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AIM:NCCL

Ncondezi Energy Ltd

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Market:
AIM
Market Cap:
£17.48 m
Price
5.00 GBX
Change
2.04%
52 weeks high
6.77
52 weeks low
2.80

Ncondezi Energy is focused on the development of a large scale, long life, integrated thermal coal mine and 300MW power plant project (the "Project") targeting reliable, affordable and accessible power whilst meeting the most stringent emission standards. The Project will supply power using nearby existing transmission infrastructure to meet local demand in the north of Mozambique.

The Project is one of the most advanced power development projects in Mozambique and has unique advantages over other potential power projects in the region including full ownership over its fuel source, provision of energy security through generation diversification and fast timetable to first power.

Aligned To Government Strategy

The Project is closely aligned to the Mozambican Government’s stated objective of universal energy access by 2030 with less than a third of the population currently on the grid. Mozambique currently has the largest percentage demand growth in southern Africa, forecast to grow by 2000MW over the next 10 years. Mozambique also acts as a key regional energy player, being the largest exporter of electricity to South Africa as well as supplying neighbouring Botswana, Swaziland, Zambia and Zimbabwe.

The Mozambican Government's current energy generation plan targets 650MW of new coal fired power on the grid by 2023, which the Project is being positioned to meet. In addition, the Project was selected as a key infrastructure project at the 2nd China-Mozambique International Cooperation Summit in 2019.

PROJECT OVERVIEW

Ncondezi is developing an integrated thermal coal mine and 300MW power plant, located in the Tete Province of northern Mozambique, to supply electricity to the Northern Grid. The project is approximately 92km from the existing power transmission grid. The Company is targeting delivery of first power between end 2023 and beginning 2024.

Ncondezi signed a Joint Development Agreement (“JDA”) with China Machinery Engineering Corporation (“CMEC”) and technology partner General Electric (“GE”) in July 2019. The Mining Concession, approval of both the mine and power plant Environmental Social Impact Assessments are already in place. The next key steps will be:

Finalise tariff offer with EDM - H1 2020

Finalisation of Ncondezi historic costs - Q2-Q3 2020

Finalisation of subscription price - Q2-Q3 2020

Finalise PPA and PCA - Q2-Q3 2020

The development of the Ncondezi Project will see a substantial investment into the Tete Province, generating domestic revenue streams, stimulating regional development, creating employment opportunities and strengthening and diversifying the country’s production base.

 

POWER PROJECT

Ncondezi plans to develop Mozambique’s first coal fired power plant on the Ncondezi mine concession area in the Tete Province in northern Mozambique. This follows the conclusion of both a Mine and Power project Definitive Feasibility Studies ("DFS") which confirmed that a large scale, long life, open pit thermal coal mine and integrated power plant is technically and economically viable.

This large scale project will be developed in phases, starting with a 300MW integrated mine and power plant (the “Project”), with the potential to expand to an 1800MW power plant. The Power DFS was conducted by Parsons Brinckerhoff and independently reviewed by STEAG, one of Germany’s largest electricity producers, from an operator’s perspective.

The power plant will use a modern and proven Circulating Fluidised Bed (“CFB”) technology, which will use state of the art emission control technologies and comply with OECD guidelines and the most stringent IFC/World Bank guidelines for coal power plants.

Coal will be supplied from the development of an adjacent open pit coal mine producing 1.5 million tonnes per annum.

The power plant will be located about 92kms away from the local transmission network.

The Project plans to sell 100% of power generated to Electricity of Mozambique ("EDM") through a 25 year Power Purchase Agreement ("PPA"). This will be supported by a Power Concession Agreement ("PCA") to be negotiated with the Mozambican Ministry of Mineral Resources and Energy ("MIREME").

Ncondezi’s power project has a unique advantage over other potential power projects in the region because it is entirely focused on supplying Mozambique’s growing energy demands over the short to medium term, it can be delivered in a reasonably short time frame and the power plant can be scaled up in 300MW units.

Mozambique is one of the largest generators and exporters of electricity in sub-Saharan Africa and is strategically well positioned, with existing transmission infrastructure, to meet the shortfalls in energy supply domestically and in the broader Southern African Power Pool, especially South Africa, Zimbabwe, Botswana, Malawi, Swaziland and Namibia. The 300MW Project is closely aligned to the Mozambican Government’s stated objective of accelerating the electrification of the country and expanding access to electricity. Currently less than a third of the Mozambican population has access to electricity. The power plant will help Mozambique maximise the potential of its resources in country and will be an important contributor to Mozambique’s future development.

