Ncondezi Coal Company Limited is pleased to announce that it has successfully concluded a Power Framework Agreement with the Government of Mozambique in respect of the Ncondezi Power Project in the Tete Province, northern Mozambique.

Purpose
The PFA governs the relationship between Ncondezi and the GoM during the Development Phase of the Ncondezi Power Project and sets out the agreed pathway and requisite Government and Developer Milestones that need to be reached prior to Project Financial Close for Ncondezi to become eligible for the award of a formal Power Concession.

Significance
The PFA is, amongst others, a legal pre-requisite to the initiation of exclusive power off-take discussions with potential off-takers, including Electricidade de Mozambique, the state owned power utility company, for the conclusion of a power purchase agreement. Mozambique is one of the largest generators and exporters of electricity in sub-Saharan Africa and is strategically well positioned, with existing transmission infrastructure, to meet the shortfalls in energy supply domestically and in the broader Southern African Power Pool, especially South Africa, Zimbabwe, Botswana, Malawi and Namibia. The Ncondezi Power Project is targeting power generation in 2017 and through the conclusion of the PFA the GoM has formally undertaken to support Ncondezi as a potential integral contributor to power production in Mozambique and the broader region.

Scope
The PFA covers the first two phases of the Ncondezi project up to 600MW and stipulates that Ncondezi and the GoM shall negotiate in good faith terms and conditions that are mutually acceptable to both parties for any subsequent phases of the Ncondezi Power Project from 600MW up to 1800MW

Conditions Precedent
The PFA will become effective upon the fulfilment, or waiver by Ncondezi in its discretion, of a number of conditions precedent within 365 days of the PFA’s signature. The CPs include: (i) the conclusion of heads of terms with credible off-takers for all or part the Project’s power generation; (ii) the conclusion of heads of terms with the GoM and applicable government bodies on the local and foreign strategic shareholding in the project; (iii) a commercially bankable tax incentive structure and (iv) transmission arrangements. Ncondezi anticipates meeting all these conditions precedent within the agreed timeframe.