Rns5 Nov 2018 07:07
JDA Process Update
The Company is pleased to report that it has received a Letter of Support ("LoS") for the Project from the Ministry of Mineral Resources and Energy ("MIREME") and a signed Memorandum of Understanding ("MoU") with the Mozambican state power utility Electricity de Mozambique ("EDM"). The LoS and MoU (together the "Support Documents") set out a clear pathway for development of the Project, including finalisation of the Project timetable, and confirm that Project development is to be managed through a Liaison Committee, chaired by MIREME. The Support Documents also confirm that coal generation is part of Mozambique's energy generation mix and that the Project is an advanced stage project which is in line with the national Energy Policy.
In particular, the MoU sets out certain prerequisite conditions to enter formal tariff negotiations including the finalisation of the JDA with the Company's potential strategic partners and the receipt of binding engineering, procurement, and construction ("EPC") and operations and maintenance ("O&M") contracts. EDM has also identified certain preconditions to the negotiations including that the local exchange rate outlook remains stable and for the continuation of, or improvement in, energy demand outlook and regional tariff pricing outlook, each of which can be waived at EDM's election.
The Support Documents have been shared with the Company's potential strategic partners for review, and the Company has submitted a proposed updated timetable for signing of the JDA, receipt of firm EPC and O&M proposals and commercial operations date for the Project. This process includes counter signing of the MoU by its potential strategic partners to give it legal effect. As per previous announcements, the Company's believes that the JDA can be completed within 3 months of an updated timetable being agreed.
The Support Documents follow the introduction of the Company's potential strategic partners to MIREME and EDM and subsequent submission of an updated tariff proposal in July 2018 which included a more than 10% reduction in the previously agreed tariff rate.
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