Key Development Milestones Completed:

Definitive Feasibility Study - Parsons Brinckerhoff

Transmission Route Acceptance - EDM

Power Plant Framework Agreement - MIREME

Power Offtake Contract Heads of Terms - EDM

Power Plant and Transmission Line Environmental and Social Impact Assessment approval - Ministry for the Coordination of Environmental Affairs

Power Plant Project Ownership Heads of Terms - MIREME

Power Plant Land Access Rights ("DUAT") - Mozambique Government

Letter of Support - MIREME

Joint Development Agreement - China Machinery Engineering Corporation ("CMEC") and technology partner General Electric ("GE")

 

THE COAL MINE

The Ncondezi coal mine will be an open pit, low strip ratio, contractor mining operation producing 1.5 million tonnes of coal over a 25 year life of mine to supply to the adjacent power plant via a 2km conveyor. Following approval of the Mine Definitive Feasibilty Study and the Environmental and Social Impact Assessment, Ncondezi has been granted a Mining Concession for its 100% owned licence area.

The mine has a defined a substantial JORC coal resource of 4.7 billion tonnes and a Measured Resource of 120 million mineable tonnage in situ (“MTIS”) has been classified by the Company’s geological consultant, the Mineral Corporation Consultancy (Pty) Ltd, in the South Block in accordance with the JORC Code. This follows the completion of an infill drilling programme completed in September 2013. The drilling was focused over the planned open pit mining area within the South Block that was identified as the most economical to supply coal to the power plant.

In order to provide a bankable Coal Sales Agreement to the power plant, the mine needed to demonstrate sufficient coal resources in the Measured Category to supply the 300MW power plant for 25 years plus a 40% contingency, equivalent to 70 million mineable tonnes in situ. The upgraded resource has exceeded this target with sufficient additional Measured Resource to theoretically supply an additional 300MW (600MW total) power plant for 25 years.

Financing is expected to be secured via a 100% bankable offtake agreement with power plant. A Coal Supply Agreement Heads of Terms has been signed and a full agreement is expected to be finalised once the power plant Power Purchase Agreement has been signed.

Mineral Resource (announced 13 November 2013)

Geology

Only coal zone A, the lowermost coal zone in the South Block, is present within the Measured Resource area. The zone comprises a package of coal variably interbedded with non coal lithologies and, where not eroded, ranges from approximately 50-70m in thickness. The package dips from surface, in the north of the Measured Resource area, to a maximum depth of approximately 120m in the southwest. The amount of non-coal material interbedded with the coal is variable, but, where not partially eroded, the zone typically contains a cumulative coal thickness of 30-40m. Three principal dolerite sills intrude the coal zone and are named D02, D04 and D06 from the base upwards.

For more information please click here 

 

MOZAMBIQUE

Key Facts

One of Africa’s fastest growing economies

Largest exporter of power to South Africa

Strong commercial links with South Africa as its main trading partner

High inflows of Foreign Direct Investment

Politically stable since the end of civil war in 1992

Considered successful example of post-conflict reconciliation

The Republic of Mozambique, known commonly as Mozambique, is a former Portuguese colony which gained independence in 1975. Mozambique is one of Africa’s fastest growing economies, mainly driven by post-conflict reconstruction, achieving an average annual real GDP growth rate of 8.8% between 1996 and 2008. According to the IMF, annual real GDP growth in Mozambique is expected to be in excess of 5% for each year until at least 2014. The country has three ports, Beira, Maputo and Nacala. The largest export partner is the Netherlands at over 55%, with South Africa approximately 10% and Zimbabwe 2%.

Mozambique is currently the largest exporter of power into South Africa, providing approximately 1,450MW via the HVDC transmission lines from the Cahora Bassa hydroelectric dam in the Tete Province. The country is becomingly an increasingly important power player in the region with peak demand growth of 15% in 2011 and 8% per annum expected going forward.

The southern African region has a power capacity shortage, with a current shortfall of 6,000MW and an additional 1,500MW required per annum each year over the next 20 years. Although South Africa has the largest generation demand growth with an additional 40,000MW required by 2025.

Planned transmission expansion projects in Mozambique could provide additional capacity to be transmitted across Mozambique, South Africa and the wider SADC region. The most advanced project is the Regional Transmission Backbone project, (the “STE Project”) which will run from Tete to Maputo and connect into South Africa with planned capacity up to 3,100MW.

Mozambique has resources of coal, titanium, natural gas, tantalum and graphite. Examples of resource development in the country include Vale’s US$1.3 billion Moatize coal mine, Rio Tinto's Benga coal mine, BHP Billiton Ltd’s US$2 billion Mozal aluminium smelter, Kenmare Resources PLC’s US$500 million Moma titanium minerals mine and Sasol Ltd’s US$1.2 billion gas pipeline project. In addition, the government has supported the development of the Cahora Bassa Dam, a substantial hydro-power facility, which is a source of energy for Mozambique and neighbouring countries, including South Africa and Zimbabwe.

