Mineral exploration and development company Kibo Mining should have sufficient funding to complete the integrated coal/power definitive feasibility study (DFS) report for its Rukwa coal-to-power project, in Tanzania, by the second quarter of this year, Hume Capital said in a research note last month.

The Rukwa project entails the twin track development of a coal mine based on an existing resource and a 250 MW to 300 MW mouth-of-mine thermal power plant, aimed at addressing Tanzania’s expected future power generation needs.

The country currently has less than 1 000 MW of power generation capacity operational of the 2 000 MW it requires and, with a projected gross domestic product growth rate of 7% a year in the medium term, it is facing increasing power generation undercapacity to meet its economic development needs.

“Kibo’s integrated strategy makes sense, given the recent downward pressure on commodity prices, and should help reduce Kibo’s exposure to the commodity cycle, thereby lowering earnings volatility and improving shareholder returns,” Hume says.

Kibo started the first phase of the Rukwa definitive mine feasibility study (DMFS) in the second half of last year, with the results received in December.

The company also received the results of its power prefeasibility study (PFS), covering the power generation element of the flagship project, at the end of last year.

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 exceeds expectations”, highlights 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.

Following the receipt of these results, Kibo said in a presentation to shareholders in January that it is targeting the completion of the Rukwa coal DFS as well as the power DFS by the second quarter of this year.

Hume further says that it expects Kibo’s risk profile to improve as the company advances the project through the DFS stage and secures commercial agreements and project financing.