The next focusIR Investor Webinar takes places on 14th May with guest speakers from WS Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
Moving to a WeWork is a non-story. Just a logical step in a world with more home working and a need for flexible office space. I know of some very big companies who have chosen WeWork for the same reason.
Well said BENJAN1 - I wouldnât be surprised to see Mr Fletcher showing his support with further buying.
Completely agree!
With the push to renewables as an alternative to fossil fuels, Moz and funders will undoubtedly be supportive of this project, with massive demand for power.
The shift to grid scale solar should be a game changer for this company and there isnât long to wait, with first FS due this week.
Huge demand for power in Moz and the wider sub-Saharan Africa region.
No political sensitivities.
No problem finding willing funders.
Hi STC,
LTH here but Iâll try to be as balanced as possible in my response.
To me, there are a number of relevant moving parts with this company, which should influence your decision whether to invest or not:
1) The main project is entirely contingent on financing being available (we are told that this is the key to unlocking the other workstreams, i.e tariff) and it would seem that Chinese banks are the only possible provider of this. Chinaâs announcement that they will no longer fund overseas coal projects has understandably had a negative impact on the share price but they are yet to officially state that finance isnât available for this project, which could be viewed as positive (as other projects have officially been shelved and the company, alongside CMEC, have worked hard to ensure the project is viewed as âadvancedâ and therefore an exception). Recently, there have been some positive signs as the macro picture is changing and Mozambiqueâs relationship with China has been cemented (see articles re Yang Jiechiâs recent visit to Moz).
2) Regarding the solar project, in my view this is potentially a game changer. There will almost certainly be many willing financiers and Moz/the region needs the power, and quickly. As confirmed by the RNS, this project can potentially be delivered in 2024 by benefitting from work already carried out in relation to the main project. More generally, could this solar project also be the key to China providing funding for the C2P project? From a PR perspective, it may enable them to position their investment as being in an âenergy parkâ, as opposed to just coal. This is of course speculation on my part.
3) Will more funding be required? Yes, as the RNS confirms current funds will last until October. However, in my view, particularly if there are positive announcements in the interim, the share price is likely to steadily creep up before October. Given Fridays RNS, generally I think that now is a good time to invest, as the company is no longer a âone trick ponyâ. I think this is the first time that this has been the case, as the previous solar arm of the company was almost irrelevant in financial terms compared to the current proposal.
4) Debt. Seritza loan restructuring seems positive for shareholders overall but there still remains the issue of the shareholder loan - this is referred to in the annual report and currently totals c. $5.4m. The company will need to take steps to provide certainty to shareholders ahead of November 2022 - they managed to do this before through the Undertaking not to call in the loan and I see no reason why they couldnât/wouldnât enter into a similar agreement in the event the restructuring isnât agreed in time.
These are what I view as the major relevant factors but others may like to add/disagree! As mentioned, Iâve tried to be as balanced as possible but I do think this is a good investment at these levels and taking into account the current circumstances,
Hi Sider,
The plant will include âState-of-the-art emissions control technologies to meet the current draft IFC/World Bank most stringent emissions guidelines for coal plantsâ according to the latest Ncondezi presentation with a technical appendix. See link below:
https://www.ncondezienergy.com/wp-content/uploads/2020/05/Ncondezi-Project-Update-Presentation-May-2020.pdf
In the latest Q&A, Hanno said that carbon capture at current cost is unlikely to be commercially attractive but clearly the plans clearly meet higher standards then many ageing plants in South Africa/the West.
Interestingly, China seem keen to support clean coal at home:
https://www.google.co.uk/amp/s/amp.scmp.com/news/china/politics/article/3165092/xi-jinping-puts-focus-clean-technologies-during-trip-chinas
No idea of timescales but I would expect something before year end in line with the suggested timeline in the Half Year report.
Hi Extrader,
Elizabeth Johnson, company PR, has said that an update is in the works in response to shareholders expressing concerns in the Twitter Group. She said this a couple of weeks ago and has reconfirmed since (just before Christmas, if I remember correctly).