Mozambique covers an area of 801,590 km2 and borders South Africa, Swaziland, Tanzania, Malawi, Zambia and Zimbabwe. The climate is tropical to subtropical with coastal lowlands, plateaus in the northwest and mountains in the west. The highest point is Monte Binga at 2,436m, and the lowest point is the coast along the Indian Ocean. The estimated population is approximately 21.7 million, of which 9.8 million are in the labour force.

 

For more information please click here 

Michael Haworth

Non-Executive Chairman

Michael Haworth was appointed to the Board as Non-Executive Chairman in June 2012.

Mr Haworth has over 20 years’ experience in the mining sector including roles as Managing Director at JP Morgan and Head of Mining and Metals Corporate Finance in London. He is currently a Senior Partner and Co-Founder of Greenstone Resources.   

Aman Sachdeva

Non-Executive Director

Aman Sachdeva was appointed to the Ncondezi Board on 21 May 2015 and brings a wealth of experience having spent more than 20 years in the infrastructure industry, specializing in the energy sector; ranging from project finance, management consulting, regulatory affairs, mergers and acquisitions, power system planning, energy conservation and marketing. Mr Sachdeva is currently the founder and Chief Executive Officer of Synergy Consulting, an independent consulting practice with a focus on project finance, which has to date closed projects worth US$12 billion. Mr Sachdeva is also an advisor to the World Bank, Energy Sector for Central Asia, South Asia and Africa on a variety of projects.

Estevão Pale

Non-Executive Director

Estevão Pale has more than 30 years' experience in the mining industry. He is currently the Chief Executive Officer of Companhia Mocambicana de Hidrocarbonetos, S.A., a Mozambican natural gas company. Between 1996 and 2005, he was the National Director of Mines in the Republic of Mozambique’s Ministry of Mineral Resources and Energy, where he was responsible for the supervision and control of mineral activities as well as the formulation and implementation of the mining and geological policy.

Mr Pale has been a director of numerous companies in the mining sector including Promaco SARL and the Mining Development Company, as well as the General Director and Chief Executive of Minas Gerais de Moçambique. Mr Pale has a postgraduate diploma in Mining Engineering from the Camborne School of Mines, and a Masters degree in Financial Economics from the University of London (SOAS). He completed a course in Gas Business Management in Boston at the Institute of Human Resources Development Corporation in 2006.

Hanno Pengilly

Chief Executive Officer

Hanno has considerable knowledge in the power and mine sectors on the back of his experience in the business over the last 10 years. Hanno joined the Company in 2010 and has been the Company’s Chief Development Officer since May 2012. Hanno has been responsible for managing key project milestones including the delivery of the power plant and mine feasibility studies in 2013 and 2014. Since May 2017, Hanno has led the Company’s strategic partner process, which successfully resulted in the signing of a binding Joint Development Agreement (“JDA”) in July 2019, and led the Company in key negotiations with the Mozambique government and state power utility Electricidade de Moçambique (“EDM”).

Prior to joining the Company, he was an investment banker at JP Morgan, based in the United Kingdom and South Africa, and predominantly focused on natural resources. He holds a BSc in Economics.

Registered Office

Coastal Building Wickhams Cay II,

P.O. Box 2221 

Road Town, Tortola British Virgin Islands

Mozambican Office

25 de Setembro, 1147

2nd Floor, Room 6

Maputo

Company Secretary

Elysium Fund Management Limited

PO Box 650, 1st Floor, Royal Chambers St Julian's Avenue Guernsey, GY1 3JX Channel Islands

SIGNIFICANT SHAREHOLDERS

ShareholderSharesPercentage

Africa Finance Corporation54,988,52016.92%

Scott Fletcher52,717,03816.22%

Polenergia International Societe A Responsabilite Limitee*29,111,7198.96%

Michael Haworth**16,759,4625.16%

* Jacek Glowacki NEL's former non-executive director (resigned on 25th November 2019) holds 291,375 shares in his own name and is executive director of one of Polenergia's group subsidiaries

** Michael Haworth NEL's non-executive chairman holds 3,649,329 shares in his own name and 13,110,133 through a trust

Registrar

Computershare Investor Services (BVI) Limited

Woodbourne Hall PO Box 3162 Road Town Tortola British Virgin Islands

Nominated Advisor And Broker

Liberum Capital Limited

Ropemaker Place Level 12 25 Ropemaker Street London, EC2Y 9AR United Kingdom

Auditors

BDO LLP

55 Baker Street London, W1U 7EU United Kingdom

Legal Advisor The The Company As To BVI Law

Ogier

41 Lothbury London, EC2R 7HF United Kingdom

Legal Advisor To The Company As To UK Law

Bryan Cave Leighton Paisner LLP

Adelaide House London Bridge London United Kingdom EC4R 9HA

Legal Advisor To The Company As To Mozambique Law

Sal & Calderia

Avenida Julius Nyerere, 3412 P.O. Box 2830 Maputo Mozambique