TIDMNCCL
RNS Number : 4309G
Ncondezi Energy Limited
23 July 2019
News Release
Ncondezi Signs Joint Development Agreement with China Machinery
Engineering Corporation and General Electric
23 July 2019: Ncondezi Energy Limited ("Ncondezi" or the
"Company") (AIM: NCCL) is pleased to announce that it has signed a
Joint Development Agreement ("JDA") with China Machinery
Engineering Corporation ("CMEC") and General Electric Switzerland
Gmbh ("GE") to co-develop and construct the integrated Ncondezi
300MW coal fired power project and coal mine in Tete, Mozambique
(the "Project"). This is a region which is not connected to the
national grid and with low levels of electrification today.
Highlights:
-- The JDA formalises certain of the key terms on which the
Project will be co-developed and, constructed by Ncondezi, CMEC and
GE (together the "Parties").
-- The JDA was executed by senior representatives at a Beijing
signing ceremony, including CMEC President Mr. Han Xiaojun, GE
Steam Power President & CEO, Mr. Michael Keroulle, and Ncondezi
Chairman, Mr. Michael Haworth.
-- JDA signing follows the Project's recent inclusion by Chinese
and Mozambique governments on the list of key infrastructure
projects at the 2nd China-Mozambique International Cooperation
Summit held in the first half of 2019.
-- Ncondezi is expected to hold a 40% equity interest in the Project.
-- Project Steering Committee to be setup with representatives
from each Party to manage the development process to Financial
Close ("FC"), the point at which first funds are drawn for Project
construction.
-- CMEC will be the main Engineering, Procurement and
Construction ("EPC") and Operations and Maintenance ("O&M")
contractor for the Project.
-- GE will be the exclusive subcontractor for the power project
core technology, including the boiler, steam turbine, generator,
and air quality control solutions which will ensure the plant meets
the emission standards established by the World Bank. GE will also
supply the required parts and serve as a field advisor for the
power plant maintenance.
-- The JDA is the key outstanding milestone to formally engage
with the Mozambican Government and state power utility,
Electricidade de Mocambique ("EDM"), on the electricity tariff and
key Project commercial agreements such as the Power Purchase
Agreement ("PPA") and Power Concession Agreement ("PCA").
-- Parties to initially focus on finalising a set of development
co-funding investment conditions which include finalisation of the
electricity tariff and PPA with EDM. Ncondezi to be responsible for
any agreed additional third party development costs during this
phase other than the EPC and O&M tendering related costs which
will be the responsibility of CMEC and GE.
-- Ncondezi responsible for 40% of development costs to FC based
on an agreed budget once the development co-funding investment
conditions have been satisfied or waived.
-- A subscription price and terms for the 60% share in the
Project to be agreed once the electricity tariff with EDM has been
confirmed, utilising an accredited asset valuation firm to be
appointed by the Parties, and it is expected to be paid at an
agreed date when the Project transaction agreements, internal and
government approvals are obtained.
-- Parties have agreed that Ncondezi's historical development
costs to date and the Parties' future development costs for the
Project will be reimbursed in cash as part of the Project capital
costs at FC through debt and equity financing, subject to approval
by the Parties and Project debt financing institutions.
-- The JDA is subject to termination in a number of
circumstances such as certain milestones and deadlines not being
satisfied, force majeure or liquidation event, unresolved deadlock
at the Steering Committee or any party announcing its intention not
to proceed with the Project.
-- The JDA includes a one year non-compete for any party that
terminates the JDA where it no longer intends to proceed with the
Project. Ncondezi has agreed to refund any CMEC or GE development
costs approved by the Parties should the JDA be terminated and the
Project reach FC with a new partner, be sold or liquidated.
Ncondezi Non-Executive Chairman, Michael Haworth said: "The
Board welcomes CMEC and GE to the Project as partners and
co-developers and looks forward to working with two world class
companies who will bring complimentary skills, resources and
experience to deliver the Project.
The JDA signing formally starts the co-development process with
CMEC and GE on the US$1 billion Ncondezi integrated power project
in Tete, Mozambique. This is a significant milestone that should
materially enhance the credibility of the project in Mozambique and
with international financiers, helping to unlock key development
processes including the finalisation of the electricity tariff and
PPA with EDM as well as initiating project financing discussions
with banks and the China Export and Import Credit Insurance Company
("Sinosure").
The JDA signing comes after the recent Project inclusion as a
key infrastructure project at the 2nd China-Mozambique
International Cooperation Summit held earlier this year. Further
strengthening the platform of support for the Project at the
Mozambican and Chinese government level.
The Parties will now finalise and agree the joint development
program to Financial Close, with a focus on achieving the
development co-funding conditions starting with the submission of
an updated electricity tariff to EDM and opening up tariff
negotiations over the next 6 months. The tariff and PPA process is
expected to leverage off existing development work completed and
not require material external cost to the Company.
Whilst key milestones are still to come, the JDA is an important
step towards the goal of generating power in 2023."
Enquiries
For further information please visit www.ncondezienergy.com or
contact:
+44 (0) 7555 180
Ncondezi Energy: Hanno Pengilly 708
Liberum Capital Limited: Andrew Godber, Edward Thomas, +44 (0) 20 3100
NOMAD & Joint Broker Kane Collings 2000
Novum Securities
Limited +44 (0) 20 7399
Joint Broker Colin Rowbury 9427
Note:
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation ("MAR"). Upon the publication of this
announcement via Regulatory Information Service ("RIS"), this
inside information is now considered to be in the public domain. If
you have any queries on this, then please contact Hanno Pengilly,
Chief Development Officer of the Company (responsible for arranging
release of this announcement) on +27 (0) 71 362 3566.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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