Dated: 11 December 2014
Kibo Mining plc (“Kibo” or the “Company”) (AIM: KIBO; AltX: KBO), the Tanzania focussed mineral exploration and development company, is pleased to confirm that the Company has now received the Power Pre-Feasibility Study Report, covering the power generation element of the Rukwa Coal to Power Project (“RCPP”).
Two Components to the RCPP – Coal Mining and Power Generation
Within our announcement of 1 December 2014 we advised shareholders that the Phase 1, Stage 1 report in respect of the RCPP Definitive Mining Feasibility Study (“DMFS”) covering the coal mining component of the RCPP, had been received by the Company. That report significantly exceeded our expectations. We further announced to market on 9 December 2014 the key findings of this report, which highlighted a conservatively calculated project NPV range of between US$116m and US$141m at a 5.7% discount rate and an average annual mining margin of between US$14.8m to US$19.4m per annum.
The second component of the RCPP, and the subject of this announcement, is power generation which, when combined with the coal mining component, dramatically enhances the value of the project as a whole.
Background to Study
The Power Pre-Feasibility Study (“PPFS”) conducted by Aurecon, was commissioned by the Company as announced to market on 10 November 2014. Recognising the wealth of data available to Aurecon from historic RCPP work programmes, we were able to accelerate completion of this study and the estimated early December delivery has been met by our independent advisers. We would like to thank Aurecon for their expediency, diligence and professionalism shown in the timely delivery of this study and during the course of their work.
Power Pre-Feasibility Study – Report Overview
We are now pleased to confirm that the PPFS report has also exceeded the Company’s expectations in terms of the robustness of overall project economics including notably, the deliverable underlying forecast free cash flow, based on preliminary internal financial modelling of the relevant results from the PPFS Report and DMFS Phase 1, Stage 1 Report. This is highly significant, demonstrating the potential for the project to achieve an accelerated payback of capital expended on project development and thus reducing the project risk profile. This factor greatly assists the Company particularly when considering our ability to conclude the best terms with prospective commercial partners. We are now reviewing the PPFS report in detail and will prepare an update to shareholders with regard to the report contents.
In both the coal mining and power generation components, the Company and our advisors consistently adopted prudent assumptions, duly reflected in the preparation and delivery of the feasibility reports received to date. Notwithstanding this prudent approach, the unique nature of the RCPP meant that we always expected project economics would be strong. The advisers’ technical work completed thus far has demonstrably proven that to be the case.
Moreover, the entirety of our work has never wavered from the key principles that the RCPP must be developed in a manner that properly reflects the local, regional and national need for near term energy solutions, whilst delivering cost effective power to enhance the lives of the Tanzanian people.
Detailed PPFS Announcement to Follow
A review of the PPFS report is now underway and a separate update announcement will be provided to shareholders in due course. This update will focus on a summary of power generation operations and key financial data related to the power generation component of the RCPP.
Louis Coetzee, CEO of Kibo Mining plc said “We are extremely pleased to receive this second key report covering the power generation component of the RCPP. In particular the underlying free cash flow demonstrated, underpins project viability, reduces risk and considerably enhances the economic attractiveness of the RCPP.
The RCPP was pursued for the exponential opportunity a combined coal mining and power generation operation offered Kibo and its shareholders. We were delighted to receive positive findings for the coal mining element and now even more so for the power generation element. The value being independently identified within the two reports clearly demonstrates that the RCPP is a substantially valuable and transformational asset for the Company.
We are also anticipating finalisation of the Preliminary Economic Assessment report for our Imweru Gold project, another asset that we consider holds considerable financial and strategic value to Kibo.”
Download Full Report
[ott_teaser btn_text=”Download” btn_icon=”icon-right-big” btn_url=”https://kibo.energy/wp-content/uploads/Final-RNS_RCPP_PDFS_PFS-Report_V3.0_10-12-20141.pdf” btn_target=”_blank”]Power Pre-feasibility Update- Rukwa Coal to Power Project[/ott_teaser]