At that point First Quantum Minerals must fund African Energy Resources’ 25% interest in the JV as a loan carry.
In order to conclude these commercial arrangements, First Quantum Minerals has sought to extend the period required to complete its earn‐in for 75% interest in the Sese JV.
African Energy Resources advises that the Sese JV has completed the required technical studies related to coal mining and power generation to evaluate the 450 MW Sese integrated power project.
First Quantum Minerals advises that the parties have agreed to extend the period for it to complete the earn‐in by 12 months, to 12 July 2018, at which time if firm arrangements for wheeling power are not in place the commitment date may be extended by a further 12 months.
The extension of the earn‐in period is subject to the following terms:
- First Quantum Minerals shall immediately subscribe for 17 692 308 new African Energy Resource shares at a price of $0.078 per share, for total proceeds of $1.38 million
- As a result of this investment, First Quantum Minerals’s interest in African Energy Resources shall increase to 86 692 308 shares representing 13.8% of shares on issue
- First Quantum Minerals shall transfer to African Energy Resources, their entire holding in ASX‐listed Caravel Minerals within 30 days
- First Quantum Minerals will continue to retain African Energy Resources personnel to assist in the negotiations for transmission and wheeling arrangements, under its direction
- First Quantum Minerals will continue using its best endeavours to secure the necessary Generation and Export Licence, and transmission and wheeling arrangements and will continue to provide adequate funding for such activities
- The balance of funds that First Quantum Minerals is required to commit to the Sese JV to complete 75% earn‐in will be reduced by $2 million to approximately $5 million.
The Sese JV has secured the majority of the licences and permits required for the power project, including the recently awarded Mining Licence and Manufacturing Development Approval Order.
A Generation and Export Licence and suitable transmission and wheeling agreements with the relevant southern African power utilities are the only key outstanding commercial documents.
African Energy’s cash reserves will increase to approximately $4.8 million on completion of the share placement.
Feature image credit: First Quantum Minerals