Bushveld Minerals Limited (LON:BMN) has signed a memorandum of understanding with Chinese group Sinohydro to work on a bankable feasibility study for the Imaloto thermal power plant project in Madagascar.
Fortune Mojapelo, Bushveld’s chief executive, said it was a major step forward for the project.
“Sinohydro and its parent company PowerChina, bring a wealth of technical expertise in building such projects and bringing them into operation.
The MoU reinforces the commercial merits of the project and the bankable feasibility study will add significant value to the development of the power project.”
Liu Kai, vice president of Sinohydro, added: "As a major breakthrough for the energy sector of Madagascar, this project will help solve the problem of power shortage and contribute to local economic growth in the south of the country."
The feasibility study will assess an initial 60Mw independent power producer (IPP) coal power plant and associated 200 kilometre transmission line in southern Madagascar.
Coal fuel for the power station will be provided from Bushveld subsidiary Lemur's coal mining permit area in Madagascar.
Sinohydro will prepare the bankable study at its own cost within 12 months of signing the MoU while both companies will work on an Environmental Impact Assessment, engineering and operation/management contracts.
Once the BFS is complete, Sinhydro’s PowerChina, may take an equity interest in the project while Lemur will continue the development of its mine.
Lemur has already completed pre-feasibility studies for the mine, power plant and transmission line, while Madagascar power utility, Jirama, is currently negotiating an offtake agreement with Lemur for electricity for the IPP.
Bushveld shares rose 6% to 7.75p and have trebled since the end of February as investors have welcomed progress on the acquisition of the Vametco vanadium mine in South Africa that is now due to complete on Friday.
--updates for share price --