JOHANNESBURG (miningweekly.com) – A consolidation of coal mining and power generation technical reports on the Rukwa coal-to-power project (RCCP), in Tanzania, into an integrated prefeasibility study (IPFS) report has shown the project to be “robust” at key consolidated financial, technical and operational levels, project developer Kibo Mining said on Tuesday.
The company said the IPFS demonstrated that the project was viable at a consolidated level, rather than purely at the coal mining or power generation stages of the RCPP, confirming the fundamentals and viability of the consolidated project and “substantially” increasing confidence levels in Kibo’s ability to successfully develop and deliver it.
According to Kibo, four alternative development option had proven to be financially, technically and operationally feasible.
It outlined an indicative project revenue range over an assumed 25-year project life of between $8-billion and $8.5-billion with an indicative pre-tax equity internal rate of return above 23% and an indicative post-tax payback, excluding any mitigation from potential government concessions and incentives, of between 7.5 and 9 years.
The indicative project net present value range, according to the IPFS, was at a 15% discount rate of between $250-million and $280-million.
Meanwhile, there was sufficient additional coal resources available from Rukwa to potentially more than double the power station’s current design size and plant life.
Moreover, the technical and environmental risk assessment did not identify any high-risk concerns and “unanimously” recommended further development of the project following a feasibility analysis.
According to the report, Rukwa could be successfully constructed and commissioned within the current projected timelines for completion, as the feasibility work done, to date, already covered a “significant” amount of work beyond the standard industry scope, required for prefeasibility compliance.
Kibo Mining CEO Louis Coetzee believed the IPFS confirmed the robust nature of the project and enabled it to pass yet another milestone “with flying colours”.
“With the validation of RCPP fundamentals, the IPFS substantially increases confidence in the project. Completion of this stage of the project’s feasibility work considerably enhances the inherent value of Rukwa and is an important factor in finalising commercial partner discussions.
“We would reaffirm to investors that our commercial negotiations continue actively. We are managing this process carefully, with our main focus being the conclusion of a joint development agreement at the earliest possible opportunity. In this regard, the company recently held separate project site visits at the RCPP, with prospective partners. Further updates will follow,” he outlined in a statement.