Wrap Text
Power Pre-Feasibility Study Report – Rukwa Coal to Power Project
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: IE00B61XQX41
("Kibo" or "the Company")
Dated: 18 December 2014
Power Pre-Feasibility Study Report - Rukwa Coal to Power Project
Kibo Mining plc ("Kibo" or the "Company") (AIM: KIBO; AltX: KBO), the Tanzania focussed
mineral exploration and development company is pleased to announce the findings from the
Power Pre-Feasibility Study ("PPFS) report for the Rukwa Coal to Power Project ("RCPP").
Key Highlights
The PPFS report was prepared by Aurecon on behalf of the Company and findings include the
following:
* four plant configurations were assessed, with a base case technology comprising 2 x
150MW Circulating Fluidised Bed (CFB) recommended for further development in Feasibility;
* sufficient additional coal resources are available from Rukwa to potentially expand the
power station to double the current design size or to be used in alternate energy conversion
technologies such as coal to liquids;
* a technical and environmental risk assessment was undertaken which unanimously
recommended further development of the project via feasibility analysis;
* total project cost, dependent on the plant option selected, is estimated between US$640
million and US$760 million;
* modelling was undertaken based on conservative "base-load" assumptions (80% capacity
factor) to predict annual generation profiles over the plant life. Indicative annual power
generated, dependent on plant option selected, will be between 1,841GWh per annum and
1,877GWh per annum.
Based on the parameters discussed above, the Company has decided to proceed with the definitive
feasibility stage of the Power Definitive Feasibility Study ("PDFS") as recommended by Aurecon.
Drawing relevant data from the PPFS and the Definitive Mining Feasibility Study: Phase 1, Stage
1 Report, the Company also prepared an internal preliminary financial model as a base case
financial model, to be verified in respect of the 300MW power plant and coal mine base case,
during the ensuing definitive feasibility studies. Publication of detailed financial information on
the RCPP is at present commercially sensitive, based on early stage assumptions with regard to
power generation volumes, pricing, capital and operating costs and therefore not ready for public
dissemination. Highlights of the indicative base case financial model which Kibo has used to
inform its decision on whether to proceed with the definitive feasibility stage of the PDFS include:
* Indicative power generation revenues, over an assumed 25 year plant operation, of
approximately US$7.8 to US$8.4billion;
* Indicative pre-tax equity IRR in excess of 23%;
* Indicative post-tax payback of approximately 8 to 9 years;
* Indicative project NPV range at a 15% discount rate of US$230 to US$280 million.
The preliminary financial model and information discussed above, comprises the Company's
internal financial base case for the RCPP. This base case will now be provided to the Company's
independent financial and technical advisors on the RCPP, for proper assessment, evaluation,
validation and adjustment during the definitive feasibility study stage of the PDFS. The
commercial and financial figures discussed above should therefore not in any way be construed
as a financial forecast of any kind.
Louis Coetzee, CEO of Kibo Mining plc said "This Power Pre-Feasibility Study work represents
an acutely critical part of the RCPP. We are delighted that the report received demonstrates the
robust nature of the project from a technical perspective. The purpose of the PPFS is, in part, to
identify any major technical flaws that could be project fatal. This report has confirmed no such
flaws were identified.
We are particularly pleased with project robustness, because the RCPP is a clear opportunity for
Kibo to assist the Tanzanian government in its striving for energy solutions to address the energy
supply deficit in Tanzania. Access to power provides enhancement to everyday life domestically
and commercially. This project above all can deliver safe and reliable base-load power to the
Tanzanian people and commercial enterprises benefitting the national socio-economic
development plan. The RCPP is a strategic catalyst for the economic development regionally as
well as nationally and hence our resolute drive to successfully complete this coal/power project.
Notwithstanding societal benefit, any commercial development of this magnitude must have robust
financials and project economics. This has rightly been made all the more challenging by our
desire to offer cost effective power for users. The data currently available from the Definitive
Mining Feasibility Study report, a summary of which was released to market on 11th December
2014, is now supplemented by the data we have gathered from the Power Pre-Feasibility Study
and associated internal financial modelling. Indicative project revenues, capital payback,
deliverable margin estimates, free cash flow forecasts, project NPVs and IRR estimates appear to
be attractive for both the Company as well as its potential clients. In our opinion this is best
illustrated by our base case IRR data which highlights a pre-tax equity IRR in excess of 23%,
which is substantially above levels of return which have attracted investment in the past and the
average IRR for similar projects in the same geographic area where the RCPP will be located.
The technical quality and financial robustness of the project were expected to be very strong, but
the reports received have still exceeded expectations. As a result, the intensity and nature of
partner discussions have intensified with a considerable degree of justifiable competitive tension
as a consequence".
Important Notes for Readers
We would refer readers to our Definitive Mining Feasibility Study announcement of 11th
December 2014 and the Executive Summary Report published on our website covering the Phase
1, Stage 1 Report dealing with the mining component of the RCPP.
We would ask readers to note that the Company is engaged in highly confidential discussions with
various parties, including regulatory authorities, for whom the release of detailed financial
information may cause a breach of confidentiality and normal commercial sensitivity and may
therefore harm the Company's ability to complete negotiations on the best terms for shareholders.
The specific financial information provided is an extract from an early stage economic assessment
of the RCPP made for the purposes of deciding whether to extend the study work undertaken on
the RCPP to date. The economic assessment is based on input assumptions which will require
extensive testing and are likely to be subject to significant change as the feasibility study process
progresses.
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
Abigail Wayne
+44 (0) 20 3693 1470
Hume Capital Securities Plc
Broker
Oliver Morse and Trinity McIntyre
+61 8 9480 2500
RFC Ambrian Limited
Nominated Adviser on AIM
Daniel Thöle
Lucinda Alderson
+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 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 Rukwa with initial findings to be released in the near term.
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 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, with Preliminary Economic Assessment study findings
to be released in the near term.
Kibo also holds the Haneti Nickel Project on which the latest technical report confirms
prospectivity for nickel, PGMs, gold and strategic metals including Lithium.
Kibo Mining also holds the Pinewood (coal & uranium) project where the company has signed
a MOU to enter 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 Classification Cut-off Specific Metric Short Tons Gold Contained Gold
Type (g/t) Gravity Tonnes (t) Grade
(g/t) 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
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 MINERAL RESOURCE 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) 1.6 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) 1.6 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) 1.2 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
18 December 2014
Corporate and Designated Adviser
River Group
Date: 18/12/2014 12:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.