Oracle Power Regulatory News (ORCP)

Admission of Coal Price Petition

Released : 11 August 2015

RNS Number : 7367V

Oracle Coalfields PLC

11 August 2015



11 August 2015

Oracle Coalfields PLC

("Oracle" or the "Company")

Admission of Coal Price Petition

Oracle Coalfields PLC (AIM:ORCP), the UK energy developer of a combined lignite mineral resource and mine mouth power plant located in the Thar desert in the south-east of Sindh Province, Pakistan, announces that its coal price petition (the "Petition"), submitted to the Thar Coal and Energy Board ("TCEB"), Government of Sindh, has been examined as per Rule 4(6) of the Thar Coal Tariff Determination Rules, 2014 (the "Rules"), to ascertain its conformity with the provisions of Rule 4 (1), (4), & (5) of the Rules by the Thar Coal Tariff Determination Committee and accordingly, the Petition has been admitted.

The coal pricing regime in Pakistan is a cost-plus arrangement, under which holders of mining leases in the Thar desert are allowed a coal price that gives a US Dollar based internal rate of return of 20%. The petition Oracle submitted is based on the Mine Feasibility Study costs.

The next stage of the process is that TCEB will determine the feasibility stage coal price. On the basis of this determined coal price, the Company will proceed to apply for an initial electricity tariff for the power plant. The coal price will be re-determined in a further petition once the EPC contract price for the mine is finalised. Further coal price petitions will be submitted to TCEB periodically through the lifetime of the project as costs are updated. The electricity tariff will be similarly adjusted.

Highlights of Oracle's Mine Feasibility Stage Petition:

· 4.0 million tonne per annum mine;

· Mine capital costs (including financing costs), $879 million;

· 70:30 debt equity split;

· Mine financing of $615 million through a combination of Sinosure, the Chinese Export Credit Corporation and other financial institutions; $264 million will be sought in equity;

· Coal price sought in this petition is $76.48/tonne, averaged over the thirty year period of the lease;

Other aspects of the project are proceeding. The Company is close to selecting a mining sub-contractor, which will be followed by the signing of EPC term-sheets with SEPCO, the Shangdong Electric Power Corporation of China, for both the mine and the adjacent power plant. Discussions on financing with Sinosure, the Chinese Export Credit Corporation, are ongoing.

 Shahrukh Khan, CEO of Oracle, said:

"The admission of our coal price by the Thar Coal and Energy Board, Government of Sindh, is an important milestone for the Company and represents the latest step towards our goal of developing a producing mine capable of supplying indigenous coal. We remain steadfast in our determination to develop a long term sustainable solution to Pakistan's energy crisis.

"We thank our shareholders for their continued confidence and support."

The detailed Petition can be viewed on the Company's website, www.oraclecoalfields.com.

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