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JOHANNESBURG (miningweekly.com) – Two days after announcing that a first-stage definitive mining feasibility study (DMFS) for the coal-mining portion of its Rukwa coal-to-power project (RCPP), in Tanzania, had revealed four financially feasible options for project development, Kibo Mining said on Thursday that it had received the power prefeasibility study (PFS) report covering the power generation element of the flagship project.
Kibo said in a statement that the PFS on the power generation component of the project, when combined with the coal mining component, “dramatically enhanced” the value of the project as a whole.
The coal-mining DMFS, which “significantly exceeded expectations”, highlighted a “conservatively” calculated project net present value range of between $116-million and $141-million at a 5.7% discount rate and an average yearly mining margin of between $14.8-million and $19.4-million a year.
Kibo added on Thursday that the power PFS had also impressed, particularly in terms of the robustness of overall project economics, including, notably, the deliverable underlying forecast free cash flow.
“This is highly significant, demonstrating the potential for the project to achieve an accelerated payback of capital expended on project development and, thus, reducing the project risk profile.
“This factor greatly assists the company, particularly when considering our ability to conclude the best terms with prospective commercial partners,” noted the miner in a statement.
Kibo CEO Louis Coetzee added that the underlying free cash flow demonstrated by the study underpinned project viability, reduced risk and considerably enhanced the economic attractiveness of the RCPP.
“The project was pursued for the exponential opportunity a combined coal mining and power generation operation offered Kibo and its shareholders. We were delighted to receive positive findings for the coal mining element and now even more so for the power generation element.
“The value being independently identified within the two reports clearly demonstrates that the RCPP is a substantially valuable and transformational asset for the company. We are also anticipating finalisation of the preliminary economic assessment report for our Imweru gold project, another asset that we consider [to] hold considerable financial and strategic value to Kibo,” he commented.
A review of the report was now under way and a separate update announcement would be provided to shareholders in due course, Kibo advised.