TIDMKIBO
RNS Number : 9157X
Kibo Mining Plc
30 November 2017
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")
Dated: 30 November 2017
Kibo Mining Plc ('Kibo' or the 'Company')
Evolving Strategy to Re-Position as an Energy Company
With Acquisition of Strategic Botswanan Power Project
Kibo Mining Plc (AIM:KIBO; AltX:KBO) is pleased to announce the
agreed acquisition of an 85% interest in the Mabesekwa Coal
Independent Power Project in Botswana ('the Project' or
'Mabesekwa') in an all share transaction (the "Transaction"). This
is a major part of Kibo's strategy focused on re-positioning itself
as a strategic regional electricity supplier on the back of its
flagship Mbeya Coal to Power Project ('MCPP') in Tanzania.
Overview
-- 85% interest in Mabesekwa to be acquired from Sechaba Natural
Resources Limited ("Sechaba"), a subsidiary of Shumba Energy
Limited (BSE:SHUMBA) ("Shumba"), for 153,710,030 new ordinary
shares in Kibo ("Consideration Shares") that shall rank pari passu
with the existing ordinary shares in Kibo
-- The Project will consist of a 300Mt subset of the current
insitu 777Mt coal Mineral Resource (SAMREC) defined by Shumba at
Mabesekwa ("MCIPP Resource"). The Resources that comprise thee
MCIPP Resource will be defined during the detailed due diligence
process
-- Kibo's intention is to build on the work completed to date
investigating the construction of an integrated power project at
Mabesekwa
-- Notable synergies with Kibo's flagship Mbeya Coal to Power
Project in Tanzania, providing considerable benefits including
economies of scale in equipment, execution, project finance and
strong existing MCPP strategic partnerships
-- Project perfectly placed to address the chronic power shortages in Southern Africa
-- Water and land use permits and environmental certification in
place at the Project, previous studies include a Pre-Feasibility
Study on the coal mine and a Scoping Study on the power plant
-- Sechaba to retain a 15% interest in the Project and gain a seat on Kibo's Board of Directors
-- Kibo to be given first right of refusal to participate on
terms and conditions no more onerous than those available to
Sechaba in any energy projects that Shumba may pursue over a six
year period from transaction completion and Shumba to be granted a
reciprocal first right of refusal on any coal export projects that
Kibo may pursue over the same period
-- Project backed by leading African and international
institutional investors through Shumba's investor base
-- Acquisition is part of Kibo's strategy to build a portfolio
of near-term energy production assets in multiple geographies
-- Kibo to rebrand to reflect the expanded strategy
Should the Transaction complete and the Consideration Shares be
issued Kibo will have 548,964,394 ordinary shares on issue and
Sechaba would hold 153,710,030 ordinary shares in Kibo, which would
represent 28.00% of the enlarged share capital of the Company as at
Transaction completion, and thus be a Substantial Shareholder. This
assumes no further ordinary shares in Kibo are issued prior to
Transaction completion.
Kibo's CEO, Louis Coetzee, said: "This is a fantastic
opportunity for Kibo as we focus on building an energy business
with producing assets in multiple geographies. Given this is the
first step in pursuing our expanded strategy, we are pleased that
the Project is ideally located in Botswana, which has one of the
best credit ratings in sub-Saharan Africa and a business-friendly
environment. The synergies with our flagship MCPP project in
Tanzania are impossible to ignore, placing us in a strong position
to utilise our knowledge and contacts to rapidly advance both
projects to production in a short time-frame. By combining our own
strengths with the experience of GE as our OEM partner and our
Chinese development partner, SEPCO III, combined with Shumba's
international recognition and institutional support, I believe we
have a winning formula! I look forward to providing further updates
on our progress as we build and expand our existing strategic
partnerships and intrinsic strengths, to transform Kibo into a
leading, vertically integrated energy business with sustainable
strategic assets across Africa."
Strategy & Acquisition
The Company is focused on building a diversified portfolio of
strategically located, near-term energy production assets spanning
the entire spectrum of electricity generation across Africa, that
can solve the increasing acute energy shortages on the continent.
