Last checked at 9 Jun 2015 07:00
Kibo Mining Plc (Incorporated in Ireland)
(Registration Number: 451931)
(External registration number: 2011/007371/10)
Share code on the JSE Limited:KBO
Share code on the AIM: KIBO
ISIN: IE00B97C0C31
("Kibo" or "the Company")
Dated: 09 June 2015
Mbeya Coal to Power Project - SEPCO III Board Approves Joint Development Agreement
Kibo Mining Plc ("Kibo" or the "Company") (AIM:KIBO; JSE AltX: KBO), the Tanzania focused mineral exploration and development company, is pleased to announce that the Joint Development Agreement ("JDA") recently signed between the Company and SEPCO III, has now been approved by the SEPCO III board of directors.
Highlights
· Joint Development Agreement approved by SEPCO III board of directors;
· Material conditions precedent in JDA satisfied;
· Definitive feasibility study on Mbeya Coal to Power Project ("MCPP") on schedule;
Louis Coetzee, Chief Executive Officer of Kibo Mining plc, commented: "Kibo Mining is delighted to confirm that the board of directors of SEPCO III have now approved the JDA recently signed between Kibo and SEPCO III. This marks a crucial milestone in the implementation process of the JDA and I am delighted to confirm to our shareholders that the material conditions precedent to the JDA, are now satisfied. The board approval of the JDA by SEPCO III, was always the most substantial condition precedent, without which none of the remaining conditions precedent can be satisfied. Further and final implementation of the JDA is in essence now an administrative process.
The new status of the Joint Development Agreement with SEPCO III, one of the world's largest, most technically capable and financially robust EPC providers will not only allow us to significantly increase the pace at which the feasibility work can be concluded but also further increase the ability to secure further investors and finance into the MCPP, at a project level.
We look forward to further strengthening our relationship with SEPCO III, who we have found to be a highly capable, practical and proficient team. This is particularly evident in the significant amount of work that was done towards completing the MCPP feasibility studies while awaiting the formal SEPCO III board approval, now received"
Joint Development Agreement Overview
The JDA recently signed between Kibo Mining and SEPCO III ("the parties") wherein the parties have agreed to jointly develop the MCPP has now been approved by the SEPCO III board of directors. (Further information in respect of the MCPP is provided separately below. NOTE: Please follow the following link for extensive background information on SEPCO III: http://www.sepco3.com/profile/columnsId=1.html )
The JDA is subject to a number of conditions precedent, of which finalisation of a Due Diligence (including a site visit) and SEPCO III board approval, were the most significant conditions. Both of these have now been satisfied under the terms and conditions of the JDA.
Approval of the JDA by SEPCO III, now paves the way for SEPCO III to make an equity investment in the MCPP, to a maximum of 15% of total equity in the SPV which will ultimately hold the MCPP asset as detailed below. This investment will take the form of a contribution towards the completion of the Definitive Feasibility Study and all related activities leading in effect to the point of financial close.
SEPCO III will retain specfic responsibility to lead the Power Generation component of the Definitive Feasibility Study and Kibo will lead the Mining component. It is expected that the Definitive Feasibility Study across both Mining and Power Generation components will be completed by October 2015.
During completion of the Definitive Feasibility Study the partners will collaborate with regard to identification and review of construction providers and power plant operators to identify suitable organisations to build and operate the completed MCPP. The partners will also collaborate to identify, review and confirm the appropriate financing structure for the MCPP construction process. In addition, the Definitive Feasibility work will also include negotiation and agreement of the terms of a Power Purchase Agreement, Implementation Agreement and Environmental Impact Assessment.
After successful completion of Definitive Feasibility Studies, and assuming the project is deemed feasible, a Special Purpose Vehicle will be established into which the MCPP will be transferred. Kibo Mining will hold at least 85% of this SPV and SEPCO III up to 15% of total equity.
SEPCO III will be the sole EPC contractor for the MCPP, subject to the submission by SEPCO III of an EPC proposal at financial close, which, when independently evaluated, complies with the following:
· The EPC proposal must be price competitive against international benchmarks for similar EPC contracts; and
· The EPC proposal must demonstrate international industry best practice standards.
It is anticipated that financing for the MCPP will be available at a 70% debt to 30% equity gearing ratio. The specific providers of both debt and equity capital will be identified during the course of 2015 but only confirmed during financial close in December 2015. Standard Bank, financial advisors for the MCPP, will play an integral role in the financing discussions and process.
