AIM and AltX-listed energy development company Kibo Mining has completed the acquisition of an 85% interest in the Mabesekwa Coal Independent Power Project (MCIPP) in Botswana.
Kibo Mining acquired the interest in the strategic integrated power project in Botswana in an all share deal with Sechaba Natural Resources (Sechaba), a subsidiary of Shumba Energy.
MCIPP complements Kibo Mining’s Mbeya Coal to Power Project (MCPP) in Tanzania and is in line with the company’s broader strategy to position itself as a strategic regional energy company focused on tackling the acute power shortage, particularly in Southern Africa.
“The completion of the acquisition of the MCIPP both strengthens and diversifies our African energy portfolio in line with our stated strategy. Ideally located in Botswana, which has one of the best credit ratings in sub-Saharan Africa, and like much of Africa suffers from acute energy shortages, the MCIPP has notable similarities with our MCPP in Tanzania. These synergies will enable us to capitalise on our institutional knowledge and contacts in the industry as we pursue rapid development of both projects in tandem,” says Kibo Mining CEO Louis Coetzee.
Under the terms of the agreement, Sechaba has been issued 153 710 030 new ordinary shares in Kibo Mining at an issue price of GBP 0.061. The consideration shares, which rank pari passu with the existing ordinary shares, represent 27.13% of the enlarged share capital and consequently Sechaba will be a substantial shareholder of Kibo Mining.
Furthermore, Sechaba, which has retained a 15% interest in the MCIPP, will gain a seat on Kibo Mining’s board of directors, with founder and MD of Shumba Energy Mashale Phumaphi appointed as Sechaba’s nominated director.
“[Phumaphi’s] extensive corporate finance and technical experience will make him a valuable addition to our team,” says Coetzee, who adds that Phumaphi will hold a 2.44% beneficial interest in the securities of the company after the issue of the consideration shares.
As part of the transaction, Kibo Mining also has first right of refusal over any energy projects that Shumba Energy may pursue over the next six years. Additionally, Shumba Energy will be granted first right of refusal on any coal export projects that Kibo Mining may pursue over the same period. Notably, the MCIPP enjoys strong institutional investment support through Shumba’s shareholder base.
Furthermore, Sechaba will retain the benefit of the following modest royalties from MCIPP should it go into production:
- US$ 0.50 from revenue received per ton of coal sold from the area covered by the MCIPP coal resource; and
- $0.225 from revenue received per kilowatt hour produced and sold by any power plant owned by Kibo Energy (Botswana), the entity holding the MCIPP in Botswana or using coal procured from the area covered by the MCIPP coal resource.
MCIPP at a glance
The MCIPP is located about 40 km east of the village of Tonata and about 50 km southeast of Francistown – Botswana’s second largest city. Kibo envisages it 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 by Kibo.
Mabesekwa consists of a 300 Mt subset of the current in-situ 777 Mt coal resource, and while the 300 Mt acquired has now been precisely delineated with boundary coordinates, a Competent Person’s Report (CPR) inclusive of a new coal resource statement under SAMREC guidelines for the 300 Mt subset has not yet been completed.
Notable synergies between the projects provide considerable benefits, including economies of scale in equipment, execution, project finance and strong existing MCPP strategic partnerships. MCIPP already has water and land use permits and environmental certification in place.
Furthermore, a prefeasibility study on the coal mine has been completed, as has a scoping study, which highlight the power plant having a maximum capacity of 600 MW (4×150 MW) based on a coal delivery rate of 3.2 Mtpa and a life of mine of over 30 years.