Kibo signs financial advisory mandate letter with ABSA
AA – Kibo Mining plc (“Kibo” or the “Company”) (AIM: KIBO; AltX: KBO), the Tanzania focused mineral exploration and development Company, is pleased to announce that it has signed an advisory engagement letter (the “Mandate”) with Absa Bank Limited / Barclays Bank Limited (the “Advisor”) laying out the scope of work and terms under which it will act as new financial advisor to the Company on the Mbeya Coal to Power Project (“MCPP” or the “Project”).
The scope of work in the Mandate requires the Advisor to assist in delivering the Project to a successful Financial Close by completing amongst others, the following:
- develop a financial model for the Project with the assistance of the Company and its technical advisors and partners;
- assist the Company in the negotiation, review and finalization of all agreements pertaining to the MCPP including, inter alia, the power purchase agreement, EPC-agreement, O & M agreement and grid connection agreement; and
- develop a comprehensive and optimum funding structure for the project in cooperation with the Company and its advisors, and to implement it by soliciting and negotiating with potential lenders and/or equity providers sufficient funding on optimal terms to bring the project to successful Financial Close.
The Company has been successful in negotiating a minimal cash retainer fee in return for granting the Advisors equity call options of 3.5% of the total share capital of Mbeya Development Company Ltd (the “Project Company”) (“Advisor Options”). The terms of the Advisor Options will be formalized in an option agreement within three months of the commencement date of the Mandate. The option agreement will provide for shares to be issued (“Call Option Shares”) and the Advisor Options to be held in trust until the exercise date. It will also include a provision for the Advisors to be issued further shares to maintain its holding at 3.5% in the event of further share issues in the Project Company. The exercise date of the Advisor Options will be no earlier than 18 months after completion and commissioning of the Project., The option agreement will include a mechanism for release of the rights of the Advisor to the Call Option Shares on the exercise date, subject to payment of an amount equal to the value of the Call Option Shares calculated on the exercise date. The valuation of the call options will be calculated based on to the Net Present Value of the Project.
The Mandate also provides for the Company, at its sole election, to suspend payment of the retainer fee for one month or longer in the event of project delays. The Company will have the right to exercise this right twice during the period in which the Mandate is in force.
Louis Coetzee, CEO of Kibo Mining, said: “We are extremely pleased with having ABSA / Barclays on board as the new financial advisor to the MCPP on the terms outlined above.
ABSA / Barclays will replace our existing financial advisor, Standard Bank for the very important financial close phase of the MCPP. We are glad to report that the transition to ABSA will be seamless and will not result in any delay or additional budget cost towards completion of the Integrated Bankable Feasibility Study for the project. We are looking forward to benefitting from ABSA / Barclays’ impressive record in bringing projects similar to the MCPP to successful financial close.
The fact that ABSA / Barclays are prepared to take an equity stake in the MCPP in lieu of the standard cash retainer fee, on completion of the project, not only helps with our cash flow in the short to medium term, but also demonstrates its strong confidence and belief in the project.
Together with our recently announced agreement with SEPCO III, appointment of Norton Rose Fulbright as legal advisers to the MCPP and MOU with GE, the addition of ABSA / Barclays to our team of advisors and partners represents another key step in moving the project towards successful financial close.”
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