Excalibur Alpha – Legal & Financial

Overall Progress
  1. MoU with TANESCO

A Memorandum of Understanding outlining the detailed process for the PPA negotiations have been agreed and approved by the TANESCO Executive Management and awaits Board approval

  1. Power Purchase Agreement and Government Support

  • TANESCO will be the off-taker on the back of a [25] year PPA
  • The Ministry of Finance and the Government of Tanzania (“GOT”) will provide a letter of support for the integrated Project
  • GOT will also sign an Implementation Agreement for the direct contractual obligations and undertakings between itself and MCPP
  1. Sponsor Profile – Kibo Mining

  • Kibo is a public company quoted on AIM and on the Alternative Exchange of the JSE
  • Kibo has a single country, multi-commodity exploration portfolio, focused on exploration and development of mineral projects in Tanzania, where it owns a significant mineral rights portfolio
  • Kibo through its 100% owned Tanzanian subsidiary, Rukwa Coal Ltd, holds a thermal coal deposit at Rukwa, which contains a significant Joint Ore Reserves Committee compliant defined coal resource, which will be utilised as the fuel source for the MCPP
  • Kibo owns a number of other exploration projects located in the established and gold prolific Lake Victoria Goldfields, the emerging goldfields of eastern Tanzania and the Mtwara Corridor in southern Tanzania where the Government has prioritised infrastructural development attracting significant recent investment in coal and uranium
  • These projects range from multi commodity early stage exploration projects to a gold project that has already entered project development stage

Financing Strategy Equity:

  • Pre-Financial Close (“FC”)
  • Kibo has funded development costs to date; and
  • It is expected that the incoming SEP will be responsible for funding of the majority of remaining development activities up to FC.
  • At Financial Close
  • Equity will be split between Kibo and the various equity parties introduced to the Project
  • Kibo intends to re-invest its development fee applicable under the Project as well as a portion of all reimbursable development costs as its equity contribution; and
  • The equity investment is envisioned to be a combination of ordinary equity and shareholder loan subject to Tanzanian thin capitalisation rules

Financing Strategy Debt:

  • It is intended that the debt financing will be arranged from a combination of loans sourced from Development Finance Institutions (“DFI”), Commercial Banks and with support from an Export Credit Agency (“ECA”)
  • Project equipment sourcing is yet to be finalized. However, it is very likely that the bulk of the equipment (boilers, steam turbines, balance of plant would emanate from China)
  • With a Chinese EPC contractor chosen (SEPCO III), it is very likely that Sinosure (Chinese ECA) support will be forthcoming
  • It is anticipated that the loan amount will comprise of the following
  • An ECA tranche to be partially covered by Sinosure and it is assumed that this tranche will be funded by a combination of Chinese state banks and international banks
  • A DFI tranche to be funded by African and international DFIs
  • Commercial bank tranche to be funded by commercial banks; and this commercial bank tranche will be covered by political risk insurance