Sign up United Kingdom
Proactive Investors - Run By Investors For Investors

Kibo Mining's attractions more visible following Katoro listing

Beaufort Securities estimates Katoro’s risk-adjusted equity value at £12.7mln or 11.7p per share
picture of mining hammer
Work has now started at Katoro

Kibo Mining PLC (LON:KIBO) will hope that it has cleared the picture a little for investors following the spinning out of its gold assets into a separate company.

Katoro, as the business is now called, was undoubtedly a little overshadowed by other parts of Kibo’s operations, notably its Mbeya coal mine/power station project in Tanzania.

And while Kibo is still the majority owner in Katoro, the move does give investors who are interested in the gold side their own vehicle.

Coal and power at Mbeya

At Mbeya, Kibo announced in March that the strategy will now be to develop the mine to produce coal for the Mbeya 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 Mbeya (MCPP).

The study investigated alternative commercial opportunities other than producing coal specifically for the 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. 

Significant Tanzanian mining footprint

Meanwhile, the listing of its Imweru and Lubando gold mining assets in Tanzania as Katoro (LON:KAT) took effect on 23 May.

A reverse takeover of Opera Investments was the method for the deal with the name change from Kibo Gold to reflect the new business focus.

Kibo still owns 56% of Katoro and with its board to comprise Louis Coetzee as executive chairman and Myles Campion, Paul Dudley and Tinus Maree as non-executive directors, Kibo is still going to be setting the agenda in the short-term at least.

Development work starts ahead of schedule at Imweru

Development work on the Imweru gold project in Tanzania has also started, Kibo noted at the end of May. Operational teams have been deployed on site ahead of the arrival of the first drill rig.

"We are extremely pleased with the successful and rapid start of work on the Imweru project. As a result, we are now two months ahead of our previous work programme schedule, which initially indicated that drilling would commence in Q3 2017,” said Coetzee.

“With this, the capability and capacity of the project team who are responsible for executing the Imweru work programme, is also clearly demonstrated," Coetzee added.

What the house says

Beaufort Securities estimates Katoro’s risk-adjusted equity value at £12.7mln or 11.7p per share based on the compliant resource estimate of 755,000 oz of gold.

Through its listing Katoro raised gross proceeds of £1.5mln, which it will use for additional drilling and a pre-feasibility study as well as applying for a mining licence before the end of 2017.

“Whilst the Lake Victoria Goldfields region is now considered to be mature from a gold exploration perspective, we believe there is still potential for significant new discoveries, albeit at greater depths, with additional examples of lower grade stockwork as well as disseminated deposits that may have been overlooked during earlier stages of exploration,” said Beaufort.

Katoro is valued at around £5.7mln at 5p, with Kibo worth £19mln at 5.05p. 

View full KIBO profile View Profile

Kibo Energy PLC Timeline

Related Articles

March 07 2018
Production at Thalanga is forecast to grow more than 50% between 2018 and 2019.
maps of Australia with company projects marked
April 17 2018
Samples from the Mt Read Cobalt Project graded up to 7,800 ppm cobalt.
map showing Cobalt belt in East Ontario with projects marked
August 14 2018
A historical 8-tonne bulk sample from the Mulligan project averaged 10% cobalt grade.

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use