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Ncondezi and Rio Tinto partner up for Mozambique infrastructure agreement

World Coal,

Ncondezi has signed an agreement with Rio Tinto Coal Mozambique (RTCM) and Minas de Revuboe for an integrated transport development project. The project provides rights for Ncondezi to access up to 10 Mtpa of rail and port capacity on a proposed greenfield rail and port project to be developed in Mozambique. The agreement allows the parties to build upon the results of a jointly-funded order of magnitude infrastructure (OoM) study that was completed in Q4 2011 and move the project towards implementation.

The OoM study identified a preferred port and rail solution in Mozambique approximately 500 km from Tete province, where Ncondezi has coal assets, and north of the Zambezi river mouth. The port developed will be a deep water port capable of handling up to capesize vessels with expandable capacity from an initial 25 million tpa upgradable to 100 million tpa. The project is expected to offer the lowest transport costs for the export of coals from Tete, as it will employ modern and proven rail and port technologies, cover the shortest rail distance to port and benefit from economies of scale as capacity is ramped up. The results of the OoM study also demonstrated that the project will provide positive social economic opportunities and additional potential, and is environmentally sound.

RTCM will lead the necessary study work required to determine the feasibility of an integrated transport corridor. Ncondezi will not be required to contribute to the project feasibility or development capital costs, other than for the infrastructure required for the Ncondezi project’s sole use to connect a rail spur with the transport project’s rail network.

Prior to proceeding with the construction and development phase, Ncondezi will be required to enter into commercial arms length take-or-pay commitments with the transport project operator in relation to phasing of coal production and allocating tonnage over a ramp up period. Ncondezi expects this to follow negotiations with coal off-takers for its export coal products from its Ncondezi project in Tete.

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