Name of the Project
Mbeya coal-to-power project (MCPP).

Location
Tanzania.

Client
Kibo Mining.

Project Description
The integrated bankable feasibility study (IBFS) on the MCPP has concluded that the MCPP is financially, technically and operationally a very robust project.

The IBFS comprises an integration of the definitive mining feasibility study (DMFS), the definitive power feasibility study (DPFS), the integrated financial model for the MCPP and all the other relevant technical studies on the MCPP to date.

The MCPP comprises a 122-million-tonne coal resource, of which 85.9% qualifies for the inclusion in any future reserve statement. Of this, 39-million tonnes are included in the pit design and are sufficient to satisfy the required indicative coal requirement of 39-million tonnes for 30 years.

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

The mining method developed for the Mbeya coal mine has been confirmed as modified terrace mining. Overburden will be removed using a free dig (truck-and-shovel) method, with coal seam and interburden mining using mechanised continuous surface mining. The DPFS has concluded that the power plant, which will be 250 MW to 350 MW, will require coal with a calorific value of 12.85 GJ/t.

Net power that will be generated has been estimated at 1 840 GWh/y.

Average coal and limestone consumption has been estimated at 1 497 432 t/y (as fired) and 110 359 t/y respectively.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The MCPP DMFS estimates an internal rate of return of 69.2% with a payback of 2.4 years.

Value
The MCPP DMFS estimates a peak funding requirement of $17-million.

No new figures have been released in the DPFS.

Kibo Mining remains restricted in its ability to release certain detailed information pertaining to the IBFS, owing to the company’s being engaged in highly confidential discussions with various parties, including regulatory authorities. Such information is commercially sensitive and could result in a breach of Kibo’s confidentiality obligations, subsequently harming the company’s chances to successfully complete negotiations.

The most recent figures, released in the April 2016 DPFS, confirmed the total estimated project cost of the thermal power plant as below the cost estimate stated in the power prefeasibility study (PFS) released in 2014. The power PFS estimated the project’s total cost, depending on the plant option selected, at between $640-million and $760-million.

Duration
Not stated.

Latest Developments
Kibo Mining has reached the final phase of discussions with the Tanzania Electric Supply company (Tanesco) regarding the power purchase agreement (PPA) for the MCPP.

Kibo has resubmitted a reformatted IBFS, with unchanged content, to Tanesco and the final commercial discussions on the PPA are now expected to be concluded expeditiously.

Kibo previously compiled an extensive IBFS that comprised nine chapters, with a variety of technical reports, but Tanesco requested that Kibo reformat the IBFS into its own preferred structure and format.
 

Meanwhile, Kibo has signed a strategic development agreement (SDA) with China-based Sepco III to work towards enhancing Kibo’s strategy and the development of its portfolio of energy projects.

As part of the SDA, Sepco III has committed to a two-stage equity investment in Kibo.

Sepco III has committed to acquiring an initial direct equity investment of between 10% and 15% of Kibo's issued share capital for a cash price to be agreed between the two parties.

Additionally, Sepco III has the option, at its sole discretion and within 18 months from completion of the first direct equity investment, to make a second direct equity investment in Kibo of a further 5% to 10% of Kibo's issued share.

As part of the SDA, Sepco III has, subject to completing the first equity investment, the right to become the sole bidder for the engineering, procurement and construction (EPC) contract in respect of all Kibo's existing and future energy projects anywhere in the world.

The SDA is a major endorsement, by one of the world’s largest EPC contractors, of Kibo’s portfolio and strategy Kibo CEO Louis Coetzee has said.

The SDA provides the company with short- to medium-term cash stability, and it further strengthens Kibo’s network of key partners and institutional investors to support the company as it advances its portfolio of energy projects.

The SDA is the result of many months of negotiating with Sepco III, which Coetzee has said recognises Kibo’s position as a bridgehead into the African energy arena.

Key Contracts and Suppliers
Sepco III (engineering, procurement and construction contractor) and GE (equipment, technology and services).

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.