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Rukwa coal to power project

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World Coal,

Kibo Mining plc, the Tanzania focussed mineral exploration and development company has announced positive findings from the Integrated Pre-Feasibility Study Report for the Rukwa Coal to Power Project.

Louis Coetzee, CEO of Kibo Mining plc said "Completion of the IPFS marks a significant stage for the RCPP, drawing together the technical findings from the Coal Mining and Power Generation elements, into a consolidated report. The IPFS provides a further, more in-depth technical review stage, with the results once again confirming the robust nature of the RCPP and enabling the project to pass yet another milestone with flying colours.

With the validation of RCPP fundamentals the IPFS substantially increases confidence in the project, to the benefit of the company and relevant third parties. Completion of this stage of the RCPP feasibility work considerably enhances the inherent value of the RCPP and is an important factor in finalising commercial partner discussions.

We would reaffirm to investors that our commercial negotiations continue actively. We are managing this process carefully, with our main focus being the conclusion of a joint development agreement at the earliest possible opportunity. In this regard the company recently held separate project site visits at the RCPP, with prospective partners.”

The IPFS draws together the findings of the coal mining and power generation technical reports, into a consolidated technical report covering the entire RCPP project. This stage of the technical review aims at demonstrating whether the project is viable at the consolidated level, rather than purely at the coal mining or power generation stages of the RCPP.

The IPFS report utilised: the Power Pre-Feasibility report prepared by Aurecon (inclusive of a prefeasibility level environmental impact assessment study); the Concept Study report of the Definitive Mining Feasibility Study, prepared by Minxcon; and the internal financial model for the RCPP, based on the findings and results from the aforementioned feasibility reports and developed in conjunction with the Company’s financial advisors.

The IPFS confirmed the fundamentals of the consolidated RCPP, demonstrating the viability of the project overall and thereby substantially increasing confidence levels in the ability to successfully develop and deliver the project.

Specifically, the IPFS has considered, validated and confirmed the following consolidated project fundamentals as previously announced by Kibo:

  • The RCPP is robust at financial, technical and operational levels with four alternative development options identified and investigated for the RCPP, with all four development options proving to be financially, technically and operationally feasible;
  • Indicative RCPP revenue range over an assumed 25 year life of project of approximately US$8 to US$8.5 billion;
  • Indicative pre-tax equity IRR above 23%;
  • Indicative post-tax payback, excluding any mitigation from potential Government concessions and incentives, of approximately 7.5 to 9 years for RCPP;
  • Indicative project NPV range at a 15% discount rate of US$250 to US$280 million;
  • Sufficient additional coal resources available from Rukwa, to potentially expand the power station to more than double the current design size and plant life and / or to be used in alternate energy conversion technologies such as coal to liquids;
  • Technical and environmental risk assessment did not identify any high risk concerns and unanimously recommended further development of the project via feasibility analysis;
  • The RCPP can be successfully constructed and commissioned within the current projected timelines for completion;
  • Feasibility work done to date already covers a significant amount of work beyond the standard industry scope, required for pre-feasibility compliance.

Adapted from press release by Joseph Green

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