Ncondezi Energy Limited (LON:NCCL) said it has signed a shareholder agreement term sheet with China Machinery Engineering Corporation (CMEC) which will see it maintain a 40% stake in its 300-megawatt coal-fired power project and coal mine in Mozambique.
Under key principles agreed in the term sheet, CMEC will subscribe for a 60% equity stake in the project following the execution of a full form agreement, while CMEC and Ncondezi have agreed to fund development costs up to the financial close of an agreement on a 60:40 basis.
CMEC has also agreed to lead a debt financing process from Chinese financiers, while the term sheet also includes agreements on investment conditions, governance and management structures, and board composition for the project.
Investment conditions for the execution of full form agreement include approval of the tariff envelope by Electricidade de Moçambique, the signing of engineering procurement and construction agreements and an agreement on the 60% subscription price to be paid by CMEC.
"We are delighted to have signed the Shareholders Agreement Term Sheet marking another exciting milestone for the company. The signing establishes the key principles on which the Full Form Agreements will be executed. This will facilitate the drafting and execution of these agreements and provides a clear signal to key government counterparties in Mozambique and China of the continued progress being made with the Project. The [term sheet] confirms that on Investment Conditions being satisfied CMEC will participate in the project as our 60% partner. They will secure the debt financing from Chinese financiers, once again demonstrating their confidence in the project”, said Ncondezi chief executive Hanno Pengilly.
“Following today’s announcement, we believe the project is the only baseload coal power project in Mozambique that has announced such progress with strategic partners, reconfirming both the project's credibility and position as the most advanced project of its type in the country. This is an exciting time for the team and our shareholders as we continue to make excellent progress across all our workstreams and we look forward to updating shareholders further over the coming weeks", the CEO added.