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African Energy sells stake in 300MW Sese plant

                                                                                                                                                                                                                                                                                                                                                                                                                                                

African Energy (AFR) could sell a majority stake of its Sese Integrated Power Project to First Quantum Minerals (FQM). FQM is a Zambian, Canadian and United Kingdom listed mining and metals company operating seven mines and developing five projects worldwide. AFR and FQM have executed a HOA under which FQM will make a Joint Venture Investment to acquire a majority interest in African Energy Holdings SRL once certain conditions precedent have been satisfied.

African Energy Holdings SRL is the wholly owned Barbados project entity which owns African Energy Resources Botswana (Pty) Ltd, the holder of the Sese and Sese West coal prospecting licences, the Foley North industrial minerals prospecting licence, the approved EIA, surface rights and water allocation.

The deal, worth AUD 20 million (P158,84 million), with an initial payment of AUD $8 million (P63 million) will be used to repay outstanding project loans between African Energy Holdings SRL and AFR  which will earn FQM an effective 51 percent interest in the Sese Project.

Key conditions requiring satisfaction within 30 days of signing the HOA are: Completion of due diligence by FQM on African Energy Holdings SRL and African Energy Resources Botswana and their asset and the execution of a Shareholders Agreement.

On completion of these three transactions, AFR will have; Working capital of US $10million (P90.5 million) to be used for ongoing project development work at Mmamabula and Mmamantswe; 25 percent carried interest in all future project developments at Sese;  A world‐class joint venture partner with the ability to arrange finance at attractive rates and a ‘clear path to rapid project development of one or more power projects in the region.’

The Sese Integrated Power Project seeks to take advantage of three key facts: Sese coal provides a source of very cheap fuel for electricity generation; Sese is located near the hub of the transmission networks that form the backbone of the Southern African Power Pool and there is a shortage of electricity supply for the foreseeable future in all southern African countries.

African Energy is developing the Sese Integrated Power Project (SIPP) at its 2.5 billion tonne Sese coal deposit in northern Botswana. SIPP will have the potential to supply power to Botswana, Zambia, South Africa and Namibia. African Energy has completed a number of milestones for the Sese project which have reduced development risk: Phase 1 of the definitive feasibility study to evaluate a coal mine to provide fuel for an initial; 300MW power station has been completed. No further technical studies are required until a boiler manufacturer has been selected; An Environmental Impact Assessment for the first 300MW integrated power project and coal mine at Sese was approved by the Department of Environmental Affairs in Botswana on 1 September, and is valid for project initiation within 5 years.

To meet these needs, the Sese Integrated Power Project has been designed around an initial 300MW power station comprising two 150MW CFB boilers, with a captive 1.5 Mtpa coal mine providing cheap fuel. The power station and enough coal to supply it for 30 years (approximately 50Mt) will be ring-fenced in Sese Power Pty Ltd, a wholly owned Botswana subsidiary of African Energy. Project finance (debt and equity) will be raised for the development of the project and the debt will be non-recourse to African Energy and therefore off balance sheet.

A water allocation of up to 2.8 GL per annum from the nearby Shashe Dam has been approved for project use, sufficient for approximately 750MW of power generation and associated coal mining. Additional water resources can be secured from Shashe Dam for further projects.  Surface Rights have been approved over an area covering enough coal to fuel five 300MW power projects, along with access to the main highway, rail and power transmission lines.

First Quantum Minerals Limited (FQM) and African Energy Resources Ltd have executed a binding Heads of Agreement (HOA) under which FQM can earn a joint venture interest in the Sese Project and carry AFR’s interest through to commercial operation of one or more integrated power projects. FQM can earn a 75 percent interest in the Sese Project through investment of AUD $20 million and arranging finance as a loan carry for AFR’s 25 percent interest in the Project.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

FQM has also agreed to subscribe for 69 million shares in AFR by way of a Private Placement at AUD 5.5c per share to raise approximately AUD $3.8 million, with, subject to shareholder approval, attaching options on a 1 for 5 basis exercisable at 10c within three years. AFR’s Board of Directors has also resolved to undertake non‐renounceable entitlement offer (Rights Issue) to all eligible shareholders to raise additional net funds of approximately AUD 3.5 million.

