JOHANNESBURG (miningweekly.com) – A first-stage definitive mining feasibility study (DMFS) of Kibo Mining’s Rukwa coal-to-power project (RCPP), in Tanzania, has revealed four alternative options for project development, with the project financially feasible for all of the options investigated.
The early-stage findings suggested yearly estimated coal sale revenues of between $39-million and $43-million, assuming sales of 1.6-million tons, with all-in cost margins ranging from 38% to 45% for a 27-year mine life.
Applying this margin, Kibo believed that a yearly margin of between $14.8-million and $19.4-million would be generated and, applying a real discount rate of 5.7%, the best estimated net present value (NPV) ranged from between $116-million and $141-million.
“We are delighted to deliver this DMFS update to investors. The report is highly significant in numerous areas, but notably in respect of the all-in cost margin range, which is significantly above the 25% level considered healthy for this type of project.
“We are also delighted with the estimated NPV range, which demonstrates the value of just one component of Kibo Mining's assets,” CEO Louis Coetzee said in a statement on Tuesday.
He added that the cost margin and NPV ranges were particularly impressive, given the “very prudent” assumptions applied.
This was, Coetzee argued, evidenced by the use of coal pricing significantly below the current market price, reflecting the “robust economies” of the project as well as the prudent initial DMFS assumptions.
“As a result, this represents a base-case valuation for the project. Furthermore, we would note that this valuation, pertaining as it does to the coal mining element of the RCPP, is solely in respect of an input, or coal supply, to power generation. The power element is expected to be considerably more substantial in terms of operational revenues and its proportionate significance in respect of the economic potential of the RCPP,” Coetzee emphasised.
Kibo expected to receive the final power prefeasibility study shortly and would update the market on the report and its findings thereafter.