIBO; AltX:
KBO), the Tanzania focused mineral exploration and development
Company, is pleased to announce that it has signed a new Agreement
(the "Agreement") with major international China based EPC
contractor, SEPCO III. The Agreement establishes a re-defined
contractual relationship between SEPCO III and the Company
(together "the Parties") by which SEPCO III can earn the right to
become the sole bidder for the EPC contract to build the power
plant component of Kibo's, Mbeya Coal to Power Project ("MCPP").
This Agreement supersedes and replaces the existing Joint
Development Agreement currently in force between the Parties (first
announced on 20 April, 2015). The principal terms and conditions of
the Agreement are:
-- SEPCO III to refund Kibo for 50% of the total development
costs incurred by Kibo on the MCPP to date ("Development Costs"),
with a fixed first tranche in the amount of US$1.8 million to be
paid in cash to Kibo, no later than 30 August 2016;
-- SEPCO III and the Company to mutually agree by no later than 22 September 2016:
o The final amount that constitutes the Development Costs;
o The final amount to be refunded to Kibo; and
o The date at which the residual refund amount (i.e. final
amount to be refunded less the initial US$1.8m first tranche) will
be payable to Kibo.
-- Conditional on Kibo receiving the first refund tranche of
US$1.8 million and mutual agreement being reached between the
Parties on the refund payment balance due, SEPCO III will be
formally appointed sole bidder and will be required to submit an
EPC bid proposal to Kibo by 22 October 2016. This bid must meet the
EPC-specification laid down by Kibo and Tractebel Engineering (MCPP
Definitive Power Feasibility Study consultant) for the construction
of the MCPP thermal power plant. This EPC-specification requires
the EPC-bid to, amongst others, be competitive against an
international benchmark determined by Tractebel in respect of
elements such as price, technical standards, operational,
management and financial capability and capacity. The final bid
must also comply with international good practice and standards and
will in the final instance be subject to acceptance by Kibo and its
financial advisors appointed to the MCPP;
-- Subject to SEPCO III's bid proposal meeting the
EPC-specification as determined by Kibo and Tractebel Engineering,
SEPCO III will be formally awarded the EPC contract by Kibo, no
later than 23 December 2016;
-- SEPCO III will no longer earn any equity in the MCPP and all
payments made to Kibo under the Agreement, will be a cash refund
for historical development cost associated with the development of
the MCPP;
The Agreement provides for summary termination in the event of
any of the listed conditions not being met, specifically in terms
of missing any of the agreed timelines. In particular, if the
Parties cannot agree on the total amount deemed to comprise the
Development Costs by the 22(nd) September 2016 (bullet point 2
above) or do not complete signing of an EPC contract by the 23(rd)
December 2016 (bullet point 4 above), the Agreement will
terminate.
Louis Coetzee, CEO of Kibo Mining, said: "We are extremely
pleased that we have been successful in negotiating a new agreement
with SEPCO III on favorable terms that ensures the Company
continues to hold a 100% interest in the MCPP and still leaves Kibo
with full and absolute control over the further development of the
project.
Under the terms of the Agreement, the Company will benefit from
a near term cash injection which the Company can use at its sole
discretion and which will be of great assistance with the further
development of the MCPP. It also provides for a further cash
payment to be made to Kibo, subsequent to the initial tranche of
US$1.8m as partial reimbursement of the shareholder funds spent to
date on the project.
The Agreement reflects recognition of the increased value of the
MCPP by SEPCO III, following completion of the Mining and Power
Definitive Feasibility Studies earlier this year and provides for
the project to benefit from the experience of a large EPC
contractor with a proven track record of successful thermal power
plant construction in a number of countries. The Agreement also
significantly enhances the MCPP's ability to attract serious
investors on competitive terms and significantly strengthens Kibo's
position in the commercial negotiations related to the MCPP,
specifically in relation to the development of the power purchase
agreement for the project.
Contacts
Louis Coetzee +27 (0) 83 Kibo Mining Chief Executive
2606126 plc Officer
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Andreas Lianos +27 (0) 83 River Group Corporate Adviser
4408365 and Designated
Adviser on JSE
------------------ ------------ -------------------- -------------------
Jon Belliss +44 (0) 207 Beaufort Securities Broker
382 Limited
8300
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Oliver Morse +61 8 9480 RFC Ambrian Nominated Adviser
2500 Limited on AIM
------------------ ------------ -------------------- -------------------
Daniel Thöle +44 (0) 203 Bell Pottinger Investor and Media
/ Anna Legge 772 Relations
2500
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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 Mbeya, which has a
significant NI 43-101 compliant defined resource, and is developing
a 250-350 MW mouth-of-mine thermal power station, the Mbeya Coal to
Power Project ("MCPP"), previously called Rukwa Coal to Power
Project ("RCPP"), 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 the Mbeya project with an integrated Bankable Feasibility
Study report for the MCPP to be released in the near term. On 20th
April 2015, Kibo signed a Joint Development Agreement for the
completion of the Definitive Feasibility Studies and development of
the MCPP with China based EPC contractor SEPCO III.
The Company also has extensive gold focused interests including
Lake Victoria Goldfields and Morogoro projects. At Lake Victoria,
the Company has 100% owned projects with a 550,000 oz. JORC
compliant gold Mineral Resource at the Imweru Project and a 168,000
oz. NI 43-101 compliant gold Mineral Resource at the Lubando
Project. 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 entered into a 50/50 Exploration
Joint Venture with Metal Tiger plc.
Finally, the Company also holds the Morogoro (gold) project
where the company has also entered 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 prioritized 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 recognizes 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
Johannesburg
25 August 2016
Corporate and Designated Adviser
River Group
This information is provided by RNS
The company news service from the London Stock Exchange
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