Kibo Energy PLC (Incorporated in Ireland)
(Registration Number: 451931)
(External registration number: 2011/007371/10)
Share code on the JSE Limited: KBO
Share code on the AIM: KIBO
("Kibo" or "the Company")
Dated: 23 July 2020
Kibo Energy PLC ('Kibo' or the 'Company')
Kibo's UK Energy Subsidiary to Seek Admission to the Standard List of the London Stock Exchange
Kibo Energy PLC, the multi-asset Africa focused energy company, is pleased to announce that it is seeking admission for its 100% owned UK subsidiary Sloane Developments Ltd ('Sloane'), which will be renamed Mast Energy Developments PLC ('MED'), to the Standard List of the London Stock Exchange plc ("London Stock Exchange" or "LSE") ('Admission'). Admission will be accompanied by an IPO which will seek to raise sufficient funds to develop a portfolio of flexible power plants in the UK to become a multi-asset operator in the rapidly growing Reserve Power market.
· Kibo's UK energy assets to be listed on the Standard List of the London Stock Exchange as a new company named Mast Energy Developments PLC by Q4 2020;
· Kibo has agreed with St Anderton to purchase its 40% interest in Mast Energy Developments Ltd ("Mast Energy") in exchange for shares in MED (currently Sloane);
· Pre-Admission Kibo will hold 73.89% and St Anderton 26.11% of MED; MED will hold 100% of the original Mast Energy Developments Ltd and Bordersley Power Ltd operations;
· Kibo intends to maintain a strategic interest in MED post the initial fundraise and Admission of at least 51% ensuring continued upside from future developments;
· Admission planned to capitalise on strategic growth opportunities identified in the UK Reserve Power market enabling Kibo and MED to better focus and deliver on their primary strategic objectives;
· MED fundraise to be undertaken alongside listing - funds raised will be used to fast-track Bordersley development and facilitate roll-out of a portfolio of flexible power projects;
· An experienced board and management for MED comprising directors from Kibo, Mast Energy and new appointments will be announced in conjunction with publication of the prospectus;
· River Group appointed as advisor to manage the Admission and the associated IPO; and
· A prospectus for the Admission and IPO will be published once it has been approved by the Financial Conduct Authority
Kibo CEO, Louis Coetzee, said, "Reserve Power is the fastest growing energy sector in the UK as a result of rising demand and predicted energy deficit. In light of this rapid growth and demand, we believe it is an opportune and highly strategic time to list our UK clean natural gas energy assets as a standalone company on the LSE. As a separate company with a highly focussed corporate strategy, MED will have greater operational capacity and be able to access and appeal to a new spectrum of investors. Accordingly, the company will be able to develop a portfolio of flexible power plants at scale and pace, as opposed to on a project-by-project basis. This will include fast-tracking the development of Bordersley, the first 5MW gas-fuelled power generation plant in the MED portfolio which is set to be in production before the end of 2020.
"Crucially Kibo will retain a controlling (50% plus) interest in MED, meaning shareholders will continue to benefit from future MED development upside, whilst Kibo's assets and resources will be focussed on realising value from our portfolio of assets in Sub-Saharan Africa. In particular, our Benga Power Plant Project in Mozambique is continuing to advance at pace, with the delivery of two PPAs for up to 400 MW expected before the end of 2020. Whilst there are clear synergies between our UK and African operations and their objectives, we firmly believe this is the most strategic and value accretive development decision for both entities and all stakeholders. Further updates will continue to be provided in due course as we progress the planned Admission and IPO."
Overview of the Admission
Kibo's 100% owned subsidiary Sloane Developments Limited ('Sloane') is to be renamed Mast Energy Developments PLC ("MED") and restructured as the entity to be listed on the LSE. MED will hold prior to Admission a 100% interest in both Mast Energy Developments Ltd, which will be renamed Mast Energy Limited ('Mast Energy'), and Bordersley Power Limited, which holds the Bordersley project. Following the initial fundraise and Admission, it is intended that Kibo will hold at least 51% of MED.
River Group has been appointed as advisor to manage the Admission and the associated IPO. A prospectus for the Admission and IPO will be published once it has been approved by the Financial Conduct Authority (the 'FCA'). An experienced board and management for MED comprising directors from Kibo, Mast Energy and new appointments will be announced in conjunction with publication of the prospectus.
Impact of Admission on Kibo Strategy
Kibo's primary strategic focus remains on addressing the acute power deficits in Sub-Saharan Africa and incorporating sustainable power options into its solutions. Nonetheless, the Company recognises the significant value opportunities available in the rapidly growing Reserve Power market in the UK and having successfully established a strategic portfolio of assets to capitalise on this, Kibo believes now is an opportune time to establish the assets in a standalone, listed company. Kibo will retain a strategic interest in its UK assets through its planned controling interest in MED, ensuring Kibo shareholders will continue to benefit from future development upside whilst also having a clear valuation of its holding, enhancing the overall value of Kibo. The Kibo and current Mast Energy management teams believe the planned Admission provides strategic growth opportunities for both entities and will enable each company to further focus and deliver on its strategic objectives.
Kibo envisages the following key advantages by listing MED:
· Greater visibility on the valuation of Kibo's strategic portfolio of assets, which also includes a c.29.7% interest in Katoro Gold PLC;
· Greater visibility on MED as a clean natural gas power producer;
· Greater investor diversification; opportunity to target new investor bases including UK focussed funds, those confined to LSE main board listed companies, and those more averse to African risk;
· Opportunity to fast-track the completion of work on Bordersley by utilising funds from the proposed fundraise, which on commissioning (planned for end of 2020) will generate the company's first revenue stream; and
· Synergistic growth opportunities with Kibo's core African energy projects: the Reserve Power market model, partner network and technologies can potentially be leveraged to support the planned renewable components of these projects.