MCPP Background
Through the MCPPKibo Mining is seeking to mine a 109Mt NI 43-101 compliant thermal coal resource, utilising this coal for a mine mouth 250MW to 300MW thermal power station. This project is in the development stage, with Definitive Feasibility work ongoing. Various reports have been released on this project in the last quarter of 2014, as detailed below. The project has the support of the Tanzanian government at all levels as well as the local community, and is a key component of the Tanzanian National Strategic Energy Plan which seeks to resolve the shortage of power in the country, notably in the region where the project is located.
MCPP Technical Findings to Date
During Q4 2014 and following the extensive review and analysis of the MCPP by third party advisors, Competent Persons' Reports were prepared in respect of both Mining and Power Generation components of the MCPP. These technical findings are summarised below:
Mining Component
Completion of Concept Study Report (Stage 1, Phase 1 of the Definitive Mining Feasibility Study) for the Rukwa Mineral Resource by Minxcon Projects (Pty) Ltd. Report findings were announced on 9 December 2014, with highlights including:
· Four alternative options identified for project development with the project financially feasible for all four alternative options evaluated;
· Capital Investment of between US$46 million and US$89 million;
· Annual coal sale revenues estimated between US$37 million and US$44 million depending on the selected option;
· All-in in Cost Margin estimates of 38% to 45% (equates to an indicative annual margin of US$14.8 million to US$19.4 million);
· NPV of US$116 million to US$141 million at 5.7% discount rate with payback period 3.9 to 4.7 years.
Thermal Power Station Component
Completion of Power Pre-Feasibility Report by Aurecon. Report findings were announced on 18 December 2014, with highlights including:
· Four thermal plant configurations were assessed with recommendation for 2 X 150 megawatt Circulating Fluidised Bed option to be evaluated at Feasibility Study stage;
· Total capital cost estimated at between US$640 million to US$760 million depending on plant configuration;
· Indicative annual power generated (dependent on plant option selected) between 1,841 gigawatt hours per annum and 1,877 gigawatt hours per annum;
· High level environmental risk analyses identified no major obstacles to development;
· Additional Rukwa Mineral Resource sufficiently large enough to potentially double the current design size to 600 megawatts or to be used in alternate energy conversion technologies.
Completion of preliminary base case financial model for MCPP by the Company as announced on 18 December 2014 with highlights including:
· Estimated indicative Life of Plant revenues of approximately US$7.8 billion to US$8.4 billion;
· Indicative project NPV of between US$230 million and US280 million (at a 15% discount rate);
· Indicative pre-tax equity IRR > 23%; and
· Indicative post-tax payback of 8 to 9 years.
Contacts
Louis Coetzee | +27 (0) 83 2606126 | Kibo Mining plc | Chief Executive Officer |
Andreas Lianos | +27 (0) 83 4408365 | River Group | Corporate Adviser and Designated Adviser on JSE |
Jon Belliss | +44 (0) 207 382 8300 | Beaufort Securities Limited | Broker |
Oliver Morse | +61 8 9480 2500 | RFC Ambrian Limited | Nominated Adviser on AIM |
Daniel Thöle Lucinda Alderson | +44 (0) 203 772 2500
| Bell Pottinger | Investor and Media Relations |
Kibo Mining - Notes to editors
Kibo Mining is listed on the AIM market in London and the AltX in Johannesburg. The Company is focused on exploration and development of mineral projects in Tanzania, and controls one of Tanzania's largest mineral right portfolios. Tanzania provides a secure and stable operating environment for the mineral resource industry and Kibo Mining therein.
Kibo Mining holds a thermal coal deposit at Rukwa, which has a significant JORC compliant defined resource (See Table 1 below), and is developing a 250-350MW mouth-of-mine thermal power station with an established management team that includes Standard Bank as Financial Advisor. Kibo is undertaking a Coal Mining Definitive Feasibility Study and a Power Pre-Feasibility Study for Rukwa with an integrated Coal-Power interim study report to be released in the near term. On 20th April 2015, Kibo signed a Joint Development Agreement for the completion of the Definitive Feasibility Studies and development of the MCPP with China based EPC contractor SEPCO III.
The Company also has extensive gold focused interests including Lake Victoria Goldfields and Morogoro projects. At Lake Victoria, the Company has projects with a 550,000oz JORC compliant gold Mineral Resource at Imweru Project (See Table 2 below) and a 168,000oz NI 43-101 compliant gold Mineral Resource at the Lubando Project (See Table 3 below) in which the Company holds a 90% attributable interest. The Company is currently undertaking a Definitive Feasibility Study on its Imweru Project.
Kibo also holds the Haneti Project on which the latest technical report confirms prospectivity for nickel, PGMs, gold and strategic metals including lithium.
Kibo Mining further holds the Pinewood (coal & uranium) project where the company has entered into a 50/50 Exploration Joint Venture with Metal Tiger plc.
Finally the Company also holds the Morogoro (gold) project where the company has also entered into a 50/50 Exploration Joint Venture with Metal Tiger plc.
