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KIBO MINING PLC - Signs New Agreement with SEPCO III on the Mbeya Coal to Power Project Securing Cash Payment and Avoiding Equity

Release Date: 25/08/2016 08:00
Code(s): KBO     PDF:  
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Signs New Agreement with SEPCO III on the Mbeya Coal to Power Project Securing Cash Payment and Avoiding Equity

  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”)

  25 August 2016

Kibo Signs New Agreement with SEPCO III on the Mbeya Coal to Power Project Securing Cash
                         Payment and Avoiding Equity Dilution

Kibo Mining plc (“Kibo” or the “Company”) (AIM: KIBO; AltX: KBO), the Tanzania focused mineral
exploration and development Company, is pleased to announce that it has signed a new Agreement (the
“Agreement”) with major international China based EPC contractor, SEPCO III. The Agreement
establishes a re-defined contractual relationship between SEPCO III and the Company (together “the
Parties”) by which SEPCO III can earn the right to become the sole bidder for the EPC contract to build
the power plant component of Kibo’s, Mbeya Coal to Power Project (“MCCP”). This Agreement
supersedes and replaces the existing Joint Development Agreement currently in force between the Parties
(first announced on 20 April, 2015). The principal terms and conditions of the Agreement are:

       SEPCO III to refund Kibo for 50% of the total development costs incurred by Kibo on the MCPP
       to date (“Development Costs”), with a fixed first tranche in the amount of US$1.8 million to be
       paid in cash to Kibo, no later than 30 August 2016;

        SEPCO III and the Company to mutually agree by no later than 22 September 2016:

              The final amount that constitutes the Development Costs;
              The final amount to be refunded to Kibo; and
              The date at which the residual refund amount (i.e. final amount to be refunded less the
              initial US$1.8m first tranche) will be payable to Kibo.

       Conditional on Kibo receiving the first refund tranche of US$1.8 million and mutual agreement
       being reached between the Parties on the refund payment balance due, SEPCO III will be formally
       appointed sole bidder and will be required to submit an EPC bid proposal to Kibo by 22 October
       2016. This bid must meet the EPC-specification laid down by Kibo and Tractebel Engineering
       (MCPP Definitive Power Feasibility Study consultant) for the construction of the MCPP thermal
       power plant. This EPC-specification requires the EPC-bid to, amongst others, be competitive
       against an international benchmark determined by Tractebel in respect of elements such as price,
       technical standards, operational, management and financial capability and capacity. The final bid
       must also comply with international good practice and standards and will in the final instance be
       subject to acceptance by Kibo and its financial advisors appointed to the MCPP;

       Subject to SEPCO III’s bid proposal meeting the EPC-specification as determined by Kibo and
       Tractebel Engineering, SEPCO III will be formally awarded the EPC contract by Kibo, no later
     than 23 December 2016;

     SEPCO III will no longer earn any equity in the MCPP and all payments made to Kibo under the
     Agreement, will be a cash refund for historical development cost associated with the development
     of the MCPP;

 The Agreement provides for summary termination in the event of any of the listed conditions not
 being met, specifically in terms of missing any of the agreed timelines. In particular, if the Parties
 cannot agree on the total amount deemed to comprise the Development Costs by the 22nd September
 2016 (bullet point 2 above) or do not complete signing of an EPC contract by the 23rd December 2016
 (bullet point 4 above), the Agreement will terminate.


 Louis Coetzee, CEO of Kibo Mining, said: “We are extremely pleased that we have been successful
 in negotiating a new agreement with SEPCO III on favorable terms that ensures the Company
 continues to hold a 100% interest in the MCPP and still leaves Kibo with full and absolute control
 over the further development of the project.

 Under the terms of the Agreement, the Company will benefit from a near term cash injection which
 the Company can use at its sole discretion and which will be of great assistance with the further
 development of the MCPP. It also provides for a further cash payment to be made to Kibo,
 subsequent to the initial tranche of US$1.8m as partial reimbursement of the shareholder funds
 spent to date on the project.

 The Agreement reflects recognition of the increased value of the MCPP by SEPCO III, following
 completion of the Mining and Power Definitive Feasibility Studies earlier this year and provides
 for the project to benefit from the experience of a large EPC contractor with a proven track record
 of successful thermal power plant construction in a number of countries. The Agreement also
 significantly enhances the MCPP’s ability to attract serious investors on competitive terms and
 significantly strengthens Kibo’s position in the commercial negotiations related to the MCPP,
 specifically in relation to the development of the power purchase agreement for the project.

Contacts


                        +27 (0) 83 2606126       Kibo Mining         Chief Executive Officer
  Louis Coetzee                                  plc
                                                                     Corporate Adviser and
  Andreas               +27 (0) 83 4408365       River Group
                                                                     Designated Adviser on JSE
  Lianos
                                                  Beaufort
  Jon Belliss           +44 (0) 207 382                              Broker
                                             Securities Limited
                        8300
                                               RFC Ambrian
  Oliver Morse          +61 8 9480 2500                              Nominated Adviser on AIM
                                                  Limited
                        +44 (0) 203 772
  Daniel Thöle / Anna   2500                     Bell Pottinger      Investor and Media
                                                                     Relations
         Legge


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 Mbeya, which has a significant NI 43-101 compliant
defined resource, and is developing a 250-350 MW 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 Bankable Feasibility Study report for the MCPP 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 100% owned projects with a 550,000 oz. JORC
compliant gold Mineral Resource at the Imweru Project and a 168,000 oz. NI 43-101 compliant gold
Mineral Resource at the Lubando Project. 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 prioritized 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 recognizes 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

Johannesburg
25 August 2016
Corporate and Designated Adviser
River Group

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