Significant progress has been made as per recent updates and we expect the funds under this Loan Agreement will be sufficient to reach Definitive Agreements with the Chinese Partners later this year.
Naheed Memon, chief executive
How is it doing
At the project level, Oracle is awaiting the formal approval of a notice to proceed and letter of intent from Pakistan’s Private Power Infrastructure Board.
When that is issued Oracle will be required to lodge a performance bond of US$700,000.
After that, a full EPC (construction) and O&M (operation & maintenance) proposal from its Chinese partners is needed.
That will be followed by an electricity tariff petition submission and completion of the Environmental and Social Impact Assessment approval.
The consortium (TEPL) will seek a 30-year Power Purchase Agreement (PPA) with Pakistan’s Central Power Purchasing Authority.
A coal supply agreement between TEPL and Sindh Carbon Energy Limited, Oracle's subsidiary which owns and operates the mine, is also required as is an Implementation Agreement between TEPL and Pakistan government.
Once all the approvals, permits and tariffs are in place, Oracle’s partners will arrange the finance.
Development of the mine will be in a single phase of 8mln tonnes a year with the power to be a single 2x660Mw unit with the application submitted to the Private Power Infrastructure Board on this basis.
“The required feasibility work relating to this refinement is being assessed with a view to determining not only the optimal revised mining plan, but also the most suitable configuration of the mine and power plant to minimise the costs of the development.”
Under the terms of the MoU, Oracle will hold a 12% equity stake while Beijing Jingneng (BJPC) and PowerChina will own 73% and 15% respectively.
BJPC, which is listed in Shanghai and is worth around US$3bn, replaced Sichuan Provincial.
Gas to fertiliser
In November, the resource on Block VI at Thar in Pakistan was officially recognised as a potential coal gasification/fertiliser project.
Pakistan is estimated to face a fertiliser shortage of 2.6Mtpa by 2026-27 and the use of Thar's lignite, via the gasification process, to produce urea can help to address the shortfall.
Sheikh Ahmed Bin Dalmook Al Maktoum will invest £500,000 into Oracle.
Al Maktoum will hold an 11.5% stake in the company with warrants that will allow him to expand this stake to 22.3%.
The Sheikh is a member of Dubai’s ruling family and chief executive of Africa Middle East Resource Investment, a conglomerate focused on energy and infrastructure projects.
Al Maktoum’s investment formed part of a larger placing to raise £700,000 by issuing shares at 0.25p each.
Losses in the half-year to June 2019 were £483,000.
In September, Oracle entered into an additional loan agreement with Brandon Hill Capital to provide a working capital facility of up to £200,000.
Subsequent to an initial £50,000 drawdown, it added, the company will receive up to £50,000 per month.
The firm said the proceeds from all drawdowns will be applied to operational and general working capital purposes.
What the boss says: Naheed Memon, chief executive
“We are honoured and delighted to welcome His Highness Sheikh Ahmed Bin Dalmook Al Maktoum as a shareholder in Oracle. His extensive network and global relationships are expected to help the Company as it seeks to unlock the inherent value of Block VI and its sizeable coal resources."
- Formal agreement to proceed with Chinese partners
- Engineering, Procurement and Construction (EPC) contract and Operation and Maintenance contract (O&M) contracts.
- For the power plant, a Letter of Intent by the Private Power Infrastructure Board to secure a generation licence is needed.
- Progress on the gas to fertiliser project