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KIBO ENERGY PLC - Kibo inks Power Purchase & Coal Supply Term Sheets with Vale Moambique, S.A for Benga Power Plant Project

Release Date: 05/09/2019 08:00
Code(s): KBO     PDF:  
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Kibo inks Power Purchase & Coal Supply Term Sheets with Vale Moçambique, S.A for Benga Power Plant Project

 Kibo Energy PLC (Incorporated in Ireland)
 (Registration Number: 451931)
 (External registration number: 011/007371/10)
 Share code on the JSE Limited: KBO
 Share code on the AIM: KIBO
 ISIN: IE00B97C0C31
 (“Kibo” or “the Company”)

 Dated: 5 September 2019

                          Kibo Energy PLC (‘Kibo’ or the ‘Company’)
                     Kibo inks Power Purchase & Coal Supply Term Sheets
                    with Vale Moçambique, S.A for Benga Power Plant Project

Kibo Energy PLC, the multi-asset, Africa focused energy company, is pleased to announce that is has
signed a non-binding Power Purchase Term Sheet (‘PPTS’) and a non-binding Coal Supply Term Sheet
(‘CSTS’) with Vale Mozambique, S.A. (‘Vale’) for the Benga Power Plant Project in Mozambique
('BPPP’). Also see the RNS of 7 June 2019 in this regard.

       * PPTS signed with Vale for c.37% of the available power targeted for phase 1 generation at
         the BPPP
                 - Agreement highlights the urgent need for a reliable power source in the region
                 - Tariff calculation mechanisms typical of Power Purchase Agreements (‘PPAs’)
                 - Definitive PPA with Vale based on the initial terms in the PPTS targeted for
                   agreement and finalisation during Q4 2019
                 - Finalised Vale off-take would significantly enhance economic feasibility and ultimate
                   fundability of the BPPP
       * CSTS signed with Vale for the total coal requirement of the BPPP over the modelled 25-year
         life of plant
                 - Competitive coal price negotiated reflected in competitive indicative electricity tariff
                   of independent financial model for BPPP
                 - Coal source which is essentially co-located with the BPPP eliminates coal transport
                   and handling cost and provides considerable operational flexibility
                 - Definitive Coal Supply Agreement (‘CSA’) seeking to be concluded with Vale
                   consistent with initial terms set out in the CSTS
       * Signing of PPTS and CSTS paves the way for further integration possibilities to enhance and
         optimise operational synergies between Vale and Kibo

Louis Coetzee, CEO of Kibo Energy, commented, “Finalisation of both a PPTS and a CSTS in such
a short span of time after the completion of a Base Case Definitive Feasibility Study and Independent
Financial Model clearly reflects the commercial robustness of the project, both representing key
milestones in the development of our first pure energy project. Ultimately, this demonstrates the urgent
need and fast-growing demand for electricity in a mineral and resource rich region, which will remain
unexploited without access to reliable and affordable electricity.

“In addition to the above referred term sheets, the Company also had further formal engagement with
EDM, Mozambique’s national utility over the past week, as part of the ongoing process set out in the
existing MOU between the parties, to develop and ultimately agree a PPA for the balance of the
electricity that will be produced from the BPPP and not sold to private off-takers. These very productive
and technical discussions acknowledged the relevance of the declared corporate strategy of Kibo,
whereby the BPPP is gaining increasing recognition as a critical energy project in Mozambique, with
a pivotal role to play in providing a comprehensive energy solution, rather than just being capacity to
generate electricity. The success of energy projects in developing economies and which is true for all
of the Company’s utility scale projects, will continue to depend on our ability to demonstrate a profound
understanding, capacity and commitment to address the needs and requirements of all legitimate
stakeholders. I look forward to updating shareholders on further progress.”
Details on Non-Binding Term Sheets
Progress continues to be made to advance the Company’s 65% owned Benga Power Plant Project in
Mozambique, where a 150-300 MW coal-fired power plant is planned with fuel provided by local coal

To this end, the Company has signed a PPTS with Vale, a local coal miner, and subsidiary of Vale SA,
one of the world’s largest diversified miners, situated in very close proximity to the BPPP site. Delivery
of a PPTS is a key milestone and directly aligns with the Company’s energy strategy; it is very well
developed and demonstrates clear intention of the involved parties to enter the next phase of negotiation
aiming for execution of a final binding PPA in Q4 2019 in compliance with all relevant regulatory and
statutory requirements.

