Member Info for CF73

[With correction to typo!]

All for a £6m market cap?!

- Just the Historic Costs owed by CMEC to NCCL come to c.£20m.
- Then add the Subscription Price CMEC must pay for the 60% stake they are officially interested in.
- Then add the value of our 40% stake, if we retain it.

- But what price, if an outright sale?

- In 2011, NCCL Market Cap was £171m. That was when the NCCL Project was just a coal mine!

- Today, in 2022, we talking about the coal mine (120million tonnes mineable, enough to easily support 600MW; with a total 4.7bilion tonnes JORC of high grade coal available): and a Power Plant, upwards of 1800MW!! With the 600MW to come on line in quick succession!

What value this?!?!

Many LTHs arguing the current SP is not a reflection of final deal or outright sale, where NCCL has strong support from CMEC/ China.

I'm revising my previous outright sale estimates!

All for a £6m market cap?!

- Just the Historic Costs owed by CMEC to NCCL come to c.£20m.
- Then add the Subscription Price CMEC must pay for the 60% stake they are officially interested in.
- Then add the value of our 40% stake, if we retain it.

- But i an outright sale?

- In 2011, NCCL Market Cap was £171m. That was when the NCCL Project was just a coal mine!

- Today, in 2022, we talking about the coal mine (120million tonnes mineable, enough to easily support 600MW; with a total 4.7bilion tonnes JORC of high grade coal available): and a Power Plant, upwards of 1800MW!! With the 600MW to come on line in quick succession!

What value this?!?!

Many LTHs arguing the current SP is not a reflection of final deal or outright sale, where NCCL has strong support from CMEC/ China.

I'm revising my previous outright sale estimates!

#NCCL First 300MW proposed to be online mid-2025. Second 300MW in 2026 (see Mozambique Power System Master Plan)

However, first 300MW is already 2 yrs late (owing to COVID) costing Moz (&Malawi) valuable development. As a result, can imagine all relevant parties (Moz State/ EDM, CMEC/ China, GE and NCCL) now eyeing 2x300MW (600MW) from the off (ready for mid-2025)

Ultimately chasing 1800MW total & no coal supply issues, where all the coal comes at cost, where cost is as low as you can get (i.e. no major transport/freight issues, as coal on site), and where the Interconnector runs within 10km to 12km of the project!!

What is all this worth???!!!

Many LTHs are saying that the current SP will not reflect the ultimate price of the deal, whether percentage stakes or an outright sale (where the latter - in my and others opnions - is the most likely).

Good luck folks!

Great find again from Sider!

The Tete coal and Power Project, building from 300MW to 1800MW!!

At a guess, they may start work on the first 600MW immediately. 300MW intended to be online by 2025. Orignal plan was for 2023, but for COVID Delays. So both Moz (and Malawi) are behind developmentally as a result. Can imagine that there may be ideas around going for the second 300MW - to make the 600MW initial total - to bring it online for around 2025 (given the develpment lost to COVID, with the first 300MW coming on line two years late).

Is worth mentionng again that the Project is a major cooperation project under China's Belt and Road Initiative:

From the June JDSA SIgning RNS:

'JDA signing follows the Project's recent inclusion by Chinese and Mozambique governments on the list of key infrastructure projects at the 2nd China-Mozambique International Cooperation Summit held in the first half of 2019.'
https://www.investegate.co.uk/ncondezi-energy-ltd--nccl-/rns/ncondezi-signs-jda-with-cmec-and-ge/201907231107404309G/

Is all happening!!

Indeed extrader. To exmeplify the problem in real time, Malawi is currently upwards of 30% down on its already meagre capacity owing to storms - including trouble with one its dams.

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'Malawi Loses 30% of Its Electricity to Tropical Storm Ana'

Feb 06, 2022

[...]

'“We have lost the dam here because the control mechanism that we had to take the water to the intake of the machines has been destroyed," he said. "We had the training dike and that has been washed away, and on the dam wall you have seen that now the water is passing through the dam wall and therefore we cannot hold any water at the dam and through that, we cannot generate any electricity.”
https://www.voanews.com/a/malawi-loses-30-of-its-electricity-to-tropical-storm-ana-/6429686.html

[...]

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The power that Moz is being supported to generate is intended for both domestic use and large-scale export. Countries like Malawi are resource poor, their capacity 'hovering around 50MW' at present. Clearly not enough, hence the emphasis Interconnector for both Malawi and Moz, but espeically for Malawi!

extrader, yes, I know about the dam. Tete Coal and Power Project will be built and will come on line much sooner, and a total of 1800MW being discussed, way more than I had realised! And I think the relevant parties wil go for the lot, as it's using all their coal, and way more reliable than hydro (i.e. prone to storms, floods, droughts etc)

*cylinder ??

