Bushveld Minerals Limited’s (LON:BMN) Lemur coal and energy subsidiary has signed a binding power purchase agreement with Madagascar state-owned utility, JIRAMA, as part of the Imaloto power project on the island.
The power plant will be located at the mine-mouth of Lemur’s coal deposit, which is host to approximately 136mln tonnes of coal.
Bankable feasibility study on track for H1 2018 completion
Bushveld said the addition of a power component will unlock the full value of the coal asset, while at the same time securing reliable electricity off-take backed by a government entity.
The PPA is for a period of 30 years starting from 2021 once the plant has been built and is up and running.
JIRAMA’s off-take is expected to increase in accordance with rising demand, starting with an initial 10MW of the nameplate 60MW capacity.
Lemur has already identified other potential users and negotiations are already underway for off-take agreements with these users.
Bushveld added that Lemur is on track to complete a bankable feasibility study at the project in the first half of next year.
‘Critical milestone’ says Bushveld boss
“The signing of the Power Purchase Agreement with JIRAMA achieves a critical milestone in the development of Lemur's integrated coal-to-power project,” said Bushveld chief executive Fortune Mojapelo.
“Coupled with the on-going progress on the project's bankable feasibility study, and our recent strengthening of the Lemur management team, this achievement adds significant value to the project and brings it even closer to implementation.
“Furthermore, this agreement delivers the anchor off-taker for the Imaloto Power Project in Madagascar.
“In addition to its established customer base, proven operational capability and existing mini-grid distribution infrastructure in the region, the agreement with JIRAMA secures the all-important support from the Government of Madagascar to provide reliable, base load electricity to the southern part of the island.”
Bushveld shares added 0.9% to 8.8p in early deals on Thursday.