Kibo Mining plc, the Tanzania focused mineral exploration and development company, has signed a new agreement with major international China-based EPC contractor, SEPCO III. The agreement establishes a re-defined contractual relationship between SEPCO III and the company by which SEPCO III can earn the right to become the sole bidder for the EPC contract to build the power plant component of Kibo’s, Mbeya coal to power project (MCCP). This agreement supersedes and replaces the existing joint development agreement currently in force between the two parties (first announced on 20 April 2015).
Principal terms and conditions of the agreement include:
SEPCO III to refund Kibo for 50% of the total development costs incurred by Kibo on the MCPP to date with a fixed first tranche in the amount of US$1.8 million to be paid in cash to Kibo, no later than 30 August 2016.
SEPCO III and Kibo to mutually agree by no later than 22 September 2016 for the final amount that constitutes the development costs; the final amount to be refunded to Kibo; and the date at which the residual refund amount (i.e. final amount to be refunded less the initial US$1.8 million first tranche) will be payable to Kibo.
Conditional on Kibo receiving the first refund tranche of US$1.8 million and mutual agreement being reached between the parties on the refund payment balance due, SEPCO III will be formally appointed sole bidder and will be required to submit an EPC bid proposal to Kibo by 22 October 2016. This bid must meet the EPC-specification laid down by Kibo and Tractebel Engineering (MCPP Definitive Power Feasibility Study consultant) for the construction of the MCPP thermal power plant. This EPC-specification requires the EPC-bid to, amongst others, be competitive against an international benchmark determined by Tractebel in respect of elements such as price, technical standards, operational, management and financial capability and capacity. The final bid must also comply with international good practice and standards and will in the final instance be subject to acceptance by Kibo and its financial advisors appointed to the MCPP.
Subject to SEPCO III’s bid proposal meeting the EPC-specification as determined by Kibo and Tractebel Engineering, SEPCO III will be formally awarded the EPC contract by Kibo, no later than 23 December 2016.
The agreement provides for summary termination in the event of any of the listed conditions not being met, specifically in terms of missing any of the agreed timelines.
Louis Coetzee, CEO of Kibo Mining, said: “We are extremely pleased that we have been successful in negotiating a new agreement with SEPCO III on favourable terms that ensures the company continues to hold a 100% interest in the MCPP and still leaves Kibo with full and absolute control over the further development of the project.”
Read the article online at: https://www.globalminingreview.com/finance-business/26082016/kibo-and-sepco-iii-sign-agreement-on-mbeya-coal-to-power-project-2321/