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KIBO MINING PLC - Mbeya Coal to Power Project SEPCO III Board Approves Joint Development Agreement

Release Date: 09/06/2015 08:00
Code(s): KBO     PDF:  
Wrap Text
Mbeya Coal to Power Project – SEPCO III Board Approves Joint Development Agreement

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")

Dated: 09 June 2015

Mbeya Coal to Power Project - SEPCO III Board Approves Joint Development 
Agreement

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 the Joint Development 
Agreement ("JDA") recently signed between the Company and SEPCO III, has now been 
approved by the SEPCO III board of directors.

Highlights

*Joint Development Agreement approved by SEPCO III board of directors;
*Material conditions precedent in JDA satisfied;
*Definitive feasibility study on Mbeya Coal to Power Project ("MCPP") on schedule;

Louis Coetzee, Chief Executive Officer of Kibo Mining plc, commented: "Kibo Mining is 
delighted to confirm that the board of directors of SEPCO III have now approved the JDA 
recently signed between Kibo and SEPCO III. This marks a crucial milestone in the 
implementation process of the JDA and I am delighted to confirm to our shareholders that the 
material conditions precedent to the JDA, are now satisfied. The board approval of the JDA by 
SEPCO III, was always the most substantial condition precedent, without which none of the 
remaining conditions precedent can be satisfied. Further and final implementation of the JDA is in 
essence now an administrative process.

The new status of the Joint Development Agreement with SEPCO III, one of the world's largest, 
most technically capable and financially robust EPC providers will not only allow us to 
significantly increase the pace at which the feasibility work can be concluded but also further 
increase the ability to secure further investors and finance into the MCPP, at a project level.  

We look forward to further strengthening our relationship with SEPCO III, who we have found to 
be a highly capable, practical and proficient team. This is particularly evident in the significant 
amount of work that was done towards completing the MCPP feasibility studies while awaiting the 
formal SEPCO III board approval, now received"

Note: MCPP was Previously called Rukwa Coal to Power Project ("RCPP")

Joint Development Agreement Overview

The JDA recently signed between Kibo Mining and SEPCO III ("the parties") wherein the parties 
have agreed to jointly develop the MCPP has now been approved by the SEPCO III board of 
directors. (Further information in respect of the 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 ) 

The JDA is subject to a number of conditions precedent, of which finalisation of a Due Diligence 
(including a site visit) and SEPCO III board approval, were the most significant conditions. Both 
of these have now been satisfied under the terms and conditions of the JDA. 

Approval of the JDA by SEPCO III, now paves the way for SEPCO III to make an equity 
investment in the MCPP, to a maximum of 15% of total equity in the 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. 

After successful completion of Definitive Feasibility Studies, and assuming the project is deemed 
feasible, a Special Purpose Vehicle 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 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);
-  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 and Designated Adviser

Jon Belliss
+44 (0) 207 382 8300
Beaufort Securities Limited
Broker

Oliver Morse
+61 8 9480 2500
RFC Ambrian Limited
Nominated Adviser

Daniel Thšle
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

09 June 2015

Designated and Corporate Adviser

River Group









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