Kibo finalizes and awards EPC contract for MCPP Power Plant to SEPCO III
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 awarded the EPC contract for the construction of the proposed Mbeya Coal to Power Project (“MCPP” or the “Project”) thermal power plant to SEPCO III. A legally binding EPC Cover Agreement (“the Cover Agreement”) between Kibo’s wholly owned subsidiary Mbeya Power Ltd and SEPCO III was signed on 19 December 2016. The Cover Agreement incorporates the complete EPC-contract as well as the EPC co-ordination agreement, the latter governing the implementation and execution of the EPC contract, as well as the OEM contract submitted by General Electric (“GE”) and which constitutes an integral part of the EPC contract.
The full EPC contract will remain subject to potential change, pending finalization of the Power Purchase Agreement (“PPA”) and final requirements by lenders and equity investors during financial close. These changes will however only relate to changes required as a result of specific requirements in the PPA or final MCPP-funding arrangements. Notably the Cover Agreement fixes the EPC contract price and concludes all technical and commercial negotiations between the Company and SEPCO III with regard to the EPC-contract and related matters.
The award of the contract follows a detailed review of the bid submitted by SEPCO III in accordance with the terms of the new agreement signed between the Company and SEPCO III which was announced on the 25th August 2016. The extensive review that was carried out over the past two months by Kibo and its consultants Tractebel Engineering concluded that the bid fully met, and in general exceeded the required EPC specification, when compared to the international benchmark set by Tractebel Engineering for this purpose. Most significant is the fact that the SEPCO III bid significantly exceeded price and technical expectations and specifications.
Louis Coetzee, CEO of Kibo Mining, said: “We are extremely pleased to award the EPC contract to SEPCO III and to do so within the time schedule previously announced. Over the past two months the SEPCO III bid has been the subject of intense scrutiny, clarification and negotiation and has passed all tests with flying colors. We are particularly pleased with the high standard of professionalism, depth of knowledge and experience, capacity and capability that has been demonstrated by SEPCO III in this process. In SEPCO III we not only have a highly capable EPC contractor but also a loyal and true partner on whose support we can invariably rely on for the further development of the MCPP.
Signing the EPC Cover Agreement is the most decisive step forward to date in the development process of the MCPP and a true watershed moment in the history of the MCPP. The EPC price is one of the most, if not the most important, factors that determines the ultimate viability of a project like the MCPP. With certainty on the EPC price now we can confidently state that the MCPP is not only definitely viable, but also very robust and that it has exceeded all our expectations to date. The final
EPC price will now also allow us to finalize the integrated financial model for the MCPP, but more importantly to finalize PPA negotiations expeditiously, as soon as the Tanzanian Government has concluded its final policy changes on the procurement of power projects like the MCPP. In this regard the Company continues to work closely with the Tanzanian Government and is expecting this process to be concluded very soon and with significantly positive outcomes for the energy sector in Tanzania.”
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