Ncondezi Energy Ltd (LON:NCCL) has provided an update on historical development cost reimbursement negotiations with China Machinery Engineering Corporation (CMEC) for work on the integrated Ncondezi 300MW coal-fired power project and coal mine in Tete, Mozambique.
"It is with great pleasure that we update investors on the positive progress regarding agreement of project historical development costs to be reimbursed to the company at financial close,” said Ncondezi chief executive Hanno Pengilly in a statement.
“Following an extensive third-party audit review of the company's historical costs over a 10 year period, and following successful negotiations with CMEC, Ncondezi has been able to demonstrate US$26.7mln of historical expenditure on the project.”
Of this amount, he added, CMEC has agreed "in principle" to reimburse US$21mln, with the balance, relating to senior and project management costs, still subject to further negotiation. The US$21mln represents a 24% premium to previously agreed historical development costs.
“As the project power tariff is currently being negotiated with EDM, both parties have agreed to finalise the historical development costs once negotiations with EDM have been completed, as this will also have an impact on CMEC's subscription price to be agreed for the 60% share in the project and the project developers' fee,” continued Pengilly.
“With this work now complete, the company can focus its resources on the tariff approval process with EDM and finalising the EPC contracts with CMEC early in the new year."