(Alliance News) - Kibo Energy PLC on Monday said it has signed a binding term sheet for the supply of approximately 200 megawatts of energy to Baobab Resources Ltd's Tete steel and vanadium project in Mozambique.
Shares in Kibo were up 8.0% in London at 0.27 pence in late morning trading and flat in Johannesburg at 9.00 rand cents at midday.
Baobab is to deal and negotiate exclusively with Kibo over entry into a power purchase agreement to supply the project, which is located 36 kilometres from Kibo's Benga power plant project.
Benga is a joint venture between Kibo and Termoelectrica de Benga SA and will consist of a thermal power plant with a minimum capacity of at least 350 megawatts plus renewable energy projects.
Kibo will have the right to pursue other power purchase agreements so long as they do not hurt benga's ability to supply the Tete project's needs. This includes a deal with Mozambican state-owned electric utility Electricidade de Mocambique that Kibo is still working towards.
Kibo Chief Executive Louis Coetzee said: "We are delighted to have secured this strategically important agreement with Baobab. The [Tete steel & vanadium] project represents one of Mozambique's key development projects that could contribute significantly to the growth of the country. We are therefore delighted that our Benga project will be supporting this growth by providing 100% of TSV project's [approximately 200 megawatt] energy requirements, subject to reaching final agreement on an appropriate [power purchase agreement].
"This PPA will be one of a number of supply agreements we are targeting for Benga, in line with our commitment to creating reliable, sustainable and affordable electricity in Mozambique and we look forward to providing further updates in due course as these agreements progress. It is envisaged that the c 200MW requirement of the TSV Project will be developed as part of the existing Benga power project, and talks are currently underway with our JV-partners in Benga, to determine whether the latest addition to the Benga portfolio will have any impact on the economic interest of each JV partner, given Kibo's added efforts in increasing the utilisation of Benga."
By Anna Farley; annafarley@alliancenews.com
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Kibo Energy (KIBO)