Kibo Mining PLC (LON:KIBO) has completed the mining definitive feasibility study of the Mbeya coal-to-power project (MCPP) in Tanzania.
Results from the MDFS correlate accurately with those of the mining pre-feasibility study announced in August of last year, and have reconfirmed the Mbeya coal mine as a robust project with strong financial and commercial indicators, the company said.
The internal rate of return (IRR) in the MDFS improved to 69.2% from 53.9% in the MPFS, while the payback period for the project has been cut to 2.4 years from 2.6 years.
Furthermore, the peak funding requirement of US$17mln has been virtually halved.
The coal requirement for the power station over the life of the plant has been reduced by 23% from the requirement indicated in the MPFS, which will bring about significant environmental and cost benefits, Kibo said.
The total coal requirement of the Mbeya power plant over the life of plant is stated as a probable reserve in the MDFS, meaning that the power plant can rely on an upfront guaranteed fuel supply for its entire life span.
The all-in cost margin, at 39%, has been reduced from 49% indicated in the MPFS due to greater accuracy in modelling key cost drivers.
“We are delighted with the results of the MDFS, which have confirmed, and in various areas improved on the positive pre-feasibility study results,” said Louis Coetzee, chief executive officer (CEO) of Kibo.
The CEO added that the project fundamentals have significantly improved since the end of the concept study conducted in 2014.
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“We are particularly pleased with the improved IRR of 69.2% and the significantly improved environmental impact. The significance of the mining method that was developed for the Mbeya coal mine cannot be underestimated. This method not only eliminated one of the two biggest environmental risks for the MCPP, i.e. eliminating the need to wash the coal, but also reduced the coal requirement by 23%, which means substantial cost savings for both the mine and the power plant,” Coetzee explained.
“It will also result in a corresponding reduction in emissions. Considering that these two elements are fundamental to the fundability of the MCPP, we could not have hoped for better results from the MDFS,” the CEO said.
The two key work streams required for the completion of the MCPP integrated bankable feasibility study have now been completed and the company is now focused on completion of the final work on the integrated bankable feasibility study.