Its flagship asset is the MCPP in Tanzania, which comprises the
development of the Mbeya Coal Mine, a 1.5Mt p/a mining operation
and the Mbeya Power Plant, a 300MW mine-mouth thermal power station
anticipated to be in production in 36 months from the date of
achieving financial close.
As part of this strategy, the Company has agreed to acquire an
85% interest in the company that will hold the Mabesekwa Coal
Independent Power Project in Botswana from Sechaba, a Botswana
registered 100% subsidiary of Shumba, with the Project to consist
of 300Mt of the existing 777 Mt Mabesekwa coal Mineral Resource.
The 85% interest will be acquired for a consideration of
153,710,030 new ordinary shares in Kibo. The Consideration Shares
will be issued and credited as fully paid by Kibo to Sechaba on the
completion date at an issue price being the higher of GBP0.06 or
the volume weighted average price at which the Ordinary Shares
shall have traded on AIM for the 30 trading days immediately
preceding the completion date. Completion will take place at 14h00
London Time on the fourth Business Day after the fulfilment of the
last of the conditions, or such other date as Kibo and Sechaba may
agree to in writing, at the offices of Kibo's London Solicitors,
Messrs Ronaldsons LLP of 55 Gower Street, London, WCIE 6HQ
("Completion"). The conditions that must be met before the
transaction can complete, and on or before the Long Stop Date of 1
June 2018, which date may be extended by agreement in writing
between the Parties, include amongst others the following:
-- Sechaba having incorporated a new 100% subsidiary ('NewCo')
of Sechaba and having transferred the Project to NewCo, free of
every and all encumbrances and with all permits and authorisations
current and in good standing;
-- Kibo having delivered a notice in writing to Sechaba to the
effect that it is satisfied in its sole discretion with the results
of the due diligence investigation into the Project, the
incorporation of NewCo, the acquisition by NewCo of the Project and
the procurement by NewCo of the Project Authorisations and or
Permits;
-- Kibo having received the advice of its Nominated Advisor in
writing in respect of the matters for which its advice is required
in accordance with the AIM Rules; and
-- The Parties having received the approval of any regulatory
authority with jurisdiction regarding the transaction and whose
approval is required to implement its provisions.
Under the terms of the agreement, Sechaba will retain a 15%
interest in NewCo and will be given a seat on Kibo's Board of
Directors; this nomination will be advanced in due course, and
details of the service contract of the director to be appointed
will be notified as soon as it has been finalised. As part of the
transaction, Kibo will have first right of refusal over any energy
projects that Shumba may pursue over the next six years after
Completion. Additionally, Shumba will be granted first right of
refusal on any coal export projects that Kibo may pursue over the
same time period. The Project also enjoys strong institutional
investment support through Shumba's shareholder base.
Sechaba will retain the benefit of the following modest
royalties from NewCo should the Project go into production:
-- USD 0.50 from revenue received per metric tonne of coal sold
from the area covered by the MCIPP Resource; and
-- US 0.225 cents from revenue received per kilowatt hour
produced and sold by any power plant owned by NewCo in Botswana or
using coal procured from the area covered by the MCIPP Resource
Other material terms include:
-- Kibo to use reasonable commercial endeavours on reasonable
commercial terms and on an arm's length basis to free-carry Sechaba
for the reasonable funding requirements of the MCIPP until
financial close of a project financing, after which Sechaba may be
diluted
-- For a period of one year after Completion, Sechaba is subject
to lock up and orderly market arrangements for any sale of
Consideration Shares, with a maximum disposal of 5% in any calendar
month permitted
-- Sechaba may distribute up to 50% of its Consideration Shares
in specie to its shareholders (currently another subsidiary of
Shumba) on condition that the recipient(s) comply with the lock up
and orderly market arrangements or distribute the Consideration
Shares in specie to Shumba, who must immediately distribute the
Consideration Shares in specie to its own shareholders
-- Warranties, representations and undertakings typical of a transaction of this nature
The Board believes that the Project presents a highly
synergistic opportunity, being perfectly placed to address the
chronic power shortages in Southern Africa. Furthermore, it has
many similarities to Kibo's flagship asset, the MCPP, where a 300MW
'mine mouth' power station is anticipated to be in production in 36
months from the date of achieving financial close. It is envisaged
that with Kibo developing two similar power projects, considerable
benefits will be realised including economies of scale both in
equipment, execution and project finance.
