Vancouver – CIC Energy (ELC-T) and International Power (IPR-N, IPR-L) have inked a deal to bring Japanese multi-national 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. The deal would be facilitated by CIC Energy and International Power equally selling down a portion of their respective equity stakes in Meepong Energy (Mauritius), the power station joint venture company.
Sumitomo will also have an option to acquire 20% of Meepong Resources (Mauritius) that holds the planned coal mine assets for phase one of the generation project.
Happy with the addition of another major partner into the project, CIC Energy president and CEO Greg Kinross stated in the news release, 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 Africas national electrical utility. The balance will go to Botswanas national electricity utility, Botswana Power.
Phase one of the project is an expected 2,100-2,500 megawatt coal-fired power station with commercial operations planned for 2012. Costs for the initial proposed 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 a further three generating units added to boost total output capacity to the 4,200-4,920 megawatt level.
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 totaling about $88 million earmarked for engineering and construction contractors for Mmamabula.
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