Kibo Mining PLC (LON:KIBO) has decided to implement a diversified production strategy for its Mbeya coal mine in Tanzania that could see it reach output earlier than planned.
The company said the strategy will develop the mine to produce coal for the Mbya power plant, its primary client, and for the domestic coal market, its secondary client.
The decision to adopt a diversified production strategy follows an integrated bankable feasibility study on the Mbeya coal to power project (MCPP).
The study investigated alternative commercial opportunities other than producing coal for the Mbeya power plant. It found there were sufficient additional coal resources at Mbeya to expand the power station to more than double the existing design size and plant life.
Revenues over the 25 year life of the project were forecast at between US$7.5-8.5bn while returns on the project were between 14.7% and 16% after tax.
“An integrated consideration of all these aspects shows that a diversified production strategy is indeed feasible and has potential to significantly enhance the economics of the Mbeya coal mine and which could allow the mine to be put into production earlier than planned for the MCPP,” said Kibo chief executive Louis Coetzee.
Kibo plans to produce between 250 to 350 megawatts (Mw) from the mouth-of-mine thermal power station but it has the capacity to rise to 600Mw in the second phase.