CIC Energy Lands Sumitomo as Mmamabula Partner

Vancouver — CIC Energy (ELC-T, CIEGF-O) and International Power (IPRPY-O, IPR-L) have inked a deal to bring Japanese multinational Sumitomo (ssumy-o) on as a third partner at its Mmamabula energy project, in southeastern Botswana.

The preliminary agreement sees Sumitomo subscribing to a 20% equity interest in the initial phase of the energy project. CIC Energy and International Power will sell down equal portions of their respective stakes in Meepong Energy (Mauritius), the power station joint-venture company, to facilitate the deal.

Sumitomo will also have an option to acquire 20% of Meepong Resources (Mauritius), which holds the coal mine assets that will initally feed the generation project.

Pleased with the addition of another major partner at the project, CIC Energy president and CEO Greg Kinross said in a statement, “over and above their wealth of experience, (it) should also enhance our access to new sources of project finance.”

Most of the electricity generated at the Mmamabula energy project is expected to be sold under long-term (about 40 years) power purchase agreements being negotiated with Eskom, South Africa’s national electrical utility. The balance will go to Botswana’s national electricity utility, Botswana Power.

The first phase of the project, a 2,100- to 2,500-megawatt coal-fired power station with commercial operations, is planned for 2012. Costs for the first phase of development are estimated at about US$5.5 billion, of which about 95% will go for plant construction costs.

A second-phase expansion proposed for Mmamabula sees another three generating units added to boost total output to 4,200-4,920 megawatts.

Earlier this year, CIC Energy tabled a revised global mineral resource estimate for Mmamabula reviewing about 2.3 billion measured and indicated tonnes of thermal coal.

CIC Energy also recently closed a pair of equity financings, totalling about $88 million, earmarked for engineering and construction contractors for Mmamabula.