Ncondezi Energy Ltd has agreed in principle the terms of a Non-Binding Offer (NBO) with China Machinery Engineering Corp. (CMEC) and General Electric South Africa Ltd (GE) (together the Consortium) to enter into exclusive negotiations to develop, construct and operate the integrated Ncondezi 300 MW coal-fired power project and opencast coal mine in Tete, Mozambique (together the Integrated Project).
Under the NBO, CMEC and GE will acquire a minimum 60% equity stake in the Integrated Project. The NBO grants exclusivity until 30 April 2018 to conclude a binding Joint Development Agreement (JDA). This will set out the commercial terms on which the parties will complete the acquisition and jointly develop and fund the Integrated Project up to and including Financial Close (FC).
CMEC and GE will lead project debt financing in conjunction with Ncondezi for both the power project and mine project at FC (FC targeted for completion end of 4Q18).
CMEC and GE will be responsible for the engineering, procurement and construction (EPC) and operations and maintenance (O&M) for the integrated project on a build own operate basis.
The offer subject to CMEC and GE successfully completing their due diligence and agreeing the commercial terms of the JDA.
Formal signing ceremony for the NBO is planned to be in Beijing, China, in early November 2017.
Ncondezi Non-Executive Chairman, Michael Haworth, commented: “The company is pleased to announce agreeing to enter into exclusive negotiations with CMEC and GE, following an intensive process to identify a new partner to take a leadership role in delivering the 300MW coal fired power project and integrated mine.
The CMEC and GE NBO has the potential to materially de risk the development, financing, construction and operation of the power and mine projects. CMEC and GE’s collective experience in both the energy and mining sectors and specific experience and reputations operating in Mozambique, gives them distinct advantages as a potential partner with Ncondezi.
The NBO proposes to develop the power plant and mine projects as an integrated project, which has the potential to greatly simplify the development, commercial and financing aspects of the process to FC and is welcomed by Ncondezi.
The Board believes that a return to CFB technology, where technical work is more advanced, will also facilitate a shorter, more cost-effective route to FC. Today’s announcement further highlights the advanced development stage of the power project and its attractiveness to international developer and operators. All efforts will now be focused on delivering the JDA.”