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Shumba strikes another deal

Publishing Date : 05 December, 2017

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Shumba Energy Ltd has announced the conclusion of definitive agreements with Kibo Mining at it’s Mabesekwa Coal Project. Kibo Mining is a multi-asset resource development and energy company focused on South West Tanzania, listed on London’s AIM market and the AltX in Johannesburg.

The partnership shall be ring fenced to 35% of the total Mabesekwa in –situ 869mt coal resource. This is in line with Shumba’s strategy to work with strategic partners to fast track current coal resources into production. According to the transaction, 35 % of the Mabesekwa coal resource shall be transferred to a special purpose vehicle (“NewCo”) which shall be utilised in the partnership. Furthermore 85% interest in NewCo to be acquired from Sechaba Natural Resources Limited, a subsidiary of Shumba for 153,710,030 new ordinary shares in Kibo that shall rank pari passu with the existing ordinary shares in Kibo.

The Consideration Shares will be issued and credited as fully paid by Kibo to Sechaba on the completion date at an issue price being the higher of GBP0.06 or the volume weighted average price at which the Ordinary Shares shall have traded on AIM for the 30 trading days immediately preceding the completion date.

This means that Kibo shares to a minimum value of GBP 9.2 m shall be issued to Sechaba. The transaction further shows that Sechaba will retain the benefit of the following royalties from NewCo when the mine and power station go into operation: USD0.50 from revenue received per metric tonne of coal sold from the area covered by the MCIPP Resource; and US 0.225 cents from revenue received per kilowatt hour produced and sold by any power plant owned by NewCo in Botswana or using coal procured from the area covered by the MCIPP Resource.

Sechaba is to retain a 15% interest in the NewCo and gain a seat on Kibo’s Board of Directors Kibo shall be given first right of refusal to participate on terms and conditions no more onerous than those available to Sechaba in any energy projects that Shumba may pursue over a six year period from transaction completion and Shumba to be granted a reciprocal first right of refusal on any coal export projects that Kibo may pursue over the same period. This excludes existing projects. Should the transaction complete Sechaba will hold 28% of the enlarged share capital of Kibo assuming no further ordinary shares in Kibo are issued prior to transaction completion.



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