(Excuse the typo :-)

That's a brilliant cylinder

Tete Coal and Power Project at 9mins 50 secs - that's a brilliant find Sider!!!

Has been hard to value the project, given the low SP. But is worth thinking about this.

We know the Coal Mine and Power Plant project is a BILLION$$$ investment. The June 2019 JDA Signing RNS stated:

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‘The JDA signing formally starts the co-development process with CMEC and GE on the US$1 billion Ncondezi integrated power project in Tete, Mozambique.’
https://www.investegate.co.uk/ncondezi-energy-ltd--nccl-/rns/ncondezi-signs-jda-with-cmec-and-ge/201907231107404309G/

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So this is a massive project.

We know that the market cap for the company in 2011, with just the coal mine, was £171m. As an experiment, divide that with the 409m shares currently in issue, and we get 41.8p per share.

Remembering, this is just the coal mine. And today, the price of coal is considerably higher.

Looking closely at the coal mine, website currently says:

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‘The mine has a defined a substantial JORC coal resource of 4.7 billion tonnes and a Measured Resource of 120 million mineable tonnage in situ (“MTIS”) has been classified […]’

‘In order to provide a bankable Coal Sales Agreement to the power plant, the mine needed to demonstrate sufficient coal resources in the Measured Category to supply the 300MW power plant for 25 years plus a 40% contingency, equivalent to 70 million mineable tonnes in situ. The upgraded resource has exceeded this target with sufficient additional Measured Resource to theoretically supply an additional 300MW (600MW total) power plant for 25 years.
https://www.ncondezienergy.com/the-coal-mine/

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Interestingly, they not only mention the initial 300MW Power Plant, expected to deliver power mid-2025 (following, we learn from a recent article, Financial Close by end of H1, 2022; and 36 months construction), they also mention another 300MW – making a total of 600MW.

The Mozambique Power System Master Plan describes 300MW by 2023 – where COVID has delayed till 2025; and the next 300MW (making this 600MW total) due in 2026, a year later.

If we accept the project is happening (and I believe it looks likely), then all of this potentially comes into view. If we believe it’s happening, how do we/ the market value this amount of coal and this amount of power, where the coal can arrive at the Power Plant at literally cost price, maintaining strong margins and profitability?!

Remembering

- We got ‘Binding JDA
- We signed EPC with CMEC (signed Sept 2021)
- And Historic Costs agreed, in-principle, to the tune of c.£20m
- Interconnector construction moving forward, carrying power out of Tete, where NCCL are located and where other projects ‘have fallen away’; to Malawi, who need the power (wanting to add 1, 000MW to National Grid, in next four years!), pushing hard on moving forward work on construction work, & where respective Presidents have recently shaken hands over agreements on power trade (Nov 2021)

So what should be the NCCL valuation?

Actually, I missed something:

----------------------

We know,

The more I think about it, the more I feel the Interconnector is there primarily/ specifically to support the Ncondezi power project. From other recent articles, we know

- It is explicit World Bank policy to support cross-border Interconnection projects to enable larger investments, of the sort CMEC/ China are making with Noncdezi
- That the Minerals and Mines Boss, Max Tonela, said, the Interconnection Project was key to making 'large energy projects in Mozambique viable'. Well the Interconnector connects Tete (in Mozambique) with Malawi, where we are the only NEW power project
- That the Mozambique Power System Master Plan describes a total of 1200MW to come Tete coal-derived power, starting with, now, 300MW in 2025, and a further 300MW (making 600MW) in 2026; 300MW more in 2034 and the final 300MW in 2038.

And also,

- JDA signing follows the Project's recent inclusion by Chinese and Mozambique governments on the list of key infrastructure projects at the 2nd China-Mozambique International Cooperation Summit held in the first half of 2019

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We hear little in the news about the project. But behind closed doors, the project is no secret. Behind those closed, it feels there is a greater degree of certainty - the project literally a formaility, in my opinion - than the market realises.

DYOR though folks!

Following, China helping 'Mozambique achieve faster development' comes from/ starts with cheap reliable baseload power, for both domestic consumption and for trade with, for example, Malawi and into wider SAPP (Souuthrn African Powr Pool). That energy/ power trade is also World Bank policy i.e. World Bank will fund/ support cross border Interconnection Projects - to 'play a catalytical role in leveraging new investments.’