Mabesekwa Coal Independent Power Project
The Project is located approximately 40km east of the village of
Tonata and approximately 50km southeast of Francistown, Botswana's
second largest city. Kibo envisages the Project as a coal-based
integrated mine-mouth power plant, with potential for incorporation
of a solar component as part of the further studies to be conducted
on the Project by Kibo. Certain aspects of the Projects have been
advanced previously by Sechaba, including water and land use
permits and environmental certification which are now in place.
The power plant fuel source is envisaged to be drawn from the
MCIPP Resource. As earlier stated, the Project will consist of a
300Mt subset of this current 777Mt coal Mineral Resource, with the
precise subset comprising the MCIPP Resource to be defined during
the detailed due diligence. Given the MCIPP Resource is yet to be
technically defined, Kibo has not yet estimated a standalone
Mineral Resource for the MCIPP Project, however the Mineral
Resources as estimated by Sechaba for the entire Mabesekwa Project
are set out in the table below on a 100% basis (noting that it is
not yet possible to determine which subset of these Resource will
comprise the MCIPP Resource):
Table 1: Mabesekwa Resource Statement (SAMREC, dated 4 June
2015, 100% basis)
SEAM SEAM SAMREC IN % IN SITU RAW QUALITIES (AIR
SITU DRIED)
-----------------------------------------
THICKNESS CATEGORY Megatons GEOLOGICAL Megatons RD ASH IM VM CV TS
------ ----- ---- ----- ------ -----
No DISCOUNT with gm/cc % % % % %
discount discount
----------- ---------- ---------- ---------- ----------- ----------- ------ ----- ---- ----- ------ -----
SE 2.70 Measured 2.05 5 1.95 1.94 47.7 5.9 18.0 11.2 1.30
SD 3.81 Measured 8.30 5 7.88 1.93 48.5 4.9 18.2 11.4 1.30
SC 4.48 Measured 22.31 5 21.19 1.90 45.4 5.6 19.2 12.2 1.64
SB 6.32 Measured 41.56 5 39.48 1.87 45.9 5.2 18.9 12.0 1.48
SA 7.53 Measured 38.22 5 36.31 1.72 32.0 4.9 19.2 18.2 2.30
----------
Measured 112.44 5 106.81 1.83 41.3 5.2 19.0 14.1 1.77
----------------------- ---------- ---------- ----------- ----------- ------ ----- ---- ----- ------ -----
SE 3.08 Indicated 25.10 10 22.59 2.03 52.8 5.0 17.4 9.6 0.87
SD 3.40 Indicated 48.14 10 43.32 1.91 46.4 5.5 18.7 11.9 1.28
SC 4.58 Indicated 105.43 10 94.88 1.96 49.5 5.3 18.0 11.1 1.40
SB 6.61 Indicated 214.24 10 192.82 1.84 42.0 5.7 19.2 13.4 1.59
SA 6.49 Indicated 154.00 10 138.60 1.74 34.5 5.1 19.0 17.0 2.09
----------
Indicated 546.91 10 492.21 1.85 42.2 5.4 18.8 13.7 1.63
----------- ---------- ---------- ---------- ----------- ----------- ------ ----- ---- ----- ------ -----
SE 3.92 Inferred 37.61 15 31.97 1.96 49.1 5.6 18.6 10.9 1.41
SD 2.79 Inferred 12.17 15 10.35 1.91 46.4 5.9 18.6 11.7 1.22
SC 4.16 Inferred 32.89 15 27.96 1.97 49.8 5.5 17.8 11.1 1.47
SB 6.22 Inferred 75.91 15 64.52 1.86 44.8 5.5 18.3 12.6 1.35
SA 5.63 Inferred 51.19 15 43.51 1.73 34.8 4.8 18.7 17.3 2.02
----------
Inferred 209.77 15 178.31 1.87 44.0 5.4 18.4 13.2 1.54
----------- ---------- ---------- ---------- ----------- ----------- ------ ----- ---- ----- ------ -----
GRAND TOTAL 869.12 777.33 1.85 42.5 5.4 18.7 13.56 1.63
----------------------- ---------- ---------- ----------- ----------- ------ ----- ---- ----- ------ -----
Technical Notes:
(R) Minimum Seam thickness cutoff = 1.0m
(R) Dry Ash Free Volatile cut-offs (insitu raw qualities) =
26%
(R) Borehole densities:
ü Measured >8bh/100ha
ü Indicated 4-8bh/100ha
ü Inferred 1bh/100ha
(R) Geological Discount for unforeseen geological features
ü Measured Resources - 5%
ü Indicated Resources -10%
ü Inferred Resources -15%
Shumba Energy
Shumba Energy, a Botswana based, locally owned coal and energy
development company listed on the Botswana Stock Exchange and the
Stock Exchange of Mauritius, controls a significant portion of
advanced energy projects in Botswana. It offers the advantage of
being based in a country with the best credit rating in sub-Saharan
Africa with a stable fiscal and political setting and has a highly
experienced management team with extensive global knowledge of
project development and financing.
