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Improved financials for Mbeya coal to power project’s mine

Published by
World Coal,

A Tanzania focused mineral exploration and development company, Kibo Mining, has reported significantly improved financials for the Mbeya coal to power project’s (MCPP) coal mine component.

In corporation with its advisers, Minxcon Projects, the company has completed a financial optimisation study for the MCPP coal mine, which is based on feasibility results received to date.

Louis Coetzee, CEO of Kibo Mining, stated: “We are delighted to provide this update showing the outcome of the latest, more detailed work undertaken by our advisers for the MCPP.”

The impact of optimal gearing for the MCPP coal mine was tested on the surface miner contractor option. The following shows key results:

  • All-in cost margin ranges from 47.9% to 48.1%. Applying the aforementioned all-in cost margin, Kibo has deduced that annual earnings before interest and tax will be between US$23.5 million to US$23.6 million.
  • Applying a real discount rate of 5.51%, the best estimated net present value of free cash flow to equity ranges between US$214 million and US$219 million.
  • Equity IRR (leveraged) range between 131% and 146% with a Project IRR of 54%.
  • Cash return on capital invested ranging between 726% and 732%.

Kibo’s CEO further indicated that the company is pleased with the NPV range of US$214 million to US$219 million being confirmed in relation to the coal mining component and not the larger power generation side of the project.

Coetzee commented: “This is a large-scale project which is now demonstrably lower risk. With the relatively low capital investment required, the Mbeya coal mine delivers a high project IRR and short payback period … The IRR being substantially above the cost of debt makes it an attractive option to consider project level loan financing. The project’s robust financials will play in Kibo’s favour in respect of the competitiveness and conditions attached to any such loans.”

Edited from press release by Harleigh Hobbs

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