A new report on the coal mine part of Kibo Mining's (LON:KIBO) Mbeya coal to power project (MCCP) has shown "significantly improved" financials, the Tanzania-focused firm said today.
Investors hailed the update, part of the ongoing definitive feasibility study, sending shares up 10% to 5.64p.
The thermal coal deposit at Rukwa has around 109mln tons of resources and the group is also developing a 250-350MW mouth-of-mine power station.
Kibo said it was particularly pleased that the NPV of the mine component was confirmed at between US$214mln and US$219mln,
This did not include the significantly larger power generation portion of the project, it noted.
The study was completed by Kibo and advisers Minxcon and based on contract surface mining.
The all-in cost margin ranged from 47.9% to 48.1%.
That means annual earnings before interest and tax (EBIT) of between US$23.5mln and US$23.6mln will be generated, the company said.
Louis Coetzee, Kibo's chief executive, told Proactive that today's figures were good - and not just for the coal mine.
"It also puts the power component of the MCPP in a very strong position, because literally everything else in the MCPP can be of world class standard.
“Everything hinges on the coal mine and we now know that this part is as strong as they come," he said.
The peak funding required to develop the mine is US$38.9 million, which the firm hopes to raise through 70% in debt and 30% in equity.
"The IRR being substantially above the cost of debt makes it an attractive option to consider project level loan financing," it said.