The more I think about it, the more I feel the Interconnector is there primarily/ specifically to support the Ncondezi power project. From other recent articles, we know

- It is explicit World Bank policy to support cross-border Interconnection projects to enable larger investments, of the sort CMEC/ China are making with Noncdezi
- That the Minerals and Mines Boss, Max Tonela, said, the Interconnection Project was key to making 'large energy projects in Mozambique viable'. Well the Interconnector connects Tete (in Mozambique) with Malawi, where we are the only NEW power project
- That the Mozambique Power System Master Plan describes a total of 1200MW to come Tete coal-derived power, starting with, now, 300MW in 2025, and a further 300MW (making 600MW) in 2026; 300MW more in 2034 and the final 300MW in 2038.

This about the development of not just Mozambique but the wider Southern African, and has full support of international donor agencies, China and the respective African nations.

Now, add this, from as recent as 29 Nov 2021.

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http://www.news.cn/english/2021-11/29/c_1310339998.htm

'China, Mozambique vow to strengthen mutually beneficial cooperation: FMs'

Source: Xinhua| 2021-11-29 13:02:33|Editor: huax
29-11-2021

'DAKAR, Nov. 28 (Xinhua) -- Chinese State Councilor and Foreign Minister Wang Yi and Mozambican Minister of Foreign Affairs and Cooperation Veronica Macamo on Sunday pledged to strengthen mutually beneficial cooperation between the two countries during a meeting here in Senegal's capital.'

[...]

'China attaches great importance to the development of China-Mozambique relations, and stands ready, under the guidance of the important consensus reached by the two heads of state and taking the meeting as an opportunity, to promote the comprehensive strategic cooperative partnership between the two countries to achieve greater development, said the senior Chinese diplomat.'

'He also said that with thanks to the joint efforts of the two sides, bilateral economic and trade cooperation has continued to grow despite the impact of the pandemic.'

'Wang stressed that China is ready to strengthen mutually beneficial cooperation with Mozambique in such areas as infrastructure, agriculture and energy under the frameworks of the joint construction of the Belt and Road, FOCAC and the Economic and Trade Forum between China and Portuguese-speaking countries to help Mozambique achieve faster development.'

[...]

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This meeting and those words around cooperation - especially in the 'areas as infrastructure, agriculture and energy under the frameworks of the joint construction of the Belt and Road' - come in late November, (29 Nov, 2021), well after c.Sept 21st, when Chinese President, Xi, made those one-time comments about coal.

This signals to me that the project is on, that NCCL will get Chinese funding!

The June 2019 JDA Signing pointed to the major importance of the Ncondezi Project to the Mozambican-Chinese cooperation:

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Ncondezi Energy Ltd (NCCL)
Tuesday 23 July, 2019
Ncondezi Energy Ltd
Ncondezi signs JDA with CMEC and GE
RNS Number : 4309G
Ncondezi Energy Limited

News Release
23 July 2019

'Ncondezi Signs Joint Development Agreement with China Machinery Engineering Corporation and General Electric'

[...]

' JDA signing follows the Project's recent inclusion by Chinese and Mozambique governments on the list of key infrastructure projects at the 2nd China-Mozambique International Cooperation Summit held in the first half of 2019.'

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This demonstrates the critical nature/ massive importance of the Ncondezi power project under the cooperation framework, with the 2019 JDA a key step to realising the project and mutual/ bilateral interests.

Now, since then, NCCL and CMEC (i.e. being representative of/ owned by the Chinese State) have agreed 'in-principle' 'Historic Costs' (c.£20m) to be paid to NCCL on Finanical close; and have only just the signed the Project EPC (Sept 2021) - making the project an 'advanced project', ensuring it gets Chinese Funding (in my and other LTHs opinion).

I believe we will be hearing BIG positive news this Quarter!

Then read this again!

https://africaoilgasreport.com/2021/09/power-deficit/proposed-300mw-coal-power-plant-in-mozambique-moves-to-financial-close/

Useful article/ Blog from the World Bank (from 2 weeks ago), about World Bank investment strategy in Africa.

