First Quantum Minerals is set to purchase a 51% stake in African Energy Holdings for $8 million and will become project manager for the Sese Project. The Sese Power Project is African Energy’s most advanced project and will eventually result in the plant exporting power to Zambia.
African Energy has reported that “all conditions precedent to the conclusion of the Sese JV shareholders agreement have been met. The $8 million will be used to repay all outstanding loans between African Energy Holdings and African Energy Resource, thus providing additional working capital.”
First Quantum will invest a further $12 million within 18 months to earn an additional 24% stake in African Energy. This additional funding for African Energy will be used to immediately investigate the development of power generation projects at Sese.
Once First Quantum has earned its 75% stake, African Energy’s 25% interest will be funded by First Quantum and loan carried through to the start of commercial operations. African Energy’s 25% carried interest will be financed under the same terms as First Quantum’s majority stake, with First Quantum to arrange the full financing for each project.
On receipt of the $8m initial investment, African Energy will have approximately $10m working capital and no debt, and a 25% carried interest in new power projects being developed at Sese. African Energy retains 100% ownership of the Mmamabula West and Mmamantswe coal and power projects in Botswana.