Name and Location
Mbeya (formerly Rukwa) coal-to-power project (MCPP), Tanzania.

Client
Kibo Mining.

Project Description
The project comprises two prospecting licences and two prospecting licence applications in south-western Tanzania, just south of Lake Rukwa.

Kibo is undertaking a twin-track development at Mbeya.

Rukwa has total in situ resources of 109.39-million tons of coal, with the coal to be fed into a 250 MW to 300 MW mine-mouth thermal power station.

Seven different coal seams exist for the Rukwa coal mine.

It has been proven that constant coal production over the total life-of-mine can be achieved.

Phase 2, Stage 1, of a prefeasibility study (PFS) on the intended Rukwa coal mine completed in August 2015 has identified four possible mining methods for the development of the mine.
– Option 1 – surface miner, contractor, no crushing.
– Option 2 – surface miner, owner mining, no crushing.
– Option 3 – free dig, contractor mining, crushing.
– Option 4 – free dig, owner mining, crushing.

The differences in the options are mainly attributable to alterations in mining operating costs and mining capital costs, with the project financially feasible for all the options.

The mining project has been assessed for a 28-year mine life, with average coal production estimated at 1.48-million tons over the life-of-mine.

Meanwhile, a prefeasibility report on the project’s thermal power station component recommends the installation of two 150 MW units.

The report further indicates yearly power generation of between 1 841 GWh and 1 877 GWh, and an additional mineral resource sufficiently large enough to potentially double the current design size to 600 MW or be used in alternate energy-conversion technologies.

Net Present Value/Internal Rate of Return
A financial optimisation study completed on the MCPP in October 2015 revealed that applying an all-in cost margin of between 47.9% and 48.1% could result in the operation’s generating yearly earnings before interest and taxes of between $23.5-million and $23.6-million.

Applying a real discount rate of 5.51%, the best estimated net present value of free cash flow to equity ranges from $214-million to $219-million, with a cash return on capital invested of 726% to 732% and a project payback period of 2.6 years.

The study has further pointed to an equity internal rate of return (IRR) ranging from 131% to 146%, with a project IRR of 54%.

Value
The MCPP technical report estimates a required capital investment of between $46-million and $89-million, and yearly coal sale revenues of between $37-million and $44-million, depending on the selected development option.

The total capital cost of the thermal power plant is estimated at between $640-million and $760-million, depending on the plant configuration.

Duration
Not stated.

Latest Developments
Kibo’s completed restatement of its Mbeya coal resource has shown an “unexpected” 10% hike in the mineral resource of the Tanzania-based asset.

The total mineral resource has increased from the 109.2-million tonnes disclosed in the 2012 resource statement to 120.8-million tonnes, comprising a measured resource of 20.9-million tonnes, an indicated resource of 88.6-million tonnes and an inferred resource of 11.3-million tonnes.

The critical milestone of the Mbeya coal resource restatement will provide input into the reserve statement currently under way and enable Kibo to progress the mining definitive feasibility study (MDFS), which is on schedule.

“The restated Mbeya coal resource . . . provides comfort that the MCPP will have sufficient reserve capacity, subject to viable MDFS results, to satisfy the energy needs for potential future expansions of the Mbeya power plant,” Kibo Mining CEO Louis Cotezee has said.

Key Contracts and Suppliers
Standard Bank (financial adviser).

On Budget and on Time?
Not stated.

Contact Details for Project Information
Kibo Mining, tel +353 91 865367, fax +353 91 755066 or email info@kibomining.com.