Kibo Energy Regulatory News (KIBO)

Kibo Energy 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

Dated: 28 October 2020

Kibo Energy PLC ('Kibo' or the 'Company')

UK Subsidiary Secures Third Reserve Power Site

Option with Lease Heads of Agreement for the Installation of a 6 MW Synchronous Gas-powered Standby Generation Facility in West Midlands

Kibo Energy PLC ('Kibo' or the 'Company'), the multi-asset Africa and UK-focused energy company, is pleased to announce that its 100% owned UK subsidiary, Sloane Developments Ltd. ('Sloane'), has agreed an option/lease Heads of Terms ('HOT') for the installation of a 6 MW flexible gas power project in the West Midlands, England (the 'Installation'). 

Highlights

· HOT to install a 6 MW flexible gas power project in the West Midlands, England - planning and permitting already in-place

· Expands existing portfolio of UK shovel-ready sites, in line with strategy to acquire and develop a 300 MW portfolio of small-scale flexible power generation assets:

o 100% interest in 5 MW gas fuelled Bordesley power generation plant, currently under development and scheduled for commissioning in Q1 2021

o 100% interest in the acquisition of a 9 MW flexible gas power project

· Proven and significant market demand with blue-chip off-taker already secured

· Power generation can be controlled remotely, maximising efficiencies, and will match times of peak demand within the local network when called upon by the National Grid

· Project development subject to successful listing of Sloane, to be renamed Mast Energy Developments Plc ('MED'), on the Standard List of the London Stock Exchange:

o Admission is progressing well with the appointment of all the relevant advisers finalised and first submission of the prospectus to the FCA made

o Targeting listing before the end of 2020, opening the way for rapid growth during 2021 utilising funds raised by MED as part of its listing

o Kibo to retain a strategic interest of at least 51%

Louis Coetzee, CEO of Kibo, said: "The installation of this 6 MW gas power project will represent the third site in our subsidiary's growing portfolio of flexible power plants in the UK. With increasing supply/demand volatility, the Reserve Power market is the fastest growing energy sector in the UK and accordingly there is significant demand for flexible power projects of this kind. These three sites mark the start of a much larger portfolio of 300 MW that Sloane is aiming to establish in the UK, with a pipeline of sites totalling a further 71 MW currently being assessed, and additional prospective sites being continuously added.

"Following the LSE Admission, Sloane will be in a position to develop its portfolio at scale and pace, as opposed to on a project-by-project basis and advance significantly towards imminent revenue generation. With the listing progressing on track and due to be completed by the end of this year, this is an exciting period for both Sloane and Kibo. We look forward to providing further updates on progress in due course as we focus on realising meaningful value for all stakeholders."

Installation of a 6 MW flexible gas power project

· Near shovel-ready project:

o Lease hold site with planning and permitting in place for the installation of a 6 MW synchronous gas-powered standby generation facility with ancillary infrastructure.

o The installation will comprise a 3 by 2 MW gas reciprocating configuration. The specific level of noise from the generators shall not increase the existing ambient sound level by more than 1dB at any nearby noise sensitive educational receptor existing at the date of permission.

o The proposed scheme will feed its power into the local distributive network operated by the local distribution network operator rather than into the transmission network operated by the National Grid, thereby having the key benefit of avoiding transmission losses.

o Natural Gas will be delivered to the generators onsite via a connection to the local gas distribution network. The primary function of the proposed development is to provide electrical generation into the local distributive network when called upon by the National Grid. Times of generation will match times of peak demand within the local network and generation can be controlled remotely.

· Guaranteed income:

o Revenue will be created by selling electricity generated to the blue chip off-taker in terms of the contractual arrangements Sloane/MED already have in place.

· Rapidly growing target market:

o Increasing volatility arising from structural shift from fossil fuels to renewable sources and rising spend on gas & electricity is resulting in tight capacity margins during peak times.

· Project development subject to successful listing of Sloane:

o Costs of EPC Scope of Works are estimated as £2.8 million and will be funded by an equipment lease agreement to be entered into. The initial monthly lease payments (for first 4 months) are budgeted for in the Listing working capital budget and remaining monthly lease payments (following 80 months) will be covered by steady state revenue creation.

· Sloane LSE admission:

o This project installation will be in line with the proposed Listing Admission, which will facilitate development of a portfolio of flexible power plants in the UK operating in the rapidly growing Reserve Power market.

· This project installation will provide additional revenue opportunity, building upon the revenue potential of Bordesley (6 MW) and the previously announced 9 MW project (see RNS of 07 September 2020), and will be synchronous to the Listing working capital budget forecast.

Transaction Rational

The acquisition is an important step toward solidifying Sloane's strategic intent to establish itself as a significant presence in the Reserve Power market, with the ultimate objective of developing a reserve power portfolio in aggregate of 300 MW generating capacity.

Through the acquisition, Sloane will:

· Solidify the creation of a strategic platform from which it can significantly accelerate the development of its project portfolio by developing multiple sites simultaneously;

· Significantly improve and enhance the commercial integrity and investment attractiveness of the Sloane reserve power portfolio by establishing early revenue creating opportunity;

· Enhance the current reserve power portfolio, which includes the near-term Bordesley project, currently under development, and a 9 MW flexible gas power project.

· Mitigate investment risk materially through the planned installation of a synchronous 6 MW gas-powered standby generation facility to be connected to Balance of Plant as well as gas and grid connections.

Further Information

The HOT provides for an option/lease agreement for a period of 30 years, (commensurate to the project life), to be entered into by 31 December 2021 or such other date as the parties may agree to in writing. Completion of the option agreement shall take place upon the satisfaction or waiver of a number of conditions precedent, including, but not limited to:

· Sloane being successfully admitted to trading on the London Stock Exchange

· The completion of due diligence by Sloane on the Vendor

· All applicable necessary, regulatory, statutory, board and other approvals or consents having been obtained by the parties

Progress on Admission of Sloane

The admission process, announced on 23 July 2020, is progressing well with the appointment of all the relevant advisers having been finalised and the first submission of the prospectus to the FCA having been made. The intention is to have the Admission completed before the end of 2020, opening the way to rapid growth during 2021.

**ENDS**

This announcement contains inside information as stipulated under the Market Abuse Regulations (EU) no. 596/2014.

For further information please visit www.kibo.energy or contact:

Notes

Kibo Energy PLC is a multi-asset, Africa focused, energy company positioned to address the acute power deficit, which is one of the primary impediments to economic development in Sub-Saharan Africa. To this end, it is the Company's objective to become a leading independent power producer in the region.

Kibo is simultaneously developing three similar coal-fuelled power projects: the Mbeya Coal to Power Project ('MCPP') in Tanzania; the Mabesekwa Coal Independent Power Project ('MCIPP') in Botswana; and the Benga Independent Power Project ('BIPP') in Mozambique. By developing these projects in parallel, the Company intends to leverage considerable economies of scale and timing in respect of strategic partnerships, procurement, equipment, human capital, execution capability / capacity and project finance.

Additionally, the Company has a 60% interest in MAST Energy Developments Limited ('MED'), a private UK registered company targeting the development and operation of flexible power plants to service the UK Reserve Power generation market.

Johannesburg

28 October 2020

Corporate and Designated Adviser

River Group