Thanks
Thanks extrader. My point regarding the risk rating was more than âsubstantialâ (last confirmed a number of months ago) wouldnât have provided a good foundation for a viable tariff solution. The award of the contracts should, I would think, result in the risk rating falling, potentially adding credibility to NCCLâs tariff proposal.
Iâll let someone else comment on the numbers!
For context, this project had a âsubstantialâ overall risk rating earlier this year:
https://documents1.worldbank.org/curated/en/652711618414528246/pdf/Disclosable-Version-of-the-ISR-Mozambique-Malawi-Regional-Interconnector-Project-P164354-Sequence-No-04.pdf
Hardly the foundation of a viable tariff solutionâŚ
Sorry, second link didnât work:
https://twitter.com/channelafrica1/status/1450849987571634187?s=21
The May 19th RNS included the following from Hanno:âIn addition, we have obtained all necessary approvals, including from EDM to further develop an optimised transmission integration solution identified in the 2020 Transmission Integration Study. This has strong potential to reduce the transmission capex, further enhancing the Project's competitive offering. This work is not expected to impact tariff negotiations as it will be completed in parallel to them.âJoining the dots, this statement seemed to be suggesting the Moz-Mal interconnector project had relevance to NCCLâs tariff proposal.News articles now confirm that the contracts have been awarded and they will be cracking on with the project:https://www.maraviexpress.com/escom-announces-commencement-of-malawi-mozambique-interconnection-project/https://twitter.com/channelafrica1/status/1450849987571634187?s=21If this does indeed have, as indicated previously, have relevance to our tariff, we should now see some progress, starting with âTransmission Integration Approval from EDMâ referred to in the Half Year Report.Hopefully EDM are on board with NCCLâs proposal!
https://projects.worldbank.org/en/projects-operations/procurement-detail/OP00146300
Following last weekâs confirmation regarding the Mozambique side of the project, we now have the contract award from the border into Malawi.
Plus official contract award of the Moz Mal inter connector (to L&T) - https://projects.worldbank.org/en/projects-operations/procurement-detail/OP00145750
Fingers crossed.
In the meantime, EUR4.6M contract award on the Moz-Mal interconnector: https://projects.worldbank.org/en/projects-operations/procurement-detail/OP00139278
I completely agree. If CMEC have high confidence that Moz will allow the project to go ahead (and remember this was included as a key infrastructure project at the 2nd China-Mozambique International Cooperation Summit in May 2019), I personally expect us to sell 100% of the project at a time that makes the most financial sense (for CMEC), which may be just around the corner.
Thanks GGG.
Just heard another rumour.
Apparently itâs coming home.
None taken.
I was surprised that EDM shared the identity of the successful bidder but they clearly feel comfortable doing so. I would have thought theyâd wait until the contract award notice was issued.
We know that Ncondezi âofficiallyâ took into account the interconnector project in their transmission integration study. We do not know that there is âofficiallyâ a link between the transmission line and the project, other than that we have effectively âappliedâ for the project to connect into this infrastructure. There will only âofficiallyâ be a link once the project and tariff is approved, which as we all know is well overdue.
I agree that the things items within the control of the company need to be addressed ASAP.
Hi Caterham,
Personally, I donât think so. This was just a public procurement process for the construction contract, out of which the successful bidder will presumably earn a profit for their efforts. As I understand it, the transmission lines will be state owned infrastructure. All in all, although it would have been a confidence booster if CMEC were awarded the contract, the key takeaway for me is that the connecting infrastructure is slowly being de-risked, which has to be positive for any connecting power project.
Thanks
Hi GGG,
I think the point I disagree with is that the transmission line is âdirectly related to our projectâ. I think there is a good chance it will be but, at this stage, in my opinion, there is no official/formal link, as our project isnât approved.
EDM were kind enough to respond to my direct enquiry, so they must have been willing to share the progress of the tender. They also stated that the result will be officially published in a couple of months, which I assume is as a result of following due process and will be the point when any announcements are made.