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Kibo Mining PLC: THE INVESTMENT CASE

Kibo Mining’s transformation into a pure energy company is now well underway

Kibo's transformation into an energy company is gathering momentum
Kibo Mining’s transformation into a pure energy company is now well underway
INVESTMENT OVERVIEW: KIBO The Big Picture
Kibo's Louis Coetzee signing an agreement with one of China's major power and infrastructure companies

“The value proposition has changed completely,” says Louis Coetzee of Kibo Mining PLC (LON:KIBO).

“We are changing the strategy to become a pure energy company.”

READ: KIbo Mining splits mining and power assets with Haneti Nickel switch

It’s not a complete departure from the old Kibo though, since the long-standing flagship asset, the Mbeya coal-to-power project in Tanzania, remains key.

But the emphasis now will be on the power aspect of the operation rather than the coal mining element, a shift which was further underlined when Kibo signed a new deal on a project in Mozambique in early June.

The joint venture with Mozambican energy company Termoeléctrica de Benga involves the further assessment and potential development of the Benga power project, a standalone operation that will likely draw coal in from local mines in the Tete region, but which isn’t likely to undertake any mining itself.

That deal followed on from a move into Botswana earlier this year, in which the company acquired an 85% interest in the Mabesekwa power project, an undertaking that in this case does come with its own coal reserves.

But it’s the power, not the coal, that is the focus now.

Accordingly, shareholders can expect a proposal to change Kibo’s name at the upcoming annual meeting, to be held shortly. Out will go Kibo Mining, and in will come Kibo Energy, or some similar formulation.

Because Coetzee doesn’t intend to stop at three power projects. The aim is to develop a portfolio of power generating assets across Africa, and not only coal-fired power either.

“We’re not there yet where we think we have a full portfolio,” says Coetzee.

“We want to create a full-scale energy company across the various energy sectors. And there are no countries that we necessarily rule out.”

READ: Kibo Mining publishes maiden resource for Mabesekwa coal project

Building power stations is obviously a more expensive undertaking than building coal mines, but Coetzee isn’t fazed by this increase in his company’s potential capital requirement. On the contrary, the new model actually makes it easier to raise funds.

“You have a 25-to-40 year advanced off-take agreement,” he says. “It’s a very strong bankable agreement.”

The Mozambique deal is a case in point.

“We start this process from the PPA side,” says Coetzee. “We already have letters of comfort for 150 megawatts.”

Actually, this approach is opposite to what was originally done at Mbeya, when the company was still coming at the project from the coal mining side.

“In Tanzania we did it bottom up,” says Coetzee. “In Mozambique it’s top down.”

WATCH: Kibo Mining beds down transformation into energy company with Benga project

But it’s fair to say that it was in Tanzania that Kibo learned the power business. The Mbeya project is situated in the central south west of the country, in a region that’s comparatively undeveloped and crying out for power. When Kibo was looking for options for the coal at Mbeya, power was the obvious outlet, as shipping costs to take the coal to the coast for export would likely be prohibitive.

A relationship with TANESCO, the national electricity utility, was built, and relationships with Chinese and American power companies were developed too.

And this process has along the way allowed Kibo to begin its transformation into an aspiring regional power producer.

Mbeya remains the most advanced, as it moves through the feasibility stage. The Botswana and Mozambique projects are at the pre-feasibility stage.

“From an economic perspective all these projects have a huge amount to contribute,” says Coetzee.

The locations are propitious.

“Mozambique is on the eve of a huge economic development. Botswana is also positioned very well. And Tanzania is becoming a development hub for East Africa.”

Kibo is positioned to supply into all these burgeoning markets, and to reap long-term benefits.

“Our risk profile has completely changed,” says Coetzee.

Watch this space for further updates.

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