The PPTS, completed in a short timeframe, highlights the urgent need for a reliable power source in the
region and provides for the private off-take of c. 37% of the total available power production of the first
phase 150 MW boiler unit. Early engagement with power off-takers furthermore enables the Company
to accommodate specific requirements in the development phase of the project, ensuring that all
specification and optimisation aspects are built into the first phase of project design.

Additionally, the Company has signed a CSTS with Vale, which provides for the supply of the total
coal requirement of the BPPP over the modelled 25-year life of plant. A blend of varying quality
bituminous coal can be procured from Vale, which will be fed to the Power Plant boiler. Vale produces
both metallurgical/coking coal and thermal coal for the export market and aims to have a combined
production rate of 20 million tonnes per year by 2021. This combination of scale and product diversity
not only provides security of feed supply over life of plant, but of critical importance, provides the
BPPP with the rare strategic advantage of being able to rapidly adjust the optimal fuel quality
requirements of the power plant to comply with the varying operational and technical requirements of
the power plant. This control is possible because of the certainty and diversity of feed supply
specifications able to be delivered from the mine and is in contrast to many coalfired power plants,
especially integrated mine-mouth coalfired plants, where there are very few, if any, options for
materially varying the quality of fuel supply (which in turn denies them the ability to achieve and
maintain optimal production, emission and cost efficiencies). In addition to other optimisation
opportunities being evaluated, this aspect is expected to afford the BPPP the opportunity to operate
well above the standard efficiency rates for coal fired power plants, providing valuable economic
benefits for the BPPP and clients alike.

Kibo was able to negotiate a competitive coal price mechanism with Vale, which includes the benefits
of eliminating a substantial portion of coal transport and handling cost by virtue of the coal source being
virtually co-located with the BPPP site.

The CSTS provides the framework and initial terms from which Kibo and Vale will seek to agree a
final definitive CSA.

Conclusion of a PPA or CSA remains subject to typical matters such as final negotiations, internal
approvals, regulatory approvals, due diligence and entry into definitive legal documentation satisfactory
to both parties.

More about Vale Moçambique, S.A.
For more information on Vale Mozambique, please access                         the   following    weblink:


   This announcement contains inside information as stipulated under the Market Abuse Regulations
   (EU) no. 596/2014.

 For further information please visit or contact:
Louis Coetzee              Kibo Energy PLC         Chief Executive Officer
Andreas Lianos         +27 (0) 83 4408365            River Group             Corporate and Designated
                                                                             Adviser on JSE

Jason Robertson        +44 (0) 20 7374 2212       First Equity Limited       Joint Broker
Andrew Thomson         +61 8 9480 2500            RFC Ambrian Limited        NOMAD on AIM
Isabel de Salis /       +44 (0) 20 7236 1177      St Brides Partners Ltd     Investor and Media
Gaby Jenner                                                                  Relations Adviser

  Kibo Energy PLC is a multi-asset, Africa focussed, energy company positioned to address the acute
  power deficit, which is one of the primary impediments to economic development in Sub-Saharan
  Africa. To this end, it is the Company’s objective to become a leading independent power producer
  in the region.

  Kibo is simultaneously developing three similar coal-fuelled power projects: the Mbeya Coal to
  Power Project (‘MCPP’) in Tanzania; the Mabesekwa Coal Independent Power Project (‘MCIPP’) in
  Botswana; and the Benga Power Plant Project (‘BPPP’) in Mozambique. By developing these
  projects in parallel, the Company intends to leverage considerable economies of scale and timing in
  respect of strategic partnerships, procurement, equipment, human capital, execution capability /
  capacity and project finance.

  Additionally, the Company has a 60% interest in MAST Energy Developments Limited (‘MED’), a
  private UK registered company targeting the development and operation of flexible power plants to
  service the Reserve Power generation market.

 5 September 2019
 Corporate and Designated Adviser
 River Group

Date: 05/09/2019 08:00:00
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