 

The Rights Issue will also be priced at AUD 5.5c, and is underwritten. AUD $8 million of the funds invested by FQM in the Project will be returned to AFR as loan repayments. Successful completion of the Private Placement, Entitlement Offer and the joint venture investment will leave AFR debt free, with approximately AUD $10 million working capital and with a 25 percent carried interest in new power projects to be developed at Sese.

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Matsheka seeks raise bond program ceiling to P30 billion

14th September 2020
Dr Matsheka

This week Minister of Finance & Economic Development, Dr Thapelo Matsheka approached parliament seeking lawmakers approval of Government’s intention to increase bond program ceiling from the current P15 Billion to P30 billion.

“I stand to request this honorable house to authorize increase in bond issuance program from the current P15 billion to P30 billion,” Dr Matsheka said. He explained that due to the halt in economic growth occasioned by COVID-19 pandemic government had to revisit options for funding the national budget, particularly for the second half of the National Development Plan (NDP) 11.

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Lucara sits clutching onto its gigantic stones with bear claws in a dark pit

14th September 2020
Lesedi La Rona

Botswana Stock Exchange (BSE) has this week revealed a gloomy picture of diamond mining newcomer, Lucara, with its stock devaluated and its entire business affected by the COVID-19 pandemic.

A BSE survey for a period between 1st January to 31st August 2020 — recording the second half of the year, the third quarter of the year and five months of coronavirus in Botswana — shows that the Domestic Company Index (DCI) depreciated by 5.9 percent.

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Botswana Diamonds issues 50 000 000 shares to raise capital

14th September 2020
Diamonds

Botswana Diamond PLC, a diamond exploration company trading on both London Stock Exchange Alternative Investment Market (AIM) and Botswana Stock Exchange (BSE) on Monday unlocked value from its shares to raise capital for its ongoing exploration works in Botswana and South Africa.

A statement from the company this week reveals that the placing was with existing and new investors to raise £300,000 via the issue of 50,000,000 new ordinary shares at a placing price of 0.6p per Placing Share.

Each Placing Share, according to Botswana Diamond Executives has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per new ordinary share for a period of two years from, 7th September 2020, being the date of the Placing Warrants issue.

In a statement Chairman of Botswana Diamonds, John Teeling explained that the funds raised will be used to fund ongoing exploration activities during the current year in Botswana and South Africa, and to provide additional working capital for the Company.

The company is currently drilling kimberlite M8 on the Marsfontein licence in South Africa and has generated further kimberlite targets which will be drilled on the adjacent Thorny River concession.

In Botswana, the funds will be focused on commercializing the KX36 project following the recent acquisition of Sekaka Diamonds from Petra Diamonds. This will include finalizing a work programme to upgrade the grades and diamond value of the kimberlite pipe as well as investigating innovative mining options.

Drilling is planned for the adjacent Sunland Minerals property and following further assessment of the comprehensive Sekaka database more drilling targets are likely. “This is a very active and exciting time for Botswana Diamonds. We are drilling the very promising M8 kimberlite at Marsfontein and further drilling is likely on targets identified on the adjacent Thorny River ground,” he said.

The company Board Chair further noted, “We have a number of active projects. The recently acquired KX36 diamond resource in the Kalahari offers great potential. While awaiting final approvals from the Botswana authorities some of the funds raised will be used to detail the works we will do to refine grade, size distribution and value per carat.”

In addition BOD said the Placing Shares will rank pari passu with the Company’s existing ordinary shares. Application will be made for the Placing Shares to be admitted to trading on AIM and it is expected that such admission will become effective on or around 23 September 2020.

Last month Botswana Diamond announced that it has entered into agreement with global miner Petra Diamonds to acquire the latter’s exploration assets in Botswana. Key to these assets, housed under Sekaka Diamonds, 100 % subsidiary of Petra is the KX36 Diamond discovery, a high grade ore Kimberlite pipe located in the CKGR, considered Botswana’s next diamond glory after the magnificent Orapa and prolific Jwaneng Mines.

The acquisition entailed two adjacent Prospecting Licences and a diamond processing plant. Sekaka has been Petra’s exploration vehicle in Botswana for year and holds three Prospecting Licenses in the Central Kalahari Game Reserve (Kalahari) PL169/2019, PL058/2007 and PL224/2007, which includes the high grade KX36 kimberlite pipe.

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