Background and Commercial Rationale for Admission
The MED business strategy is to acquire and develop a portfolio of flexible small-scale power generation assets, exploiting a growth niche market in the UK for Reserve Power generation to balance out the national grid at critical times. MED has already identified multiple sites across the UK where it aims to construct natural gas power plants. Natural gas is the cleanest fossil fuel available and most readily available through the UK's extensive natural gas infrastructure; thus, it will minimise pollution while assisting with supporting critical base load power to the UK's increasing dependency on renewable resources for electricity generation.
The Bordersley Project
The first site in the MED portfolio will be Bordesley, a 5MW gas-fuelled power generation plant located in the UK midlands (Birmingham area) in which Kibo currently has a 100% interest and on which Kibo has released numerous progress updates on RNS/SENS over the last 18 months. The project is now at an advanced development stage with the scheduled scope of work being implemented by Italian company, AB Impianti S.R.L ('AB') under an EPC contract signed in 2019. Unfortunately, the on-set of the COVID-19 pandemic in Q1 2020 has delayed the work programme over the last number of months but work has now recommenced, albeit slightly slower than before, and the Company remains confident that Bordersley can be in production before the end of 2020.
MED Development Pipeline
MED is responsible for managing the development and delivery of Bordesley as well as the sourcing, evaluating, acquiring (where sites meet strict criteria), developing and on-going maintenance of additional sites. In this regard, an accelerated development plan for an expanded portfolio of additional sites is being aggressively advanced, supported by a number of key commercial agreements already in place both specific to Bordersley and in preparation for future sites when they come on-stream.
These key commercial agreements comprise:
· An agreement with Balance Power Projects ('Balance') to facilitate the planned portfolio ramp up referred to above. Balance is experienced in sourcing sites and obtaining project rights necessary for developing gas projects. This agreement provides MED with immediate access to as many "shovel-ready" sites for further evaluation and due diligence by MED as MED can fund;
· A five-year Power Purchase Agreement ('PPA') with Statkraft Markets GmbH, part of the Statkraft Group, ensuring (Refer Kibo RNS 02 July 2019) remote operation and management of the plant and the purchase of 100% of power produced at a floor price to ensure a reliable and steady income stream for MED; and
· An EPC Joint Development Agreement with AB a subsidiary of the AB Group, to manage the end-to-end Engineering, Procurement, and Construction ('EPC') scope of works ('SoW') for the Bordesley project. (Refer Kibo RNS 30 October 2019).
Additionally, various funding and commercial opportunities to enhance MED's capacity and ability to significantly expand its project portfolio are being actively pursued.
Background to Reserve Power
Reserve Power (Flexible Power) is the process of timing energy supply to be used during periods of peak demand. Smaller grids can only manage smaller power plants, requiring peaking plants to be installed in areas of need. (According to current consensus the most efficient and competitive plants are small gas-fired power plants less than 50MW in size, controlled remotely to generate power on demand (reaction time of under 10 mins) and have very low fixed, start up and capital costs.) These unmanned plants can run for long periods continuously but are generally limited to c. 1800-2500 hours per year and support/enable the use of intermittent renewable energy facilities by supplying a source of back - up energy. The flexibility to adjust to electricity supply on demand, these installations can access multiple revenue streams 'simultaneously'.
Reserve Power is the fastest growing energy sector in the UK as a result of rising demand and predicted energy deficit. (Independent forecasts predict demand for new reserve power capacity over the next five years to be 4,000 - 6,000MW with an additional support requirement of 2,000 - 4,500MW.) Additionally, the UK aims to achieve the EU target of having a 20% share of renewables by 2020. As a result, the need for reserve power is likely to rise.
In light of the above, Reserve Power opportunities currently attract considerable investment, especially in the UK.
For further information please visit www.kibo.energy or contact:
Kibo Energy PLC
Chief Executive Officer
+27 (0) 83 4408365
Corporate and Designated Adviser on JSE
+44 (0) 20 7392 1494
ETX Capital Limited
Bhavesh Patel / Stephen Allen
+44 20 3440 6800
RFC Ambrian Limited
NOMAD on AIM
Charlotte Page / Beth Melluish
+44 (0) 20 7236 1177
St Brides Partners Ltd
Investor and Media Relations Adviser
Kibo Energy PLC is a multi-asset, Africa focused, energy company positioned to address the acute power deficit, which is one of the primary impediments to economic development in Sub-Saharan Africa. To this end, it is the Company's objective to become a leading independent power producer in the region.
Kibo is simultaneously developing three similar coal-fuelled power projects: the Mbeya Coal to Power Project ('MCPP') in Tanzania; the Mabesekwa Coal Independent Power Project ('MCIPP') in Botswana; and the Benga Independent Power Project ('BIPP') in Mozambique. By developing these projects in parallel, the Company intends to leverage considerable economies of scale and timing in respect of strategic partnerships, procurement, equipment, human capital, execution capability / capacity and project finance.
Additionally, the Company has a 60% interest in MAST Energy Developments Limited ('MED'), a private UK registered company targeting the development and operation of flexible power plants to service the UK Reserve Power generation market.
23 July 2020
Corporate and Designated Adviser