(Alliance News) - Ncondezi Energy Ltd on Tuesday said development work at the Tete coal mine and power plant project in Mozambique is going to plan.
Shares were 9.6% higher on Tuesday afternoon in London at 4.44 pence each.
The thermal coal mine will power a 300 megawatt power plant in northern Mozambique, which will supply energy to the country's northern grid. It is targeting first power at the end of 2023.
The project was selected by both Mozambique and China as a priority asset during the Second Belt & Road forum, which was held in China during April 2019.
The project financial model is at an "advanced" stage, Maputo-based Ncondezi said, with internal sign-off from the company's partners at Tete expected during March. Tariff submission is on track for the first quarter of 2020, with target tariff negotiation finalisation expected in the first half of 2020.
"The company continues to make good progress towards delivering on its objectives for the quarter. I am pleased to report the project financial model is at an advanced stage and nearing final sign off by the company and its partners. The signed off the financial model will form the basis for a formal tariff offer submission to Electricidade de Mocambique which is targeted for the end of March," said Chief Executive Hanno Pengilly.
"The company and its partners are focused on delivering a competitive tariff offer in line with previously agreed tariffs in Mozambique, supported by an attractive financing package from one of the world largest banks."
"The project would not be able to make such progress without the support of both the Chinese and Mozambican governments. The project's inclusion as a priority project has provided access to key Mozambican government departments through the Committee, enabling identification and facilitation of accelerated development works streams," Pengilly continued.
Elsewhere, in October last year, Ncondezi signed an agreement with renewable energy firm GridX Africa Development to finance and develop a solar battery project in Mozambique. The project will consist of 400 kilowatt peak solar facility and a 928 kilowatt-hour energy storage facility.
The project will cost USD1.0 million which Ncondezi is fully funding. All major items have been produced and construction will start at the end of March.
Ncondezi confirmed on Tuesday commissioning of the project remains on track for the second quarter of 2020, with first revenue forecast in the third quarter. The project is set to provide average annual revenue of USD200,000.
"In addition to the main project, the company's first C&I project in the off grid solar and battery storage sector is progressing on track and I look forward to providing more regular updates once installation works start at the end of the month. We believe this to be one of the first projects of its type in Mozambique in what is a strategic growth sector for the continent," said Pengilly.
Lastly, Ncondezi is targeting the restructuring of a loan early in the second quarter. Half of the loan is held by the firm's biggest shareholder, 45% by the Ncondezi board, and the rest by former management and private investors.
"The shareholder loan restructuring is expected to be completed as per previously announced restructuring terms, however the process for has been delayed due to a loan holders' internal approval processes which have been outside of the company's control," added CEO Pengilly.
By George Collard; georgecollard@alliancenews.com
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