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LONDON (Alliance News) - Kibo Mining PLC Monday said it has completed a financial optimisation study for the coal mine at the Mbeya coal-to-power project in Tanzania, which has suggested the mine has the potential to generate earnings before interest and tax of around USD23.5 million per year.
The miner said the latest study does not include the power aspect of the project, leaving the mine with an all-in cost margin varying between 47.9% to 48.1%, which will lead to Ebit between USD23.5 to USD23.6 million per year.
The mine will have a lifespan of 28 years, producing 1.5 million tonnes of coal per year to generate annual revenue of around USD48.4 million, Kibo said.
"The high all-in cost margin reflects low operating costs as a result of the proposed mining method and shallow ore body, small sustaining capital expenditure and fixed coal price as received from the power plant and is a key indicator of the robustness of the project," said the miner.
The best estimated net present value of the mine stands between USD214 to USD219 million with an internal rate of return of 54%, Kibo said. It said the internal rate of return is "substantially above the cost of debt", making it an "attractive option to consider loan financing" to fund the development.
"We are delighted to provide this update showing the outcome of the latest, more detailed work undertaken by our advisers for the MCPP," said Chief Executive Louis Coetzee.
"In particular, we are delighted with the confirmation of the net present value range of USD214 million to USD219 million which is solely in respect of the coal mining component and does not include the significantly larger power generation portion of the project," he added.
The study was based on funding the project 70% by debt financing and 30% through equity with a peak funding requirement of just over USD37.9 million, which will be spent all within the first year of development, comprising USD26.5 million in loans and 11.4 million in equity, said Kibo.
Kibo shares were up 4.4% to 5.35 pence per share on Monday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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