The Company's projects are located in the established and gold prolific Lake Victoria Goldfields, the emerging goldfields of eastern Tanzania and the Mtwara Corridor in southern Tanzania where the Government has prioritised infrastructural development attracting significant recent investment in coal and uranium. The Company has a positive working relationship with the Tanzanian government at local, regional and national levels and works hard to maintain positive relationships with all communities where company interests are held. The Company recognises the potential to enhance the quality of life and opportunity for Tanzanian citizens through careful development of its projects.
Updates on the Company's activities are regularly posted on its website www.kibomining.com
Technical data
Rukwa Mineral Resource
Table 1 below presents a table showing the Mineral Resource estimate for the Rukwa Coal Project. The table is taken from an NI 43 101-Compliant Report by GEMECS (Pty) Ltd dated April 2012.
Table 1
RUKWA COAL RESOURCE SUMMARY- GEMECS (Pty) Ltd | |||
SEAM | NI 43-101 | IN SITU | |
SEAM | THICKNESS | CLASS | MILLION TONS |
S4 | 1.14 | Indicated | 2.17 |
S3U | 2.04 | Indicated | 6.92 |
S3L | 2.3 | Indicated | 12.63 |
S2 | 3.45 | Indicated | 23.43 |
S1U | 2.48 | Indicated | 7.34 |
S1L | 2.92 | Indicated | 17.4 |
S0 | 1.08 | Indicated | 1.44 |
Total Indicated Resources | 71.34 | ||
S4 | 1.31 | Inferred | 1.38 |
S3U | 2.24 | Inferred | 2.94 |
S3L | 2.27 | Inferred | 3.86 |
S2 | 3.42 | Inferred | 7.94 |
S1U | 2.05 | Inferred | 6.5 |
S1L | 3.15 | Inferred | 12.83 |
S0 | 1.06 | Inferred | 2.6 |
Total Inferred Resources | 38.05 | ||
TOTAL RESOURCES | *109.39 | ||
*Kibo holds 100% of the Rukwa Mineral Resource
Imweru Mineral Resource
Table 2 below presents a table showing the Mineral Resource estimate for the Imweru Project at a base case economic cut-off grade for the reporting of the resource of 0.4 g/t. The table is taken from a JORC-Compliant Report by Tetra Tech EBA dated February 2014.
Table 2
Area | Material Type |
Classification | Cut- off (g/t) | Specific Gravity | Metric Tonnes (t) |
Short Tons | Gold Grade (g/t) | Contained Gold Ounces (troy) |
Central | Laterite | Indicated | 0.40 | 2.50 | 131,000 | 144,000 | 1.785 | 8,000 |
Saprolite | Indicated | 0.40 | 2.50 | 706,000 | 778,000 | 1.387 | 32,000 | |
Bedrock | Indicated | 0.40 | 2.89 | 1,895,000 | 2,089,000 | 1.043 | 64,000 | |
Total | Indicated | 0.40 | 2.77 | 2,732,000 | 3,012,000 | 1.168 | 103,000 | |
Central | ||||||||
Laterite | Inferred | 0.40 | 2.50 | 685,000 | 755,000 | 1.317 | 29,000 | |
Saprolite | Inferred | 0.40 | 2.50 | 1,047,000 | 1,154,000 | 1.040 | 35,000 | |
Bedrock | Inferred | 0.40 | 2.89 | 7,838,000 | 8,640,000 | 1.029 | 259,000 | |
Total | Inferred | 0.40 | 2.82 | 9,569,000 | 10,548,000 | 1.051 | 323,000 | |
East | Total | Inferred | 0.40 | 2.70 | 2,653,000 | 2,925,000 | 1.449 | 124,000 |
Imweru Property Total | Indicated | 0.4 | 2.77 | 2,732,000 | 3,012,000 | 1.168 | 103,000 | |
Inferred | 0.4 | 2.79 | 12,222,000 | 13,473,000 | 1.137 | 447,000 | ||
Combined (inf+ind) | 0.4 | 2.79 | 14,954,000 | 16,485,000 | 1.143 | 550,000 | ||
*Kibo holds 90% of the Imweru Mineral Resource
* Total estimates are rounded, based on composites capped at 26 g/t gold at Imweru Centraland 25 g/t at Imweru East, the cut-off grade isbased on a gold price of US$1,200 and a 90% metallurgical recovery is assumed in calculation of cut-offgrade. A base case of 0.40 g/t has been selected.
