JOHANNESBURG (miningweekly.com) – AltX- and Aim-listed Kibo Mining has signed a new, redefined agreement with China-based contractor Sepco III, which can now earn the right to become the sole bidder for the engineering, procurement and construction (EPC) contract to build the power plant component of Kibo’s Mbeya coal-to-power project (MCPP), in Tanzania.
The agreement, which replaces the existing joint development agreement between the parties, will see Sepco awarded the EPC contract in December, subject to its bid proposal meeting the EPC specification defined by Kibo and the project’s definitive power feasibility study consultants, Tractebel Engineering, along with several other conditions outlined in the new contractual agreement.
“We are extremely pleased that we have been successful in negotiating a new agreement with Sepco III, on favourable 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,” said Kibo CEO Louis Coetzee in an update to shareholders.
Sepco will kick off its refund of 50% of the total development costs incurred by Kibo on the MCPP to date with a fixed first tranche of $1.8-million by August 30, after which the Chinese group will be formally appointed as sole bidder and will have to submit its EPC bid by October 22.
“The EPC specification requires the EPC bid to, among 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 advisers appointed to the MCPP,” Coetzee pointed out.
The agreement is also conditional on the parties agreeing by September 22 on the final amount of the development costs, the total refund amount and the payment due date.
Further, the near-term cash injection by Sepco III, which will no longer earn any equity in the MCPP, will allow Kibo to further develop MCPP.