Africa-focused Kibo Energy has announced several updates that will progress and significantly repositions its interests in Botswana, namely the Mabesekwa Coal Independent Power Project (MCIPP), and associated coal assets.
The company indicated that it signed a first of a series of agreements to implement the heads of agreement (HoA) with Shumba to reorganise the arrangements for the MCIPP and its associated coal asset in Botswana.
It also signed shareholder agreement in respect of restructuring Kibo Energy Botswana, providing Kibo with a 35% interest in KEB, which holds a total 761Mt coal resource and has three large customers; and it signed a shareholder agreement, which concludes restructuring of the first Botswana subsidiary company, Kibo Energy LTD (Botswana).
The company said that remaining agreements remain on track to be completed by 20 March 2020, in which Kibo will also hold an 85% interest in an energy project, which is to be called KP2; and 35-40% interest in a new 300MW energy project, KP1, that will exclusively provide a new petrochemical plant with energy.
The agreement gives Kibo access to a revenue stream from an estimated annual coal production of 7.5Mt coal per year.
Louis Coetzee, CEO of Kibo, said: “We are delighted with the progress being made as we advance the restructuring of our interests in Botswana to significantly lower development and execution risk.”
He added that being part of several much larger projects naturally provides many benefits and advantages to the company and its shareholders. “Not least because, having finalised the shareholder agreement, we’ll be holding a 35% interest in an enlarged project with a total 761Mt coal resource that already has three large customers, whereas before we had one.”
Coetzee said that the company continues to hold an 85% interest in the energy project, which is to be called KP2 and in addition, a 35-40% interest in a new 300MW energy project, KP1, a bespoke 300MW power plant that will exclusively provide a new petrochemical plant with energy, where the costs of feasibility/ technical studies are to be funded by Shumba.
“We can now fully leverage our coal resource at Mabesekwa by providing and fast-tracking three different revenue streams, which would give Kibo access to a revenue stream from an estimated annual coal production of 7.5Mt coal p/a. compared to producing 1.5Mt p/a for its own consumption at the MCIPP power plant.
“As I mentioned in past announcements, there is no funding impact in addition to what Kibo currently has for the development of the MCIPP power plant other than we may have to nominally increase our operational capacity to meet the additional operational / management demands for the development oftwo 300MW power plants. This is a real opportunity for a shorter and faster route to revenue generation; we look forward to updating shareholders on further progress soon.”
In September 2019, Kibo and Shumba signed a binding HOA with Shumba and various subsidiaries of each party to reorganise the arrangements for the MCIPP and its associated coal asset in Botswana. The reorganisation sees the MCIPP retained assets consolidated into Kibo Energy Botswana; this enlarged project in which Kibo has a 35% interest has a total 761Mt coal resource.
An additional joint venture (KP2) between Kibo and Shumba (held 85%/15% respectively) will advance the existing MCIPP energy projects in Botswana.