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")
21 July 2015
Mbeya Coal to Power Project
SEPCO III Joint Development Agreement Unconditional and Funded
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 all conditions precedent in the Joint Development Agreement ("JDA") recently signed between the Company and SEPCO III, have subsequently been met in full and that the JDA now enjoys unconditional status.
Highlights
· All conditions precedent in the SEPCO III JDA have been met in full;
· SEPCO III funding commitments, as called for under the terms of the JDA, fulfilled;
· Detail work schedule and implementation plan to complete Bankable Feasibility Study ("BFS") for Mbeya Coal to Power Project ("MCPP") finalised;
Louis Coetzee, Chief Executive Officer of Kibo Mining plc, commented: "Kibo Mining is delighted to confirm that the JDA with SEPCO III is now unconditional, funded until completion of BFS and fully operational. This marks another crucial progressive milestone in the development of the MCPP. With the JDA now implemented, its execution will henceforth be Kibo's first priority in the further development of the MCPP.
The new unconditional status of the JDA with SEPCO III, one of the world's largest, most technically capable and financially robust EPC providers, will allow us to conduct and complete the MCPP BFS at pace and to the highest international standard.
With all the most important strategic MCPP enablers now firmly in place, we can resolutely focus our entire MCPP effort on delivery of this robust world class project."
Joint Development Agreement Overview
The remaining conditions precedent in the JDA recently signed between Kibo Mining and SEPCO III ("the parties"), wherein the parties have agreed to jointly develop the MCPP, have now all been met. This latest development follows an intensive joint Kibo / SEPCO III work and planning session held at the SEPCO III headquarters in Qingdao China from 15 to 18 July 2015. (Further information in respect of the JDA and 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 )
At the date of signing, the JDA was subject to a number of conditions precedent which had to be fulfilled before the agreement could become unconditional. The two most important conditions precedent were:
· A due diligence site visit to MCPP in Tanzania, by SEPCO III - fulfilled and announced to market on 29 April 2015; and
· Board approval of the JDA by Kibo and SEPCO III respectively - fulfilled and announced to market on 09 June 2015.
A number of administrative conditions precedent still had to be met after the 9 June RNS referred to above and the last of these were fulfilled during the Kibo / SEPCO III work and planning session, held during the past week at the SEPCO III headquarters in Qingdao. Upon meeting the last of the conditions precedent, the JDA became unconditional and as a result it simultaneously also met all conditions to receive funding as provided for under the terms and conditions of the JDA (See RNS of 20 April 2015).
During the work and planning session referred to above, Kibo and SEPCO III also finalised the work and implementation schedules to ensure the successful and timely delivery of a Bankable Feasibility Study for the MCPP can be achieved in accordance with the guidelines and objectives outlined below.
MCPP JDA background
SEPCO III's funding contribution to the MCPP will be made as an equity investment in the MCPP, to a maximum of 15% of total equity in the Special Purpose Vehicle ("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 with the appropriate Tanzanian Government bodies.
After successful completion of Definitive Feasibility Studies, and assuming the project is deemed feasible, an SPV 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 MCPP Kibo 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 Mbeya 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); and
· 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 |
+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, the Mbeya Coal to Power Project ("MCPP"), previously called Rukwa Coal to Power Project ("RCPP"), 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 the Mbeya project 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 Central and 25 g/t at Imweru East, the cut-off grade is based on a gold price of US$1,200 and a 90% metallurgical recovery is assumed in calculation of cut-off grade. A base case of 0.40 g/t has been selected.
** Classification of Mineral Resources incorporates the terms and definitions from the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code) published by the 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
21 July 2015
Corporate and Designated Adviser
River Group