**S**
For further information please visit www.kibomining.com or
contact:
Louis Coetzee +27 (0) 83 Kibo Mining Chief Executive
2606126 Plc Officer
Andreas Lianos +27 (0) 83 River Group Corporate Adviser
4408365 and Designated
Adviser on JSE
Jon Belliss +44 (0) 207 Beaufort Securities Broker
382 8300 Limited
Andrew Thomson +61 8 9480 RFC Ambrian NOMAD on AIM
2500 Limited
Isabel de +44 (0) 207 St Brides Investor and
Salis / Priit 236 1177 Partners Ltd Media Relations
Piip Adviser
Notes to editors:
Kibo Mining is a multi-asset resource development and energy
company focused on South West Tanzania, listed on London's AIM
market and the AltX in Johannesburg. The Company's flagship asset
is the Mbeya Coal to Power Project ('MCPP'), which comprises the
development of the Mbeya Coal Mine, a 1.5Mt p/a mining operation
and the Mbeya Power Plant, a 300 MW mine-mouth thermal power
station.
The Mbeya Coal Mine has a defined 120.8 Mt NI 43 101 thermal
coal resource. A Definitive Feasibility Study has been conducted on
the project which underpins its value with an indicated IRR of
69.2%. The 300 MW mouth-of-mine thermal power station has long term
scalability to 1,000 MW, with a full Power Feasibility Study that
has been published highlighting an annual power output target of
1,8 GW based on annual average coal consumption of 1.5 Mt. An
Integrated Bankable Feasibility Study report for the entire project
indicated total potential revenues of US$ 7.5-8.5 billion over an
initial 25-year mine life, post tax equity IRR between 21-22%, debt
pay-back period of 11-12 years and a construction period of 36
months.
To assist in the execution this critical power project of the
MCPP, Kibo has assembled a team of international advisors and
partners including Engineering Procurement and Construction ('EPC')
contractors and financial teams that are assisting in the
development of. These include ABSA/Barclays as Financial Advisor,
China based EPC contractor SEPCO III, General Electric, Tractebel
Engineering (Power), Minxcon Consulting (Mining) and legal advisors
Norton Rose Fulbright.
Kibo also holds the Haneti Project on which the latest technical
report confirms prospectivity for nickel, PGMs, gold and strategic
metals including lithium and Rare Earth Elements.
Kibo Mining's projects are located in central Tanzania and in
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. Kibo Mining recognises the potential to enhance the quality
of life and opportunity for Tanzanian citizens through careful
development of its projects.
This announcement contains inside information as stipulated
under the Market Abuse Regulations
(EU) no. 596/2014 ("MAR").
Review by Qualified Persons
The information in this announcement that relates to the
Mabesekwa Coal Mineral Resource is taken from a report by CD van
Niekerk Director and Principal Geologist with the firm GEMECS (Pty)
Ltd. Mr van Niekerk is a Professional Natural Scientist with the
South African Council for Natural Scientific Professions (SACNASP),
Registration No. 400066/98 and a Fellow Member of the Geological
Society of South Africa. He has relevant experience and technical
qualifications to be a "Qualified Person" for reporting coal
resources to the SAMREC Standard and for the purposes of the AIM
Rules for Companies.
