Opg Power Regulatory News (OPG)

6th August 2014

OPG Power Ventures plc

("OPG" or the "Company")

Extension of relationship with Noble Chartering

Long Term Freight Arrangement with Noble Chartering provides a hedge on coal freight costs for OPG's current operating capacity

OPG (AIM: OPG) has entered into a joint venture arrangement ("JVA") with Noble Chartering (a wholly owned subsidiary of Noble Group Limited) ("Noble") to secure attractive long term rates for international freight. The Company has previously used, for its coal shipments, vessels contracted through Noble Chartering.

An equity investment of US$9m to access attractive long term freight rates for ten years

Under the Long Term Freight Arrangement ("LTFA"), between them, OPG and Noble are to purchase and own, jointly and equally, two 64,000t cargo vessels. The cost of each vessel has been agreed with one of the world's largest and leading shipyards at approximately US$28m (£17m) and each of OPG and Noble are to invest approximately US$9m (£5m) in stages over the period to delivery of the vessels in early 2017 as their equity contribution to the JVA. 

OPG and Noble will manage 1.5mt of cargo per annum under the LTFA for at least ten years

Under the terms of the LTFA, the Company will commit to provide 1.5mt per annum for carriage by the two vessels for a minimum period of ten years at competitive long term rates, with this volume of affreightment expected to meet the imported coal requirements of OPG's current operating capacity at Chennai.

OPG and Noble are committed to deploying the best of their combined expertise to manage both the vessels and cargo to achieve savings against prevailing shipping rates and effective operation of the fleet of two vessels. Technical management and maintenance are to be performed by a leading third party global ship manager.

LTFA expected to provide better predictability and control over a major cost item

Freight costs have in the past made up approximately 25% to 40% of the total landed cost of the imported coal OPG has purchased, depending upon activity and rates in the bulk cargo market. After scheduled delivery of the vessels in January 2017, by virtue of the project based nature of the freight arrangement, OPG will be charged an LTFA rate under the JVA for the shipment of its imported coal cargo which is expected to be lower than the long term contract rates that are currently available to the Company. Accordingly, the Directors believe that this LTFA is strategically attractive as it ensures visibility, control and competitiveness of the cost of transportation for all of OPG's imported coal requirements for Chennai I, II and III.

For further information, please visit www.opgpower.com or contact:

About OPG

OPG is operating and developing power projects in India under the group captive model with 270 MW in operation and a further 492 MW under development. In the year ended 31 March 2014 the Company's revenues were £99m, EBITDA £31m and EPS 4.1p.

About Noble Group

Noble Group (SGX: N21) manages a portfolio of global supply chains covering a range of agricultural and energy products, as well as metals, minerals and ores. Operating from over 140 locations and employing more than 70 nationalities, Noble facilitates the marketing, processing, financing and transportation of essential raw materials. Sourcing bulk commodities from low cost regions such as South America, South Africa, Australia and Indonesia, the Group supplies high growth demand markets, particularly in Asia and the Middle East. In order to ensure the integrity of its supply chains, the Group has a portfolio of interests in strategic logistics and processing assets which form an integral part of facilitating its key trade flows. We are ranked number 76 in the 2014 Fortune Global 500. For more information visit www.thisisnoble.com.

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