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Putting Africa on the path to universal electricity access
Riccardo Puliti
January 31, 2022
[…]
‘The vision of an integrated regional power market in countries of the Economic Community of West African States (ECOWAS) is coming a step closer to reality thanks to an ambitious program of cross-border interconnection projects.’[1]
[…]

‘The World Bank is ready to play a catalytical role in leveraging new investments.’[2]

https://blogs.worldbank.org/energy/putting-africa-path-universal-electricity-access

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And then:

Mozambique inks deal to complete Mozambique-Malawi Interconnection Project

21 Aug 2021

[…]

‘“Mozambique is rich in conventional and renewable sources of energy and presents itself as a regional energy hub, so the interconnection between Mozambique and Malawi provides access to the regional market, enabling large energy projects in Mozambique to become viable,” said Mozambique’s Minister of Mineral Resources and Energy, Max Tonela.’[3]
https://constructionreviewonline.com/news/mozambique-inks-deal-to-complete-mozambique-malawi-interconnection-project/

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[1] This Blog talks about West Africa, but we can see the parallels with the MOMA/ Mozambique-Malawi Interconnector. And that this is clearly a World Bank strategy.

[2] And we can see how this strategy is used to bring in larger investments, just as the MOMA/ MOMA/ Mozambique-Malawi Interconnector has unlocked CMEC/ Chinese BRI Investment

[3] Made clearer here, where MIREME (the Mozambican Mineral Resources) Boss Max Tonela discusses how the ‘interconnection between Mozambique and Malawi provides access to the regional market, enabling large energy projects in Mozambique to become viable”

In other words, it appears to me that the MOMA Interconnection Project, being paid for by someone else (i.e. World Bank and EU), was designed to unlock investment from China (i.e. Ncondezi Energy and its Coal-to-Power Project, in Tete). This meant a) China/ CMEC not having to pay for that infrastructure, thereby maintaining margins while also keeping the tariff affordable (not easy to do with a Billion$$$ investment); and b) a guaranteed wider market, being Malawi as well as Mozambique.

In other words, the Interconnector was designed to support NCCLs project, and is why NCCL inputted into the preparatory/ development work behind the Interconnector, which just so happens to ‘run past the #NCCL power project’ (quoted from NCCL tweet).

We know the Interconnector is happening. Surely means that the two nations (Mozambique and Malawi) fully expect NEW power to be coming out of Tete (where all other proposed projects ‘…have fallen away’ – NCCL CEO’s own words).

See https://twitter.com/Ncondezi_Energy/status/1382269455183581184
See https://twitter.com/Ncondezi_Energy/status/129165935684143104

Good to have you on board Acker, and you too, Welshy. You and the many others arrive at a very good time. All in my opinion, but this is a hold to/ till the endgame - where the endgame is very probably - indeed, very likely - a takeover. Good reasons as to why a takeover as opposed to the current, more openly discussed 60% stake that CMEC are due to take (for which the Subscription Price applies) - which am sure we will discuss in the coming days and weeks :-)

Agreed!

We're headed towards massive news here, within weeks!

This, the Mozambique-Malawi/ MOMA Interconnector that World Bank and EU have funded ($127m!), connecting Malawi with Tete province (Mozambique), where NCCL the only large enogh, advanced enough, project in sight, where Tete coal-derived power to provide 1200MW eventually, and where Malawi need 1000MW added to their National Grid in the coming years.

The NCCL project is largely about power/ energy trade, drawing on Tete/ Moz coal to support other nations that are not as resource rich (this is what they mean by a 'just transition' - enabling dveeloping nations to develop as quickly a possible and moving them on)

And again, and more specifcally mentioning the Interconnector:

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https://malawi24.com/2022/01/25/chakwera-pushes-for-implementation-of-energy-projects-amid-power-outage-across-malawi/

Jan 25, 2022

'[Presient Lawarus] Chakwera pushes for implementation of energy projects amid power outage across Malawi '

[...]

As many areas across Malawi are experiencing power outage, President Lazarus Chakwera this morning met technocrats and relevant stakeholders to tackle red tape and administrative obstacles that have delayed the implementation of three electricity projects.

Malawi has a generation capacity of about 441 megawatts (MW) at 11 power stations, aaccording to EGENCO. However, yesterday, some machines at two hydropower stations were shut down due to floods. Another power station, Kapichira, suffered extensive damage. Most areas in the country have had no power since yesterday as a result.

This morning, Chakwera worked from the Presidential Delivery Unit stationed in at Capital Hill to push for implementation of Mpatamanga 350 MW Hydro-Power Project, Mozambique-Malawi Interconnector Project and the Malawi Electrification Access Project which have been delayed.

“The three projects represent $1.5 billion of foreign direct investment aimed at doubling the number of Malawians with access to electricity in the next few years,” said Chakwera.'

[...]

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