The Company's Exploration Director, Noel O'Keeffe,B.Sc.(Hons)
Geology P.Geo and a member of the Institute of Geologists of
Ireland, a director of Kibo and a Qualified Person within the
meaning of SAMREC and the AIM Rules for Companies has reviewed the
resource report and the references to them in this
announcement.
Glossary of Technical Terms
"air-dried" In equilibrium with a standard
environment or with the normal
surroundings. Includes inherent
(equilibrium) moisture content
for coal
--------------------- -------------------------------------
"ash" A measure of the non-combustible
material in coal, expressed
as a percentage. Determined
by proximate analyses tests
--------------------- -------------------------------------
"CV" Calorific Value. A measure
of the heat content of a sample.
Normally measured in MJ/kg
--------------------- -------------------------------------
"density" Measure of the relative "heaviness"
of objects in terms of constant
volume. Density =-mass/volume
--------------------- -------------------------------------
"IM" More correctly termed 'equilibrium'
moisture. Moisture content
bound up in a coal sample
which remains after that sample
has been air-dried.
--------------------- -------------------------------------
"Indicated Resource" That part of a coal resource
for which tonnage, densities,
shape, physical characteristics,
grade and coal quality can
be estimated with a moderate
level of confidence. Based
on exploration, sampling and
testing information gathered
through appropriate techniques
from locations such as outcrops,
trenches, pits, workings and
drill-holes. The data-point
locations are appropriate
to confirm physical continuity,
while they are too widely
or inappropriately spaced
to confirm quality continuity.
However, such locations are
spaced closely enough for
quality continuity to be assumed.
--------------------- -------------------------------------
"Inferred Resource" That part of a coal resource
for which tonnage, grade and
coal quality can be estimated
with a low level of confidence.
It is inferred from geological
evidence and assumed but not
verified physical continuity
with or without coal quality
continuity. Based on exploration,
sampling and testing information
gathered through appropriate
techniques from locations
such as outcrops, trenches,
pits, workings and drill-holes
which is limited or of uncertain
quality or reliability.
--------------------- -------------------------------------
"insitu" In its original place. Most
often used to refer to the
location of Mineral Resources
--------------------- -------------------------------------
"insitu tonnage" Measure of mass of coal or
other mineral in the ground
--------------------- -------------------------------------
"megaton" Million tonnes (measure of
weight)
--------------------- -------------------------------------
"Measured Resource" A Measured Mineral Resource
is that part of a Mineral
Resource for which quantity,
grade or quality, densities,
shape, and physical characteristics
are estimated with confidence
sufficient to allow the application
of Modifying Factors to support
detailed mine planning and
final evaluation of the economic
viability of the deposit
--------------------- -------------------------------------
"Mineral Resource" A "Mineral Resource" is a
concentration or occurrence
of diamonds, natural solid
inorganic material, or natural
solid fossilised organic material
including base and precious
metals, coal, and industrial
minerals in or on the Earth's
crust in such form and quantity
and of such a grade or quality
that it has reasonable prospects
for economic extraction. The
location, quantity, grade,
geological characteristics
and continuity of a Mineral
Resource are known, estimated
or interpreted from specific
geological evidence and knowledge.
--------------------- -------------------------------------
"Mj/kg" Mega-Joule per kilogram (unit
of energy)
--------------------- -------------------------------------
"Mt" Million tonnes (measure of
weight)
--------------------- -------------------------------------
"MW" Million watts (unit of power,
measure of rate at which energy
is generated or consumed)
--------------------- -------------------------------------
"RD" Relative Density.
--------------------- -------------------------------------
"SAMREC" South African Code for Reporting
Mineral Resources and Mineral
Reserves
--------------------- -------------------------------------
"tonnage" Quantities where the tonne
is an appropriate unit of
measure. Typically used to
measure or estimate quantities
of in situ material or quantities
of material mined, transported,
processed or sold.
--------------------- -------------------------------------
"TS" Total sulphur, a coal quality
measure
--------------------- -------------------------------------
"volatiles/volatile A measure of the volatile
Matter/VM" component of coal as determined
under fixed conditions in
a laboratory as part of proximate
analysis.
--------------------- -------------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
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