Kibo Mining PLC (LON:KIBO) is confident it will find investors for its Mbeya (MCPP) thermal power station in Tanzania after a new study showed higher potential returns.
The bankable feasibility study pulled together all elements of the project from the coal mine through to the power station.
Kibo said the integrated bankable study (IBFS) reduced the capital costs by 21% while returns on the project were between 14.7% and 16% after tax.
“The IBFS result shows the MCPP to be equally strong and robust in respect of the fundamental requirements of all the various stakeholder interests [debt and equity] in the MCPP,” said Louis Coetzee, Kibo’s chief executive.
The study indicated a debt payback period of 11 to 12 years and between 4-5 years for equity investors.
Revenues over the 25 year life of the project were forecast at between US$7.5-8.5bn.
“This puts the company in a strong position in its ongoing discussions / negotiations with regard to the final PPA [power pruchase agreement] as well as with potential funders / investors in the MCPP,” Coetzee said.
“With independent confirmation on the bankability of the MCPP, the company expects to see a significant increase in interest and support from potential investors and other stakeholders in the MCPP."
According to the study there are also sufficient additional coal resources at Mbeya to expand the power station to more than double the existing design size and plant life.
The plan currently is for 300Mw, with capacity for this to rise to 600Mw in a second phase.
Importantly, Kibo said there were no 'red flags' on the environmental side, bearing in mind the clean coal nature of the plant design.
Coetzee added the improvement in the various IRR (rate of return figures) was well beyond management expectations and would ‘without doubt’ attract favourable attention from potential investors.