Mining major First Quantum Minerals will invest A$12 million within 18 months to increase its interest in ASX-listed coal junior African Energy Resources’ Sese coal project in Botwana to 75%.
First Quantum Minerals (FQM) and African Energy Resources (AFR) announced a binding Shareholders Agreement under which FQM invested A$8 million for a 51% stake in the Sese (Joint Venture) in January 2015, and has become the project manager of the 5 Bnt Sese JV project.
This deal sees FQM enter the coal (and power generating market) in Botswana.
The original funds will be used to pay for the pre‐development evaluation of the proposed 300 ‐ 600 MW Sese Integrated Power Project (IPP), which is planned to be developed for the regional power market.
On earning its 75% stake, FQM will loan carry AFR’s 25% share of all development funding at Sese, with this loan to be repaid from AFR’s share of future project cash flow.
AFR’s on-going 25% interest in all projects undertaken in the Sese JV (including Sese West and the Foley North limestone licences) will be loan carried through to commercial operation, with its share of debt to be priced on the same terms as FQM’s, and repaid from its share of operating cash flow.
During AFR’s quarter to March this year, the company assisted with the technical and administrative integration of the Sese JV to full FQM management. This assistance will continue as required by FQM.
A formal Lease Agreement for the approved Surface Rights area at Sese is being prepared for execution. The Environmental and Social Impact Assessment for the Sese Integrated Power Project has been approved by the Department of Environmental Affairs (DEA). This covers an initial 300 MW power station, associated coal mine and related infrastructure, including an access corridor to the main A1 highway and regional transmisison grid.
The Sese JV has been advised that the EIA approval can be expanded to a larger 600 MW project through amendments to the Environmental Management Plan (EMP) without the need to re‐ submit the entire EIA.
The Botswana Department of Mines has granted two‐year extensions for both Sese (PL96/2005) and Sese West (PL197/2007) prospecting licenses, which are now valid until 31 December 2016.