Modern Mining July 2016

COAL

Study confirms Mbeya as a “robust project”

A IM-listed Kibo Mining reports the comple- tion of a positive Mining Definitive Feasi- bility Study (MDFS) for its flagship Mbeya Coal to Power Project (MCPP) in Tanzania. The project involves the development of the Mbeya coal mine and an associated mine-mouth power station of 300 MW capacity. The MDFS comprises the optimisation of the mine design, a detailed mine design based on the results from the restated Mbeya coal resource and the final coal requirement for the Mbeya Power Station as stated in the Power Definitive Feasibility Study (PDFS). According to Kibo, results from the MDFS correlate accurately with those of the Mining Pre-Feasibility Study (MPFS), whose results were announced last year, and have reconfirmed the Mbeya coal mine as a robust project with strong financial and commercial indicators. Key results from the MDFS are the following: an IRR of 69,2 % (a 15 % improvement from the 53,9 % stated in the MPFS); a payback period of 2,4 years (a 7 % improvement from the 2,6 years stated in the MPFS); and a peak funding requirement of US$17 million (reduced by 54 % from that identified in the MPFS). The MDFS also delivers a reduction of 23 % in the power station coal requirement over the life of the plant compared to that in the MPFS, bringing about significant environmental and cost benefits. Explaining this point, Kibo says the MDFS mining method has made it possible to design a power station that requires significantly less coal for the same output – i.e. 1 840 GWh per annum. Although this will result in a linear reduction of revenue for the coal mine, this is more than recovered in cost savings for the power plant which is most sensitive to fuel costs. The mining method to be adopted at Mbeya is modi- fied terrace mining, with overburden removal by means of a free dig (truck and shovel) method and coal seam and interburden mining by means of mechanised continuous surface mining. “We are delighted with the results of the MDFS, which have confirmed, and in various areas improved on, the positive Pre-Feasibility Study results. Figures from the MDFS report confirm that the Mbeya coal mine (as the mining component of the MCPP) is a robust project in every aspect. Project fundamentals are significantly better than originally at the end of the Concept Study in 2014,” says Louis Coetzee, CEO of Kibo Mining. “We are particularly pleased with the improved IRR of 69,2 % and the significantly improved environmen- tal impact. The significance of the mining method that was developed for the Mbeya coal mine cannot be under- estimated. This method not only eliminated one of the two biggest environmental risks for the MCPP, i.e. elimi- nating the need to wash the coal, but also reduced the coal requirement by 23 %, which means substantial cost savings for both the mine and the power plant. It

will also result in a corresponding reduction in emissions. Considering that these two elements are fundamental to the fundability of the MCPP, we could not have hoped for better results from the MDFS. “The total coal requirement of the Mbeya power plant over the life of plant is stated as a probable reserve in the MDFS, meaning that the power plant can rely on an upfront guaranteed fuel supply for its entire life span.” Coetzee adds that with the two key work streams required for the completion of the MCPP Integrated Bankable Feasibility Study (IBFS) in place, Kibo is now focused on completion of the final work on the IBFS. The Mbeya (previously Rukwa) coal project comprises 22 tenements located in south-western Tanzania. What is known as the Central Block contains the 120,8 Mt Mbeya thermal coal mineral resource and will host the MCPP. The Central Block covers approximately 2 000 km 2 and is situ- ated approximately 70 km north-west of the regional town of Mbeya and just south of Lake Rukwa. It is strategically located close to Mtwara Development Corridor earmarked for rapid socio-economic development by the Tanzanian government The project received a significant boost in April 2015 with the signing of a Joint Development Agreement (JDA) with China-based EPC contractor SEPCO III. 

July 2016  MODERN MINING  31