** Classification of MineralResources incorporates the terms and definitions from the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code) published bythe Joint Ore Reserve Committee (JORC)
Lubando Mineral Resource
Table 3 below presents a table showing the Mineral Resource estimate for the Lubando Project at a base case economic cut-off grade for the reporting of the resource of 0.5 g/t Au. The table is taken from an NI 43 101-Compliant Report by EBA Engineering Consultants Limited (now part Tetra Tech EBA) dated August 2009.
TABLE3: LUBANDO MINERALRESOURCE SUMMARY - BASECASE* | |||||
Category |
West Zone | East Zone South |
East Zone Mid | East Zone North |
Total |
Measured Resource | |||||
Measured Resource(t) | 107,900 | 4,880 | 16,900 | 54,440 | 184,150 |
Grade(g/t) | 1.69 | 2.52 | 1.72 | 2.48 | 1.95 |
Total Gold(oz) | 5,900 | 400 | 950 | 4,340 | 11,500 |
Indicated Resource | |||||
Indicated Resource(t) | 280,710 | 18,330 | 61,000 | 149,350 | 509,420 |
Grade(g/t) | 1.61 | 2.23 | 1.89 | 2.73 | 1.99 |
Total Gold(oz) | 14,500 | 1,300 | 3,700 | 13,120 | 32,600 |
Inferred Resource | |||||
Total Resource(t) | 1,090,000 | 65,470 | 209,340 | 535,330 | 1,900,140 |
Grade(g/t) | 1.27 | 1.56 | 3.34 | 3.13 | 2.03 |
Total Gold(oz) | 44,550 | 3,300 | 22,500 | 53,900 | 124,200 |
*Kibo holds 90% of the Lubando Mineral Resource
* Numbers are rounded. Composites capped at 10.85g/t gold. Cut-off grade of 0.5 g/t gold based on a gold price of US$850/oz and assumed 100% metallurgical recovery.CIM definitions were followed for Mineral Resources.
Pursuant to the terms of an inherited agreement with Barrick East Africa Exploration LTD (BEAL), Kibo currently has an effective 90% interest in the Imweru and Lubando Project (and thus a 90% attributable interest in the Imweru and Lubando Mineral Resources shown in Table 2 and 3 above), with Barrick having a 10% carried interest up to a decision to mine at which point they have to contribute or be diluted to a 2% net smelter royalty. BEAL also has a first right of refusal pursuant to which they can buy the 90% interest in the project at an agreed market related value after completion of a Bankable Feasibility Study. Kibo remains the operator of the project.
Review by Qualified Persons
The information in this announcement that relates to the Rukwa Coal Mineral Resource is taken from a report titled "Independent Technical Report for the Rukwa Coal Project, Mbeya Region, United Republic of Tanzania" dated 19th April 2012 by CD van Niekerk Director and Principal Geologist with the firm GEMECS (Pty) Ltd. Mr van Niekerk is a Professional Natural Scientist with the South African Council for Natural Scientific Professions (SACNASP), Registration No. 400066/98 and a Fellow Member of the Geological Society of South Africa. He has relevant experience and technical qualifications to be a "Qualified Person" for reporting coal resources to the NI 43-101 Standard
Information in this announcement that relates to the Imweru Mineral Resource is taken from the report titled "Resource Update for the Imweru Property Geita Region Northern, Tanzania, JORC Competent Persons Report" dated February 17th 2014 (the "Report"). The Report states a JORC-compliant Mineral Resource estimate and was prepared for Kibo Mining plc by James Barr P.Geo. and Darryn Hitchcock P.Geo. Senior Geologist and Geologist respectively with TetraTech EBA Ltd. Both Mr. Barr and Mr. Hitchcock are registered as Certified Professional Geologists with Association of Professional Engineers and Geoscientists of British Columbia a recognised professional organisation. Mr Barr as principal author responsible for the Report has experience in the evaluation and reporting of Archaean Gold projects and is a "Qualified Person" for reporting gold resources to the JORC Standard. He consents to the inclusion in this document of the matters based on his information in the form and context in which they appears.
The information in this announcement that relates to the Lubando Mineral Resources is taken from a report titled "Technical Report on the Lubando property, Mwanza, Tanzania" dated 31st August 2009" (the "Report") The Report is NI 43-101 compliant and was prepared for Great Basin Gold Rusaf Gold Limited by Nathan Eric Fier C.P.G., P.Eng. Market Director for EBA Engineering Consultants Ltd and a Senior Mining Consultant. Mr. Fieris registered as a Certified Professional Geologist with the American Institute of Professional Geologists, Registration No 10062, and a professional Engineer in British Columbia, Canada Registration No. 135165. He has extensive experience in the evaluation and reporting of Archaean Gold projects.
The Company's Exploration Director, Noel O'Keeffe has reviewed the resource reports and the references to them in this announcement.
Johannesburg
09 June 2015
Corporate and Designated Adviser
River Group